ITIL v3 Foundation Certification Notes: Service Strategy [2]

[ITIL® v3 Foundation Study Notes] Important processes of the Service Strategy phase for the ITIL® 4 Foundation Certification exam are covered here, including: service portfolio management, financial management, business relationship management, demand management. The purpose, objectives, and scope of the processes and their importance in the Service Strategy lifecycle stage are addressed.

Service Portfolio Management Process

• Purpose of SPM: ensure the appropriate mix of services to meet customer requirements, the information (e.g. investment, interaction with other services) in the service portfolio clearly define the services and link them to business outcome providing the capability for alignment across the whole lifecycle to deliver value
• Objectives of SPM
  • a process to allow management of overall service provision – to review, control (how and when to provide the service), improve or retire a service
  • maintain the definitive portfolio of all services provided including the business needs and achieved outcomes
  • assist in judging the value of new service requests and review of investment
  • allows the organization to understand the value of IT services to business goals
• Scope of SPM
  • all the services in current use, in planning or having been retired
  • track investment and expenditure on all services and determine whether they are delivering value throughout the whole lifecycle
• Output of SPM: Service Portfolio
  • the complete set of services managed by a service provider (representing all the commitments and investments)
  • three sections:
    • pipeline section – pre-operational services, conceptual services (will be provided if resource is unlimited)
    • service catalogue section – customer-facing, live operational services
    • retired section – retired services
  • to ensure correct funding for all IT services across pipeline (development) and service catalogue (maintenance) sections

 Financial Management for IT Services Process

• Purpose: to secure enough funding for all the IT services (design, develop and deliver) and to control IT expenditures by balancing quality and cost, thus avoiding commitment to services that are not financially viable
• Objectives
  • define the financial framework to manage cost, apply financial control, report expenditure and recover cost from customers (if applicable)
  • study the financial impact of new / changed organizational strategy
  • secure enough funding for IT services (need to align with the overall financial management of the organization) and provide financial forecasts in respond to needs and changes
  • work with service assets and configuration management process to ensure all assets are maintained and all costs recorded
• Scope
  • ensure the financial practices within IT is consistent with organizational standards so that other business units will have an understanding of how IT is funded
  • three main processes with two cycles (planning / annual vs operational):
    • Budgeting – predicting and managing exceptions of income and expenditure
    • Accounting – establishing unit costs and recoding the expenditure with cost breakdown
    • Charging – establishing pricing policy and billing the customers (if any)

Business Relationship Management Process

• Purpose of BRM: to establish relationship between the service provider and customers and to ensure customers satisfaction by responding to changing requirements and managing customer expectation
• Objectives of BRM
  • understand customers needs and prioritize services accordingly to meet user requirements
  • maintain good communication
  • handle conflicts and complaints effectively
  • identify changes in business environment and technology that could impact services
  • ensure customer satisfaction
• Scope of BRM
  • focus on high level perspective of whether the service meets business needs
  • seek to understand customer requirements and business objectives
  • keep track of changes in technology and environment and advise users on these
  • understand the use of services on offer
  • measure level of customer satisfaction and respond to complaints
  • work with other service management processes and functions for information gathering, etc.
  • BRM – strategic, to drive overall customer satisfaction vs Service Level Management – tactical, meeting agreed levels of service in operation

Demand Management

• Purpose and Objectives of DM
  • to understand, anticipate and influence customer demand for services
  • works with Capacity Management to ensure that sufficient capacity to meet demand

Business Case

• [definition] A business case is the justification for a significant item of expenditure. The business case includes information about costs, benefits, options, issues, risks and possible problems.
• A business case is a tool for decision planning and support for understanding the likely consequences of a business decision in quantitive or qualitative terms
• Information can be captured from the Service Portfolio with sound financial management
• Business cases are built in Business Relationship Management process and evaluated in Service Portfolio Management process
• Structure of a business case
  1. Introduction – business objectives
  2. Methods and assumptions – define the boundaries (e.g. time, context)
  3. Business impacts – financial and non-financial (image, satisfaction, etc.) consequences
  4. Risk and contingencies
  5. Recommendations
• Business objectives and business impacts are closely linked and may have one-to-many / many-to-one relationship.

Conclusion: ITIL® v3 Foundation Service Strategy Processes

This ITIL® v3 Foundation study note mentions a number of Service Strategy processes:

• Service Portfolio Management – provides information for the whole service lifecycle
• Financial Management – manages costs and budgets for the whole service lifecycle
• Business Relationship Management – provides high-level, strategic interface with customers
• Demand Management – understands the demand for the service

This concludes the service strategy and brings us to the next phrase — Service Design.