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Service Strategy: ITIL Intermediate > 02. Service Strategy Principles > Flashcards

02. Service Strategy Principles Flashcards

1
Q

SS. Basic Approach

A

-acknowledge that there exists other orgs whose aim is to compete with your org
-Decide on an objective that differentiates the value of what you do or how you do it, so that customers do not perceive great value could be generated from any other alternative.
*The basic premise of SS is that service providers must meet objectives defined in terms of their customers’ business outcomes while subject to a system of constraints.
*By understanding the trade-offs involved in its strategic choices such as services to offer or markets to serve, an org can better serve customers and outperform competitors.
=> 4 Ps

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2
Q

SS. Opposing Dyanamics

A

-Future v Present
a Service Strategy resolves big issues so that staff can get on with the small details (how to provide serive rather that which service)
-Operational Effectiveness vs improvements in functionality
(effectiveness not enough to remain competitive)
-Value Capture
(Value capture is that portion of value creation that a provider is able to keep. Maybe not always be possible–may not last indefinitely) learn more!

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3
Q

Outperforming Competitors

A

The goal of servie strategy - superior performance vs competing alternatives

  • understanding of customers required outcomes
  • design within known constraints
  • balance between current success and future reqs.
  • a high-performance SS is one that enables a service provider to consistently outperform competing alternatives over time across business cycles, industry disruptions and changes in leadership.
  • it comprises both the ability to succeed today and positioning for the future.
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4
Q

4 Ps of Strategy

A
  1. Perspective–Vision & direction
  2. Position–distinguish from other competitors–
  3. How the SP will transition from their current situation to their desired situation. Plans describe the activities that the SP will need to take to achieve their perspective and position.
  4. Describe the ongoing repeatable actions that a SP will have to perform in order to continue to meet its strategic objectives.

A high performance SS comprises both the ability to succeed today and positioning for the future.

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5
Q

Services & service mgmt

A

A service is a means of delivering value to customers by facilitating outcomes that customers want to achieve w/o the ownership of specific costs and risks

Service Mgmt is a set of functions and processes for managing services over a lifecycle.

IT Service Mgmt - transforms IT resources and capabilities into IT services that are appropriate to the business requirements of an organisation

==> Resources and capabilities transform raw materials into value ==> customers fund it.

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6
Q

Service Strategy

Responsibility for specific costs and risks

(DO IT RIGHT FIRST TIME!)

Failed changes

Risks vs Costs.

A

Triangle!
Price==>Performance (warranty) ==> Functionality(utility) ==> Price ==> …
Customers concerned what a service will cost them & how reliable
Customers do not know every cost and risk mitigation by SP
Customer primarily interested in outcome it will receive and does not need to be concerned with specific costs and specific risk that the SP will have to uncur in order to deliver
Customer should only see sum total price–which includes all the SPs costs and risk mitigation measures. Customer can then judge the value of service based on a comparison of price and reliability with the desired outcome.
A good relationship relies on customer receiving a service that meets their needs, at an acceptable level of performance and at a cost that they can afford.
The SP need to work out how to achieve a balance between there 3 areas & communicate with the customer if there is anything that prevents them being able to deliver the required service at the required level of performance or price

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7
Q

Service Strategy

Internal & external services

A

Internal services are delivered between depts or business units in the same org.

External services are delivered to external customers

Reason? is to differentiate between the services that support an internal activity and those that actually achieve business outcomes

Diff. may not be so signif at 1st since the activity to deliver is often similar–however important to recognise that internal services have to be linked to external services b4 their contribution to business outcomes can be understood and measured.

This is esp important when measuring the ROI of services.

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8
Q

Service Strategy

Supporting internal and external services

A

Internal & external services are to differentiate between services that support an internal activity and those that actually achieve business outcomes.

  • Supporting services-not directly used by the business but is required by the IT SP so they can provide other IT services
  • Internal customer facing service directly supports a business process managed by another business unit.
  • External customer facing service - directly provided by IT to an external customer
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9
Q

Service Strategy

Supporting internal and external services

Supporting Services

A

not directly used by the business but is required by the IT SP so they can provide other IT Services e.g. directory services, naming services, the network or the comms. services.

