2   Service management as a practice

2.1     SERVICES AND SERVICE MANAGEMENT

2.1.1     Services

Services are a means of delivering value to customers by facilitating the outcomes customers want to achieve without the ownership of specific costs and risks. Services facilitate outcomes by enhancing the performance of associated tasks and reducing the effect of constraints. These constraints may include regulation, lack of funding or capacity, or technology limitations. The end result is an increase in the probability of desired outcomes. While some services enhance performance of tasks, others have a more direct impact – they perform the task itself.

The preceding paragraph is not just a definition, as it is a recurring pattern found in a wide range of services. Patterns are useful for managing complexity, costs, flexibility and variety. They are generic structures useful to make an idea applicable in a wide range of environments and situations. In each instance the pattern is applied with variations that make the idea effective, economical or simply useful in that particular case.

An outcome-based definition of service moves IT organizations beyond business–IT alignment towards business–IT integration. Internal dialogue and discussion on the meaning of services is an elementary step towards alignment and integration with a customer’s business (Figure 2.1). Customer outcomes become the ultimate concern of business relationship managers instead of the gathering of requirements, which is necessary but not sufficient. Requirements are generated for internal coordination and control only after customer outcomes are well understood.

Customers seek outcomes but do not wish to have accountability or ownership of all the associated costs and risks. All services must have a budget when they go live and this must be managed. The service cost is reflected in financial terms such as return on investment (ROI) and total cost of ownership (TCO). The customer will only be exposed to the overall cost or price of a service, which will include all the provider’s costs and risk mitigation measures (and any profit margin if appropriate). The customer can then judge the value of a service based on a comparison of cost or price and reliability with the desired outcome.

Figure 2.1 Conversation about the definition and meaning of services

Customer satisfaction is also important. Customers need to be satisfied with the level of service and feel confident in the ability of the service provider to continue providing that level of service – or even improving it over time. The difficulty is that customer expectations keep shifting, and a service provider that does not track this will soon find itself losing business. ITIL Service Strategy is helpful in understanding how this happens, and how a service provider can adapt its services to meet the changing customer environment.

Services can be discussed in terms of how they relate to one another and their customers, and can be classified as core, enabling or enhancing.

Core services deliver the basic outcomes desired by one or more customers. They represent the value that the customer wants and for which they are willing to pay. Core services anchor the value proposition for the customer and provide the basis for their continued utilization and satisfaction.

Enabling services are services that are needed in order for a core service to be delivered. Enabling services may or may not be visible to the customer, but the customer does not perceive them as services in their own right. They are ‘basic factors’ which enable the customer to receive the ‘real’ (core) service.

Enhancing services are services that are added to a core service to make it more exciting or enticing to the customer. Enhancing services are not essential to the delivery of a core service, and are added to a core service as ‘excitement’ factors, which will encourage customers to use the core service more (or to choose the core service provided by one company over those of its competitors).

Services may be as simple as allowing a user to complete a single transaction, but most services are complex. They consist of a range of deliverables and functionality. If each individual aspect of these complex services were defined independently, the service provider would soon find it impossible to track and record all services.

Most service providers will follow a strategy where they can deliver a set of more generic services to a broad range of customers, thus achieving economies of scale and competing on the basis of price and a certain amount of flexibility. One way of achieving this is by using service packages. A service package is a collection of two or more services that have been combined to offer a solution to a specific type of customer need or to underpin specific business outcomes. A service package can consist of a combination of core services, enabling services and enhancing services.

Where a service or service package needs to be differentiated for different types of customer, one or more components of the package can be changed, or offered at different levels of utility and warranty, to create service options. These different service options can then be offered to customers and are sometimes called service level packages.

2.1.2     Service management

When we turn on a water tap, we expect to see water flow from it. When we turn on a light switch, we expect to see light fill the room. Not so many years ago, these very basic things were not as reliable as they are today. We know instinctively that the advances in technology have made them reliable enough to be considered a utility. But it isn’t just the technology that makes the services reliable. It is how they are managed.

The use of IT today has become the utility of business. Business today wants IT services that behave like other utilities such as water, electricity or the telephone. Simply having the best technology will not ensure that IT provides utility-like reliability. Professional, responsive, value-driven service management is what brings this quality of service to the business.

Service management is a set of specialized organizational capabilities for providing value to customers in the form of services. The more mature a service provider’s capabilities are, the greater is their ability to consistently produce quality services that meet the needs of the customer in a timely and cost-effective manner. The act of transforming capabilities and resources into valuable services is at the core of service management. Without these capabilities, a service organization is merely a bundle of resources that by itself has relatively low intrinsic value for customers.

Organizational capabilities are shaped by the challenges they are expected to overcome. An example of this is provided by Toyota in the 1950s when it developed unique capabilities to overcome the challenge of smaller scale and financial capital compared to its American rivals. Toyota developed new capabilities in production engineering, operations management and managing suppliers to compensate for its inability to afford large inventories, make components, produce raw materials or own the companies that produced them (Magretta, 2002).

