David Cannon\'s presentation at the 05Oct10 itSMF WNY LIG meeting.

1. Service Strategy: Delivering Value
David Cannon
Chairman ItSMF International Executive Board
Director ITSM Strategy – Hewlett-Packard
© OGC / TSOitSMF, 20101

2. Agenda
© OGC / TSOitSMF, 20102
 Why is IT managed as a service?
 Why does IT have a credibility problem?
 Customers and Value
 Are all customers the same?
 Is all value the same?
 How should value be measured?
 Can a customer ever be wrong?
 How does Service Strategy help IT to answer these
questions?

3. Why is IT Managed as a Service?
© OGC / TSOitSMF, 20103

4. Why not Production Management?
© OGC / TSO4
 Fixed output
 Unvarying route through the factory
 Repeatable, predictable actions
 Raw materials converted to physical products
 Value is created and realized whenever the product
changes hands
 Value is carried in the product
itSMF, 2010

5. Why Service Management?
© OGC / TSO5
• Dynamic, real-time demand
• Variable output
• Changeable routing
• Dynamic components
• Output less important than
outcome
• Value only exists when used
by the consumer
• Value is carried in the
relationship
itSMF, 2010

6. IT’s Credibility Problem
© OGC / TSO6 itSMF, 2010

7. Customers and Value
© OGC / TSOitSMF, 20107

8. Are all Customers the Same?
© OGC / TSO8
External
Customer
External
Customer
External
Customer
External
Customer
External
Customer
Business Unit Business Unit
IT Unit IT Unit IT UnitIT Unit
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9. What is Value?
 Value is in the eye of the beholder
 Value is variable
 Value has to be negotiated
 Value changes over time and context
 Value can be managed
 Value is not always financial
© OGC / TSO9 itSMF, 2010

10. Is all Value the Same?
© OGC / TSO10
Money Spent
Value Added
Value Realized
itSMF, 2010

11. Value in Supply Chains
 Lessons Learned
1. If value is not realised, ‘value added’ is equal
to ‘money spent’
2. Value Realized must be greater than money
spent
3. Value added internally is not value until it is
realized
© OGC / TSO11 itSMF, 2010

12. What does this mean for IT?
 If IT wants to demonstrate value it has to
link its services to where value is realized,
not where value is added
 If IT can not do this it will always be viewed
as ‘money spent’ not ‘value added’
© OGC / TSOitSMF, 201012

13. Is all Value the Same?
© OGC / TSO13
External
Customer
External
Customer
External
Customer
External
Customer
External
Customer
Business Unit Business Unit
IT Unit IT Unit IT UnitIT Unit
Value Added?
Value
Realized
Money Spent
itSMF, 2010

14. Do Vendors Add Value?
© OGC / TSO14
External
Customer
External
Customer
External
Customer
External
Customer
External
Customer
Value Added
Value
Realized
Money Spent
Vendor Vendor Vendor
?? ?
itSMF, 2010

15. Do Vendors Add Value?
© OGC / TSOitSMF, 201015
External
Customer
External
Customer
External
Customer
External
Customer
External
Customer
Value Added
Value
Realized
Money Spent
Vendor Vendor Vendor
!! !

16. How Should Value be Measured?
© OGC / TSO16
Service Owner Business Relationship Manager
Service Catalogue
BusinessOutcomes
ServiceAssets
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17. © OGC / TSO17
Can a Customer Ever be Wrong?
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18. © OGC / TSOitSMF, 201018

19. Question for IT…
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Who is your Customer?
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20. © OGC / TSO20
Service Strategy gets Real
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21. 5 Processes
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 Strategy Management
 Service Portfolio Management
 Financial Management for Services
 Demand Management
 Business Relationship Management
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22. Strategy Management
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 Purpose: To articulate how a service provider will
enable an organization to achieve its business
outcomes through defining and executing:
 Perspective – vision, mission and objectives
 Positioning – our services vis-a-vis our customers, the
market and our competitors
 Planning – strategic and tactical plans
 Patterns – approaches and methods to achieve the
strategy
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23. Strategy Management
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 Major components:
 Strategy Assessment
 Strategy Generation
 Strategy Execution
 Strategy Measurement and Evaluation
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24. Service Portfolio Management
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 Purpose: Service portfolio management is
responsible for managing the service portfolio. It is
therefore also the process that is responsible for
defining which services will be entered into the
service portfolio and how those services are tracked
and progressed through their lifecycle. Service
portfolio management acts as a gatekeeper for the
service provider, ensuring that it only provides
services that contribute to strategic objectives and
meets the agreed business outcomes
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25. Service Portfolio Management
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26. Financial Management
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 Purpose: Financial Management ensures that
appropriate funding is allocated to design, develop
and deliver services. At the same time it works with
Service Portfolio Management to act as a
gatekeeper that ensures that the service provider
does not commit to services that they are not able to
provide. Financial management identifies the
balance between the cost and quality of service and
maintains the balance of supply and demand
between the service provider and their customers.
itSMF, 2010

27. © OGC / TSO27 itSMF, 2010

28. Demand Management
© OGC / TSO28
 Purpose: To understand, anticipate and influence
customer demand for services, and the capacity to
meet this demand. Demand management works at
every stage of the lifecycle to ensure that services
are designed, tested and delivered to support the
achievement of business outcomes at the
appropriate levels of activity
itSMF, 2010

29. Business Relationship Management
© OGC / TSO29
 Purpose: To enable business relationship managers
to provide links between the service provider and
customers at the strategic and tactical levels. The
purpose of these links is to ensure that the service
provider understands the business requirements of
the customer and is able to provide services that
meet these needs. The primary measure of whether
this purpose is being achieved is the level of
customer satisfaction.
itSMF, 2010

30. © OGC / TSO30
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itSMF, 2010