THE FOLLOWING ITIL INTERMEDIATE EXAM OBJECTIVES ARE DISCUSSED IN THIS CHAPTER:
As stated previously, the syllabus for this qualification covers the managerial and supervisory aspects of the service strategy processes. It excludes the day-to-day operation of each process and the detail of the process activities, its methods and techniques, and its information management.
Demand management is the process that seeks to understand, anticipate, and influence customer demand for services and the provision of capacity to meet these demands.
Business relationship management is crucial to ensuring that we have an integrated approach to the delivery of services to meet organizational needs.
Business relationship management has matured as a process over time. Initially, it was simply a role that was filled to ensure that a business had a named contact within the IT service provider’s organization. But now, as part of a mature service management approach, we recognize the need for business relationship management as a strategic process in its own right, not just as a role supporting service level management at an executive level.
The process of business relationship management provides a connection between organizational executives and the strategic management of the service provider.
This process has a very important part to play in the alignment of the IT service provider and the customer.
The purpose of the process is twofold:
One of the most important concepts in this relationship is that of expectation: the customer’s expectation of the service provider’s capability and the service provider’s expectation of the customer’s needs. It is critical that the expectation of the customer does not exceed what it is prepared to pay for, and business relationship management is instrumental in the management of this communication.
The objectives of business relationship management are as follows:
The scope of business relationship management will vary dependent on the nature and culture of the organization. If the organization works with an internal service provider, it is likely that business relationship management will be carried out between senior management representatives in both the IT department and business units. Often in larger organizations, you will be able to find dedicated business relationship managers (BRMs), but in smaller organizations, the role may be combined with other managerial responsibility. The BRM will work with the customer representatives to understand the objectives of the business and ensure that the services provided are in alignment and supportive of those objectives.
If an external service provider supports the organization, you will commonly find that a dedicated account manager carries out the process, with an individual allocated to a customer or to a group of smaller customers with similar requirements. As the external service provider relationship with the business is captured in a contract, the focus will be on maximizing contractual value through customer satisfaction.
One of the major requirements for business relationship management is to focus on understanding how the services we provide meet the requirements of our customers. The process needs to ensure that we can communicate effectively with our customers so that we can understand their needs. There are a number of key areas we should consider:
To successfully carry out the process of business relationship management and make sure all of the factors in the preceding list can be taken into consideration, it is necessary to work with other service management processes and functions. For example, the ability to associate business outcomes with services is part of service portfolio management; service level management provides information about service levels and their achievements; service asset and configuration management maps customers and service owners to the infrastructure, applications, and services.
Often other activities such as project management will use the BRM when they need someone to communicate with the customer. The communication is the responsibility of the business relationship manager, but it remains part of the project. The business relationship manager role is discussed further in Chapter 6, “Organizing for Service Strategy.”
This will require the identification of clear boundaries, relationships, and responsibilities between business relationship management and other service management processes because there is a strong potential for confusion. Business relationship management should focus on the relationship between the customer and service provider and the achievement of customer satisfaction, but the other service management processes should focus on the services themselves and how well they meet the agreed requirements.
Business relationship management does not ignore the services, but it should be focused on the high-level perspective of whether or not a service is meeting the business needs rather than focusing on specific targets for delivery. Equally, the other service management processes do not ignore this aspect of customer satisfaction, but they should be focused on the quality of the services and how customer expectations can be met.
An example of this is the difference between the service level management and business relationship management processes. They both have regular interaction with customers and are concerned with the ongoing review and management of service and service quality. But each has a different purpose, and the nature of the interface with the customer differs in content and responsibility.
This is clearly shown in Table 4.1, which is an extract from the ITIL Service Strategy publication.
Table 4.1 Differences between business relationship management and service level management
Business relationship management | Service level management | |
Purpose | To establish and maintain a business relationship between the service provider and the customer based on understanding the customer and its business needs. To identify customer needs (utility and warranty) and ensure that the service provider is able to meet these needs. |
To negotiate service level agreements (warranty terms) with customers and ensure that all service management processes, operational level agreements, and underpinning contracts are appropriate for the agreed service level targets. |
Focus | Strategic and tactical. The focus is on the overall relationship between the service provider and its customer and which services the service provider will deliver to meet customer needs. | Tactical and operational. The focus is on reaching agreement on the level of service that will be delivered for new and existing services and whether the service provider was able to meet those agreements. |
Primary measure | Customer satisfaction. Also an improvement in the customer’s intention to better use and pay for the service. Another metric is whether customers are willing to recommend the service to other (potential) customers. | Achieving agreed levels of service (which leads to customer satisfaction). |
Business relationship management is also concerned with the design of services, which makes it the ideal contact for strategic communication with customers for all of the service provider’s departments. There is a potential connection for business relationship management with application development as well as other development and design areas.
