Unit 1 chap3 it service management
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The document outlines a comprehensive framework for developing service strategies focused on understanding markets, customer needs, and value creation. It emphasizes the importance of classifying services, managing service portfolios, and aligning service management with business objectives to enhance customer outcomes. Additionally, it discusses the critical factors required for success, such as prioritizing investments and differentiating service offerings within various market spaces.
Unit 1 chap3 it service management
- 1. 4 Service strategy Mustufa Sir 1
- 2. 4.1 Define the market • 4.1.1 Services and strategy • 4.1.2 Understand the customer • 4.1.3 Understand the opportunities • 4.1.4 Classify and visualize Mustufa Sir 2
- 3. 4.1.1 Services and strategy • Organizations have an interest in strategy within the context of service management in two distinct but related perspectives. There are strategies for services and there are services for strategies (Figure 4.1). • From one perspective, strategies are developed for services offered. • From the other perspective, service management is a competence for offering services as part of a business strategy. Mustufa Sir 3
- 5. 4.1.2 Understand the customer • Organizations strive to achieve business objectives using whatever assets they have at hand, subject to various constraints. • Constraints include costs and risks attributable to complexity, uncertainty and conflicts in the business environment. Mustufa Sir 5
- 6. • Business managers are given the responsibility, authority, and resources necessary to deliver certain outcomes using the best possible means. • Services are a means for managers to enable or enhance the performance of business assets leading to better outcomes. • The value of a service is best measured in terms of the improvement in outcomes that can be attributed to the impact of the service on the performance of business assets. Mustufa Sir 6
- 7. Punch line • The performance of customer assets should be a primary concern of service management professionals because without customer assets there is no basis for defining the value of a service. Mustufa Sir 7
- 8. 4.1.3 Understand the opportunities • The assets are the means of achieving outcomes that enable or enhance value creation. • For example, for a lending bank value is created by the outcome of processing a loan application on time (Figure 4.2). Mustufa Sir 8
- 9. • It is important for managers to gain deep insight into the businesses they serve or target. • This includes identifying all the outcomes for every customer and market space that falls within the scope of the particular strategy. Mustufa Sir 9
- 10. 4.1.4 Classify and visualize • Services differ primarily by how they create value and in what context. Service archetypes are like business models for services. • They define how service providers act on behalf of customers to create value (Figure 4.4). • Customer assets are the context in which value is created because they are linked to business outcomes that customers want. Mustufa Sir 10
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- 12. 4.2 Develop the offerings • 4.2.1 Market space Mustufa Sir 12
- 13. 4.2.1 Market space • A market space is defined by a set of business outcomes, which can be facilitated by a service. • The opportunity to facilitate those outcomes defines a market space. Mustufa Sir 13
- 14. The following are examples of business outcomes that can be the bases of one or more market spaces. • Sales teams are productive with sales management system on wireless computers. • E-commerce website is linked to the warehouse management system • Key business applications are monitored and secure • Loan officers have faster access to information required on loan applicants • Online bill payment service offers more options for shoppers to pay Mustufa Sir 14
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- 16. 4.2.2 Outcome-based definition of services • An outcome-based definition of services ensures that managers plan and execute all aspects of service management entirely from the perspective of what is valuable to the customer. • Such an approach ensures that services not only create value for customers but also capture value for the service provider. Mustufa Sir 16
- 17. • Service definitions are useful when they are broken down into discrete elements that can then be assigned to different groups, who will manage them in a coordinated manner to control the overall effect of delivering value to customers (Figure 4.8). Mustufa Sir 17
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- 19. 4.2.3 Service Portfolio, Pipeline and Catalogue • The Service Portfolio represents the commitments and investments made by a service provider across all customers and market spaces. • It represents present contractual commitments, new service development, and ongoing service improvement plans initiated by Continual Service Improvement (Figure 4.10). • The portfolio management approach helps managers prioritize investments and improve the allocation of resources. Mustufa Sir 19
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- 21. • The Service Portfolio is divided into three phases: Service Catalogue, Service Pipeline and Retired Services (Figure 4.11). Mustufa Sir 21
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- 23. 4.2.3.1 Service Catalogue • The Service Catalogue is the subset of the Service Portfolio visible to customers. • It consists of services presently active in the Service Operation phase and those approved to be readily offered to current or prospective customers. Mustufa Sir 23
- 24. 4.2.3.2 Service Pipeline • The Service Pipeline consists of services under development for a given market space or customer. • These services are to be phased into operation by Service Transition after completion of design, development, and testing. Mustufa Sir 24
- 25. 4.2.3.3 Retired services • Some services in the Catalogue are phased out or retired. • Phasing out of services is part of Service Transition. • This is to ensure that all commitments made to customers are duly fulfilled and service assets are released from contracts. Mustufa Sir 25
- 26. 4.3 Develop strategic assets • Service providers should treat service management as a strategic asset and entrust it with challenges and opportunities in terms of customers, services, and contracts to support. • Service management begins with capabilities that coordinate and control resources to support a catalogue of services. • Challenges are overcome in achieving progressively higher service levels. • There is mutual reinforcement between the two. Capabilities and resources are adjusted until the goal is reached. Mustufa Sir 26
- 27. • Customers perceive benefits in a continued relationship, and entrust the provider with the business of increasing value and also adding new customers and market spaces to the realm of possibilities. • This justifies further investments in service management in terms of capabilities and resources, which have a tendency to reinforce each other. Mustufa Sir 27
