Revisiting Service Strategy

Revisiting “Service Strategy”

An archestra notebook.

© 2013 Malcolm Ryder / archestra

Precedents

ITIL 2011, a clarifying update to ITIL 2007, enhanced the focus on the role of strategy for service providers. The key perspective remained advisory for how to run IT like a business.

An enormous number of practitioners and thought leaders have commented or elaborated on the “service strategy” topic and continue to do so. Much of that work has aimed to put “Service Strategy” into the larger context of IT’s business operations and responsibilities to other aspects of managing a service.

So why have yet another discussion?

Primarily because of language. One potential problem within that mass of follow-up literature is confusion about what strategy is and what the elements of strategy are.

Another problem in that literature can be the assumption that differentiation must be competitive amongst providers. Given an intent to provide business advice, this is not necessarily a bad assumption; but there must be an awareness of the distinction between business strategy for the IT organization, versus IT strategy for the business. That is, supply-side issues are really not the same as demand-side issues.

Finally, the effort to maintain continuity across a vast vocabulary of ITIL-specific terms sometimes detracts, inadvertently, from a simpler way to describe things about management.

Those problems are the motivation for discussing certain things in another way. The effort starts at a high level of generality, with the assumption that (later) implementation of ideas, discussed elsewhere, likely reintroduces an important place for more technical terms.

The Importance of Strategy

But before we go to the top, a good move is to start at the point where service strategy is most often cited.

At a more detailed level, one of the most interesting and critical issues is the discussion of “Position” as it pertains to being a differentiated “provider” securely established with the customer. Thanks to work done and published by companies including some of the world’s largest ITSM vendors, this topic has been through a pretty thorough examination by subject matter experts. Yet it still falls prey to confusion of a certain type.

In this case, the IT organization is looked at as being a company. The main problem in some discussions is an implication that the successful service provider is a company that has a single “essential” competency for which its strategy directs all of its organization for executing delivery of services.

That is, the company strategy of the service provider is discussed as if the company cannot exceed the value proposition of its catalog of services. What we need, instead, is a consistent view of the way that a strategy enables the company’s desired provision of services.

We also want to see a consistent typology of the value propositions that the company’s catalog of services adequately supports because of the strategy. Too often, the value proposition of the services catalog is simply taken as “the strategic position” of the Provider. Instead, we want the relationship with the customer to be the clear model of what position the Provider can have.

The Role of a Services Provider

When we view strategy as a way to drive value propositions, we will be able to categorize types of “service providers” as Roles that use appropriate strategies.

This accommodates the logical possibility that the company can decide to perform only Role Type X, or to perform more than one role.

That choice means that business strategy, “services strategy”, and IT strategy are all distinct yet can be and should be related to each other.

The business strategy of the IT organization is actually two-fold. It is for:

• achieving top preference amongst the customers of whatever Role it takes, while also …

• achieving successful ongoing transformations as a supplier of services, where emerging requirements are detected amongst any potential customers reasonably within reach.

The services strategy of the IT organization is for maximizing the probability of actually getting the right services to the right customers – in ordinary language most often called delivery.

The IT strategy of the IT organization is about the alignment of the IT organization’s service creation capability with the business customer requirements that it wants to be able to meet.

Value Propositions versus Positions

An important point of view on the provider role is a view that shows how the service production objectives of the company relate to the value proposition of the provider’s catalog.

Some experts on ITIL’s “service strategy” topic point out that the ITIL discussion presents four “types of positioning”.

• Variety-based• Needs-based• Access-based• Demand-based

The first thing to do with these is to recognize them as types of catalogs, not types of providers. We can do this by spelling out what the four types really mean.

In doing this, another language correction is needed. The generic responsibility to supply something is a more important identifier of the interactions that address the customer. Different roles are responsible (thus potentially valuable) for different aspects of supply.

We will separate the several roles among Suppliers and label them specifically; while recognizing that all suppliers are generally in the business of services provision.

But to understand the worth of their value, their roles are defined from the service consumer’s point of view.

Value Propositions versus Positions

“Value” is always simply a specific difference having a known significance. It can be low or high, and the same value can be worth more to one party than to another.

This concept of value is important to note because it never changes. Instead, there are many different issues that can be assessed for value.

What is usually called the four positions of service strategy is actually four different bases of service value.

• Variety-based value: the customer’s reason for relating to the supplier is based on the supplier’s level of ability to specialize, in depth, on a given type of service. (The language issue here is in thinking of “a type” as “a variety” instead of thinking of “variety” as “various”.)

• Needs-based value: the customer’s reason for relating to the supplier is based on the supplier’s level of ability to offer breadth of coverage of a given type of customer.

• Access-based value: the customer’s reason for relating to the supplier is based on the supplier’s level of ability to generate reliable availability of something desired.

• Demand-based value: the customer’s reason for relating to the supplier is based on the supplier’s level of ability to create a specific service.

