ITIL Lifecycle : Service Strategy

Service Strategy is the first step in the ITIL Service Lifecycle. It serves as the core position in the basic framework of ITIL. The Service Strategy (SS) qualification is one of the five ITIL Service Lifecycle modules and provides you with the guidance that enables you to design, develop, and implement service provider strategy that aligns to the organizational strategy. It is basically a plan developed by the service organization in order to achieve its objectives.

The objective of the ITIL Service Strategy is to decide on a strategy to serve customers. Starting from an assessment of customer needs and the marketplace, the Service Strategy lifecycle stage determine which services the IT organization has to offer and what capabilities need to be developed. Its ultimate goal is to make the IT organization think and act in a strategic manner. It’s other most important objective is to determine the competitors in the market and to establish the fundamental conditions in creating services. The service organization must find a way to deliver value to the customer. The SS module focuses on the importance of the strategic aspect of services within the IT service life cycle. It provides the specific knowledge and techniques to help you demonstrate that you understand the risks and success factors and have the skills to develop and progress strategy within an organization or program.

The Strategy will guide the organization to view the big picture, far from the daily operations, and to take a closer look on the risks, cost, and performance. Essentially, Service Strategy defines the reason behind the processes, principles, and roles in delivering the services.

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Key Principles of SERVICE STRATEGY

There are five key principles of Service Strategy: value creation, utility and warranty, assets, patterns of business activity (PBA), and governance.

Value creation
Service strategy defines a unique approach for delivering better value. According to customers service consists of two elements:

  • Utility
  • Warranty

Utility is perceived by the customer from the attributes of the service that have a positive effect on the performance of tasks associated with the desired business outcomes.

Utility is generally stated in terms of:

  • Outcomes supported
  • Ownership costs and risks avoided

Warranty ensures that the utility of the service is available as needed with sufficient capacity, continuity, and security. Value of warranty is communicated in terms of level of certainty.
Warranty is usually defined in terms of availability, capacity, continuity, and security of the utilization of the services.

There are two types of service assets as listed below:

  • Resources
  • Capabilities

Resources are the inputs for production. The resources are transformed by management, organization, people and knowledge.

Capabilities refer to skills to develop and control the resources for production. These skills are based on knowledge, experience and information.

PBA signifies that the customer is engaged in activities that generate demand for services, while the governing factor refers to the need to define strategy, processes, and policies. It deals with how to implement the plan and how to follow them.

Stages for definition of strategy are:
1. Define
2. Analyze
3. Approval
4. Charter

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Five Processes in Service Strategy

Service Strategy describes five processes, three of them are newly included in the 2011 update.
1. Service Portfolio Management (SPM) An organization needs to familiarize itself with the available services and how they are going to enhance the process in delivering services. It must understand the important aspects of the business. These serve as the cornerstone of the process of SPM, which enables the organization to understand the available services, the reason behind using them, and the associated cost. It also enables the service organization to identify the strengths and weaknesses of their portfolio, resource allocation, and investment priorities. SPM also covers most of the service lifecycle, such as the services in production (catalogue), planned services (pipeline), and services being withdrawn (retired).

2. Financial Management for IT Services Financial Management in the IT sector is regarded as the road less traveled. IT service professionals often stay away from managing the financial aspects of the service processes. Hence, it is located in the Service Strategy and is often discussed by people in the upper-level management who are tasked with governing the process.
Financial Management measures the value of the IT services to ensure that the Service Management of the organization is cost-effective. It will guide the organization in making crucial decisions, allows faster changes, retain a feeling of service value, and sustain control. The core activities of Financial Management include budgeting, charting, and accounting.

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3. Strategy Management for IT Services Strategy Management is a newly introduced process in the ITIL framework. It is derived from the strategic evaluations and service strategy development activities. It resides in three sub-processes: Service Strategy Definition, Strategic Service Assessment, and Service Strategy Execution.

4. Demand Management Demand Management used to be a component of the Capacity Management process until it became a new process in 2011. It was a logical move, because demand is a significant factor in the development of Strategy and Service Design. A service organization should expect the capacity and availability for demand in the future. To project the demand, the organization must clearly understand the PBA for each customer.

5. Business Relationship Management (BRM) This process was also introduced in 2011. Experts believe that this is an influence of the ISO20000, because it plays a crucial role in the 20K service management system. It is referenced many times in other Lifecycle Stages, particularly in the Continual Service Improvement and the Service Design. By facilitating effective communication in the IT and business, this element supports most other processes and functions of ITIL.

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Service Strategy Value

Service Strategy is developed for a higher-lever end user, considering governance, competition, market spaces, and effectiveness. It offers guidance on how to identify and select opportunities while taking note of the associated costs and risks.

Strategy guidelines encompasses all four life cycle stages, in which the WHAT and WHY will be converted into HOW. Service Strategy guides the organization in its operations and long-term growth, to consider and behave in a strategic method while converting Service Management competencies into strategic assets.

This life cycle stage offers the tools that can be used by the organization in a strategic approach, mainly considering the causes and effects. Service Strategy will allow the organization to develop its service solutions according to the business needs and requirements of the customers – not only to ensure efficiency but also to offer a truly valuable service.

ITIL Related Articles:

ITIL Lifecycle : Service Design

ITIL Lifecycle : Service Transition

ITIL Lifecycle : Service Operation

ITIL Lifecycle : Continual Service Improvement (CSI)

ITIL – Service Management As A Practice

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Last updated: 03 Apr 2023
About Author

Ravindra Savaram is a Technical Lead at His passion lies in writing articles on the most popular IT platforms including Machine learning, DevOps, Data Science, Artificial Intelligence, RPA, Deep Learning, and so on. You can stay up to date on all these technologies by following him on LinkedIn and Twitter.

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