Service management capabilities are similarly influenced by the following challenges that distinguish services from other systems of value creation, such as manufacturing, mining and agriculture:

  Intangible nature of the output and intermediate products of service processes: they are difficult to measure, control and validate (or prove)

  Demand is tightly coupled with the customer’s assets: users and other customer assets such as processes, applications, documents and transactions arrive with demand and stimulate service production

  High level of contact for producers and consumers of services: there is little or no buffer between the service provider’s creation of the service and the customer’s consumption of that service

  The perishable nature of service output and service capacity: there is value for the customer from assurance on the continued supply of consistent quality. Providers need to secure a steady supply of demand from customers.

Service management is more than just a set of capabilities. It is also a professional practice supported by an extensive body of knowledge, experience and skills. A global community of individuals and organizations in the public and private sectors fosters its growth and maturity. Formal schemes exist for the education, training and certification of practising organizations, and individuals influence its quality. Industry best practices, academic research and formal standards contribute to and draw from its intellectual capital.

The origins of service management are in traditional service businesses such as airlines, banks, hotels and phone companies. Its practice has grown with the adoption by IT organizations of a service-oriented approach to managing IT applications, infrastructure and processes. Solutions to business problems and support for business models, strategies and operations are increasingly in the form of services. The popularity of shared services and outsourcing has contributed to the increase in the number of organizations that behave as service providers, including internal IT organizations. This in turn has strengthened the practice of service management while at the same time imposed greater challenges.

2.1.3     IT service management

Information technology (IT) is a commonly used term that changes meaning depending on the different perspectives that a business organization or people may have of it. A key challenge is to recognize and balance these perspectives when communicating the value of IT service management (ITSM) and understanding the context for how the business sees the IT organization. Some of these meanings are:

  IT is a collection of systems, applications and infrastructures which are components or sub-assemblies of a larger product. They enable or are embedded in processes and services.

  IT is an organization with its own set of capabilities and resources. IT organizations can be of various types such as business functions, shared services units and enterprise-level core units.

  IT is a category of services utilized by business. The services are typically IT applications and infrastructure that are packaged and offered by internal IT organizations or external service providers. IT costs are treated as business expenses.

  IT is a category of business assets that provide a stream of benefits for their owners, including, but not limited to, revenue, income and profit. IT costs are treated as investments.

Every IT organization should act as a service provider, using the principles of service management to ensure that they deliver the outcomes required by their customers.

ITSM must be carried out effectively and efficiently. Managing IT from the business perspective enables organizational high performance and value creation.

A good relationship between an IT service provider and its customers relies on the customer receiving an IT service that meets its needs, at an acceptable level of performance and at a cost that the customer can afford. The IT service provider needs to work out how to achieve a balance between these three areas, and communicate with the customer if there is anything which prevents it from being able to deliver the required IT service at the agreed level of performance or price.

A service level agreement (SLA) is used to document agreements between an IT service provider and a customer. An SLA describes the IT service, documents service level targets, and specifies the responsibilities of the IT service provider and the customer. A single agreement may cover multiple IT services or multiple customers.

2.1.4     Service providers

There are three main types of service provider. While most aspects of service management apply equally to all types of service provider, other aspects such as customers, contracts, competition, market spaces, revenue and strategy take on different meanings depending on the specific type. The three types are:

  Type I – internal service provider  An internal service provider that is embedded within a business unit. There may be several Type I service providers within an organization.

  Type II – shared services unit  An internal service provider that provides shared IT services to more than one business unit.

  Type III – external service provider  A service provider that provides IT services to external customers.

ITSM concepts are often described in the context of only one of these types and as if only one type of IT service provider exists or is used by a given organization. In reality most organizations have a combination of IT service providers. In a single organization it is possible that some IT units are dedicated to a single business unit, others provide shared services, and yet others have been outsourced or depend on external service providers.

Many IT organizations who traditionally provide services to internal customers find that they are dealing directly with external users because of the online services that they provide. ITIL Service Strategy provides guidance on how the IT organization interacts with these users, and who owns and manages the relationship with them.

2.1.5     Stakeholders in service management

Stakeholders have an interest in an organization, project or service etc. and may be interested in the activities, targets, resources or deliverables from service management. Examples include organizations, service providers, customers, consumers, users, partners, employees, shareholders, owners and suppliers. The term ‘organization’ is used to define a company, legal entity or other institution. It is also used to refer to any entity that has people, resources and budgets – for example, a project or business.

Within the service provider organization there are many different stakeholders including the functions, groups and teams that deliver the services. There are also many stakeholders external to the service provider organization, for example:

  Customers  Those who buy goods or services. The customer of an IT service provider is the person or group who defines and agrees the service level targets. This term is also sometimes used informally to mean user – for example, ‘This is a customer-focused organization.’