However, these reasons do not amount to a competitive advantage on their own. They amount to relevance.

Real Positioning

In terms of competition and differentiation, a customer’s basis of preference for a supplier of services is in the conditions of provision.

In terms of production and differentiation, the customer’s reason for relating to a supplier is in the demonstrated relevance of the supplier’s ability.

Terms of service acceptance and of service provision together make up the environment (not the market) of differentiated services.

Competitive business strategy looks at how the market offers the IT organization a path to the desired location in the environment.

The real “marketplace” for services, however, is not made of a group of competing providers addressing diverse requirements of customers.

The real marketplace is made of competing service producers addressing diverse customer needs.• Producers do not necessarily make services; they make feasible services available• Needs are not requirements; needs are conditions. Requirements are terms of addressing needs.

The three Strategies of Alignment, by Role

Business Strategy for Preference and Relevance

• ITSM is focused on the service producer’s need to be the “go to” agent and broker of timely service acquisition. The Producer and the Consumer share a goal, for which the key metric is impact@ability. The simplest instrument for shared tracking is a portfolio. The service Producer is the supplier to the business customer.

Services Strategy for Utility and Warranty

• ITIL is a framework focused on the service provider’s need to provide enough quality to the customer at an acceptable cost. The Provider and the Consumer share a goal, for which the primary ITIL metric is quality@cost. The simplest instrument for shared tracking is a catalog. Providers are responsible for supplying to Producers, not to end users.

IT Strategy for Performance and Risk

• IT Management is focused on the “delivery” of the service, which includes development, operations, and support. A consumer’s perception of “delivery” is that the consumer has the service, not that some other party sent it. However, the party responsible for the delivery is the service Source. The Source and the Consumer share a goal, for which the primary metric is function@demand. The simplest instrument for shared tracking is a registry. The Source is the supplier to the Provider.

Evaluating the worth of value propositions

© 2013 Malcolm Ryder / archestra

How well is the service working under actual

levels of pressure?

What scope of requirements is actually met well for the

expense incurred?

Is the type of change in my enablement causing

the effects I need?

Value propositions offered by services suppliers show a promised readiness to meet the needs of particular types of customers. But all customers have the same basic way of determining the worth of the “fulfillment” promised. The determination is based on both current states and expected future states.

Strategy is not a plan but instead a design. The design describes a way to influence the probability of target outcomes. Services customers ask straightforward questions about the outcomes that concern them. Good answers to the questions include citing how, why and when. Services supplier roles have strategies for fulfilling the requirements of enacting those answers on demand.

Role-modeling the alignment strategies

SERVICE PORTFOLIO(PRODUCER)

SERVICE REGISTRY(SOURCE)

SERVICE CATALOG(PROVIDER)

Impact@Ability

RELEVANCE PREFERENCE

All strategies address the Customer’s primary objective: obtain the right service on a

sustainable basis. But “rightness” and “sustainability” constantly

vary with the state of the business.

Sources, Providers and Producers are distinct roles that collaborate

to keep choices and changes synchronized within the current needs of the service customer.

© 2013 Malcolm Ryder / archestra

Strategic Supply Options & Realities for Services

PRODUCER

PROVIDER

SOURCE

CUSTOMER

PRODUCER

PROVIDER

SOURCE

Producers may or may not be part of the IT Organization. Different services may or may not be handled by different producers.

Providers can change without the Producer being replaced; and the provider may or may not be the same company as the customer. Strategy here is not about “a service”, but instead it is about services.

Sources can change without the Provider being replaced; and the output of a source may or may not be yet in demand.

Producers, Providers and Sources can create numerous combinations of relationships amongst each other without usurping each other’s role. Circulation of information about demand enables the roles to detect and propose instances or opportunities of supporting or constraining each other’s responsibilities while orchestrating a distinctive supply of valuable services. Given the velocity of business change, technology innovation, and performance transparency, supplier-created distinctions can gain or lose value. Customers may or may not opt to supply themselves by taking on roles.

The consumer of services has needs that create demand for the availability and procurement of feasible timely services.

Some Recap

• Networks of Sources, Providers and Producers create channels of supply that can be directed (orchestrated) to address specified business needs.

• IT organizations can take on roles that maximize its influence within the network of supplier roles.

• Deciding what services to supply is done with high sensitivity to the distinctive primary responsibility of each of the respective Supplier roles.

• Organizations that take on multiple roles will coordinate multiple strategies in order to generate the overall position desired with the customer.

• The customer has direct views of each supplier role, even if the interactions with the role are mainly indirect. The customer view of the role can lead to a decision about what party will play the role for the customer.

Reminders

• A services market is not the same as a services environment.

• A Provider is only one role among three different independent supplier roles.

• Advantage is a combination of the customer’s preference and the customer’s reason for relating to the supplier.

• Value is a different measure than worth.

• Services (plural) Strategy is one of three different strategies.

• Delivery is defined from the demand perspective, to include development, operation and support.