itSMF Foundations of IT Service Management Based on ITIL V3 Bria: |Foundations of IT Service Management Based on ITIL V3 AS ON = BITSM LIBRARYAbout the ITSM Library “The publications in the ETSM Libsary cover best practice in IT management and are published om behalf oF SMF International The IT Service Management Forum (itSME) is che association for (T service organizations, and for ‘austomers of FT services. eS MP's goal is to promote innovation and support of IT management. Supplies and customets are equally represented within the itSME ‘The Forum's main focus is exchange of peer Iknowledge and experience. Oue authors are global experts: The fllowing publications ar, or s00n will be, avilable. Introduction, Foundations and Practitioners books + Foundations of IT Service Management based on ITIL® (V2, Arabic. Chinese, German, English Danish and Spans) enc, Italian, Japanese, Korean, Dutch, Brazilian Portuguese, and Russian Foundacions of (T Service Managemene based on ITIL® (V3, English, Dutch) IT Service Management ~ An Introduction (V2, being replaced by V3, only a few languages left) TT Service Management An Introduction (V3, English, Dutch) TT Services Procurement based on ISPL.— An Introduction (Dutch) Projece Management based on PRINCE2™ 2005 Edicion (Dutch, Release & Control for IT Service Management, based on ITIL” —A Practitioner IT Service Management ~ best practices ‘+ IT Service Management ~ best practices, pate 1 (Dutch) + TT Service Management — best practices, part 2 (Dutch) + IT Service Management ~best practices. pare }(Duteh) + TT Service Management ~ best practices, part 4 (Dutch) Topics & Management instruments ‘+ Metrics for IT Service Management (Es ix Sigaa for IT Managemenc (English) ‘The RIP for IT Ousourcing ~ A Management Guide (Dutch) Service Agreements ~ A Management Guide (English) ish) Frameworks for IT Managemenc (English, German, Japanese) IT Governance based on COBIT® ~ A Management Guide (English, German) Pocket guides + TT Service Management ~ A summary based on ITIL® (V2, Dutch) ‘+ TT Service Management ~ A Pocket Guide (V3. English, Duteh) + TT Service Management based on ITIL ~ A Pocket Guide (V3, English, Dutch) + TT Service Management fiom Hall! (V2, English) ‘+ TT Service Management from Hell Based on Not-ITIL (V3, Eaglish) + ISOMEC 20000 ~ A Pocket Guide (English, German, Japanese, Italian, Spanish, Formerly BS 15000 ~ ‘A Pocket Guide) IT Services Procurement based on ISPL.~ A Pocket Guide (English) IT Service CMM ~ A Pocket Guide (English) Six Sigma for IT Management — A Pocket Guide (English) Frameworks for IT Management ~ Pocker Guide (English, Dutch), For any further enquiries about ITSM Library, please visie www ismbooks.com, exp /en.itsmporeal:neven/bookslitsm_librar or www.vanharen. netFoundations of IT Service Management Based on ITIL V3 itS\(¥ International ‘The IT Service Management A publication of itSMF International PUBLISHINGv Colophon Title Foundations of IT Service Management Based on ITIL V3 Authors: Jan van Bon {chief editor ITSM Library for itSMF Incernational) “Arjen de Jong (co-author, Inform-IT) Axel Kolthof (co-author, Inform-IT) Mike Pieper (co-author, InformIT) Ruby Tiassing (co-author, InformIT) Annelies van der Veen (co-author, Inform-IT) Tieneke Verheijen (co-author, Inform-IT) Copy editor: Jayne Wilkinson Publisher: 11 Haren Publishing, Zalebommel, www.vanharen.net Design & layout: CO2 Premedia by, Amersfoore - NU ISBN: 978.90 8753 057 0 Edicion: ‘Third edition, frst impression, September 2007 © Crown copyt 3. Published under license From the Conteoller of Her Majesty's Stationery Office ITIL Glossasies/Aevonyms © Crown Copyright Olfice of Government Commerce. Reproduced with the permission of the Controller of HMSO and the Office of Government Commerce TTIL® isa Registered Tiade Mark, and a Registered Communicy Trade Mark of the Office of Government ‘Commerce, and is Registered in the US. Patent and Trademark Oice" (DicSMP-Intcenational 2007 All rights reserved. No pattof this publication may be reproduced in any form by print, photo print, microfilm or any other means without written permission by the publishes Although this publication hasbeen composed with much cute, nether author, nor editor nor publisher can accep any liabily for damage caused by posible errors andlor incompleteness inthis publication, ‘TRADEMARK NOTICES TIL* and PRINCE2™ are Registered Trade Marks and Registered Community Tiade Marks ofthe Office of Government Commerce, and are Registre in che U.S. Patent andl Tademark fice. CowT* isa egitered trademark ofthe Information Systems Audic and Control Association (ISACA)/IT Goveenance Institute (ITGI. The PMBoK® i registered tama of che Project Management lnsttute (PMI)Foreword Ieis with grea pride tat I present this rigorous update of "Foundations of IT Service Management Based on ITTL V3". With che long-awaited updace of ITTL®, launched in June 2007, chis ITIL Foundations guide had to be completely reconfigured suit its objective: provide an easy introduction to the broad library of ITIL core books, to support che understanding and the further distribution of ITIL as an industry standard. In addition - as could be expected from the itSMF - we managed to be the frst in the market, o provide this service co our members. “The main focus ofthis guide ison the Service Lifecycle, as defined by ITIL. The information on this lifecycle was raken from the excensive documentation ofthe core books, and was concentrated in Pare L, Separately, che information on all the processes and functions that were also described in the core books, was concentrated in Part 2 of this book. This approach enables readers o get a fiem grasp ofthe lifecycle’ structure, while also having ll information on Functions and processes av their disposal. “The book was produced the same way other publications of che ITSM Library were produced: a bbroad team of expert editors, expert authors and expert reviewers contributed toa comprehensive text, anda lor of effore was spent on the development and review of the manuscript. The content was actually developed in a larger publishing project, covering not just ITIL, but also other important sources of information on IT Service Management. This project delivered the [TSM Library tile “IT Service Management - An Introduction”, a 500+ page itSMF tile on ITSM, ITIL, ISO/IEC 20000 and many other standards and management frameworks relevant for IT Service Management. From thac ttle all relevant material covering ITIL V3 was taken, and used foduction to ITIL, to assemble this comprehensive in For several years, “Foundations of IT Service Management Based on ITIL” has been a core clement in the important series of management guides thac is tiled the ITSM Library, and we expect this new edition will continue to hold that position, Jan van Bon Chief Edor ITSM Library for itSMF IntemationalAcknowledgements This publication isthe result of the co-operation of many experts from che fc. in many different countries, representing users, providers, government, trainers, examiners, and itSMF chapters, Te was based on an itSMF publication in the Netherlands, developed as an introduction to TT Service Management, first published in April 1999. The book was originally inicaced by Georges Kemmerling (Quint Wellingron Redwood), and built by a Dutch ieSME project team, under the guidance of chief editor Jan van Bon. Since 1999, this project ceam of reviewers and co-authors, has extended and improved the book, ina series of new editions, expressing the developments in the field of IT Service Management. In May 2002 the fist translation was published, in English. This first global edition was soon followed by a second, improved version, audited by selected icSMF members, cooperating in the itSMF International Publicacions Commitee (IPESC), each represencing an itSMF chapter In addition to that, che global edition was reviewed by several experts fiom vendor and user organizations, and by eepresentatives of che OGC. This resulted in the very first incernacionally «endorsed itSMF publication, supported by the entire itSMF community, and accepted as high quality introduction to ITTL® and IT Service Management. The book provided excellent services as an aid in understanding che published best practices in the field of IT Service Management, concentrated in and around ITIL publications, in many countries. Since 2002, several other translations appeared. Each of chese cranslations was developed and audited by a team of experts in the targeted language region, if possible under the guidance of an itSMF chapee. In all cases, a terminology cranslation table was determined, before translating, the text. Translations were delivered in English, German, French, Spanish, Russian, Chin Japanese, Italian, Korean, Braziian-Porcuguese, Arabic, and Danish, In 2004, this ctle was split into ewo separate publications: one covering the broad field of IT. Service Management (this was the “Introduction” cele), the other concentrating on the core of ‘hac fcld as it was scoped for the basic level of understanding of ITIL (this was the “Foundation” sil) {In 2007, both bookshad co be heavily rewritten, duc co significant changesin che published sources, ton IT Service Management. Therefore it was decided ro create one comprehensive publication chat would contain all the concent of both ttle, and then split the resulting manuscripe into a large all-over publication on IT Service Management and a second publication chat contained a part thereof, only covering ITIL. A ccam of expert authors and editors who work for itSMF produced the updated text (see the Colophon). As with all publications in the [TSM Library abroad Review Team was composed, representing experts from various disciplines, covering user organizations, caining organizations, consultancy organizations, global leaders in the IT service industry, and individual experts. All ‘of chese experts were deeply involved with ITIL in thei daily practice. Most of chem had already been involved in the review of one or more of the core ITIL books, or were directly involved in che ITIL Refresh project. third publication, a pocker guide on relevant IT Managementvu frameworks was abo derived from chis large manuscript. This way, the reviewers in fact reviewed three publications in one manuscript. The reviewers chat reviewed the entice manuscript, thus covering this Foundations level introduction to ITIL, are the followin, + John van Beem, ISES International, Netherlands ‘Aad Brinkman, Apreton, Netherlands Peter Brooks, PHMB Consulting, itSMF South Africa Rob van der Burg, Microsoft, Netherlands Judith Cremers, Getronies PinkRoccade Educational Ser Robert Falkowicz, Concentric Circle Consulting, itSMF Switzerland Rosario Fondacaro, Quine Wellingeon Redwood, tay Peter van Gijn, LogicaCMG, Netherlands Jan Heunks, ICT Partners, Netherlands + Linh Ho, Compuware Corporation, USA. + Ton van der Hoogen, ToTZ Diensten, Netherlands + Kevin Holland, NHS, UK + Matis Horodishtiano, Amdocs, itSMF Israel + Wim Hoving, BHVB, Netherlands + Brian Johnson, CA, USA + Georges Kemmerling, Quine Wellingeon Redwood, Netherlands + Kirstie Magowan, itSMF New Zealand + Reiko Morita, Ability IncerBusiness Solutions, Ine. Japan + Jigen Miller, Marval Benelux, Netherlands + Ingrid Ounerkerk, Getronics PinkRoccade Educational Services, Netherlands + Ton Sleutjes, CapGemini, Netherlands + Maxime Sottini, Innovative Consulting, itSMF lealy + Takashi Yagi, Hitachi Lcd SMF Japan 1s, Netherlands ‘Theie contribusions are highly appreciated and, due to their derailed review, have improved he quality of che book significantly. Given the desice fora broad consensus in the IT Service Management Feld, new developments, additional material and contributions from ITSM professionals who have worked with ITIL version 3 are welcome. They will be discussed by the edicors and where appropriate incorporated inco new editions. Comments can be sent co the Chief Editor of the TSM Library, Jan van Bon, cera: jvan.bon@inform-i.org.va Contents Colophon. Vv Foreword v Acknowledgements... ae son Ml 1 Introduction 1.1 Background 1.2. Why this book. 4.3. Organizations. 