There are many connections and similarities between business relationship management and service level management and other service management processes, and the roles are often combined. But as you can see from Table 4.2, there are distinct differences in the activities for the processes, and there needs to be a clear understanding that when carrying out business relationship management, an individual needs to be aware when they are working on a strategic business relationship and when they are working tactically.
Table 4.2 Business relationship management process and other service management processes
Scenario | Primary process being executed | Other processes involved |
Developing high-level customer requirements for a proposed new service | Business relationship management | Service portfolio management |
Building a business case for a proposed new service | Business relationship management | Service portfolio management |
Confirming customer’s detailed functionality requirements for a new service | Design coordination | Business relationship management |
Confirming a customer requirement for service availability for a new service | Service level management | Business relationship management, availability management |
Establishing patterns of business activity | Demand management | Business relationship management |
Evaluating business case for new service request from customer and deciding go/no go | Service portfolio management | Business relationship management, financial management for IT services |
Report service performance against service level | Service level management | Business relationship management |
The value of business relationship management is that it provides structured ongoing communication with customers, enabling the service provider to articulate and meet the current and future business needs of its customers. Each party gains a better understanding of the other so that customer expectations are realistic. Business relationship management mediates in disagreements and builds trust between the parties so they work together as strategic partners.
Business relationship management measures customer satisfaction and compares service provider performance with customer satisfaction targets and previous scores, usually through a regular survey. Business relationship management surveys are concerned with whether the service achieves its objectives at every level rather than day-to-day handling of individual incidents.
Significant variations in satisfaction levels or downward trends should be investigated and discussed with customers so that the reasons are understood. Any opportunities for improvement should be logged in the CSI register in conjunction with service level management for later review and prioritization. Care should be taken to ensure consistent measurements and to validate anomalous results that may have other causes.
The focus on customer satisfaction enables the service provider and customer to understand if the business objectives are being met. Although service provision without business relationship management is possible, it is potentially costly, erratic, and filled with mistrust.
Next we consider some of the policies, principles, and basic concepts of business relationship management.
The process of business relationship management is often confused with the business relationship manager role. This is because the role of many BRMs is broader than just the business relationship management process. The BRM often represents other processes when engaged in business relationship management—for example, when obtaining information about customer requirements and business outcomes for use by service portfolio management, demand, and capacity management.
Among the key concepts are a number of data repositories. You saw these earlier when we discussed the service portfolio in Chapter 3, “Service Strategy Processes: Part 1.”
Business relationship management works throughout the service lifecycle to understand customer requirements and expectations and ensure that they are being met or exceeded:
Business relationship management is involved in defining and clarifying requirements for service. Customers may present solutions, specifications, needs, or benefits when what is required is a statement of the value the customer is trying to achieve. Business relationship management should focus on the outcome and work back to defining the service.
Some service providers are included in strategic discussions about the customer’s business. Business relationship management is the process that facilitates this and ensures that the right person is included in these meetings. It also ensures that relevant information about the strategic direction of the customer is communicated back into the appropriate processes and to the people within the service provider organization.
Figure 4.1 shows the business relationship management activities. We are going to look at them in more detail.
The business relationship management process itself consists of activities in every stage of the service lifecycle, but it is rarely executed as a single end-to-end process. The exact activities that are executed will depend on the situation that has caused the service provider or customer to initiate the process. The process also interfaces with a number of other service management processes throughout the service lifecycle. Business relationship management is not a single end-to-end process with a single beginning and end. Rather, it consists of a number of key activities that are linked together.
The business relationship management process is initiated either by the customer or by service management processes and functions, usually by contacting the business relationship manager. For customers, business relationship management provides a way to communicate with the service provider about their needs, opportunities, and requirements and to have these taken care of in a formal, organized manner. The business relationship manager must maintain a register of all opportunities, requests, complaints, and compliments to track them and ensure that they do not fall between different processes and functions. The service provider is also able to initiate the business relationship management process if it needs input from customers or if it needs to initiate the creation of a new service or changes to an existing service.