- 28. 4.3.1 Service management as a closed-loop control system • As defined earlier, service management is a set of organizational capabilities specialized in providing value to customers in the form of services. • The capabilities interact with each other to function as a system for creating value. • Service assets are the source of value and customer assets are the recipients (Figure 4.16). Mustufa Sir 28
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- 30. • Services have the potential to increase the performance of customer assets and create value to the customer organization. • Improvements in the design, transition and operation of the service increase this customer performance potential and reduce the risks of variations on customer assets. • This requires a clear and complete understanding of customer assets and desired outcomes. Mustufa Sir 30
- 31. 4.3.2 Service management as a strategic asset • To develop service management as a strategic asset, define the value network within which service providers operate in support of their customers. • This network may exist entirely within a business enterprise, as is often the case for Type I and Type II providers (Figure 4.17). Mustufa Sir 31
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- 33. 4.3.2.1 Increasing the service potential • The capabilities and resources (service assets) of a service provider represent the service potential or the productive capacity available to customers through a set of services (Figure 4.17). • Projects that develop or improve capabilities and resources increase the service potential. Mustufa Sir 33
- 34. 4.3.2.2 Increasing performance potential • The services offered by a service provider represent the potential to increase the performance of customer assets. • Without this potential there is no justification for customers to procure the services. Mustufa Sir 34
- 35. 4.3.2.3 Demand, capacity and cost • When services are effective in increasing the performance potential of customer assets there is an increase in the demand for the services. • This acts as a positive feedback to the system to be taken into account. • An increase in the performance potential leads to an increase in customer demand . • The demand for services is accompanied by compensation from customers for the service levels received. • The form of compensation received depends on the type of agreement between the service unit and business unit. • The higher the service levels, the greater the compensation that services providers can expect to achieve. Mustufa Sir 35
- 36. 4.4 Prepare for execution • Every model represents a kind of process. • This model represents a clear and practical approach for formulating service strategies. It does not, however, guarantee success. • What is needed is, through reflection and examination, to make a strategy suitable in an organization’s context or situation. • Strategy involves thinking as well as doing. See Figure 4.19. Mustufa Sir 36
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- 38. 4.4.1 Strategic assessment • In crafting a service strategy, a provider should first take a careful look at what it does already. • An established service provider frequently lacks an understanding of its own unique differentiators. • The following questions can help elucidate a service provider’s distinctive capabilities: – Which of our services or service varieties are the most distinctive? – Which of our services or service varieties are the most profitable? – Which of our customers and stakeholders are the most satisfied? – Which customers, channels or purchase occasions are the most profitable? Mustufa Sir 38
- 39. 4.4.2 Setting objectives • Objectives represent the results expected from pursuing strategies, while strategies represent the actions to be taken to accomplish objectives. • Clear objectives provide for consistent decision making, minimizing later conflicts. Mustufa Sir 39
- 40. 4.4.3 Aligning service assets with customer outcomes • Service providers must manage assets much in the same manner as their customers. • Service assets are coordinated, controlled, and deployed in a manner that maximizes the value to customers while minimizing risks and costs for the provider. Mustufa Sir 40
- 41. 4.4.4 Defining critical success factors • For every market space there are critical success factors that determine the success or failure of a service strategy. • These factors are influenced by customer needs, business trends, competition, regulatory environment, suppliers, standards, industry best practices and technologies. • Critical success factors by themselves are altered or influenced by one or more of the following factors: – • Customers – • Competitors – • Suppliers – • Regulators. Mustufa Sir 41
- 42. 4.4.5 Critical success factors and competitive analysis • CSFs are determinants of success in a market space. • They are also useful in evaluating a service provider’s strategic position in a market space and driving changes to such positions. • For example, being competitive in a market space may require very high levels of availability, fail-safe operation of IT infrastructure, and adequate capacity to support business continuity of services. • In many market spaces cost-effectiveness is a common CSF, while in others it may be specialized domain knowledge or reliability of infrastructure. • Customer satisfaction, richness of service offerings, compliance with standards and global presence are also common CSFs. Mustufa Sir 42
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- 44. 4.4.6 Prioritizing investments • One common problem service providers have is prioritizing investments and managerial attention on the right set of opportunities. • At any one time, the business needs of customers are fulfilled to varying levels of satisfaction. • The best opportunities for service providers lie in areas where an important customer need remains poorly satisfied. Mustufa Sir 44
- 45. 4.4.7 Exploring business potential • Service providers can be present in more than one market space. • As part of strategic planning, service providers should analyse their presence across various market spaces. Mustufa Sir 45
- 46. 4.4.8 Alignment with customer needs • Understand the mutual relationship between customers and market spaces. • Customers can contain one or more market spaces. Market spaces can contain one or more customers (Figure 4.27). Mustufa Sir 46
- 47. 4.4.9 Expansion and growth • Once service strategies are linked to market spaces, it is easier to make decisions on Service Portfolios, designs, operations, and long-term improvements. • Investments in service assets such as skills sets, knowledge, processes, and infrastructure are driven by the critical success factors for a given market space. • The growth and expansion of any business is less risky when anchored by core capabilities and demonstrated performance. Mustufa Sir 47
- 48. 4.4.10 Differentiation in market spaces • In a given market space, services provide utility to customers by delivering benefit with a level of certainty (i.e. warranty). • Market spaces can be defined anywhere an opportunity exists to improve the performance of customer assets. • Service strategy is about how to provide distinctive value in each market space. • Service providers should analyse every market space they support and determine their position with respect to the options that customers have with other service providers. Mustufa Sir 48