1.4. Differences with previous editions. 1.5. Structure of the book 1.8 How to use this book... PART 1 THE ITIL SERVICE LIFECYCLE 2 Introduction to the Service Lifecycle. 2A Introduction to TIL. a 9 2.2 IT Governance " 2.3 Organizational maturity 42 2.4 Benefits and risks of ITSM frameWOrkS....nm:ninsnnnnnnnenn 4 2.5 Service Lifecycle: concept and overview a Sena 3. Lifecycle Phase: Service Strategy. 3.1. Introduction 8.2 Basic COnCEpIS. nr nrnen 3.3 Processes and other activities. 3.4 Organization... 3.5 Methods, techniques and tools seontnninnnnnennnne St 3.6 Implementation. 56 4. Lifecycle Phase: Service Design. 441 Introduction 4.2. Basic concepts. 4.3. Processes and other activities... 4.4 Organization son 4.5 Methods, techniques and tools 4.6. Implementation. 5 Lifecycle Phase: Service Transition... 5.1 Introduction 5.2 Basic concepts. 5.3 Processes and other activities. ae oe Sod 5.4 Organization 1005.5. Methods, technology and t00ls 105 5.6 Implementation. 105 6 Lifecycle Phase: Service Operation... 109 6. Introduction 109 6.2. Basic concepts. Seeeeeeene sen 110 6.3. Processes and other activites. 114 6.4. Organization rat 6.5 Methods, techniques and tools - 134 6.6. Implementation. 134 7 Lifecycle Phase: Continual Service Improvement. TA Introduction won: sennninnnninnnnnnnnnnnnnes 18D 7.2 Basic coneEPtS nn 7 eee 140 73 Processes and other Activites. wnavoensnennnn semnnnnnnnne 48 7.4 Organization. 148, 7.8 Methods, techniques and tools 152 7.6 implementation. 2 at 159 PART 2 FUNCTIONS AND PROCESSES 8 Introduction to Functions and Processes... m1 BA IMtrOdUCtION ents eee eeeeeeeesees a7 8.2. Management of processes 172 83. Teams, roles and positions in ITSM wrrnnnrnnnnne sewn IB. 8.4 Tools used in ITSM. 176 8.5 Communication in IT service organizations. ...n.nrn eerie 86 Culture. 7 87 Processes, projects, programs and portfolios. 7 88 Functions and processes in the lifecycle phases: 7 9 Functions and Processes in Service Strategy 181 9.1 Financial Management. a seo 181 9.2. Service Portfolio Management (SPM) . 187 9.3. Demand Management... 190 10 Functions and Processes in Service Design... 10.1 Service Catalogue Management 10.2 Service Level Management. 10.3 Capacity Management. oe snes 200 10.4 Availabilty Management. 206 10.5 IT Service Continuity Management eee enenenneene 1c) 10.6 Information Security Management 218 10.7 Supplier Management... 22311 Functions and Processes in Service Trans 11.1 Transition Planning and Support 11.2 Change Management. seo 231 11.3 Service Asset and Configuration Management... 280 11.4 Release and Deployment Management. 250 11.5 Service Validation and Testing 258 11.6 Evaluation 264 11.7 Knowledge Management... ee 267 12 Functions and Processes in Service Operation. 12.4 Event Management 12.2 Incident Management 12.3 Request Fulfilment. 12.4 Problem Management... 12.5 Access Management 12.6 Monitoring and Control 12.7 IT Operations 12.8 Service Desk 13 Functions and Processes in Continual Service Improvement 18.1 CSI Improvement Process 307 13.2 Service Reporting «.nesmnninnnnnenennannnenninnnnnnn on 7 References ee rae sonnei QM Glossary ’ — x sone IMEX so nnnnnnnnsnnnnnnnnn — 357Chapter 1 Introduction 1.1 Background Developmen in IT have had a tremendous effect on the business market during the last decade. Since the appearance of extremely powerful hardware, highly versatile sofeware and super-fast networks, all connected 10 each other worldwide, organizations have been able to develop their informacion-lependent products and services 10 a greater extent, and to bring them co the marker much faster. These developments have marked the cransition of the industrial age inco the information age. In the information age, everything has become faster and more dynamic, and everything is connected. Traditional hierarchical organizations often have difficulties in responding to this rapidly changing marker, and chis has led to current trends for organizations to become fatter and more Rexible The focus has shifted from vertical silos co horizoncal processes, and decision-making powers are increasingly bestowed on the employees. I is against this background that the work processes of IT Service Management have arisen ‘An important advantage of process-oriented organizations is that processes can be designed to support a eustomer-oriented approach. This has made the alignment between che IT organization (responsible for supplying information) and the customer (responsible for using these information systems in cheir business) increasingly significant. Over the last couple of years, this trend has attracted attention under che title of Business-IT Alignment (BITA). {As organizations gained more experience with the process-oriented approach of IT Service Management, it became clear that the process must be managed coherently. Furthermore, ic was ‘obvious thac the introduction of a process-oriented work method meant a big change For the primarily line and project-oricnted organizations. Culcure and change management proved to be crucial elements for a successful organizational design. Another importane lesson learned was that che IT organization must nor lose itself in a process culture. Just like the one-sided projectoriented organization, a one-sided process-oriented organization was not the optimum type of business. Balance was, as always, che magic word. Inq Foundations of IT Sarvice Management Basad on ITIL V3 addition, ic became clear chat the customer-oriented approach required that an end-to-end and user-eentrie approach must be followed: ic was of no help co the user co know that ‘the server was still in operation’ ifthe information system was not available at the users workplace. IT services ‘must be viewed in a larger concext. The need for the recognition of the Service Lifecycle, and the management of IT services in light of chat lifecycle, became a concern, Due to che fase growing dependency of business upon inlormation, the quality of information services in companies is being increasingly subjected co stricter internal and external requirements, The role of standards is getting more and more important, and frameworks of “best practices’ help with the development of a management system co meet these requirements Organizations that are not in control of their processes, will not be able to realize great results on the level of rhe Service Lifecycle and the end-to-end-management of those services. Organizations that do noc have theit internal organization in order, will also not achieve great results. For these reasons, al these aspects are handled alongside cach other in the course ofthis book. 1.2. Why this book This book offers detailed information for those who are responsible for strategic information issues, as well as for che (much larger) group who are responsible for setting up and executing the delivery of the informacion systems. This is supported by both the description ofthe Service Lifecycle, as documented in ITLL version 3, and by he description of the processes that are associated with it. The ITIL core books are very extensive, and can be used for a thorough study of contemporary best practices. This Foundations book provides the reader with an easy-to-read comprehensive introduction to the broad library of ITHL core books, to support the understanding and the further distribution of ITIL. as an industry standard. Once chis understanding of the structure of ITIL has been gained, the reader can use the core books for more detailed understanding and guidance for their daily practice. 