In business relationship management, the business relationship manager works to apply strategies, policies, and plans to coordinate the service provider’s processes with customer requirements and opportunities. Strategy management will have identified the key market spaces and business opportunities. The BRM will ensure that these are appropriately defined and executed from a customer perspective.
Business relationship management will work with the other service strategy processes:
In the service design stage, business relationship management will work to ensure that the detailed design and development of services continue to meet the requirements of the customer and that they are valid for the business outcomes that have been identified.
The main activities and processes the business relationship manager will work with are as follows:
The BRM will coordinate customer involvement in the processes active during service transition. They will also ensure that all changes and releases meet the requirements set by the customer.
The BRM will work with the following main processes:
In service operations, business relationship management is still required. First, customers use of services changes over time. The BRM will feed this back to the service provider. Second, although the service desk is able to deal with most incidents and requests, some require a higher level of involvement and communication, which the business relationship manager provides.
The BRM will work with the following main processes:
The BRM facilitates CSI by identifying improvement opportunities and then coordinating both service provider and customer activities to achieve this improvement. The BRM also conducts customer satisfaction surveys, which are instrumental in identifying areas for improvement and new opportunities.
Business relationship management will work with the following main activities and processes:
Service Reporting Business relationship management is key to identifying what will be reported to the customer and what the customer will be expected to do with the reports they receive.
Service Level Management Any actions agreed on at service reviews with the customers will be coordinated and monitored by the BRM, whether the actions apply to customers or the service provider.
The Seven-Step Improvement Process Business relationship management helps to identify and communicate proposed improvement to services or to the service strategy, design, transition, and operation processes of the supplier.
Business relationship management includes the following triggers:
Inputs to business relationship management are as follows:
Business relationship management has the following outputs:
The following list includes major interfaces with business relationship management:
Finally we consider the CSFs and KPIs for this process. (Remember the explanation of these in Chapter 3 in the section on strategy management for IT services.) We shall consider the following examples, but for the full list, see the ITIL Service Strategy publication:
Business relationship management faces the following challenges:
Business relationship management risks are as follows:
The final service strategy process we’ll examine is demand management. As we have done with the processes, we’ll consider the demand management process in terms its:
So let’s start with a reminder of what demand management is. Demand management is the process that seeks to understand, anticipate, and influence customer demand for services and the provision of capacity to meet these demands. It is a critical aspect of service management. Poorly managed demand is a source of risk for service providers because of the uncertainty in demand. Excess capacity generates cost without creating value.
The purpose of demand management is to understand, anticipate, and influence customer demand for services and to work with capacity management to ensure that the service provider has capacity to meet this demand. Demand management works at every stage of the lifecycle to ensure that services are designed, tested, and delivered to support the achievement of business outcomes at the appropriate levels of activity.
The objectives of demand management are as follows:
The scope of the demand management process is to identify and analyze the patterns of business activity that initiate demand for services and to identify and analyze how different types of user influence the demand for services.
The main value of demand management is to achieve a balance between the cost of a service and the value of the business outcomes it supports. The other service strategy processes define the linkage between (and the investment required for) business outcomes, services, resources, and capabilities. Demand management refines the understanding of how, when, and to what level these elements interact.
Demand management is about matching supply to demand. Unlike a factory that produces products, which can continue to be produced and stockpiled in anticipation of increased demand later, when we supply a service, the demand has to be met immediately, not later. A call center that receives few calls on a Friday afternoon cannot start answering the following Monday morning’s calls! Monday morning will be busy, but there is no way to use the quiet times to balance out that busy morning. Another way of saying this is that consumption produces demand and production consumes demand in a highly synchronized pattern. There is a real risk that insufficient capacity will mean that the demand cannot be met at the time it is needed.
A major part of demand management is to understand the potential demand and the impact of the demand on the service assets. This allows capacity management to manage service assets (and investments) toward optimal performance and cost. The aim is to adjust the productive capacity to meet the demand forecasts and patterns. Some types of capacity can be quickly increased as required and released when not in use. Offering price incentives to customers to use services at quieter times means that the arrival of demand can be influenced to some extent. However, we cannot stockpile the service output before demand actually materializes. This cycle of demand, which is then supplied, will function only while there is available capacity; as soon as capacity is no longer available, the service provider will not be able to supply enough of the services to satisfy customer demand.