  Users  Those who use the service on a day-to-day basis. Users are distinct from customers, as some customers do not use the IT service directly.

  Suppliers  Third parties responsible for supplying goods or services that are required to deliver IT services. Examples of suppliers include commodity hardware and software vendors, network and telecom providers, and outsourcing organizations.

There is a difference between customers who work in the same organization as the IT service provider, and customers who work for other organizations. They are distinguished as follows:

  Internal customers  These are customers who work for the same business as the IT service provider. For example, the marketing department is an internal customer of the IT organization because it uses IT services. The head of marketing and the chief information officer both report to the chief executive officer. If IT charges for its services, the money paid is an internal transaction in the organization’s accounting system, not real revenue.

  External customers  These are customers who work for a different business from the IT service provider. External customers typically purchase services from the service provider by means of a legally binding contract or agreement.

2.1.6     Utility and warranty

The value of a service can be considered to be the level to which that service meets a customer’s expectations. It is often measured by how much the customer is willing to pay for the service, rather than the cost to the service provider of providing the service or any other intrinsic attribute of the service itself.

Unlike products, services do not have much intrinsic value. The value of a service comes from what it enables someone to do. The value of a service is not determined by the provider, but by the person who receives it – because they decide what they will do with the service, and what type of return they will achieve by using the service. Services contribute value to an organization only when their value is perceived to be higher than the cost of obtaining the service.

From the customer’s perspective, value consists of achieving business objectives. The value of a service is created by combining two primary elements: utility (fitness for purpose) and warranty (fitness for use). These two elements work together to achieve the desired outcomes upon which the customer and the business base their perceptions of a service.

Utility is the functionality offered by a product or service to meet a particular need. Utility can be summarized as ‘what the service does’, and can be used to determine whether a service is able to meet its required outcomes, or is ‘fit for purpose’. Utility refers to those aspects of a service that contribute to tasks associated with achieving outcomes. For example, a service that enables a business unit to process orders should allow sales people to access customer details, stock availability, shipping information etc. Any aspect of the service that improves the ability of sales people to improve the performance of the task of processing sales orders would be considered utility. Utility can therefore represent any attribute of a service that removes, or reduces the effect of, constraints on the performance of a task.

Warranty is an assurance that a product or service will meet its agreed requirements. This may be a formal agreement such as a service level agreement or contract, or a marketing message or brand image. Warranty refers to the ability of a service to be available when needed, to provide the required capacity, and to provide the required reliability in terms of continuity and security. Warranty can be summarized as ‘how the service is delivered’, and can be used to determine whether a service is ‘fit for use’. For example, any aspect of the service that increases the availability or speed of the service would be considered warranty. Warranty can therefore represent any attribute of a service that increases the potential of the business to be able to perform a task. Warranty refers to any means by which utility is made available to the users.

Utility is what the service does, and warranty is how it is delivered.

Figure 2.2 Services are designed, built and delivered with both utility and warranty

Customers cannot benefit from something that is fit for purpose but not fit for use, and vice versa. The value of a service is therefore only delivered when both utility and warranty are designed and delivered. Figure 2.2 illustrates the logic that a service has to have both utility and warranty to create value. Utility is used to improve the performance of the tasks required to achieve an outcome, or to remove constraints that prevent the task from being performed adequately (or both). Warranty requires the service to be available, continuous and secure and to have sufficient capacity for the service to perform at the required level. If the service is both fit for purpose and fit for use, it will create value.

It should be noted that the elements of warranty in Figure 2.2 are not exclusive. It is possible to define other components of warranty, such as usability, which refers to how easy it is for the user to access and use the features of the service to achieve the desired outcomes.

The warranty aspect of the service needs to be designed at the same time as the utility aspect in order to deliver the required value to the business. Attempts to design warranty aspects after a service has been deployed can be expensive and disruptive.

Information about the desired business outcomes, opportunities, customers, utility and warranty of the service is used to develop the definition of a service. Using an outcome-based definition helps to ensure that managers plan and execute all aspects of service management from the perspective of what is valuable to the customer.

2.1.7     Best practices in the public domain

Organizations benchmark themselves against peers and seek to close gaps in capabilities. This enables them to become more competitive by improving their ability to deliver quality services that meet the needs of their customers at a price their customers can afford. One way to close such gaps is the adoption of best practices in wide industry use. There are several sources for best practice including public frameworks, standards and the proprietary knowledge of organizations and individuals (Figure 2.3). ITIL is the most widely recognized and trusted source of best-practice guidance in the area of ITSM.