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10
Q

Service Strategy

Supporting internal and external services

Internal Customer facing Service

A

Directly supports a business process manged by another business unit for example, Sales reporting service, enterprise resource management etc.

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11
Q

Service Strategy

Supporting internal and external services

External Customer facing Service

A

directly provided by IT to an external customer for e.g. internet access at an airport.

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12
Q

Service Strategy

Core, enabling and enhancing services

A

Core services deliver the basic outcomes desired by 1 or more customers
-Enabling services are services that are needed in order for a core services to be delivered
-Enhancing services are services that are added to a core service to make it more exciting or enticing to the customer.

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13
Q

Service Strategy

Core Services

A

Deliver the basic outcomes desired by 1 or more customers. They represent the value that the customers 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 utilisation and satisfaction.

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14
Q

Service Strategy

Enabling Services

A

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

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15
Q

Service Strategy

Enhancing Services

A

: are services that are added to a core service to make it more exciting or enticing to customers. These 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.

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16
Q

Service Strategy

Value and its characteristics

A

THE LEVEL TO WHICH THAT SERVICE MEETS THE CUSTOMERS EXPECTATIONS

  • it is often measured but how much the customer is willing to pay for the service rather than the cost of the service or any other intrinsic attribute of the service itself.
  • value is defined by customers
  • affordable mix of features
  • achievement of objectives
  • value change over time and circumstance
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17
Q

Service Strategy

Value

Achievement of objectives

A

Customers do not always measure value in financial terms.

  • they may indicate how much they are willing to pay to help them realise a desired outcome
  • Many services are not designed to produce revenue but to meet some org. objective (social responsibility HR program)
  • Commercial orgs tend to measure by financial returns
  • Gov. orgs. tend to focus on other objectives.
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18
Q

Service Strategy

Creating Value

A

There is more to value than just the function of the service and its cost.
Needs to be defined in the following terms:
-The Business outcomes achieved
-The Customers preference
-The customers perception of what was delivered.

Experience is what happened
Perception is the view of the customer

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19
Q

Service Strategy

Understanding the value of IT

A
  1. What service did IT Provide?
  2. What did the service achieve
  3. How much did it cost or what is the price of it?
  4. If it is just servers–then how does customer understand value? Customer must be able to discern a specific, discrete service and link it to specific business activity and outcome
  5. The customer will identify what they were able to do with the service and just how important that was to them.
  6. When a customer compares price/cost of a service with that the service enabled them to achieve they will be able to judge who valuable it actually is.
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20
Q

Service Strategy

Creating value

A

Perceptions of value are influenced by expectations and drive preference.

Business Outcomes - Preferences - Perceptions => Value

-Attributes of a service drive perception
-customer self-image or position in the market drive preferences
-What the customer values is different from what IT Org believes it provides
-Customers do not buy services they buy fulfilment of needs
=> customers business outcomes and perceptions are of primary importance

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21
Q

Service Strategy

Marketing Mindset

A
  • insight into customer’s challenges and opportunities
  • what is our business?
  • Who is our customers?
  • What does the customer value?
  • Who depends on our services?
  • How do they use our services?
  • Why are they valuable to them?

For customers the positive effect is the utility of the service
The assurance of that effect is the warranty
Understanding the customers business is crucial to be able to provide services that differentiate themselves

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22
Q

Service Strategy

Utility and Warranty

A

Utility : Performance Supported & Constraints removed

Warranty: ACCS or CACS
Available
Capacity
Continuous
Secure
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23
Q

Service Strategy

Utility and Warranty

A

Utility: Supporting business outcomes in terms of enhancing or enabling the performance of customer assets

Warranty: Providing assurance in terms of availability, capacity, security and Continuity

The removal of constraints would be perceived as a positive effect.

24
Q

Service Strategy

Utility

A

Utility is fit for purpose:
Perceived by the customer from the attributes of the services that have a positive effect on the performance of tasks associated with desired outcomes. Removal or relaxation of constraints on performance is also perceived as a positive effect.

25
Q

Service Strategy

Warranty

A

Fit for use

derived from the positive effect being available when needed, in sufficient capacity or magnitude and also in terms of continuity and security.