This highly synchronized pattern of supply and demand can be seen in Figure 4.2. Each time a user consumes a service, demand is presented to the service provider, and this consumes capacity of the service assets. This, in turn, results in the service being supplied to meet the consumer’s demand. The greater the consumption of the service, the higher the demand, the higher the consumption of capacity, and the more the service is supplied.
The balance of supply and demand is achieved by gearing the service assets to meet the dynamic patterns of demand on services. This means that the service provider does not just react to demand but proactively anticipates it, identifying the signals of increasing or decreasing demand and defining a mechanism to scale investment and supply as required.
This involves identifying the services using service portfolio management and quantifying the patterns of business activity. Next, the appropriate architecture to deal with the type and quantity of demand is chosen, and the capacity and availability planning processes ensure that the right service assets are available at the right time and are performing at the right levels. Performance management and tuning are carried out as required to deal with variations in demand. Gearing of service assets like this requires input from across the service lifecycle:
Service Strategy Identifies the services, outcomes, and patterns of business activity and communicates the forecast demand to design teams.
Service Design Service design confirms the availability and capacity requirements and validates that the service assets are designed to meet those requirements.
Service Transition Service transition ensures that the new or changed service is tested and validated for the forecast utilization and patterns of business activity. Tests should also be carried out to check the ability to influence and manage demand.
Service Operation The service operation functions should monitor service assets and service utilization levels to ensure that demand is within normal levels and, if not, initiate performance tuning or corrective action.
Continual Service Improvement Continual service improvement will work with demand management to identify trends in patterns of business activity and to initiate changes to the capabilities of the service provider or changes to the behavior of customers where appropriate.
Demand management activities include identifying and implementing measures to influence and manage demand together with capacity management. This could be in situations where service demand exceeds capacity and where capacity increases are not feasible. Disincentives such as charging higher rates at peak times and imposing penalties can be used to lessen demand to what is deliverable. Where capacity exceeds demand (perhaps for a new service), incentives such as lower off-peak rates could be used.
If the peaks and troughs of demand can be smoothed out, the cost of providing the service is optimized because it can always deliver what is required without excessive wasted capacity.
Demand management is based on a good understanding of business activity and how that activity impacts the demand for services. Demand management must therefore identify any documents, reports, or information that can provide insight into these activities and assist in forecasting the levels of demand. These sources will be used to define, monitor, and refine the other components of demand management described in the following section.
The following potential sources of information can assist demand management in forecasting demand:
Services are designed to enable business activities, which in turn achieve business outcomes. So every time a business activity is performed, it generates demand for services. Customer assets such as people, processes, and applications all perform business activities, and because of the way these assets are organized or because of the tasks they are completing, there will tend to be noticeable patterns in the way the activities are performed. These patterns of business activity (PBAs) represent the dynamics of the business and include interactions with customers, suppliers, partners, and other stakeholders.
PBAs must be properly understood, defined, and documented, and any changes to them must be properly controlled. Each PBA needs to have a documented PBA profile containing the following details:
Classification PBAs are classified by type, which could refer to where they originate (user or automated), the type and impact of outcomes supported, and the type of workload supported.
Attributes These may include frequency, volume, location, and duration.
Requirements These could be performance, security, availability, privacy, latency, or tolerance for delays.
Service Asset Requirements Design teams will draft a utilization profile for each PBA in terms of what resources it uses, when the resources are used, and how much of each resource is used. If the quantity of resources is known and the pattern of utilization is known, the capacity management process will be able to ensure that resources are available to meet the demand, provided it stays within the forecast range.
Figure 4.3 shows a number of different examples of patterns of business activity. Take a moment to look at them.
Example A shows the pattern of sales for a greeting card company in the United States. The pattern of card sales varies in line with major holidays or events; this in turn will lead to different levels of IT service utilization. The IT service provider must anticipate the business activity before each major holiday so the company can be sure to prepare and ship the greeting cards in time. In addition, the online ordering systems will be in high demand in the two weeks prior to the holiday. This high demand is not typical, so either the service provider will need to invest in spare capacity that will be idle at other times of the year or they will need to be able to balance the workload across multiple resources. In this way, processing lower-priority services will make way for the volumes of the higher-priority seasonal activity.
In example B, a consulting company relies on a timesheet service to bill consultants’ time. Since most consultants complete their timesheets for the entire week at the end of the week, the service is more critical and is utilized more later in the week. Consultants may need to be encouraged to log their time at the end of each day or the beginning of the next day.