Figure 2.3 Sources of service management best practice

Public frameworks and standards are attractive when compared with proprietary knowledge for the following reasons:

  Proprietary knowledge is deeply embedded in organizations and therefore difficult to adopt, replicate or even transfer with the cooperation of the owners. Such knowledge is often in the form of tacit knowledge which is inextricable and poorly documented.

  Proprietary knowledge is customized for the local context and the specific needs of the business to the point of being idiosyncratic. Unless the recipients of such knowledge have matching circumstances, the knowledge may not be as effective in use.

  Owners of proprietary knowledge expect to be rewarded for their investments. They may make such knowledge available only under commercial terms through purchases and licensing agreements.

  Publicly available frameworks and standards such as ITIL, LEAN, Six Sigma, COBIT, CMMI, PRINCE2, PMBOK^®, ISO 9000, ISO/IEC 20000 and ISO/IEC 27001 are validated across a diverse set of environments and situations rather than the limited experience of a single organization. They are subject to broad review across multiple organizations and disciplines, and vetted by diverse sets of partners, suppliers and competitors.

  The knowledge of public frameworks is more likely to be widely distributed among a large community of professionals through publicly available training and certification. It is easier for organizations to acquire such knowledge through the labour market.

Ignoring public frameworks and standards can needlessly place an organization at a disadvantage. Organizations should cultivate their own proprietary knowledge on top of a body of knowledge based on public frameworks and standards. Collaboration and coordination across organizations become easier on the basis of shared practices and standards. Further information on best practice in the public domain is provided in Appendix D.

2.2     BASIC CONCEPTS

2.2.1     Assets, resources and capabilities

The service relationship between service providers and their customers revolves around the use of assets – both those of the service provider and those of the customer. Each relationship involves an interaction between the assets of each party.

Many customers use the service they receive from a service provider to build and deliver services or products of their own and then deliver them on to their own customers. In these cases, what the service provider considers to be the customer asset would be considered to be a service asset by their customer.

Without customer assets, there is no basis for defining the value of a service. The performance of customer assets is therefore a primary concern for service management.

There are two types of asset used by both service providers and customers – resources and capabilities. Organizations use them to create value in the form of goods and services. Resources are direct inputs for production. Capabilities represent an organization’s ability to coordinate, control and deploy resources to produce value. Capabilities are typically experience-driven, knowledge-intensive, information-based and firmly embedded within an organization’s people, systems, processes and technologies. It is relatively easy to acquire resources compared to capabilities (see Figure 2.4 for examples of capabilities and resources).

Service providers need to develop distinctive capabilities to retain customers with value propositions that are hard for competitors to duplicate. For example, two service providers may have similar resources such as applications, infrastructure and access to finance. Their capabilities, however, differ in terms of management systems, organization structure, processes and knowledge assets. This difference is reflected in actual performance.

Capabilities by themselves cannot produce value without adequate and appropriate resources. The productive capacity of a service provider is dependent on the resources under its control. Capabilities are used to develop, deploy and coordinate this productive capacity. For example, capabilities such as capacity management and availability management are used to manage the performance and utilization of processes, applications and infrastructure, ensuring service levels are effectively delivered.

Figure 2.4 Examples of capabilities and resources

2.2.2     Processes

Processes define actions, dependencies and sequence. Well-defined processes can improve productivity within and across organizations and functions. Process characteristics include:

  Measurability  We are able to measure the process in a relevant manner. It is performance-driven. Managers want to measure cost, quality and other variables while practitioners are concerned with duration and productivity.

  Specific results  The reason a process exists is to deliver a specific result. This result must be individually identifiable and countable.

  Customers  Every process delivers its primary results to a customer or stakeholder. Customers may be internal or external to the organization, but the process must meet their expectations.

  Responsiveness to specific triggers  While a process may be ongoing or iterative, it should be traceable to a specific trigger.

A process is organized around a set of objectives. The main outputs from the process should be driven by the objectives and should include process measurements (metrics), reports and process improvement.

The output produced by a process has to conform to operational norms that are derived from business objectives. If products conform to the set norm, the process can be considered effective (because it can be repeated, measured and managed, and achieves the required outcome). If the activities of the process are carried out with a minimum use of resources, the process can also be considered efficient.

Inputs are data or information used by the process and may be the output from another process.

A process, or an activity within a process, is initiated by a trigger. A trigger may be the arrival of an input or other event. For example, the failure of a server may trigger the event management and incident management processes.

A process may include any of the roles, responsibilities, tools and management controls required to deliver the outputs reliably. A process may define policies, standards, guidelines, activities and work instructions if they are needed.

Processes, once defined, should be documented and controlled. Once under control, they can be repeated and managed. Process measurement and metrics can be built into the process to control and improve the process as illustrated in Figure 2.5. Process analysis, results and metrics should be incorporated in regular management reports and process improvements.

