Continual Service Improvement
1Introduction 2Serv. Mgmt. 3Principles 4Process 5Methods 6Organization 7Consideration 8Implementation 9Issues AAppendeces

2. Service Management as a Practice

2.1SERV. MGMT 2.2SERVICES 2.3LIFECYCLE FUNCTIONS & PROCESSES 2.4FUNDAMENTALS

2.1 WHAT IS SERVICE MANAGEMENT?

Service management is a set of specialized organizational capabilities for providing value to customers in the form of services. The capabilities take the form of functions and processes for managing services over a lifecycle, with specializations in strategy, design, transition, operation and continual improvement. The capabilities represent a service organization's capacity, competency and confidence for action. The act of transforming resources into valuable services is at the core of service management. Without these capabilities, a service organization is merely a bundle of resources that by itself has relatively low intrinsic value for customers.

Definition of service management
Service management is a set of specialized organizational capabilities for providing value to customers in the form of services.

Organizational capabilities are shaped by the challenges they are expected to overcome.R Service management capabilities are similarly influenced by the following challenges that distinguish services from other systems of value-creation such as manufacturing, mining and agriculture:

Service management, however, is more than just a set of capabilities. It is also a professional practice supported by an extensive body of knowledge, experience and skills. A global community of individuals and organizations in the public and private sectors fosters its growth and maturity. Formal schemes exist for the education, training and certification of practising organizations, and individuals influence its quality. Industry best practices, academic research and formal standards contribute to its intellectual capital and draw from it.

The origins of service management are in traditional service businesses such as airlines, banks, hotels and phone companies. Its practice has grown with the adoption by IT organizations of a service-oriented approach to managing IT applications, infrastructure and processes. Solutions to business problems and support for business models, strategies and operations are increasingly in the form of services. The popularity of shared services and outsourcing has contributed to the increase in the number of organizations who are service providers, including internal organizational units. This in turn has strengthened the practice of service management and at the same time imposing greater challenges upon it.

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2.2 WHAT ARE SERVICES?

2.2.1 The Value Proposition
Definition of a service
A service is a means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks.

Services are a means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks. Services facilitate outcomes by enhancing the performance of associated tasks and reducing the effect of constraints. The result is an increase in the probability of desired outcomes (see Figure 2.1).

Figure 2.1 A conversation about the definition and meaning of service
Figure 2.1 A conversation about the definition and meaning of service

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2.3 FUNCTIONS AND PROCESSES ACROSS THE LIFECYCLE

2.3.1 Functions
Functions are units of organizations specialized to perform a certain type of work and responsible for specific outcomes. They are self-contained with capabilities and resources necessary for their performance and outcomes. Capabilities include work methods internal to the functions. Functions have their own body of knowledge, which accumulates from experience. They provide structure and stability to organizations.

Functions are means to structure organizations to implement the specialization principle. Functions typically define roles and the associated authority and responsibility for a specific performance and outcomes. Coordination between functions through shared processes is a common pattern in organization design. Functions tend to optimize their work methods locally to focus on assigned outcomes. Poor coordination between functions combined with an inward focus leads to functional silos that hinder alignment and feedback critical to the success of the organization as a whole. Process models help avoid this problem with functional hierarchies by improving crossfunctional coordination and control. Well-defined processes can improve productivity within and across functions.

2.3.2 Processes
Figure 2.2 A basic process
Figure 2.2 A basic process

Processes are examples of closed-loop systems because they provide change and transformation towards a goal, and utilize feedback for self-reinforcing and self-corrective action (Figure 2.2). It is important to consider the entire process or how one process fits into another.

Process definitions describe actions, dependencies and sequence. Processes have the following characteristics:

Functions are often mistaken for processes. For example, there are misconceptions about Capacity Management being a service management process. First, Capacity Management is an organizational capability with specialized processes and work methods. Whether or not it is a function or a process depends entirely on organization design. It is a mistake to assume that Capacity Management can only be a process. It is possible to measure and control capacity and to determine whether it is adequate for a given purpose. Assuming that it is always a process with discrete countable outcomes can be an error.