1.3 Organizations Several orgunizacions are involved in the maintenance of ITHL as a description of che ‘best practice’ in che IT Service Management Rel. ose Initially ITIL was a produce of che CCTA, a UK Government Organization. On 1 April 2001 the CCTA was incorporated into the OGC, which thus became the new owner of ITIL. The aim of the OGC is to help its clients (within the UK Government) with the modernization of their procurement activities and the improvement of thei services, by. among other things, making the best possible use of IT: ‘OGC aims to modernize procurement in government, and deliver substantial value for money improvements. The OGC promotes the use of ‘bese practices in numerous areas, such as project management, program management, procurement, risk ‘management andl IT Service Management. For this reason the OGC itself has published several series of books (Libraries) which have been written by (international) experts from different companies and organizations.Introduction 3 itSMF The target group for this publication is anyone who is involved or incerested in IT Service Management. A professional organization, working on the development of the IT Service Management field, has been created especially for this target group. In 1991 the Information Technology Service Management Forum (itSME), originally known as the Information Technology Infrastructure Management Forum (ITIME), was set up as a UK association. In 1994, a sister-association was established in che Netherlands, following the UK example. Since then, independent itSMF organizations have been set up in- more than forty cour spread across the globe, and the number of “chapters continues to grow operate under the umbrella organizavion, itSMF Incernaconal (itSMF) SMF organizations itSME is aimed at the entire professional area of IT Service Management. It promotes the exchange of information and experiences thac IT organizations can use to improve their service provision. itSMF is also involved in the use and quality of the various standards and methods that are important in the field. One of these standards is (TIL. and itSMF International has an ageeement with OGC and APM Group on the promotion of the use of ITIL. The IT Service Management Forum (itSMF) isa global, independent, internationally recognized not-for-profit organization dedicated to IT Service Management. itSMF is wholly owned and principally rn by its membership. [t consis ofa growing number of national chapters, each witha large degree of autonomy, bus adhering toa common code of conduct The itSME is @ major influence on, and contributor to, industry best practices and standards worldwide, working in parmership with a wide, international mange of governmental and standards bodies, itSMF International isthe controlling body ofthe ieSMF national chapters and ses polices and provides direction for furthering she averll objectives of iSME for the adoption of TT Service ‘Management (ITSM) best practice and for ensuring adherence ta itSMF policies and standards. ‘This Foundations book is 2 publication of itSMF International, published in the ITSM Library series. The book fits in well with the mission of i ‘ME Incernational: The mission of itSMF International is to support the development of IT Service Management (ITSM) through strategie direction, co-ordination of effort and the sourcing of ‘expertice and financial support with strategic partners ‘This mission can be translated into the following publishing activities: isSMF Publishing activitie ~ publishing supporting material on accepeed best practice «publishing material tha represen ‘new thought’ in the ITSM field ~ ensuring tha, through all activities, including the publication of relevant material, iSMF asists organizations in the implementation of solutions that will deliver real value to them4 Foundations of IT Service Management Based on ITIL V3 By publishing this detailed introduction co the field of IT Service Management, based on ITIL, itSMF International offers a valuable contribution to the development of the subject. APM Group In 2006, OGC concracted the management of ITIL rights, che certification of FTL exams and accreditation of uaining organizations to che APM Group (APMC). a commercial organization. APMG defines the certification and accreditation for the ITIL exams, and published the new certification system (see Section 2.1: ITIL exams). Exam bodies The Dutch foundation Examen Instituut voor Informatica (EXIN) and the English Informacion Systems Examination Board (ISEB, part of the BCS: the British Computer Society) co-operated in the development and provision of certification for {T Service Management. For many years they were the only bodies that provided ITIL exams. With the contracting of APMG by OGC. the responsibility for ITIL exams is now with APMG. To support che world-wide delivery of these ITIL exams, APMG has accredited a number of exam bodies: EXIN, BCS/ISEB, and Loyalise College, Canada, 1.4 Differences with previous editions The ‘Foundations of IT Service Management - based on ITIL V3' book has played a key role in the distribution of ideas on IT Service Managemen and ITH. for years. The tele has been translated into chieteen languages and is recognized as che most practical introduction ro the leading ‘best practices’ in chs field, Ealier editions of the Foundations book focused on the content of daree books fiom the ITIL series (version 2): Service Support, Service Delivery and Security Management, and placed chem in a broader concext of quality management. ITIL, although widely used, was never actualy in the public domain’ bue chere were few restrictions on its use in practice. This has been acknowledged as one of the main reasons for ITILS wide acceptance. With the transfer of the management, publication, and qualifications of ITLL co the APM Group (for qualifications) and TSO (For publications) a significane shift in che marker has occurred. ITIL is now operationally ean by commercial organizations that conrol the tse of ITIL by providers in the marker, through regulations in che areas of copyright, branding and accredications. This does nor influence the use of ITIL wichin organizations wo a great extent, but it does have a specific effect in the provider marker. ‘As.a resule of continuous development of best practices, various cerms have disappeared besween the introduction of ITLL version 2 and 3, and a large number of new terms have been added co version 3. As many of these concepts are part of the scope of an IT Service Management eraining or exam, they have been included in the relevant descriptions. For a definitive list of concepts, readers should refer to the various craining and exam programs. 1 Based an the definition n Cambridge Advanced Learners Dietonany:W aorathing such as 8 Book song ‘computer program, ats the pubic domain, no ona has the ight to con! ese and anyone may uce ‘wthout sargeIntroduction 5 1.5 Structure of the book This book starts wich an introduction on che backgrounds and general principles of IT Service Management and the contex: for ETL (Chapter 1), Ie describes the parties involved in che development of best practices and standards for IT Service Management, and the basic premises and standards that are used. The body ofthe book is set up in wo large Parts: Part 1 deals with the Service Lifecycle, Part 2 deals with the individual functions and processes that are described in FTL Part 1 searts with Chapter 2, introducing the Service Lifecyele, in the context of IT’ Service Management and IT Governance. tt discusses principles of organizational maturity, and the benefits andl risks of follaving a service managemene framework. This chapter ends with the introduction of the Service Lifecycle In Chapters 3 to 7, cach of che phases in che Service Lifecycle is discussed in derail, in a standardized structure: Service Strategy, Service Design, Service Transition, Service Operation and Continual Service Improvernent.. These chapters provide a derailed view on the characteristics of the Service Lifecycle, its construct and its elements. The main points of each phase are presented in a consistent way to aid readability and clarity, so chat the cext is clear andl its readabilcy is promored. Each section follows a consistene structure: * Introduction * Basic concepes * Processes and other activities + Organization + Methods, techniques and tools * Implementation Pare 2 starts with Chapter 8, introducing the funetions and processes chac are referred coin each of the lifecycle phases. This chapter provides general information on principles of processes, reams, roles, functions, postions, cols, and other elements of interest. Next, the processes and functions are described in decal in Chapters 9 to 13. The 27 Functions and processes are clustered according tothe ITH. core book thaccontains their detailed description. Each of these processes and functions is described in terms of * Introduction + Activities, methods and rechniques, + Interfaces, inputs and ouspuss, + Metrics and Key Performance Indicators (KPIs) + Implementation, with Critical Success Factors (CSFS), challenges, risks and eraps “The Appendices provide useful sources for the reader. A Reference list of used sources is provided, as well as che official ITIL Glossary. The book ends with an extensive Index of relevant terms, thae will suppor the reader in finding relevant text element6 Foundations of IT Service Management Based on ITIL V3 1.6 How to use this book Readers who are primarily inceresed in che Service Lifecycle can focus on Part of the book, and pick whatever they need on functions and processes from part 2 Readers who are primarily interested in che functions and processes and are nor ready for a lifecyele approach yet, or who prefer a process approach, can read the introductory chapters and then focus on the functions and processes of their interest. Readers who wane a thorough introduction ro ITIL, exploring its scope andl main characteristics, can read Part on che Lifecycle, and add as many of the Functions and processes from Part 2 as they need or lke In this way, this new edition of the Foundations book aims to provide support o a variety of approaches to 'T Service Management based on ITIL.PART 1 THE ITIL SERVICE LIFECYCLEChapter 2 Introduction to the Service Lifecycle 2.1 Introduction to ITIL In the 1980s the quality of service provided by both intemal and external IT companies to UK government departments was of such a level that the CCTA (Central Computer and Telecommunications Agency, now the Office of Government Commerce, OGC) was instructed by the Government to develop a standard approach for an efficent and effective delivery of IT services. This was o be an approach which was independent of the suppliers (whether internal or external). The result of tis instruction was the development a publication ofthe Information ‘Technology Infrastructure Library™ (ITIL). (TIL is made up of a collection of ‘best practices found across the range of IT service providers. ITIL offers a systematic approach co che delivery of quality of IT services. It gives a detailed description of most of che important processes in an IT organization, and includes checklists for casks, procedures and responsibilities which can be used as a basis for tailoring co the needs oF individual organizations [At the same time, the broad coverage of ITIL also provides a helpful reference guide for many areas, which can be used co develop new improvement goals for an IT organization, enabling it to grow and mature. Over the years, ITIL has become much more than a series of useful books about IT Service Management. The framework for the ‘best practice’ in IT Service Management is promoted and further developed by advisors, crainers and suppliers of technologies or products. Since the nineties, ITIL represents not only the theoretical framework, but the approach and philosophy shared by the people who work with i in practice. Being an extended framework of best practices for IT Service Management itself, ehe advantages, and disadvantages of frameworks in general are also