26
Q

Service Strategy

Utility and Warranty

A

Utility is what the customer gets

Warranty is how it is delivered

27
Q

Service Strategy

Utility and Warranty

A

Warranty and utility are both crucial elements of creating real value for customers and the business as a whole.

Customers cannot benefit from something that is fit for purpose but not fit for use and vice versa.

28
Q

Service Strategy

Resources and Capabilities

A

Resources and capabilities are types of assets organisations use them to create value in the form of services. Resources are direct inputs for production whilst capabilities represent an organisations ability to use its resources to deliver value.

29
Q

Service Strategy

Resources and Capabilities

A

E.G.
2 SPs may have similar resources such as pplications infrastructure and access to finance–their capabilities differ in terms of mgmt systems, organisation structure, processes and knowledge assets

30
Q

Service Strategy

Framing the value of services

A

Communicating utility
-in terms of outcomes supported
-in terms of ownership costs and risks avoided
(by using a service rather than operating a service costs and risks can be avoided.)

Communicating Warranty
-generally part of the value proposition
-in terms of levels of certainty
For customers to realize the value provided by the utility, warranty must be assured in terms of availability, capacity, security and continuation of services.

31
Q

Service Strategy

Elements of Warranty

A

Availability
-available for use under agreed terms and conditions
Capacity
-support a specified level of business activity at a specified quantity
Continuity
-assures services through major failures or disruptive events
Security
-assures customer utilization will be secure

32
Q

Service Strategy

Elements of Warranty

Availabilty

A

Often more complex than whether a service is available or not.

Understanding the tolerance for certain business functions to be available or not is key–you may protect vital business functions with more fault tolerance than other areas

33
Q

Service Strategy

Elements of Warranty

Capacity

A

Important where the utility of a service arises from use of shared resources
SPs removes risk by helping customers with shortages at periods of peak demand. Businesses that face highly uncertain demand prefer capacity on demand with little or no latency

34
Q

Service Strategy

Elements of Warranty

Continuity

A

This is assured primarily through redundancy and dedicated resources.
e includes return to normal in a pre-defined time limit to restrict the overall impact of a serious failure.

35
Q

Service Strategy

Elements of Warranty

Security

A

Reduces the following risks:
unauthorised/unaccountable usage of services,
protection of customer assets from unauthorised or malicious access an no security between customer and service assets.

36
Q

Service Strategy

INTERNAL AND EXTERNAL SERVICES

A

Graph with high warranty and high utility

if utility is great but warranty is not then service no good and vice versa

37
Q

Service Strategy

RESOURCES, CAPABILITIES AND SERVICE ASSETS

A

Resources and capabilities are both services assets used to create value in the form of goods or services

  • Resources need capabilities to use the available resources to develop distinctive value-adding services to customers
  • capabilities cannot produce value w/o adequate resources
38
Q

Service Strategy

RESOURCES, CAPABILITIES AND SERVICE ASSETS

Resources

A 
Resources--direct inputs for production:
Financial capital
infrastructure
applications
information
people
39
Q

Service Strategy

RESOURCES, CAPABILITIES AND SERVICE ASSETS

capabilities

A 
Ability to use resources to produce value:
Mgmt
Organistion
Processes
Knowled`ge
people
40
Q

Service Strategy

RESOURCES, CAPABILITIES AND SERVICE ASSETS

A

Resources: need capabilities to use the available resources to develop distinctive value adding services for customers

Capabilities:
cannot produce value w/o adequate resources–it is usually easier to acquire resources than capabilities

41
Q

Service Strategy

RESOURCES, CAPABILITIES AND SERVICE ASSETS

A

balance of resources and capabilities to ensure overall delivery

42
Q

Service Strategy

Business unit and Service Providers

A

A business unit (BU) is an organisational entity that performs a defined set of business activities that create value for customers in the form of goods an services
The good or services are produced and delivered using a set of assets referred to as customer assets.

43
Q

Service Strategy

Business unit and Service Providers

Customer Assets

A

Customer assets are used to drive the achievement of business outcomes. The better the customer assets perform the more business outcome can be achieved

The smooth operation of the customer assets however is slowed by constraints–these could be internal such as lack of knowledge or funding or external such as weak economy or regulations

The BU’s capabilities coordinate control and deploy its resources to create value.