Figure 2.5 Process model

2.2.3     Organizing for service management

There is no single best way to organize, and best practices described in ITIL need to be tailored to suit individual organizations and situations. Any changes made will need to take into account resource constraints and the size, nature and needs of the business and customers. The starting point for organizational design is strategy. Organizational development for service management is described in more detail in Chapter 6.

2.2.3.1     Functions

A function is a team or group of people and the tools or other resources they use to carry out one or more processes or activities. In larger organizations, a function may be broken out and performed by several departments, teams and groups, or it may be embodied within a single organizational unit (e.g. the service desk). In smaller organizations, one person or group can perform multiple functions – for example, a technical management department could also incorporate the service desk function.

For the service lifecycle to be successful, an organization will need to clearly define the roles and responsibilities required to undertake the processes and activities involved in each lifecycle stage. These roles will need to be assigned to individuals, and an appropriate organization structure of teams, groups or functions will need to be established and managed. These are defined as follows:

  Group  A group is a number of people who are similar in some way. In ITIL, groups refer to people who perform similar activities – even though they may work on different technologies or report into different organizational structures or even different companies. Groups are usually not formal organizational structures, but are very useful in defining common processes across the organization – for example, ensuring that all people who resolve incidents complete the incident record in the same way.

  Team  A team is a more formal type of group. These are people who work together to achieve a common objective, but not necessarily in the same organizational structure. Team members can be co-located, or work in multiple locations and operate virtually. Teams are useful for collaboration, or for dealing with a situation of a temporary or transitional nature. Examples of teams include project teams, application development teams (often consisting of people from several different business units) and incident or problem resolution teams.

  Department  Departments are formal organizational structures which exist to perform a specific set of defined activities on an ongoing basis. Departments have a hierarchical reporting structure with managers who are usually responsible for the execution of the activities and also for day-to-day management of the staff in the department.

  Division  A division refers to a number of departments that have been grouped together, often by geography or product line. A division is normally self-contained.

ITIL Service Operation describes the following functions in detail:

  Service desk  The single point of contact for users when there is a service disruption, for service requests, or even for some categories of request for change. The service desk provides a point of communication to the users and a point of coordination for several IT groups and processes.

  Technical management  Provides detailed technical skills and resources needed to support the ongoing operation of IT services and the management of the IT infrastructure. Technical management also plays an important role in the design, testing, release and improvement of IT services.

  IT operations management  Executes the daily operational activities needed to manage IT services and the supporting IT infrastructure. This is done according to the performance standards defined during service design. IT operations management has two sub-functions that are generally organizationally distinct. These are IT operations control and facilities management.

  Application management  Is responsible for managing applications throughout their lifecycle. The application management function supports and maintains operational applications and also plays an important role in the design, testing and improvement of applications that form part of IT services.

The other core ITIL publications do not define any functions in detail, but they do rely on the technical and application management functions described in ITIL Service Operation. Technical and application management provide the technical resources and expertise to manage the whole service lifecycle, and practitioner roles within a particular lifecycle stage may be performed by members of these functions.

2.2.3.2     Roles

A number of roles need to be performed during the service lifecycle. The core ITIL publications provide guidelines and examples of role descriptions. These are not exhaustive or prescriptive, and in many cases roles will need to be combined or separated. Organizations should take care to apply this guidance in a way that suits their own structure and objectives.

Roles are often confused with job titles but it is important to realize that they are not the same. Each organization will define appropriate job titles and job descriptions which suit their needs, and individuals holding these job titles can perform one or more of the required roles.

It should also be recognized that a person may, as part of their job assignment, perform a single task that represents participation in more than one process. For example, a technical analyst who submits a request for change (RFC) to add memory to a server to resolve a performance problem is participating in activities of the change management process at the same time as taking part in activities of the capacity management and problem management processes.

See Chapter 6 for more details about the roles and responsibilities described ITIL Service Strategy.

2.2.3.3     Organizational culture and behaviour

Organizational culture is the set of shared values and norms that control the service provider’s interactions with all stakeholders, including customers, users, suppliers, internal staff etc. An organization’s values are desired modes of behaviour that affect its culture. Examples of organizational values include high standards, customer care, respecting tradition and authority, acting cautiously and conservatively, and being frugal.

High-performing service providers continually align the value network for efficiency and effectiveness. Culture through the value network is transmitted to staff through socialization, training programmes, stories, ceremonies and language.

Constraints such as governance, capabilities, standards, resources, values and ethics play a significant role in organization culture and behaviour. Organizational culture can also be affected by structure or management styles resulting in a positive or negative impact on performance. Organizational structures and management styles contribute to the behaviour of people, process, technology and partners. These are important aspects in adopting service management practices and ITIL.

Change related to service management programmes will affect organizational culture and it is important to prepare people with effective communication plans, training, policies and procedures to achieve the desired performance outcomes. Establishing cultural change is also an important factor for collaborative working between the many different people involved in service management. Managing people through service transitions is discussed at more length in Chapter 5 of ITIL Service Transition.