2.3.3 Specialization And Coordination Across The Lifecycle
Specialization and coordination are necessary in the lifecycle approach. Feedback and control between the functions and processes within and across the elements of the lifecycle make this possible. The dominant pattern in the lifecycle is the sequential progress starting from Service Strategy through Service Design, Service Transition, Service Operation and back to Service Strategy through CSI. That however is not the only pattern of action. Every element of the lifecycle provides points for feedback and control. The combination of multiple perspectives allows greater flexibility and control across environments and situations. The lifecycle approach mimics the reality of most organizations where effective management requires the use of multiple control perspectives. Those responsible for the design, development and improvement of processes for service management can adopt a process-based control perspective. Those responsible for managing agreements, contracts and services may be better served by a lifecycle-based control perspective with distinct phases. Both these control perspectives benefit from systems thinking. Each control perspective can reveal patterns that may not be apparent from the other.

Figure 2.3 Continual Service Improvement model
Figure 2.3 Continual Service Improvement model

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2.4 CONTINUAL SERVICE IMPROVEMENT FUNDAMENTALS

2.4.1 Purpose of CSI
The primary purpose of CSI is to continually align and realign IT services to the changing business needs by identifying and implementing improvements to IT services that support business processes. These improvement activities support the lifecycle approach through Service Strategy, Service Design, Service Transition and Service Operation. In effect, CSI is about looking for ways to improve process effectiveness, efficiency as well as cost effectiveness.

Consider the following saying about measurements and management: You cannot manage what you cannot control. You cannot control what you cannot measure. You cannot measure what you cannot define.

If ITSM processes are not implemented, managed and supported using clearly defined goals, objectives and relevant measurements that lead to actionable improvements, the business will suffer. Depending upon the criticality of a specific IT service to the business, the organization could lose productive hours, experience higher costs, loss of reputation or, perhaps, even a business failure. That is why it is critically important to understand what to measure, why it is being measured and carefully define the successful outcome.

2.4.2 CSI Objectives

2.4.3 CSI Scope
There are three main areas that CSI needs to address:

To implement CSI successfully it is important to understand the different activities that can be applied to CSI. The following activities support a continual process improvement plan:

These activities do not happen automatically. They must be owned within the IT organization which is capable of handling the responsibility and possesses the appropriate authority to make things happen. They must also be planned and scheduled on an ongoing basis. By default, 'improvement' becomes a process within IT with defined activities, inputs, outputs, roles and reporting. CSI must ensure that ITSM processes are developed and deployed in support of an end-to-end service management approach to business customers. It is essential to develop an ongoing continual improvement strategy for each of the processes as well as the services.

The deliverables of CSI must be reviewed on an ongoing basis to verify completeness, functionality and feasibility to ensure that they remain relevant and do not become stale and unusable. It is also important to ensure that monitoring of quality indicators and metrics will identify areas for process improvement. Since any improvement initiative will more than likely necessitate changes, specific improvements will need to follow the defined ITIL Change Management process.

2.4.4 CSI Approach
As the above figure shows, there are many opportunities for CSI. The figure above also illustrates a constant cycle for improvement. The improvement process can be summarized in six steps:

Figure 2.4 Service gap model Service gap model
Figure 2.4 Service gap model Service gap model

Since CSI involves ongoing change, it is important to develop an effective communication strategy to support CSI activities - ensuring people remain appropriately informed. This communication must include aspects of what the service implications are, what the impact on the personnel is and the approach or process used to reach the objective. In the absence of truth, people will fill in the gap with their own truth.

Perception will play a key role in determining the success of any CSI initiative. Proper reporting should assist in addressing the misconceptions about the improvements. It is important to understand why there are differences in perception between the customer and the service provider. Figure 2.4 identifies the most obvious potential gaps in the service lifecycle from both a business and an IT perspective.

