Service Strategy
Introduction
A strategy outlines the future potentialof investment and defines the outcomes. It is made to answer the Who, Why, What, Where, When and How questions. A strategy is deemed successful when the IT organization understands how to provide value to their customer and how to differentiate themselves from competitors.
Core, enablingand enhancing services
Core services deliver the basic outcomesdesired 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 customerto receive the ‘real’ (core) service.
Enhancing services are servicesthat 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).
Value to the Business
Service Strategyprovides the following Value to the business:
• Support the ability to link activities performed by the service provider to outcomes that are critical to internal or externalcustomers.
• Enable the service provider to have a clear understanding of what types and levels of service will make its customers successful.
• Enable the service providerto respond quickly and effectively to changes in the business environment, ensuring increased competitive advantage over time.
• Support the creation and maintenanceof a portfolio of quantified services that will enable the business to achieve positive return on its investment in services.
• Facilitate functional and transparent communication between the customer and the service provider.
• Provide the means for the service provider to organize itself so that it can provide services in an efficient and effective manner.
Why Have aService Strategy?
Strategy, in the context of Service Management, is used by the Service Providers to:
• Attain market focus: Deciding where and how to compete
• Distinguish capabilities: Develop service assets that the business appreciates
Purpose
Service Strategy is a set of strategies designed to provide direction for growth, investment and define outcomes that can be measured.
The purpose of the service strategy stage of the service lifecycle is to define the perspective, position, plans and patterns that a service provider needs to be able to execute to meet an organization‘s business outcomes.
In order to implement the best Service Strategy, every IT organization must understand how:
• To provide value to their customers
• To differentiate themselves from other providers
Objectives
The objectives of Service Strategyinclude:
• An understanding of what strategy is
• A clear identification of the definition of services and the customers who use them
• The ability to define how value is created and delivered
• A means to identifyopportunities to provide services and how to exploit them
• A clear service provision model, that articulates how services will be delivered and funded, and to whom they will be delivered and for what purpose
• The means to understand the organizational capability required to deliver the strategy
• Documentation and coordination of how service assets are used to deliver services, and how to optimize their performance
• Processes that define the strategy of the organization, which services will achieve the strategy,what level of investment will be required, at what levels of demand, and the means to ensure a working relationship exists between the customer and service provider.
Service Strategy should be revised on a regular basis to ensure its alignment with the direction and needs of the business.
The deliverables of Service Strategy include:
• Service Portfolio
• Service Catalog
• Requirements for Service Design, Service Transition and Service Operation cycles
Scope
Service Strategy starts by defining and discussing the generic principles and processes of service management, and these generic principles are then applied consistently to the management of IT services.
Two aspects are covered in Service Strategy:
• Defining a strategywhereby a service provider will deliver services to meet a customer‘s business outcomes
• Defining a strategyfor how to manage those services
Service Value Definition
Customers are often wary of the quality and integrity of services offered by an IT company. In this perspective, the service value comprise of service utility as well as service warranty.
Service Value = Service Utility+ Service Warranty
Service Utility defines the functionality of an IT service from the customer’s perspective. Utility, as perceived by the customer, is the service attributes that have a positive effect on the performance of tasks associated with desired business outcomes. This is often referred to as ‘Fit for Purpose’.
For example: Hardware technicians in the field securely access enterprise applications (increase gain) without being constrained by location (decrease constraints).
Service Warranty for a service provides the customerwith a level of reassurance and guarantee to meet agreedupon requirements. Warranty will minimize possible losses for the customer due to variations in performance. This is often referred to as
‘Fit for Use’.
For example: The technicians are able to contact a Service Desk when they encounter incidents pertaining to their equipment, and the Service Desk Agent is able to resolve the incident or provide a work around solution (increaseservice availability to the technicians).
Value Creation throughServices (Customer Assets)
The customer of IT (the business) uses its assets to create value for their customers
(end-customer). These assets are called Customer assets.
IT organizationscan create value for their customers by enhancing the performance of these customer assets. Hence, value creation of a servicecan be increased by increasing the utility or warranty attributes.
Some examples of outcomes are described as:
• Increase in throughputof business process
• Increase in customer satisfaction
• Decrease in fixed costs of business process
Value Creation throughServices (Service Value)
Value is defined not only strictly in terms of the customer’s business outcomes. It is highly dependent on customer’s perceptions.
Perceptions are influenced by:
• Attributes of a service
• Present or prior experiences with similar attributes
• Relative endowment of competitors and peers
• Customer’s self-image or actual positionon the market
It is the provider’s responsibility to demonstrate value, influence perceptions and respond to preferences. Perceptions of value are influenced by expectations. Customers do not buy services; they buy the fulfillment of particular needs. What the customer values is frequently different from what the IT organization believes it provides.
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