2.2.4     The service portfolio

The service portfolio is the complete set of services that is managed by a service provider and it represents the service provider’s commitments and investments across all customers and market spaces. It also represents present contractual commitments, new service development, and ongoing service improvement plans initiated by continual service improvement. The portfolio may include third-party services, which are an integral part of service offerings to customers.

The service portfolio represents all the resources presently engaged or being released in various stages of the service lifecycle. It is a database or structured document in three parts:

  Service pipeline  All services that are under consideration or development, but are not yet available to customers. It includes major investment opportunities that have to be traced to the delivery of services, and the value that will be realized. The service pipeline provides a business view of possible future services and is part of the service portfolio that is not normally published to customers.

  Service catalogue  All live IT services, including those available for deployment. It is the only part of the service portfolio published to customers, and is used to support the sale and delivery of IT services. It includes a customer-facing view (or views) of the IT services in use, how they are intended to be used, the business processes they enable, and the levels and quality of service the customer can expect for each service. The service catalogue also includes information about supporting services required by the service provider to deliver customer-facing services. Information about services can only enter the service catalogue after due diligence has been performed on related costs and risks.

  Retired services  All services that have been phased out or retired. Retired services are not available to new customers or contracts unless a special business case is made.

Service providers often find it useful to distinguish customer-facing services from supporting services:

  Customer-facing services  IT services that are visible to the customer. These are normally services that support the customer’s business processes and facilitate one or more outcomes desired by the customer.

  Supporting services  IT services that support or ‘underpin’ the customer-facing services. These are typically invisible to the customer, but are essential to the delivery of customer-facing IT services.

Figure 2.6 illustrates the components of the service portfolio, which are discussed in detail in section 4.2. These are important components of the service knowledge management system (SKMS) described in section 2.2.5.

Figure 2.6 The service portfolio and its contents

2.2.5     Knowledge management and the SKMS

Quality knowledge and information enable people to perform process activities and support the flow of information between service lifecycle stages and processes. Understanding, defining, establishing and maintaining information is a responsibility of the knowledge management process.

Implementing an SKMS enables effective decision support and reduces the risks that arise from a lack of proper mechanisms. However, implementing an SKMS can involve a large investment in tools to store and manage data, information and knowledge. Every organization will start this work in a different place, and have their own vision of where they want to be, so there is no simple answer to the question ‘What tools and systems are needed to support knowledge management?’ Data, information and knowledge need to be interrelated across the organization. A document management system and/or a configuration management system (CMS) can be used as a foundation for implementation of the SKMS.

Figure 2.7 illustrates an architecture for service knowledge management that has four layers including examples of possible content at each layer. These are:

  Presentation layer  Enables searching, browsing, retrieving, updating, subscribing and collaboration. The different views onto the other layers are suitable for different audiences. Each view should be protected to ensure that only authorized people can see or modify the underlying knowledge, information and data.

  Knowledge processing layer  Is where the information is converted into useful knowledge which enables decision-making.

  Information integration layer  Provides integrated information that may be gathered from data in multiple sources in the data layer.

  Data layer  Includes tools for data discovery and data collection, and data items in unstructured and structured forms.

Figure 2.7 Architectural layers of an SKMS

In practice, an SKMS is likely to consist of multiple tools and repositories. For example, there may be a tool that provides all four layers for the support of different processes or combinations of processes. Various tools providing a range of perspectives will be used by different stakeholders to access this common repository for collaborative decision support.

This architecture is applicable for many of the management information systems in ITIL. A primary component of the SKMS is the service portfolio, covered in section 2.2.4. Other examples include the CMS, the availability management information system (AMIS) and the capacity management information system (CMIS).

2.3     GOVERNANCE AND MANAGEMENT SYSTEMS

2.3.1     Governance

Governance is the single overarching area that ties IT and the business together, and services are one way of ensuring that the organization is able to execute that governance. Governance is what defines the common directions, policies and rules that both the business and IT use to conduct business.

Many ITSM strategies fail because they try to build a structure or processes according to how they would like the organization to work instead of working within the existing governance structures.

Governance works to apply a consistently managed approach at all levels of the organization – first by ensuring a clear strategy is set, then by defining the policies whereby the strategy will be achieved. The policies also define boundaries, or what the organization may not do as part of its operations.

Governance needs to be able to evaluate, direct and monitor the strategy, policies and plans. Further information on governance and service management is provided in Chapter 5. The international standard for corporate governance of IT is ISO/IEC 38500, described in Appendix D.

2.3.2     Management systems

A system is a number of related things that work together to achieve an overall objective. Systems should be self-regulating for agility and timeliness. In order to accomplish this, the relationships within the system must influence one another for the sake of the whole. Key components of the system are the structure and processes that work together.