applicable to ITIL, OF course, ITIL was developed because of the advantages mentioned earlier. Many ofthe pointers from "best practices are intended to avoid potential problems, or, should they occur afte all, co solve them,10 Foundations of T Sarvice Management Based on ITIL V3 ITIL exams In 2007 the APM Group launched a new certification scheme for (TIL, based on ITIL version 3, ITIL version 2 willbe maintained for a transition period, concinuing until the year 2008, CTH version 2 has qualifications on chree levels: Foundation Certificate in IT Service Management Practitioner Certificate in IT Service Management. There are Practitioner Certificates for various processes or functions from ITIL version 2 (Service Level Management, Capacity Management, ete) and Practitioner Certificates for clusters ofthe functions and processes (our clusters: Release &¢ Control, Support & Restore, Agree & Define and Plan & Improve} ‘Manager Certificate in IT Service M: The ITIL version 2 exams proved to be a great success. Until 2000, some 60,000 certificates had been distributed, buc in the following years the number rocketed, and by 2006 had broken the boundary of 300,000 ITIL certificares. For ITIL version 3 a completely new system of qualification was sec up. There are four + Foundation level - This level is aimed at basic knowledge of, and insight into, the core principles and processes of ITIL version 3. Ae this level the qualification remains very similar to the old [TIL version 2 Foundation. Intermediate level: = Intermediate level 1 - Te first middle level is aimed ar the Service Lifecycle and is buile up around the five core books of ITIL version 3: Service Strategy, Service Design. S ‘Transition, Service Operation and Continual Service Improvement. ~ Incermediate evel 2-"The second middle level is aimed at capabilites and is buile up around: four clusters: Service Portfolio & relationship management, service design 8¢ optimization, service monitoring 8 control and service operation & support. ‘The ewo middle levels are aimed at an insight into, and application of, the knowledge of ITIL version 3. These levels replace the Practitioner and Manager levels of ITIL version 2. * Advanced level - This level was sil under development when this book was being writen, Ie is anticipated hat this will rest the ability to apply ITIL version 3 principles in a realli For every element in the scheme a number of credits can be obtained. Credits are also awarded for the certificates from the ITIL version 2 scheme. Various ‘bridge exams’ are offered in order to connect version 2 certificates to the version 3 exams. In order to obtain an ITIL version 3 diploma, che candidate must obtain 22 credits, ewo at Foundation level and the remainder at the middle levels. Figure 2.1 presents the new certification system, The system! is based on the requirements of che effective fulfillment of the relevant role in an [T organization, {T-Systam is based on Blooms Taxonemy of Learn, an ealabished Tadinique for doing and measuring ages of rearing,Introduction to the Service Lifecycle "1 Professional Diploma TTL Diploma Achieved oc * oe 15 Credits 16 Credits x * 2 credits on RS IML Foundation for Service Management Figure 2.1. Certification APMG (Source: APMG) The Foundation certificate is importane call members of staff who need co know the most important tasks in an IT management organization and their mutual cohesion, Afier obtaining the Foundation certificate staff members can participate in the lifecycle and capability exams. At this level candidates are taught ro carry out tasks within the Service Lifecycle, These exams are aimed at knowledge and competence. 2.2 IT Governance With the growing role of informacion, Information Systems and IT Service Management, the management requitements for IT grew as wel. These requirements focus on two aspects: the compliance with internal and external policies, laws and regulations, and the provision of added value o the stakeholders of the organization, IT Governance isstll avery young discipline, with no more than afew acknowledged standards or frameworks available, In contrast, there are many dilferenc definicions of IT Governance available. A definition that receives a ot of support isthe cone by Van Grembergen: IT Governance consss of « comprehensive famework of structures, proceses and relational ‘mechanisms. Structures involve the exitence of responsible functions such as IT executives and saccouns, and a diversity of IT Committes. Proceses refer to strategic IT decision-making and ‘monitoring. Relational mechanisms include business participation and partnerships, strategic dialogue and shared learning. ‘There is a clear distinction berween govemance and management, suggesting that governance enables the creation of a setting in which others can manage their tasks effectively (Sohal & Ficpatick). So IT Governance and IT management are ewo separate entities. [T Service Management can be considered co be part of the IT management domain, which leaves IT Governance in the Business or Informacion Management domain,2 Foundations of IT Service Management Sased on ITIL V3 Although many frameworks are characerined as ‘IT Governance frameworks, such as Con T and even ITIL, most of them are in face management frameworks. There is at least one s for FT Governance available: the local Australian Standard for Corporate Governance (As015) 2.3 Organizational maturity From che moment Richard Nolan incroduced his ‘staged model’ for the application of CT in organizations in 1973, many people have used stepwise improvement models. These models, were quickly recognized as suitable inscruments for quality improvement programs. thereby helping organizations to climb up the maturity ladder. Dozens of variations on the theme can easily be found, ranging from trades such as software development. acquisition, systems engineering, software testing, website development, data warehousing and security engineering, to help desks and knowledge management. Obviously the ‘taizen principle (improvement works best in smaller steps) was one that appealed to many. Afeer Nolan’ staged model in 1973, the mose appealing application of this modeling was found when the Software Engineering Institute (SEI) of Carnegie Mellon University. USA, published. its Software Capability Maturity Model (SW-CMM). The CMM was copied and applied in most of the cases mentioned above, making CMM something ofa standard in maturity modeling, The CMM was later followed by newer editions, including CMMI (CMM loregraced). Laer, these models were applied in quality management models, like che European Foundation For Quality Managemen (EFQM). Apart from the broad quality management models, chere are several other industry accepted practices, such as Six Sigma and TQM, which are complementary ro TIL ‘The available standards, and frameworks of best practice, offer guidance for organizations in achieving ‘operational excellence’ in IT Service Management. Depending upon theie stage of development, organizations rend co require differenc kinds of guidance. Maturity model: CMMI In the IT industry, the process maturity improvement process is best known in the context of the Capability Maturity Model Integration (CMMI. This process improvement method was developed by the Sofware Engineering Insticute (SEI of Camegie Mellon University. CMMI provides both a staged and a continuous model. In the continuous representation, improvement is measured using capably levels. Maturity is measured for a particular process across an organization. [n che staged representation, improvement is measured using macurty level, for a set of processes across an organization, ‘The capabilicy levels in che CMMI continuous representation are: LL Incomplete process - process chat cither is nor performed or partally performed 2. Performed process - satisfies the specific goals of the process area 3. Managed process - a performed (capability level 1) process that has the basic infrastructure in place to support the processIntroduction to the Service Lifecycle 1 4, Defined process - a managed (capability level 2) process thats tailored from che organization's set of standard processes according co che organization’ tailoring guidelines, and contributes ‘work products, measures and other process improvement information co che organizational process assets ‘Quantitatively Managed process - defined (capability evel 3) process chat is controlled using statistical and other quantitative techniques 6, Optimizing process - a quantitatively managed (capability evel 4) process that is improved based on an understanding of che common causes of variation inherent in che process ‘The CMMI staged representation model defines ive matucity eves, each a layer in che base for the nexe phase in the ongoing process improvement, designated by the numbers | through 5 1. Initial - processes are ad hoc and chaotic 2. Managed - the projects of the organization have ensured that processes are planned and executed in accordance with policy 3, Defined - processes are well characterized and understood, and are described in standards, procedures, cools and methods 4, Quantitatively Managed - the organization and projects establish quantitative objectives for quality and process performance, and use them as criteria in managing processes 5. Optimizing - focuses on continually improving process performance through incremental and innovative process and technological improvements Many other maturity models were based on these structures, such as the Gartner Macurity Models. Most of these models are focused ar capability macurity. Some others, ike KPMG's World Class IT Maturity Model, take a different approach, Standard: ISO/IEC 20000 Developing and maincaining a quality system which complies wich the requirements of the ISO 3000 (ISO-9000:2000) series can be considered 2 oo! For che organization to reach and maintain the system-focused (or ‘managed! in ITT Service CMM) level of macutity ‘These ISO standards emphasize che definition, description and design of processes. For IT Service Management organizations, a specific ISO standard was produced: the ISO/IEC 20000 (see Figure Customer maturity ‘When assessing the maturity of an organization, we cannot restrict ourselves to the service provider. The level of maturity of the customer (Figure 2.3) is also important. If chere are large differences in maturity between the provider and the customer, then these will have co be considered to prevent a mismatch in the approach, methodls ane mucual expectations. Specifically, this afeets the communication between the customer and the provider.