What is ITIL Demand Management? An Introduction

Steve Manjaly May 12, 2022
- 7 min read

Predicting consumer demand and ensuring you have the resources to support that is key to the success of any organization. The same is true for IT, and this is where ITIL demand management comes in. Demand management is an ITIL process that interfaces with multiple processes and manages expectations on both customer and service provider ends. 

Let’s explore the demand management process, what it entails, and what good demand management looks like. 

What is demand management?

Demand management is a ITSM process used to ensure that consumer demands are anticipated ahead of time and are delivered without incurring unplanned costs. It’s used to analyze, predict, and influence customer demand for products and services. It’s part of the service strategy in the ITIL lifecycle wherein we plan the services offered, their scope, the budget, and other aspects

For example, let’s say that we’re offering IT infrastructure services to our client who in turn is offering SaaS accounting software to their customers. The usage of this software varies throughout the year, with high usage perhaps during the end and beginning of financial years and little usage during the holidays. To ensure quality services, we have to anticipate this demand; ensure that our infrastructure can handle the varying loads and that end-users have enough bandwidth. 

Of course, ITIL demand management is not limited to computing resources alone; it includes human resources as well. It could be the service desk agents for fielding extra customer queries or the network personnel for configuring the extra servers and hardware. 

How do organizations manage demand for their services?

Demand management is closely associated with the revenue of the organization. If the organization underestimates the demand, it may suffer losses to make resources available as client demand increases. If the company overestimates the demand, unused resources won’t generate any income, once again costing the company

Organizations rely on understanding their customer and the end-users and how they usually operate. In the above example where we discussed SaaS accounting software, we know from experience and industry knowledge how the demand fluctuates throughout the year. This is commonly referred to as Patterns of Business Activity or PBAs

PBAs are usually described as how the demand for different services fluctuates or varies throughout a time period. They showcase the volume usage for different services, how often they will be needed, and how much delay is acceptable. 

Another tool used to anticipate the demand are user profiles. By classifying different users based on their IT needs, organizations can predict the demand and how they vary. For example, developers in an organization are likely to use more computing resources than people in the HR department or the accounting department. 

Besides anticipating the demand, ITIL demand management also employs different techniques for influencing or controlling the demand. They can either be technical or financial. Financial control is similar to how utility providers add a surcharge during peak times. For example, organizations may charge extra for using instances beyond a certain limit. An example of technical control would be the company throttling the network or increasing the delay for the services. 

Business relationship managers are the key personnel in demand management. They’re responsible for communicating with the customer and gauging the demand for the future. They’ll also use data from previous usages to estimate the demand. The business relationship managers in turn will communicate this with other services to build the service catalog and invest in new services or expand the services offered. 

What is the difference between demand management, capacity management, and availability management?

In ITIL, demand management is concerned with the volume and frequency of service required by the client or the customer. For example, it could be a data backup of the client’s servers. Demand management is focused on working with the client to build a clear picture of their future requirements and building the services to support that. 

Capacity management is more about the speed and efficiency of these services and ensuring that the service provider has the capacity to meet the agreed-upon service levels. It works closely with demand management to make sure that the services delivered support the requirements. In the above example, the service should be able to back up the client servers at a certain speed and with certain efficiency levels that fit the business requirement. And for this, it continually monitors service delivery as well as the underlying technology, such as the networking equipment, hard disks, servers, etc. 

Availability management is focused on ensuring that the services are available to support the business requirements of the client as defined in the SLA. It’s aimed at managing the number of times a service goes down in a time period and how long it takes to restore the services. Once again taking the above example, if the customer needs continuous server backups, the SLA would define how often this service can go down. And depending on this, the service provider will invest in the infrastructure and the resources for the service. 

What are the benefits of demand management?

Demand management helps better manage the budget for the organization

Demand management helps an organization plan a budget and stick to it. It helps a company use their resources efficiently and prevent waste. With proper demand anticipation, the company can ensure that its resources are not sitting idle and are generating value. And with efficient demand control, they can ensure that the client requirement doesn’t exceed what they have planned, and if so, it won’t cost them. 

ITIL demand management helps an organization manage its revenue properly and create value for the stakeholders. It makes sure that their assets are utilized and are generating value instead of creating unnecessary costs for them. 

Ensures a high quality of service

When a company has a clear picture of the expected demand, they’re able to plan and allocate resources accordingly. And this is why business communication and efficient collaboration is important for proper demand management. Since all the processes in ITSM are to deliver high-quality services to the customer, they have to be planned according to the customer demand. And if this doesn’t go as anticipated, it will affect the rest of the services, which will in turn affect the service quality. 

Demand management helps organizations plan the rest of the ITSM processes and deliver continuous uninterrupted and high-quality services to their customers. This in turn will affect the company’s reputation among customers. 

Prevents security issues

With an increase in demand, there’s also an increase in cyber threats. Your IT network must be able to withstand the security risks and ensure uninterrupted services as the demand scales up and down. And for this, you have to carefully predict and manage the demand for the services. If the demand exceeds the available resources, you may have to rapidly scale up and this can present unknown risks. By planning and anticipating customer demands, you can build robust IT services and mitigate security risks. 

Offers business advantages for the organization

With precise resource anticipation and allocation, organizations are able to reduce wastage. And they can do so without compromising the service quality or customer experience. Companies are constantly looking to maximize their returns and cut short their unnecessary expenditures. By managing the demand efficiently, organizations can reduce their running cost and ensure value from all of their services. And they can leverage this lower cost to offer better prices for their services or expand its scope and gain an edge over the competition. 

Helps better manage other aspects of IT 

Demand management makes ITSM proactive; by planning and anticipating services demanded, organizations can build the services from the ground up to support them. ITSM doesn’t end up playing catch-up with the demand but remains ahead of it. ITIL demand management works with other processes to ensure that they can support the customer demand. 

What does good demand management look like?

Clear communication with the customers and the ITSM team

This mainly falls on the business relationship manager or the owner of the demand management process. For efficient demand management, both the service provider and the service customer have to collaborate seamlessly. They both have to clearly communicate the scope and volume of services. 

Without this, the service quality and customer experience may be affected, the service provider may incur unexpected costs, and can crush the whole demand management process. This is why the role of a business relationship manager is important. They act as the interface between the customer and the rest of the ITSM processes and stakeholders. In a good demand management process, the expectations between all the parties are clearly communicated. 

Smooth data analysis pipeline

Understanding the customer and anticipating their service volume requirement is crucial for demand management. For this, you have to analyze their current usage and how it varies with time. It’s not just calculating the demand for an entire month or a quarter either. Sometimes certain services may experience high volumes during the day while others may experience high volumes on weekends. These fluctuations have to be analyzed to better predict and manage demand. 

And this data analysis pipeline doesn’t end with just predicting the demand. Even during the service transition and service operation, data is collected and analyzed to make sure that the predicted demand meets the actual demand. 

A smooth data analysis pipeline in which all the relevant data is collected, feedback from all sources are analyzed and the information is passed on to the decision-makers and is used in service design shows a good demand management process.  

No unexpected expenditures or costs 

This is fairly obvious. Without a good demand management process, the organization’s costs can go out of control. The rest of the processes in service delivery rely on demand management to plan their resources and if it goes off-track, the whole ITSM can go off-track. When every element in the demand management process, from aligning client expectations to controlling the demand, plays out well, the organization’s expenditure will be as expected. 

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