Service Level Management has the task of ensuring that potential gaps are managed and that when there is a gap, to identify if there is a need for a Service Improvement Plan (SIP). Often a large gap exists between what the customer wants, what they actually need, and what they are willing to pay for. Add to this the fact that IT will often try to define and deliver what they 'think' the customer wants. As a result, it is not surprising that there is a perception and delivery gap between the Customer and IT.

2.4.5 Value To Business Perspectives On Benefits
There are four commonly used terms when discussing service improvement outcomes:

Much of the angst and confusion surrounding IT process improvement initiatives can be traced to the misuse of these terms. Below is the proper use:

Intangible Benefits
When used in Business Cases, soft benefits (intangibles) are IT investment payoff areas not expressed in monetary ways. 'Less frequent use of temporary workers makes hourly employees feel better' is intangible if no believable monetary impact is shown. Conversely, 'Less frequent use of temporary workers will save £100,000 annually in labour costs' is tangible when expressed in believable pound terms.

Traditionally, one of the most difficult Business Case problems is quantifying soft benefits such as increased brand image and customer satisfaction. When hard numbers are available to support an ROI argument, it may seem easier to leave the soft benefits out altogether. Instead, use the soft benefits to tell a story in the Business Case.

Attempt to capture value that lies beyond the reach of an ROI calculation such as:

2.4.6 Justification
As a practice, CSI must prove its worth to an organization to continue its existence. Like other practices, CSI must have a well-defined purpose within the organization with clear ongoing benefits that impact the entire organization. How CSI achieves this also needs to be easily understood, e.g. business efficiency, potential cost reduction when introducing services, increased customer satisfaction with the provision of existing services, more agility when responding to requests for new services, or more reliable IT services to support business critical services.

Organizations wishing to improve services also need to be aware of the impact of business and market developments on the IT area. Understanding these general trends in the context of the organization helps determine how ITIL can best be utilized for aligning the IT organization with everchanging business demands. To justify any improvement, the IT organization should compare the costs and revenue (savings). The difficulty in doing this, however, is that while the costs are relatively easy to measure (people, tools etc.) the increase in revenue as a direct result of the Service Improvement Plan (SIP) is more difficult to quantify.

Understanding the organization's target and current situation should form the basis of the Business Case for a SIP. A stakeholder assessment and a goal-setting exercise will help focus on the results and aims.

Business Drivers
Businesses are becoming increasingly aware of the importance of IT as a service provider, to not only support but also enable business operations. As a result the business leaders of today ask much more pointed and direct questions regarding the quality of IT services and the competency and efficiency of their provider. This higher level of scrutiny buttresses the expanding need for CSI, meaning that:

Technology Drivers
The rapid pace of technology developments, within which IT provides solutions, becomes a core component of almost every area of business operations. As a result, IT services must:

2.4.7 Benefits
Benefits must be clearly identified to help justify the effort involved in gathering, analysing and acting on improvement data. Be sure to:

The generic benefits described in the remainder of this section, are those that will be realized by implementing CSI within an organization.

Business/customer benefits

Financial Benefits

Innovation Benefits

IT Organization Internal Benefits

2.4.8 Cost
A Service Improvement Plan (SIP), just like any other major plan, will have costs associated with executing its activities: Staff resources trained in the right skill sets to support ITSM processes Tools for monitoring, gathering, processing, analyzing and presenting data

Continual Improvement Benefits Measurement
Once an improvement initiative is completed, that's not the end of the story. Benefits, ROI and VOI will be subject to change over time as processes become increasingly mature, or unravel due to neglect. Any continual process improvement programme should include periodic reevaluation of benefits. KPIs may change as business drivers change, a new technology may revolutionize storage capacities, or a new web protocol creates entirely new business opportunities. In nearly every major improvement initiative the ROI and, perhaps, the VOI are intensely scrutinized and hotly debated in the steps leading up to project approval ... and then promptly forgotten and stuck in a drawer never to be seen or heard from again. If IT is serious and honest about the benefits of improvements beforehand then it is essential that IT quantify those benefits and report on them after the fact.