“ Foundations of IT Service Management Based on ITIL V3 ‘Management System .gement Responsibly Documentation Requirements Competence, Awareness and Training tan Planning and implementing ve i Planning and poll Implementing New Management uy 7 ‘or Changed Services Service Delivery Processes + Service Level Management + Capacity Management Service Reporting 1 Serulee Continuity & ‘Avalability Management Information Security Management + Budgerting & Accounting for services Control Processes + Configuration Management) * change Management Release Process Relationship Processes Release Resolution Processes | + Business Relationsship Mamt Management ‘incident Management | _* Supplier Management + Problem Management Figure 2.2 Overviow of the ISOVIEC 20000 Service Management System horizontal communication ly Business IT Service Provider Figure 2.3 Communication and maturty levels: customer and provider 2.4 Benefits and risks of ITSM frameworks “The list below identifies some benefits and possible problems of using IT Service Management bese practices. This lise is not intended to be definitive, but is proved here as a basis for considering some of the benefits thac can be achieved and some of che mistakes that can be made ‘when using common process-based IT Service Management frameworks:Introduction tothe Service Lifecycle 15 Benefis to the customer/user + the provision of IT services becomes more customer-focused and agreements about service qualicy improve che relationship + the services are described better, in customer language, and in mote appropriate detail + bercer management of the quality availabilcy, reliability and cost ofthe services are managed better communication with the IT organization is improved by agreeing on the points of contact Benefits to the (T organization: * the IT organization develops a clearer structure, becomes more eflicient, and is more focused ‘on the corporate objectives » che IT organization is more in control ofthe infrastructure and services it has responsibiliey for, and changes become easier to manage + an effective process steuceue provides a framework For the effective outsourcing of elements of the IT services * following best practices encourages a cultural change towards providing service, and supports the introduction of quality managemenc syscems based on the ISO 9000 series or on ISOMEC 20000 + frameworks can provide coherent frames of reference for internal communication and ‘communication with suppliers, and for the standardization and identification of procedures Potential problems/mistakes: + che ineroduction can take a long time and requice significant effort, and may require a change of culeure in the organization; an overambitious introduction can lead to frustration because the objectives are never met * if process structures become an objective in themselves, che service quality may be adversely affected in cis scenario, unnecessary or over-engincered procedures are seen as bureaucratic obstacles, which are to be avoided where possible there is no improvement in IT services due a Fundamental lack of understanding about what the relevant processes should provide, what the appropriate performance indicators are, and hhow processes can be controlled + improvement in the provision of services and cost reductions are insufficiently visible, because no baseline data was available for comparison and/or the wrong targets were identified + a successful implementation requires the involvement and commitment of personnel at all levels in the organization; leaving the development of the process structures co a specialist department may isolate chac department in the organization and it may set a direction that is not accepted by other departments + iff chee is insuffcieneinvestmenc in appropriate taining and support tools, justice will not be done to the processes and the service will nor be improved: additional resources and personnel ‘ay be needed in the short cerm ifthe organization i already overloaded by routine IT Service ‘Management activities which may not be using "best practices!6 Foundations of IT Service Management Based on ITIL V3 2.5 Service Lifecycle: concept and overview ‘The information provision role and system has grown and changed since che launch of ITH, version 2 (in 2000/02). IT supports and is part of an increasing number of goods and services. In the business world, the information provision role has changed as well: [1° role is no longer just supporting, buc has become the baseline for dhe creation of business value ITIL version 3 intends to include and provide insight into IT's new role in al its complexicy and dynamics To that end, a new service management approach has been chosen that does noc center around processes, bur focuses on che Service Lifecycle. Basic concepts Before we describe the § vice Lifecycle, we need ro define some basic concepts. Good practice ITIL is presented as a good practice (literally: correet method). This is an approach or method that has proven itself in practice. These good practices can be a solid backing for organizations that want co improve their IT services. In such cases, the best ching to do is to select a generic standard or method that is accessible to everyone, ITIL, ConiT, CMMI, PRINCE2® and [SOY IEC 20000, for example. One of the benefits of these freely accesible generic standards is that they can be applied to several real-life environments and situations. There is also ample training available for open standards. This makes it much easier co train staf Another source for good practice is proprietary knowledge. A disadvanrage of this kind of knowledge is that it may be customized for the context and needs of a specific organization, ‘Therefore, ic may be difficult co adopt oF replicate and it may not be as effective in use. Service A service is about creating value forthe customer. ITIL defines a service as follows: A service isa means of delivering value to customers by fcilcating outcomes the customers want 10 achieve without che ownership of pecifc costs or risks. Outcomes are possible from the performance of tasks, and they are limited by a number of constrains, Services enhance performance and reduce the pressure of constraint, This increases the chances of the desired outcomes being realized. Value Value is the core of the service concept. From the customer's perspective value consists of ew core components: utility and warranty. Utility is what che customer receives, and warranty is how ic is provided. The concepts utilry and warranty are described in the Section ‘Service Stracegy’ Service management ITIL defines service management as follows: Service management sat of specialised engonizarona capabilites for providing value 19 ‘usomer inthe form of servicesIntroduction tothe Serviee Lifecycie 7 ITIL discusses some of the Fandamental principles of service management that supplement the functions and processes in che ITIL core books. The next principles may help design a service ‘management syst * Specialization & co-ordination - The goal of service management is to make capabilities and resources availible chrough serviees that are useful and acceprable to the customer with regard co qualiy, costs and risks. The service provider takes the weight of responsibility and resource management of the customers shoulders so char chey can focus on the business) core competence. Service management co-ordinates the business of service management responsibility with regard ro certain resources, Uiilty and warranty act asa guide + Agency principle - Service management always involves an agent and a principal chac seconds this agent «o fulfill aesivities on their behalf. Ageras may be consultants, advisors or service providers. Service agents act as intermediary between service providers and customers in conjunction with users. Usually, these agents are the service provider's staff, buc they can. also be self-service systems and processes for users. Value for the customer is ereated through agreements between principals and agents + Encapsulation - The customer's interest focuses on the value of uses he prefers to be spared fom any technical details and structure complexity. The ‘encapsulation principle’ is focused on hiding whar the customer does not need and showing what is valuable and useful to the customer. Thee principles are closely linked co this separation of concerns ~ modularity: a clear, modular structure ~ loose coupling: reciprocal independence of resources and users, Systems TIL describes the organizational structure concepts which proceed from system theory. The Serviee Lifecycle in ITIL version 3 isa syst isa system as well, The definition of a system: however a function, a process or an organization A system is a group of interacting, inerrelasing or interdependent components that form a unified whole, operating together far a common purpose. Feedback and learning are two key aspects in the performance of systems; they tum. processes, functions and organizations inco dynamic systems. Feedback can lead co learning and growth, not only within a process, but also within an organization in its entirety Within a process, for instance, the Feedback about the performance of one cycle is, in its turn, input forthe nexe process cycle. Within organizations, there can be feedback becween processes, fancsions and lifecycle phases. Behind this feedback is the common goal: the customer's objectives.8 Foundations of IT Service Management Based on ITIL V3 Functions and processes The distinction berween functions and processes is importanc in [TTL What isa function? A fienction is a subdivision ofan organization tha is specialized in fulfilling a specified ype of work, and is sponsible for spcifc end result. Functions are independent subdivisions with capabilities and resources shat are required for their performance and results. They have their own practices and their own knowledge bod. Whae isa proces? A process isa structured set of activites designed ro accomplish a defined objective. Proceses result in a goal-oriented change, and utilize feedback for sefenbancing and x actions Processes possess the following characteristics: + They are measurable - because they are performance-oriented. + They have specific results + They provide results to customers or stakeholders + They respond to a specific event - a process is indeed continual and iterative, but is always originating from a certain event. {can be difficult to determine whecher something i a Function o¢ a process. According to ITIL, whether ic isa function or process