Example C shows how journalists use a word-processing and editorial service. From a quiet start early in the day, the service gets busier and busier as deadlines approach. This behavior is consistent with the nature of journalism, so trying to change it is unlikely to be successful. In these cases, measures will have to be taken to ensure that resources are available to match the PBA.
User profiles (UPs) are based on roles and responsibilities within organizations and may include business processes and applications. Many processes are automated and can consume services on their own. Processes and applications can have user profiles. Each UP can be associated with one or more PBAs.
Business processes are the primary source of demand for services. Patterns of business activity (PBAs) influence the demand patterns seen by the service providers. It is important to study the customer’s business to identify, analyze, and classify such patterns to provide sufficient basis for capacity management. The service provider must visualize the customer’s business activity and plans in terms of the demand for supporting services, as shown in Figure 4.4. Analyzing and tracking the activity patterns of the business process make it possible to predict demand patterns for services in the catalog that support the process. It is also possible to predict demand for underlying service assets that support those services.
Some of the benefits for analyzing PBAs are in the form of inputs to service management functions and processes:
The PBAs may show that different levels of performance are required at different times or with different combinations of utility. In these cases, demand and service portfolio management can work together to define service packages that meet the variations in PBAs.
One of the activities of demand management during service operation is to manage or influence the demand where services or resources are being overutilized. Typically this would occur in the following situations:
There may be no spare budget to increase resources. Demand management could assist by differential charging or other means. It is important to note that any actions taken by demand management would be done in conjunction with the other processes, such as financial management, business relationship management, capacity management, and service level management.
Triggers of demand management are as follows:
Demand management has the following inputs:
The outputs of demand management include user profiles and documented patterns of business activity to be included in the service and customer portfolios. Other outputs are policies for management of demand when resources are overutilized and policies for how to deal with situations in which service utilization is higher or lower than anticipated by the customer. Finally, demand management will agree on and document the various options for differentiated offerings that can be used to create service packages.
Major interfaces with demand management are as follows:
You’ll recall from earlier discussions the definitions of critical success factors and key performance indicators. Here are some examples for demand management.
Demand management faces the following challenges:
The risks of demand management are as follows:
In this chapter, we completed our examination of the service strategy processes by looking at business relationship management and demand management. Business relationship management ensures that the services provided meet the needs of the organization in both the short and long term by working with senior business management to align the services provided to the business strategic requirements.
Through demand management, the service provider is able to anticipate and influence customer demand for services. Demand management techniques can moderate excessive demand or stimulate demand where there is overcapacity. Demand management endeavors to ensure that demand does not exceed the capacity to deliver and that there is no expensive unused capacity.
Understand the principles and techniques of service strategy. You will need to understand service strategy principles, techniques, and relationships and their application for the creation of effective service strategies.
Know the service strategy processes of demand management and business relationship management. From a management-level viewpoint, know the purpose objectives, scope, principles, and activities of business relationship management and demand management.
Understand the interfaces with other processes. You need to be able to describe how the business relationship management and demand management processes interface with the rest of the service lifecycle and the processes from the other lifecycle stages.
Understand the business value, challenges, and risks of each process. You should be able to explain the value the business derives from the business relationship management and demand management processes and the challenges and risks involved in running them.
Understand how business relationship management works with the senior business management. Make sure you understand how the business relationship manager(s) work to ensure that the service provider understands the business strategy and provides the services required to further that strategy. Know that this process also involves explaining to the business what the service provider can and cannot do.
Be able to describe the key differences between business relationship management and service level management. You should be able to list and explain the differences in activities and focus between business relationship management and service level management.
Understand the key activities of demand management. Make sure you understand how demand management anticipates the level of demand and works with capacity management and other processes to meet it.
You can find the answers to the review questions in the appendix. Patterns of business activity are used to track what? Demand management is about matching what to demand? Which of these information sources should be used by demand management? User profiles (UPs) are based on what? Which of the following statements is incorrect? Every ________ should be documented with the following details: classification, attributes, requirements, and service asset requirements. Which of the following responsibilities is NOT a responsibility of BRM? Which of the following responsibilities is NOT a responsibility of service level management? True or False? The customer portfolio is a database or structured document used to record all customers of the IT service provider. The customer agreement portfolio is a database or structured document used to manage service contracts or agreements between an IT service provider and its customers. Which of the following is NOT a trigger for BRM?Review Questions