A systems approach to service management ensures learning and improvement through a big-picture view of services and service management. It extends the management horizon and provides a sustainable long-term approach.

By understanding the system structure, the interconnections between all the assets and service components, and how changes in any area will affect the whole system and its constituent parts over time, a service provider can deliver benefits such as:

  Ability to adapt to the changing needs of customers and markets

  Sustainable performance

  Better approach to managing services, risks, costs and value delivery

  Effective and efficient service management

  Simplified approach that is easier for people to use

  Less conflict between processes

  Reduced duplication and bureaucracy.

Many businesses have adopted management system standards for competitive advantage and to ensure a consistent approach in implementing service management across their value network. Implementation of a management system also provides support for governance (see section 2.3.1).

A management system of an organization can adopt multiple management system standards, such as:

  A quality management system (ISO 9001)

  An environmental management system (ISO 14000)

  A service management system (ISO/IEC 20000)

  An information security management system (ISO/IEC 27001)

  A management system for software asset management (ISO/IEC 19770).

Service providers are increasingly adopting these standards to be able to demonstrate their service management capability. As there are common elements between such management systems, they should be managed in an integrated way rather than having separate management systems. To meet the requirements of a specific management system standard, an organization needs to analyse the requirements of the relevant standard in detail and compare them with those that have already been incorporated in the existing integrated management system. Appendix D provides further information on these standards.

ISO management system standards use the Plan-Do-Check-Act (PDCA) cycle shown in Figure 2.8. The ITIL service lifecycle approach embraces and enhances the interpretation of the PDCA cycle. You will see the PDCA cycle used in the structure of the guidance provided in each of the core ITIL publications. This guidance recognizes the need to drive governance, organizational design and management systems from the business strategy, service strategy and service requirements.

Figure 2.8 Plan-Do-Check-Act cycle

ISO/IEC 20000 is an internationally recognized standard that allows organizations to demonstrate excellence and prove best practice in ITSM. Part 1 specifies requirements for the service provider to plan, establish, implement, operate, monitor, review, maintain and improve a service management system (SMS). Coordinated integration and implementation of an SMS, to meet the Part 1 requirements, provides ongoing control, greater effectiveness, efficiency and opportunities for continual improvement. It ensures that the service provider:

  Understands and fulfils the service requirements to achieve customer satisfaction

  Establishes the policy and objectives for service management

  Designs and delivers changes and services that add value for the customer

  Monitors, measures and reviews performance of the SMS and the services

  Continually improves the SMS and the services based on objective measurements.

Service providers across the world have successfully established an SMS to direct and control their service management activities. The adoption of an SMS should be a strategic decision for an organization.

One of the most common routes for an organization to achieve the requirements of ISO/IEC 20000 is by adopting ITIL service management best practices and using the ITIL qualification scheme for professional development.

Certification to ISO/IEC 20000-1 by an accredited certification body shows that a service provider is committed to delivering value to its customers and continual service improvement. It demonstrates the existence of an effective SMS that satisfies the requirements of an independent external audit. Certification gives a service provider a competitive edge in marketing. Many organizations specify a requirement to comply with ISO/IEC 20000 in their contracts and agreements.

2.4     THE SERVICE LIFECYCLE

Services and processes describe how things change, whereas structure describes how they are connected. Structure helps to determine the correct behaviours required for service management.

Structure describes how process, people, technology and partners are connected. Structure is essential for organizing information. Without structure, our service management knowledge is merely a collection of observations, practices and conflicting goals. The structure of the service lifecycle is an organizing framework, supported by the organizational structure, service portfolio and service models within an organization. Structure can influence or determine the behaviour of the organization and people. Altering the structure of service management can be more effective than simply controlling discrete events.

Without structure, it is difficult to learn from experience. It is difficult to use the past to educate for the future. We can learn from experience but we also need to confront directly many of the most important consequences of our actions.

See Chapter 1 for an introduction to each ITIL service lifecycle stage.

2.4.1     Specialization and coordination across the lifecycle

Organizations need a collaborative approach for the management of assets which are used to deliver and support services for their customers.

Organizations should function in the same manner as a high-performing sports team. Each player in a team and each member of the team’s organization who are not players position themselves to support the goal of the team. Each player and team member has a different specialization that contributes to the whole. The team matures over time taking into account feedback from experience, best practice, current process and procedures to become an agile high-performing team.

Specialization and coordination are necessary in the lifecycle approach. Specialization allows for expert focus on components of the service but components of the service also need to work together for value. Specialization combined with coordination helps to manage expertise, improve focus and reduce overlaps and gaps in processes. Specialization and coordination together help to create a collaborative and agile organizational architecture that maximizes utilization of assets.

Coordination across the lifecycle creates an environment focused on business and customer outcomes instead of just IT objectives and projects. Coordination is also essential between functional groups, across the value network, and between processes and technology.