Benefits measurement considerations in this context may include:

It is generally accepted that ITIL is the missing piece of the puzzle that enables better quality of service delivery. It facilitates saving money and time, and adds value to the organization. ITIL also spans the business and technology gap to create synergy with proven results.

Figure 2.5 Service portfolio spine
Figure 2.5 Service portfolio spine

Organizations adopt the ITIL framework because they want to establish a consistent, comprehensive service management foundation and better manage the cost of service delivery. ITIL emphasizes the importance of providing IT services to satisfy business needs in a cost effective manner. The most tangible benefit to organizations using ITIL is a marked improvement in resource utilization, eliminating redundant effort, decreasing errors and the amount of work that has to be redone, and increasing scalability with current resource levels. In addition, the ITIL framework helps improve the availability, reliability, stability and security of mission-critical IT services by providing demonstrable performance indicators to measure and justify the cost of service quality. The provision of KPIs is essential to supporting CSI. These KPIs become the data inputs to analyse and identify improvement opportunities.

2.4.9 Interfaces To Other Service Lifecycle Practices
For CSI to be successful, it is important to provide improvement opportunities throughout the entire service lifecycle. If for example, CSI focuses only on the Service Operation phase of the lifecycle it will have limited success. This is like treating a symptom of a problem instead of treating the problem itself. Often the problem may actually start in the Service Strategy or Service Design stages of the service lifecycle. That is why implementing a service improvement process needs to take a wider view. There is much greater value to the business when service improvement takes a holistic approach throughout the entire lifecycle.

The connection point between each of the core volumes is the service portfolio. It is the 'spine' which connects the lifecycle stages to each other.

The remainder of this section covers the relationships between each of the publications and CSI.

Service Strategy
Service Strategy focuses on setting a strategic approach to service management as well as defining standards and policies that will be used to design IT services. It is at this phase of the lifecycle that standards and policies are determined around measuring and reporting for an enterprise-wide view of the organization, possibly utilizing a tool such as Kaplan and Norton's Balanced Scorecard. Service improvement opportunities could be driven by external factors such as new security or regulatory requirements, new strategies due to mergers or acquisitions, changes in technology infrastructure or even new business services to be introduced. Feedback from the other core phases of the service lifecycle will also be important.

Service Design
Service Design is tasked with the creation or modification of services and infrastructure architecture that are aligned to the business needs. Design elements ensure that a customer-centric viewpoint is used in creating the capability, process specification and planning, and acceptance of service management practices. Service Design takes the strategy described in the first phase and transforms it through the design phase into deliverable IT services. Service Design is responsible for designing a management information framework that defines the need for critical success factors (CSF), key performance indicators (KPI), and activity metrics for both the services and the ITSM processes New strategies, architecture, policies and business requirements will drive the need for continual improvement within Service Design.

Service Transition
Service Transition manages the transition of new or changed services into the production environment. Change and Configuration Management play major roles at this point in the lifecycle. This phase focuses on the best practices of creating support models, a knowledge base, workflow management, and developing communication and marketing for use in the transitioning of services to production. As new strategies and designs are introduced this provides an excellent opportunity for continual improvement. Service Transition is also responsible for defining the actual CSFs, KPIs and activity metrics, creating the reports and implementing the required automation to monitor and report on the services and ITSM processes.