Value is always defined in the context of customers and customer assets.

44
Q

Service Strategy

Business unit and Service Providers

Service Assets

A

Service Providers (SP) use services assets to deliver services to the business unit.

These services are designed to enhance the performance of the customer assets and/or to reduce the effect of constraints.

45
Q

Service Strategy

Business unit and Service Providers

Service Potential

A

Service potential comes from SP’s exploiting their service assets by developing their resources and capabilities.

Service potential is converted into performance potential of customer assets

w/o this potential there is not justification for customers to use services.

Increasing the performance potential frequently stimulates additional demand for the service in terms of scale or scope.

46
Q

Service Strategy

Business unit and Service Providers

Service Potential

Demand

A

based on greater demand it can translate into:

  • greater use of service assets (increased service potential)
  • justification for the on-going maintenance and upgrades of service assets
  • reduction in unused or idle capacity
  • the recovery costs incurred in fulfilling the demand based on the agreed terms and conditions.
47
Q

Service Strategy

Service Providers

3 Types

A

Type I: internal Service provider

Type II: Shared Services unit

Type III: External Service Provider

48
Q

Service Strategy

Service Providers

3 Types–why Distinguish?

A

While most aspects of service mgmt apply equally to all types of service provider, other aspects such as customers, contracts, competition, market spaces, revenue and strategy take on different meaning depending on the specific type

49
Q

Service Strategy

Service Providers

Type I

A

Typically business functions embedded within the BU.

Type I have the benefit of tight coupling with their owner/customers, avoiding certain costs & risk

Type I operate within internal market spaces–their growth is limited by the growth of the BU they belong to. Each BU may have its own Type I.

Success not measured in terms of revenues or profits because the tend to operate on a cost recovery basis with internal funding

50
Q

Service Strategy

Service Providers

Type II

A

Type II are functions such as finance, IT, HR and logistics

Not always core of an org’s competitive advantage

Share Services Unit SSU

Serve business units as direct customers

Can standardise their service offerings use market based pricing to influence demand patterns

51
Q

Service Strategy

Service Providers

Type III

A

The business strategies of customers sometimes require capabilities readily available from a Type II provider.

The additional risks that Type II providers assume over Type I/II are justified by increased flexibility and freedom to pursue opportunities.

They can offer competitive prices and drive down unit costs consolidating demand. Not all Business strategies are served by internal service providers–customers may pursue sourcing strategies requiring services from external providers

The motivation may be access to knowledge experience scale scope capabilities and resources that are either beyond the reach of the org or outside the scope of a carefully considered investment portfolio

52
Q

Service Strategy

Service Providers

A

Aggregation or insourcing can move control and hence decision making closer to the business. Which for some businesses may make the difference in maintaining a competitive edge.

Outsourcing or dis-aggregation will move operational decisions outside the direct control of the org and thus the services is seen more as a loosely coupled provision.

53
Q

Service Strategy

Choosing a supplier type

A
  • Does the activity require highly specialised assets?
  • Will those assets be idle or obsolete if that activity is not longer performed?
  • How frequently is the activity performed within a period or business cycle?
  • How complex is the activity? Is it simple and routine? Is it stable over time with few changes?
  • Is it hard to define good performance?
  • Is it hard to measure good performance?
  • Is it tightly coupled with other activities or assets in the business?
  • Would separating it increase complexity and cause problems of coordination?
54
Q

Service Strategy

Defining Services

A

Step 1 - Define the market and identify customers
Step 2 - Understand the customer
Step 3 - Quantify the outcomes
Step 4 - Classify and visualise the service
Step 5 - Understand the opportunities (market spaces)
Step 6 - Define services based on outcomes
Step 7 - Service models
Step 8 - Define service units and packages

How to identify customers and their requirements and whether there is an opportunity that the SP can fulfil.

Typically happens as part of Service Portfolio Mgmt

55
Q

Service Strategy

  1. Define the market and identify the customers
A

The group of customers that are interested in and can afford to purchase the service a SP offers and to whom the service provider is able legally and logistically to supply those services.

Markets can be defined by the following criteria:

  • Industry
  • Geographical
  • Demographic
  • Corporate

Service Strategy: ITIL Intermediate (10 decks)

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