The ITIL Service strategy is the first stage in the service lifecycle. It paves the way for the following four. This stage contains the guidelines for organizations to set out a solid strategy for their IT services, position them in the appropriate place in the service portfolio, and ensure they add value from a financial and experience perspective.
This article will define service strategy, its purpose, and examine in detail the five processes that comprise it. Then we will explain the different stages to effectively implement one in your organization and build a solid structure for your IT service delivery.
Are you prepared to learn all about service strategy? Let’s go!
Introduction to ITIL Service Design
Service Management is about ensuring that IT services are planned, designed, delivered, and continually improved to meet the business's needs. It’s a structured approach that helps organizations manage their service operations and align them with their business goals.
Many organizations use the ITIL framework to guide their Service Management strategies. One critical part of ITIL is service design, which focuses on creating IT services that are reliable and meet business requirements.
The ITIL framework organizes Service Management into five stages, known as the ITIL service lifecycle:
- Service Strategy: Defines the approach for delivering services that meet business needs.
- Service Design: Focuses on designing the services, including processes, policies, and documentation.
- Service Transition: Manages the change and deployment of new or modified services.
- Service Operation: Oversees the day-to-day operation of services to ensure they run smoothly.
- Continual Service Improvement: Looks at ways to improve services and processes over time.
Now that you know the full context, we can focus on the first stage of the lifecycle: the ITIL service strategy.
The 5 Stages of the ITIL Service Lifecycle
ITIL service strategy definition
Service strategy is the stage defined in the ITIL service lifecycle that examines the overall approach for IT Service Management. Its purpose is to define the perspective, position, plans, and patterns that a service provider needs to be able to execute to meet an organization's business outcomes.
Put simply, the strategy phase of the ITIL lifecycle is in place to ensure that IT and the business work together to create a solid foundation and approach on which to design, build, and improve effective and efficient IT services.
Service strategy in ITIL v3
Service strategy is a crucial part of ITIL v3. It acts as the service lifecycle's starting point, ensuring a solid strategy is in place before the service can be designed, transitioned into service, supported, maintained, and improved.
Service strategy in ITIL 4
ITIL 4 has changed the game slightly, but there is still a place for service strategy. The five service strategy processes defined in ITIL v3 still exist in ITIL 4, but they live in the service value system (SVS) within the General Management practices.
ITIL 4 divides practices into three sections: Service, Technical, and General Management. General Management practices are a set of processes that can be applied across the organization for the success of the business and the services it provides.
Seven benefits of the ITIL service strategy
Service strategy has the following benefits:
- Improved alignment of IT services with business objectives: By considering and incorporating business interests from the start, IT services will be more consistent and integrated with the whole organization.
- Better Financial Management: During this first stage, the adequate accounting, budgeting, and charging activities are carried out. This means that cost-effectiveness will be a central motive when designing your ITIL service lifecycle.
- Increased efficiency and effectiveness: Both the utility and warranty requirements are captured and addressed during this process, improving overall productivity.
- Improved decision-making processes: Because this stage makes sure that the appropriate Risk Management activities are in place, organizations have the ability to make better informed decisions.
- Clearly defined roles and responsibilities: Everybody and everything within the IT department will be assigned clear duties and obligations that are codified in RACI charts.
- Enhanced collaboration: The Business Relationship Management process – we'll circle back to that in just a minute – supports communication and stronger team work between IT and the whole business.
- Increased visibility of IT services: Building a comprehensive service portfolio will give your organization a centralized display of everything it has to offer.
ITIL Best Practices to Get Started With The Framework
The 4 Ps of service strategy
One of the fundamental tenets of service strategy is the 4 Ps. These four elements ensure that the strategy is balanced and has considered the overall approach, market position, patterns of business activity, and overall service delivery.
The 4 Ps of service strategy are:
- Perspective: the overall strategy and approach that the organization will take to achieve its goals and objectives.
- Position: the organization's competitive position in the market and how it plans to differentiate itself from its competitors.