Service Operation
Service Operation provides best practice advice and guidance on all aspects of managing the day-to-day operation of an organization's IT services. Service Operation is responsible for the monitoring and initial reporting related to the people, processes and infrastructure technology necessary to ensure a highquality, cost-effective provision of IT services which meet the business needs. Every technology component and process activity should have defined inputs and outputs that can be monitored. The results of the monitoring can then be compared against the norms, targets or established Service Level Agreements. When there is a discrepancy between what was actually delivered and what was expected this becomes a service improvement opportunity. Within the Service Operation phase of the lifecycle, internal reviews would be performed to determine the results, what led to these results, and if necessary recommendations for some level of fine tuning. The integration of service improvement within the service lifecycle is represented in Figure 2.6. This is an approach that provides for Continual Service Improvement activities to be in place within each of the other core disciplines of the service lifecycle.

Figure 2.6 CSI and the service lifecycle CSI throughout the lifecycle
Figure 2.6 CSI and the service lifecycle CSI throughout the lifecycle

An organization can find improvement opportunities throughout the entire service lifecycle. Figure 2.6 shows the interaction that should take place between each lifecycle phase. An IT organization does need to wait until a service or service management process is transitioned into the operations area to begin identifying improvement opportunities.

Each lifecycle phase will provide an output to the next lifecycle phase. This same concept applies to CSI. As an example a new service is designed or modified and passed onto Service Transition. Service Transition can provide feedback to Service Design on any design issues or everything is looking good before the service moves into Service Operation. CSI does not have to wait for the service to be implemented and in operations before any improvement opportunities are identified and communicated. These CSI steps throughout the lifecycle should not be viewed as placing blame or pointing fingers, but as a learning tool on improvement.

To be effective, CSI requires open and honest feedback from IT staff. Debriefings, or activity reviews, work well for capturing information about lessons learned such as 'did we meet the timelines?' and 'did we provide quality?' Segmenting the debriefing or review into smaller, individual activities completed within each phase of the service lifecycle and capturing the lessons learned within that phase makes the plethora of data more manageable. Collecting this information is a positive beginning toward facilitating future improvements (see Figure 2.7).

Figure 2.7 ITSM monitor control loop
Figure 2.7 ITSM monitor control loop

CSI will make extensive use of methods and practices found in many ITIL processes such as Problem Management, Availability Management and Capacity Management used throughout the lifecycle of a service. The use of the outputs, in the form of flows, matrices, statistics or analysis reports, will provide valuable insight into the design and operation of services. This information, combined with new business requirements, technology specifications, IT capabilities, budgets, trends and possibly external legislative and regulatory requirements will be vital to CSI to determine what needs to be improved, prioritize it and suggest improvements, if required.

It will be important to sift through large amounts of raw data before synthesizing the right information. This information must then be analysed and studied, but against what? This is where the different layers of management come in - strategic, tactical and operational - each with their own goals, objectives, CSFs and KPIs, all of which must be aligned and supportive of each other but, more importantly, aligned with the goals and objectives of the business. The ability to derive any meaningful information from the data collected depends not only on the maturity of the processes but also on the level of maturity of the services provided by IT.

Open and honest feedback is also needed from the staff responsible for hand-offs between the service lifecycles. Understanding the lessons learned, 'What went well?' and 'What could have been improved?' can influence future improvements in each stage of the lifecycle. Feedback from Service Operation to Service Transition and Service Transition to Service Design, and then from Service Design to Service Strategy is an effective way to integrate a holistic approach to CSI.

CSI on its own will not be able to achieve the desired results. It is therefore essential to leverage CSI activities and initiatives at each phase of the service lifecycle. Figure 2.8 illustrates the increased value to the organization when the sphere of influence of CSI is expanded to include each phase of the service lifecycle.

At this point you may have concluded that all aspects of CSI must be in place before measurements and data gathering can begin. Nothing could be further from the truth. Measure now, gather data now, analyse now, begin reviews of lessons learned now, make incremental improvements now. Don't wait! Start improving now!
Figure 2.8 Bernard-Doppler service improvement levels of opportunity
Figure 2.8 Bernard-Doppler service improvement levels of opportunity

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