depends completely on the organizational design. A good example ofa function isa service desk, a good example of a process is change management. The hierarchical seructure of Functions can lead to the rise of ‘silos’ in which each function is very selforiented. This does noc benefit rhe success ofthe organization asa whole, Processes run through the hierarchical structure of functions: functions often share some processes. This is how processes suppress the rise of funcional silos, and help co ensure an improved co-ordination in beeween functions The Service Lifecycle ITIL version 3 approaches service management from the lifecycle of a service. The Service Lifecycle isan organization model providing insight into: + che way service management is structured + che way the various components ate linked co each other + che impact chat changes in one componenc will have on other system components and on the cenire system So the new ITIL version focuses on the Service Lifecycle, and the way service management components are linked. The processes are also discussed (both the old familiar ones and the new cones) in the cycle phases. They describe how things change. “The Service Lifeeycle consists of five phascs. Each volume of the new ITIL books describes one of these phases:Introduction tothe Service Lifecycle 19 1. Service Strategy - the phase of designing, developing and implementing service management asa strategic resource 2. Service Design -the design phase of developing appropriate IT services, including architecture, processes, policy and documents: che design goal is to meet the current and future business, requirements 3. Service Transition - the phase of developing and improving capabilities for the transition of new and modified services to production 4, Service Operation - che phase of achieving effectiveness and efficiency in providing and supporting services in order ro ensure value forthe customer and che service provider 5. Continual Service Improvement - the phase of creating and maintaining the value for the customer by design improvement, and service introduction and operation Service Strategy isthe axis of the Service Lifecycle (Figure 2.4) thar ‘runs all other phases i is the phase of policymaking and objectives. The phases Service Design, Service Transition and Service Operation implemen this strategy, their continual theme is adjustment and change. The Continual Service Improvement phase stands for learning and improving, and embraces all eycle phases. This phase initiates improvement programs and projects, and prioritizes cher based on the strategic objectives ofthe organization > > Continual ‘Service Improvement ce Figuie 2.4 The Service Lifecycle ‘The Service Lifecycle isa combination of many perspectives on the reality of organizations. This offers more Bexibility and conerol ‘The dominane pattern in the Service Li Design, co Service Transition and co Service Operation, and then, through Continual Service Improvement, back co Service Strategy, and so on. The eycle encompasses, however, many paccerns, Depending on tasks and responsibilities, a manager can choose his own control cycle isthe succession of Service Stracegy co Service20 Foundations of IT Service Management Based on ITIL V3 perspective. If you are responsible for che design, develpment of improvement of processes, the best perspective co use is a process perspective, If you are responsible for managing SLAs contracts and services, the Service Lifecycle perspective and its various phases is likely 10 meet your needs beter: ITIL Library ‘The official, new style ITIL Library encompasses che following components: * Core Library: the five Service Lifecycle publications + Complementary Portfolio: pocker guides tothe core publications ~ introductory guide and pocket guides to the core publications complementary guidance such as case studies, taining course materials, and white papers The ITIL Core consists of five publications + Service Strategy + Service Design * Continual Service Improvement Each book covers a phase from the Service Lifeeyele and enco processes are always described in derail in the book in which they ses various processes. The ind their key applicationChapter 3 Lifecycle Phase: Service Strategy 3.1 Introduction In this section, the axis ofthe lifecycle is introduced. Service Strategy delivers guidance with designing, developing and implementing service managemene asa strategic resource. The Service Strategy is critical in the context of the processes along the ITIL Service Lifecycle in the Service Design, Service Transition, Service Operation, and Continual Service Improvement (CSD phases. “The Service Strategy gives a more extensive scope of the ITIL framework. Organizations that ace already using ITIL can use ths section as a guideline for developing a strategic overview of their ITIL-based capabilities. They can also cry ro improve che synchronization between IT and business strategies. First consider why something should be done before chinking about how it will be done. The why is more imporcant for che clients business ‘This section offersa number of guidelines chat will help in setting customer- and market-oriented goals and expectations. A Service Strategy also helps in idendfying, selecting and prioritizing opportunites. A clear Service Scracegy helps to ensure that an organization is equipped ro manage costs and risks within the Service Portfolios. “The following topics are covered defining the strategy concept service assets; Service Catalogues, implementation of the strategy through the Service Lifecycle: various types of service providers: financial management; Service Portfolio Management; organizational development; and staregic tisks What is strategy? Steategy i a term chat originated in the miliary world, where ic is primarily defined as the distribution and application of miliary resources in onder to meet the objectives of a plan. In Service Managemen the strategy also has to maintain the link becween policies and tactics,2 Foundations of IT Serviea Management Based on ITIL V3 The goal of Service Strategy is w identify dhe competition and «© compete with them by distinguishing oneself from the rese and by delivering superior performances, ITIL cies the following building blocks of well-performing service providers: * Market focus - know where and how to compere + Distinguishing capabilities ~ create distinctive and profcable assets char che business appreciates + Performance anatomy - organizational seandpoines chat are measurable and feasible, such as viewing services asa strategic asset in which conscanc improvement is necessary The four Ps of strategy IFa service provider really knows its service objectives and understands the distinguishing factors ofits product, then ic is ready to begin the Service Lifecycle. The Serviee Strategy consticutes the axis ofthe cycle, We can begin with whac we call che four Ps (based on Mintzberg, 1994): strategy ositon, plan and pattern: have a clear vision and focus is perspective, + Perspes + Position - take a clearly defined seance + Plan - form a precise notion of how the organization should develop itself + Pattern - maintain consistency in decisions and actions Perspective Position Figure 3.1. The four Ps of strategy based on Henry Mintzberg Perspective Strategy is perspective because it provides the vision and Focus of an organization. It determines the distinguishing characteristics of the service provider and its interactions with the customer. Sinategy as perspective defines the convictions, values and goals that govern the behavior ofthe ‘entire organization, A strategic pepective determines the divetionshrough which the service provider can achieve its objectives.Lifecycle Phase: Service Strategy 2a Pose the following questions asa way of testing che perspectives: * Are they clear and memorable? + Are they suitable for promoting and conducting activities? + De cy establish the boundaries within which people ate free to experienc? Position Suratgy is position because i provides the decisions dha ensure that he services willbe offered ina speciic market. Ic is esential chat a service provider be conscious ofits positon in the smatkerplace Strategy as position defines the distinguishing characterises of the service provider inthe eyes of the customer Several positions are possible: + positioning based on diversity - a limiced catalogue of services, but with such depeh chac dliverse customers with similar needs can be adequately served + positioning based on need - abroad catalogue of services that delivers most of the services to specific type of customer + positioning based on accessibility - possibility o deliver services ro customers with specific needs, such as location, scale or structures Pose the following questions o tes the organization’ postion: + Does the organization help managers test the suitability ofa specific procedure? *+ Does the organization set clear boundaries within which personnel may or may not operate? + Ischere a degree of freedom for experimenting within chese constraints? Plan Strategy is a plan because ic prescribes how an organization handles a development. Strategy as plan focuses on the organizations action plan in a competitive market. Service ‘management isa co-ordinated set of plans through which service providers plan and implement service strategies. Pattern Strategy as pattern represents an organizations procedures, As a consequence of the perspective, ‘postion, and plan ofthe sraregy, characteristic patterns are created that lead to recurring success Scrategy i a pattern because it lays out the activities wichin the alloted timeframe. Mission and objectives Specialization and co-ordination are necessary in thelifecycleapproach. Feedback and monitoring during the various processes of the cycle makes this possible. ‘The dominane partcm in the cyele is the succesion of Service Suategy to Service Design, co Service Transition, co Service Operation and back again to Service Srategy via CSL2 Foundations of IT Service Management Based on ITIL V3 Service Strategy assists organizations to think and do business in a strategic manner. The implementation of the strategy cakes place through the use of stracegic assets Finally, a multidisciplinary approach is necessary in order to answer questions such as: + Whac kind of services must we offer, and co whom? + How do we stand out above the competition? + How can we justify strategic investments? + How can we actually create value for the customer and our salkeholders? + How can we efficiently allocate resources in a Service Portfolio? * How