- Patterning: designing and developing service offerings that align with the organization's strategy and position in the market.
- Provision: delivering services to customers and ensuring they are delivered consistently and reliably.
The 5 ITIL processes in the service strategy
There are five processes that make up the service strategy process:
- Strategy Management for IT services
- Financial Management
- Demand Management
- Service Portfolio Management
- Business Relationship Management
Let's take a moment to look at each process in more detail.
Strategy Management for IT services
ITIL Strategy Management for IT services aims to position ITSM as a strategic asset. IT is often seen as a black hole or a source of costs rather than a critical business enabler. This first process sets out a series of steps for aligning and integrating IT into the rest of the business.
Strategy Management recognizes that for any service provider to be successful, they must have a thorough understanding of the market space in which they operate. They must know their strengths, weaknesses, and threats as a provider and what opportunities for improvement are available.
Financial Management
Financial Management for IT services is the practice that looks after all financial aspects of IT service delivery. It ensures that the appropriate levels of funding and commitment are in place and bandages the balance between supply and demand and between cost and quality. It also covers the activities of accounting for previous IT spending, sets the budget for future IT spending, and ensures the appropriate cost models are in place.
Key activities include:
- Developing and maintaining IT service costing models.
- Creating and managing IT budgets.
- Implementing IT accounting practices.
- Analyzing and reporting on IT financial performance.
- Aligning IT investments with business goals.
- Conducting cost-benefit analyses for IT services.
- Managing IT asset lifecycle costs.
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Demand Management
Demand Management aims to help the business understand and predict the demand for services. Every business is subject to changing user behaviors, and service demand will ebb and flow over time.
ITIL defines Demand Management as understanding, anticipating, and influencing customer demand for services. This means that service demand can grow or shrink with the business cycle. A key feature of this process is defining business activity patterns; simply, this means knowing when your busy times are and ensuring you have the appropriate IT services to support them.
Important activities in this service strategy stage are:
- Identifying and analyzing patterns of business activity.
- Developing user profiles to understand service usage.
- Forecasting future service demand.
- Implementing demand reduction techniques where appropriate.
- Aligning capacity planning with predicted demand.
- Collaborating with capacity management to ensure service availability.
- Monitoring and reporting on service utilization.
Service Portfolio Management
Service Portfolio Management is the process that ensures the business has the right mix of services to balance investment, and ensures that services are correctly linked to business outcomes. This process includes these three steps:
1- Service pipeline
This is a collection of planned and future IT services that are being developed or are in the conceptual phase.
The service pipeline helps in forecasting and preparing for new services that will eventually be introduced. It ensures that future services are aligned with business strategy and are well-planned before they are launched.
Activities:
- Service development: Overseeing the creation and development of new services.
- Resource allocation: Ensuring that resources are allocated effectively for the development of these services.
- Risk assessment: Evaluating potential risks associated with new services.
2- Service catalog management
The service catalog is a comprehensive list of all current IT services offered to users and customers.
It provides a clear view of what services are available, including details about service features, delivery times, and support options. This transparency helps customers understand what they can request and how to access these services.
Activities:
- Service documentation: Maintaining detailed descriptions of each service, including service levels and features.
- Updating information: Regularly updating the catalog to reflect any changes in service offerings.
- Customer communication: Providing information to customers about available services and how to use them.
3- Retired service system
This system tracks services that have been retired or are no longer in use. Managing retired services is crucial for understanding past investments and ensuring that no obsolete services are still being referenced or used. It helps evaluate the lifecycle of services and make informed decisions about future investments.
Activities:- Record-keeping: Keeping a record of services that have been phased out.
- Evaluation: Analyzing the performance and impact of retired services to learn from past experiences.
- Resource reallocation: Redirecting resources and efforts from retired services to active or new ones.
Business Relationship Management
Business Relationship Management is the process that establishes and maintains an effective relationship between the service provider and the customer. Done well, it helps the business articulate the value of a service, identifies customer needs, and ensures that the service provider understands and meets those needs.