Feedback and control between organizational assets helps to enable operational efficiency, organizational effectiveness and economies of scale.

2.4.2     Processes through the service lifecycle

Each core ITIL lifecycle publication includes guidance on service management processes as shown in Table 2.1.

Table 2.1 The processes described in each core ITIL publication

Core ITIL lifecycle publication	Processes described in the publication
ITIL Service Strategy	Strategy management for IT services Service portfolio management Financial management for IT services Demand management Business relationship management
ITIL Service Design	Design coordination Service catalogue management Service level management Availability management Capacity management IT service continuity management Information security management Supplier management
ITIL Service Transition	Transition planning and support Change management Service asset and configuration management Release and deployment management Service validation and testing Change evaluation Knowledge management
ITIL Service Operation	Event management Incident management Request fulfilment Problem management Access management
ITIL Continual Service Improvement	Seven-step improvement process

Service management is more effective if people have a clear understanding of how processes interact throughout the service lifecycle, within the organization and with other parties (users, customers, suppliers).

Process integration across the service lifecycle depends on the service owner, process owners, process practitioners and other stakeholders understanding:

  The context of use, scope, purpose and limits of each process

  The strategies, policies and standards that apply to the processes and to the management of interfaces between processes

  Authorities and responsibilities of those involved in each process

  The information provided by each process that flows from one process to another; who produces it; and how it is used by integrated processes.

Integrating service management processes depends on the flow of information across process and organizational boundaries. This in turn depends on implementing supporting technology and management information systems across organizational boundaries, rather than in silos. If service management processes are implemented, followed or changed in isolation, they can become a bureaucratic overhead that does not deliver value for money. They could also damage or negate the operation or value of other processes and services.

As discussed in section 2.2.2, each process has a clear scope with a structured set of activities that transform inputs to deliver the outputs reliably. A process interface is the boundary of the process. Process integration is the linking of processes by ensuring that information flows from one process to another effectively and efficiently. If there is management commitment to process integration, processes are generally easier to implement and there will be fewer conflicts between processes.

Stages of the lifecycle work together as an integrated system to support the ultimate objective of service management for business value realization. Every stage is interdependent as shown in Figure 2.9. See Appendix F for examples of inputs and outputs across the service lifecycle.

The SKMS, described in section 2.2.5, enables integration across the service lifecycle stages. It provides secure and controlled access to the knowledge, information and data that are needed to manage and deliver services. The service portfolio represents all the assets presently engaged or being released in various stages of the lifecycle.

Figure 2.9 Integration across the service lifecycle

Chapter 1 provides a summary of each stage in the service lifecycle but it is also important to understand how the lifecycle stages work together.

Service strategy establishes policies and principles that provide guidance for the whole service lifecycle. The service portfolio is defined in this lifecycle stage, and new or changed services are chartered.

During the service design stage of the lifecycle, everything needed to transition and operate the new or changed service is documented in a service design package. This lifecycle stage also designs everything needed to create, transition and operate the services, including management information systems and tools, architectures, processes, measurement methods and metrics.

The activities of the service transition and service operation stages of the lifecycle are defined during service design. Service transition ensures that the requirements of the service strategy, developed in service design, are effectively realized in service operation while controlling the risks of failure and disruption.

The service operation stage of the service lifecycle carries out the activities and processes required to deliver the agreed services. During this stage of the lifecycle, the value defined in the service strategy is realized.

Continual service improvement acts in tandem with all the other lifecycle stages. All processes, activities, roles, services and technology should be measured and subjected to continual improvement.

Most ITIL processes and functions have activities that take place across multiple stages of the service lifecycle. For example:

  The service validation and testing process may design tests during the service design stage and perform these tests during service transition.

  The technical management function may provide input to strategic decisions about technology, as well as assisting in the design and transition of infrastructure components.

  Business relationship managers may assist in gathering detailed requirements during the service design stage of the lifecycle, or take part in the management of major incidents during the service operation stage.

  All service lifecycle stages contribute to the seven-step improvement process.

Appendix F identifies some of the major inputs and outputs between each stage of the service lifecycle. Chapter 3 of each core ITIL publication provides more detail on the inputs and outputs of the specific lifecycle stage it describes.

The strength of the service lifecycle rests upon continual feedback throughout each stage of the lifecycle. This feedback ensures that service optimization is managed from a business perspective and is measured in terms of the value the business derives from services at any point in time during the service lifecycle. The service lifecycle is non-linear in design. At every point in the service lifecycle, the process of monitoring, assessment and feedback between each stage drives decisions about the need for minor course corrections or major service improvement initiatives.

Figure 2.10 illustrates some examples of the continual feedback system built into the service lifecycle.

Figure 2.10 Continual service improvement and the service lifecycle

Adopting appropriate technology to automate the processes and provide management with the information that supports the processes is also important for effective and efficient service management.