can we use financial management to ensure insight and conttol over value creation? To survive, organizations must understand how chey create value for themselves and for the customer. The mission of the Service Strategy phase is ro develop the capacity co achieve and maintain a strategic advantage. The associated objectives are: » defining strategic objectives + determining the direction for growth opportunities seating investmene priorities defining outcomes, learning about effectiveness creating strategic assets identifying the competition surpassing the competition by delivering distinctive performances devising plans that will ensure dominance over the competition now and in the future ‘The development and application of the Service Strategy requites constant revision, jst as in all ‘other components of the cycle. [Fhe strategy i effective, then the efforts chat are expended in all of the ocher phases of the lifecycle will be successful 3.2 Basic concepts Utility and warranty Value is not only discernable in the customers business outcomes, but is also co a large extent, dependent on the customer's perception. This refers to the difference between economic value and economic perception. Perceprion depends on the customer’ self-image, the value tributes, and personal experience. It is important to remember that the definition and differentiation of value are mainly in che mind of the customer. Economic value does not have to correspond automatically with the economic perceptions of the customer. ITIL version 3 uses ewo importanc concepts forthe value ofa service. For customers, the positive cffecis the utility’ ofa service; the insurance ofthis positive effect is che ‘warranty’. The service value isa combination of uilcy and warranty, defined by ITIL as + Utility - mest for purpose. The arcribuces of the service that have a positive effect on the performance of activities, objects, and tasks with a specific result. Uiilcy stands for the increase of a possible profi. + Warranty - fries for we. Availability and reliability in continuity and security. Warranty stands for the decline in possible losses.Lifecycle Phase: Service Strategy 25 The ucilcy is whac the customer receives, and the warrancy affirms how i will be delivered. Icis advisable to view chese two aspects separately in order co artive at the best possible design and development. See Figure 3.2 for the combined steps rowards value creation. umury Performance supported? WF Constraints removed? pose? Value-created wallable enough? ie ‘Aralable enought Fit for we? Large enough? 1 TRUE Continuous enough? uF FLFALSE secure enough? WARRANTY. Figure 3:2 Combining utility and warranty for value creation Communicating utility and warranty ‘The utility of a service is communicated through the support of certain results or by preventing certain risks and costs. Customers are very eager ro outsource the management of assets that remove financial resources in their core assets. They also want to prevent a shortage in capacity ‘Customers are unable to use services that are nor suitable for use. Warranty guarantees the wiley ofa service by ensuring that it is available and that ic offers sufficient capacity, continuity and. security + Availability ~ availability is the most fundamental aspect in the delivery of services (0 a customer. Ie offers the customer the guarantee that the services are available according to the agreed conditions + Capacity - without the effective monitoring of capacity issues, service providers are not in a position to offer the utility of most services, + Continuity - continuity ensures thac che service supports the business even during times of great difficulty or other disasters + Security - security guarantees to customers that they can make use of the service safely and securely Value creation isa combination of the effecs of usiiey and warranty. Both are necessary for the creation of value for the customer. See Figure 3.3 forthe effec that the combination of utility and warranty has on the customer's asses, Service structures The value creation process is complex to such an extent that traditional service models are inadequate. Rather chan concenteating on a fixed chronology of activities in a chain, the Focus during the Service Strategy phase must be placed on the value creation system itself, Service management stands for patterns of co-operation.28 Foundations of IT Service Managomant Based on ITIL V3 ‘Minimal influence on business results, ‘but highly secure Considerable intluence on business results but with Title security Figure 3) Resources and capabilites are the basis for value creation ITIL defines the value network as follows: A nalue network isa web of relationships that genenate both tangible and intangible value shrough complex and dynamic exchanges between two or mare organizations. ‘The following questions play a cole in the construction of a service model + Who are che participants in the service? + Whac are che partes in exchanges and eransactions? * Whae is the impace or what are the products to be delivered from exch transaction and each participant? + What isthe best way to generate value? Service assets Resources and capabilities Resources and capabilities are types of assets. Organizations use them ro creare value in the form of goods and services. Resources comprise the direct input for production. Management, organization, people and knowledge convert resources into value. Capabilities represent the capacity ofan organization to co-ordinate, manage and apply cesources in order to produce value Resources are often based on experiences; they are knowledge-intensive, based on information, and deeply imbedded in the people, systems, processes and technologies of an organization. Ics relatively easy to compare the acquisiion of resources with the acquisition of capabilities Capabilities develop over the yeats. The development of distinctive capabilites is stimulaced by broadening and deepening of experiences acquired through the number and variety of customer files, markers, contraccs and services. Experience is gained chrough problem-solving, handling sicuations, managing risks and analyzing mistakes. Service providers must develop distinc capabilities in order co maintain customers with services that are difficult ro duplicate by theLLtecycie Phase: Service Strategy competition, Service providers must also invest substantially in education and training if they are to continue ro develop cheir strategie assets Capabilities alone cannot produce value withour adequate and appropriate resources. The productive capacity of a service provider dependls on the availabilty of resources. Capabilities are ‘ordinate the productive capacity, used to develop, implement and Asset types Together resources and capabilities form the basis forthe value ofa service (see Figure 3.4) See Fer ‘aaa RETOUR (—“cora (Crnoceses —] Cone] SERVICES == customer Figure 3.4 Resources and capabilities are the basis for value creation Below isa lis of descriptions oF asset types + Management - management is a system chat includes leadership, administration, policy, performance, regulations and incentives: chs layer cultivates, co-ordinates and oversees other asset types + Organization - organizational asses are active configurations of penple, processes, applications and infrastructures thac implement all organizational activities; cis ayer includes che Functional hierarchies, social networks of groups, ceams and individuals, and all of che systems that they use for working together cowards collective goals. + Process - process asvets consist oF algorithms, methods, procedures and routines thac drive the implementation and management of activities and interactions + Knowledge - knowledge assets are accumulations of realization, experience, informacion, insight and incellectual property chat are associated wich specific activities and contexts + People ~ people as assets represent the capacity for creativity, analysis, perception, education, assessment, leadership, communication, co-ordination, empat and erust2a Foundations of T Servioe Management Based on FIL V3 Information - information assets are collections, patterns and meaningful abstractions of daca that are applied in the concexe of customers, contracts, services, events, projets and production + Applications - application asets are greatly varied in eype and include arteficts, automation and tools for supporting the performance of other asset types applications derive their value from their relationships wich other assets + Infrastructure - infrastructure assets exist in the form of layers chat are defined by their relationships with other assets chat they support (people and applications, in particular) + Financial capital - financial assets are necessary in order to support the ownership or use of all types oF assets Type of service provider ITIL distinguishes beween the various types of service providers. Alto management apply coal ypes, there are also aspects, such as customers, contracts, competition, markets and incomes, which are differen foreach type. jh most aspects of service ITIL defines the following three archetypes ‘Type [- internal service provider ‘Type II - Shared Services Unie ‘Type IIL - external service provider ‘Type I - Internal service provider ‘Type I providers are providers who deliver their services within their wn business unit. ‘Type I providers (Figure 3.5) are found in organizasions where IT, R&D, markering or manuficeuring determine the competitive position of the organizacion, for which a high degree of control is necessary. corporate (operate Bes Tino 1 naring MD comtogs Pais Testes Government Affairs: Ce oy Gu) Truman Resures ] [ Woman Reores |) [ arn Resouces timrces scan | | Tirmcetxdmis | | ravce's inn Cotomercae” || “Cotomertare™ || ‘Comer care i i i Figure 9.5. Type | provicersLifecycle Phase: Service Strategy 23 Advantages of this type: * Shore lines of communication - close contact with che customer chrough which certain costs and risks can be avoided + Customer-oriented - specialized in a limiced sec of business needs, which makes it possible to be very customer-oriented + Limited decision rights - decision rights by the manager of the business unit Disadvantages: + Limited opportunities for growth - growch is vied co he growrh of che business unit Competition: * Open market - providers outside che business unit Objectives * Value contribution - che attainment of functional excellence and return for the business unit to which they belong, Comorate (Corporate Business Function) Coatings Pastis Textiles