Key activities in this stage:
- Establishing and maintaining key stakeholder relationships.
- Conducting regular customer satisfaction surveys.
- Facilitating communication between IT and business units.
- Identifying and articulating business requirements for IT services.
- Negotiating Service Level Agreements (SLAs).
- Managing customer expectations.
- Acting as an advocate for IT services within the business.
How to create a service strategy in 4 stages
So many strategies fail to add value because of scope creep. It's important to have a solid structure from the start to avoid future inconsistencies or confusion.
An effective strategy should follow four main stages:
- Definition: The stage that defines the strategy and overall approach; the definition should ensure that the utility and warranty requirements are captured so that the service specified in the strategy is fit for purpose and fit for use.
- Analysis: This stage investigates how the strategy is going to be implemented, identifying any potential risks that could derail implementation as well as creating a plan to mitigate any risks, obstacles, and threats.
- Approval: We all need governance and approval to keep us honest. This stage manages the process of getting senior management approval.
- Charter: The exciting part. The charter stage is the implementation of the strategy you and your team have worked so hard on.
Make sure you take enough time to work on each stage before moving on to the next. This way you will be well prepared for the implementation, avoiding the need to constantly look back or reevaluate.
ITIL Certification in 2024: Why, Which One, How and Its Costs
How to implement a service strategy
Implementing a service strategy is all about people. To deliver an effective ITIL strategy, defining the following roles can provide support during the process:
- IT Steering Group (ISG): Sets the strategy and direction for IT services. It includes members from Senior Management and Business and IT to ensure everyone is heard.
- Service Strategy Manager: Supports the ISG in developing and maintaining the IT service provider's strategy.
- Service Portfolio Manager: Works with the IT Steering Group to improve the service provider's offerings and capabilities.
- Financial Manager: Responsible for managing an IT service provider's accounting, budgeting, and charging requirements.
- Demand Manager: They must understand, anticipate, and influence customer demand for services and capture patterns of business activity.
- Business Relationship Manager: Responsible for maintaining a positive relationship with customers, identifying their needs, and ensuring that the service provider can fulfill those needs with an appropriate catalog of services.
Service strategy certification
The service strategy certification is an AXELOS qualification on the ITIL Service Strategy publication. It gives successful candidates a comprehensive understanding of the strategy stage of the ITIL lifecycle, its roles, processes, and working practices. Ideal candidates include IT finance managers, IT managers, and project managers. AXELOS classifies the service strategy certification as an intermediate course.
Key takeaways
Service strategy is the first stage in the ITIL v3 service lifecycle. Its objective is to create a solid approach from which to serve our customers. The strategy phase of the lifecycle ensures that the appropriate requirements are captured to be defined in detail in the design stage.
It’s important to put in the effort to make your strategy as strong and comprehensive as possible before moving on to the rest of the life cycle. Consider all five ITIL service strategy processes and take your time with each stage of the implementation process. This will lay the groundwork for a successful journey through service delivery.
Frequently Asked Questions
Why is service strategy important in ITIL?
In short, because it's good to have a plan. Having a strategy ensures that your services are fit for purpose and use so they can deliver value.
What are the main components of ITIL Service Strategy?
The main components are:
- Financial Management: Taking care of the financial aspects of IT services, including budgeting, accounting, and cost modeling.
- Demand Management: Understanding and predicting customer demand for services.
- Service Portfolio Management: Managing the mix of services offered, including the service pipeline, service catalog, and retired services.
- Business Relationship Management: Building and maintaining effective relationships with customers.
How does Demand Management impact service delivery?
Effective Demand Management ensures that IT services are available when needed and can handle changes in demand. It helps prevent over-provisioning or under-provisioning of services, improving overall service efficiency and customer satisfaction.
What are the benefits of implementing ITIL Service Strategy effectively?
Benefits include:
- Better alignment of IT services with business goals.
- Improved financial management and resource allocation.
- Enhanced ability to predict and manage customer demand.
- Stronger relationships with customers and more effective service delivery.