eu) eu) 0} ‘Busines Services (Shared Services Unit Human Resources siiogue Finance 2 Adminstration Sh Customer Care Logistics coslogue information ‘Technology itdons BU: Business Unit SU: Shared Services Unit Figure 3.8. Type provider ‘Type Il - Shared Services Unit Functions such as finance, FT, human resources and logistics are nor always at che core of an organization's competitive advantage, and need nor be maintained at che corporate level. The { functions are often consolidated into an autonomous unit called a shared services of such setviees unie (SU). Type H providers deliver services to Business Units that operate under the same collective strategy.30 Foundations of IT Service Management Based on ITIL V3 The advancages of a Shared Service Unie are (See Figure 3.6 * lower prices - compared with external service providers, through collective benefits, internal agreements and inteenal bookkeep * broader decision-making authority - decisions can be made ousside the business unic * possibility for standardization - che possibility of the development of a standard, which could be used by various business units + competitive position - possibility of challenging the competition Disadvantages: + replaceable - customers can compare che provider with external service providers Objective: + keep up with che industry's best practice, cultivae the market, formulate business strategies, strive for operational effectiveness and develop distinctive capabilities Corporate (Corporate Busines Function) Coatings Pasties Textiles uy) wu ou) External Providers Alpha Co. eta. Ine, Gamma. Delta. Pe. Figure 2.7 Type il provider ‘Type III - External service provider ee prelate pg hala norte exible structures CCuscomers come from various places. Competing customers have access co the same asses with the Type Ill service provider (see Figure 3.7). Advantages of this type ibility - mote freedom co exploit more opportunities » competitive prices - more opportunities to vary prices + minimizing of system risks - spreading tisks over a lager neework © more flexLifecycle Phase: Servica Stratogy 3 Disadvantages: » greater risks for che customers Objective: + 10 offer customers Hexibility and external knowledge, experience, sale, scope, capabilities and Customers consider the following issues when choosing or changing a certain cype of service provider (see Figure 3.8); + Teansaction costs: the tora costs ofa service provider should we keep the activities in-house (aggregation)? should we outsource (disaggregation)? + strategie Factors + core competencies + rise managemenc capabilites, Front ‘ype! Type ‘ype it Functional ype | Disaggregation outsourcing Corporate Type Agaregation coe outsourcing Value net ype i Insourcing Insourcing lta ot Figure 3.8. Customers choice of type of service provider 3.3 Processes and other activities Activities “The following sections deal with the four most important activities of the Service Strategy process as defined by ITIL (see Figure 3.9) 1. defining the marker «understanding the customer b.understanding che opportunities «. classifying and visualizing the services32 Foundations of IT Sarviea Management Based on ITIL V3 2, che development of the offer 3. the development of strategic assets 4. preparation for implementation Defining the market The development of Strategie assets Preparation for Implementation ‘The development of the offer Figure 2.9. The activities ofthe Senice Strategy process Defining the market In che context of servi management, orgunizations are interested in strategy from ewo different bur connected perspectives. There are strategies for services and there are services for strategies From the one perspective, strategies are developed for che services that will be offered. From the other perspective, service management is set forth as a competency for a specific business Understanding the customer For service management professionals itis essential 1 know the performance of the customer’ asses, Without an insight into these assets there is no basis on which co determine the value of Understanding the opportunities Customers’ unsupported objectives can presencan opportunity in which services can be developed, thac could be offered as a solution to the customer's problem: In a changing business there are new opportunities. The CMS (Configuration Management System) can make the mapping of customer results into services and service assers a viable option Having an insight into the customer’ business and being familiar with their objectives are essential fictors in the developmenc ofa strong business relationship withthe customer. Business Relation Managers (BRM) are cesponsible for this. They are closely involved with the customer and manage the opportunities through the use of a Customer Portfolio, BRMs work closely with Product Managers who are responsible for the development and management of services throughLitecycle Phase: Service Strategy 33 the lifecycle, Product Managers focus on che products and maincain contact with che business via a Service Portfolio. Chas Services vary primarily in how and in what contexe they create value. Service archetypes serve as the business models for services. They define how service providers behave on behalf oftheir customers, Customer assets are the context in which value is ereaed because chey ae the link fying and visualizing services with the business outcomes that the customer wants, Lines of Service service Archetypes Customer Assets (Porto Prine) Cheney Pines) (valve context) ‘Access ental [Gi] Leave, License, Provide Bi Management Managed [Ua] manage, Operate, Maintain Ba] organization Remediain [ya Recover Resolve, Rept BS] Procenes Custodial [Ga] Stone, Protec, Monitor ‘a Knowledge Administrative [pg] srocen Fal Recor serce = trative (5 Fail Record faite, [as Peon fvauation [Oa] analyze, Aes, Audie TR information Tronsformetional [U7 | woaity, Transform, Tanspor| ‘AT Applications ‘eave [Ga besion, Devin, Enaineer (Ral inrasrocure Communication ia ciation [Oa] connect itegrate Fa[ Financial anew] us uusty AlAset Figure 3.10. Service provider business model and customer assets Depending on a varicry of factors, the customer owns various kinds of assets. A combination of a service archetype and a customer asset (see Ux-Ay in Figure 3.10, and Figure 3.11) represents an item in the Service Catalogue. Various services can be asociared with the same archetype. The same archetype can be used 10 service a variety of customer assets under a utility-based Service Serategy. This isa variation of needs-based and access-based positioning, The strategy of the service provider determines the contents of the Service Catalogue, Service Strategy results in a specific collection of pattems (intended strategy) oF a collection of patterns can make a specific Service Scracegy attractive (emergene strategy). Ths visual method is, useful in the communication and co-ordination between the functions and processes of service management. The right synchronization becween the value-ceating context (customer assets) and the value-creating concepts (service archetype) helps prevent inadequacies in performance.3a Foundations of IT Service Management Based on ITIL V3 Customer assets a | oa | a | a | os | Assetbased w al Utility based z {| | | g] “ * $ Figure 3.11 Asset-based and utlty-based positioning Developing the offer ‘The consumers’ market ‘The opportunities for supporting business ourcomes with services defn market represents a series oF opportunities for service providers to serve a customer with one or the market. Every Results-oriented definition of services A results-oriented definition of services ensures thar managers view all aspects of service management from the customer’ perspective, Services ae a way of providing value eo customers by facilitating customers results wichour having co incur costs and take risks themselves, Well Formulated service definitions lad 0 effective and efficient service management processes, ‘To ensure that your service definitions are sound, pose che following questions: + What kind of services do we deliver (service type) + Who are our customers? (service type) + Whar kinds of results do we support? (wtlty) * How do the results create value for the customers of our customers? (utility) + Whar constraints do our customers encounter? (utility) Ic isimpossible to produce value withour a complete definition of value. Service Portfolio, Pipeline, and Catalogue The Service Portfolio represents the agreements and investments that the service provider makes with all customers and markets: contractual obligations, service development, Continual Service Improvemene (CSI) and third line services (visible or invisible © customers).Lifecycle Phase: Service Strategy 38 The Service Portfolio aso represent all of the resources that are active in the various phases of the Service Lifecycle. An importanc governance aspect of Service Portfolio Management (SPM) is thar every phase needs resources in onder to conclude projects, initiatives and contract. See the Section on ‘Processes and activities’ for a brief explanation of SPM. or Chapter 9 for a detailed desctiption of SPM and SPM methods, The Service Portfolio represents the opportunities and readiness of a service provider ta serve the customers and the market. The Serice Porfaio can be divided into dee subsets of services - the Service Catalogue ~ the Service Pipeline ~ Retired Services “The following sections explain the individual components ofthe Service Portfolio. Service catalogue Figura 3.12 The Service Porto. “The Service Catalogue is the expression of the operational capacity of the provider within the context of a customer or market outle. “The Service Catalogue has two aspects: the business Service Catalogue and the technical Service Catalogue (see Chapter 9 for more details). The business Service Catalogue portion is defined as the mapping of critical business processes to che underlying IT services, and keeping the decals, of the relationships between those components, supporting the customer view of the Service Catalogue. The technical Service Caralogue is the aspect of the Service Portfolio that is noc visible to the customer, containing details on the technical composition of services, supporsing the service provider's view of the Service Catalogue. The Service Catalogue consists of services that are active and approved in the Service Operation phase. The Service Cacalogue divides services into components. It communicates the policy guidelines and accountability, and includes prices, servi level agreements, and conditions for delivery