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Service Management For Dummies®

Table of Contents

Introduction

About This Book

Foolish Assumptions

How This Book Is Organized

Part I: Introducing Service Management

Part II: Getting the Foundation in Place

Part III: Service Management Technical Foundation

Part IV: Nitty-Gritty Service Management

Part V: Real Life with Service Management

Part VI: The Part of Tens

Icons Used in This Book

Where to Go from Here

Part I: Introducing Service Management

Chapter 1: Understanding Service Management

Knowing That Everything Is a Service

Looking at How the Digital World Has Turned Everything Upside Down

Implementing Service Management

Managing Services Effectively

Behind-the-scenes management activities

Provider/customer collaboration

Chapter 2: Getting Inside Service Management

Building a Foundation for Service Management

Inputs and outputs

Assets and tools

A standardized process model

Skilled participants

Seeing the Importance of Oversight

Balancing the Physical World and IT Systems

Physical and IT systems

Service best practices

Service delivery and oversight

Chapter 3: The Customer Is King

Understanding Customers’ Expectations

Looking at a Service from the Outside

Understanding Service Management

Dealing with the Commercial Reality

Gaining Control of Services and Service Components

Part II: Getting the Foundation in Place

Chapter 4: Service Management Standards and Best Practices

Understanding What Best Practices and Standards Can Do for You

Using Standards and Best Practices to Improve Quality

Finding Standards

ITIL

ISO

COBIT

eTOM

Getting Certified

Chapter 5: Implementing ITIL

ITIL V3: A Useful Blueprint for Enterprise Service Management

Book 1: Service Strategy

Book 2: Service Design

Book 3: Service Transition

Book 4: Service Operation

Book 5: Continual Service Improvement

Practical Considerations in Implementing ITIL

How ITIL Integrates with Other Best-Practices Frameworks

Chapter 6: Implementing a Service Management Strategy

Seeing What Service Management Can Do for Your Organization

Considering a real-world example

Relating the example to service management

Starting with the Service Strategy

Creating a service strategy

Finding out what customers really want

Creating a Service Management Plan

Defining a Service Management Plan

Understanding Service Management and Governance

Automating Service

Planning Service Strategy and Service Management

Finding Out How Your Organization Measures Up

Seeing What Service Management Will Look Like in Your Organization

Putting the focus on business performance

Understanding service oriented architecture

Getting to the Desired End State

Chapter 7: Launching into Service Management

Four Key Elements to Consider

Education: A crucial component

Service strategy: The driver of the service management plan

Assessment: Where you are today and where you want to go

Service management plan: A road map for moving forward

Don’t Forget to Measure, Monitor, and Optimize

Part III: Service Management Technical Foundation

Chapter 8: The Service Management Universe

Viewing Service Management in a Business Model

Understanding the Six Layers of Service Management

Defining the six layers

Recognizing the dynamic nature of the six layers

Determining the Value of Service Management

Support costs

Optimization costs

Risk costs

Change costs

Chapter 9: The Technical Foundation of Service Management

Understanding the Relationships in Systems

Computers and computer networks

Service management systems

Working with a Configuration Management Database

Integration infrastructure

Asset management and discovery

Identity management

Configuration management

Federating the CMDB

Strategy

Maturity

Key performance indicators

Chapter 10: Governing the Service Universe

Understanding the Roles of IT Governance

Helping the organization meet its goals

Providing a view from the top

Improving efficiency

Balancing IT and Business Requirements

Measuring and Monitoring Performance

Measurement methods

Proactive communication

Making Governance Work

Developing Best Practices

Establishing a governance body

Monitoring and measuring IT service performance

Cataloging control and compliance data

Part IV: Nitty-Gritty Service Management

Chapter 11: Managing the Data Center

Understanding the Siloed Nature of the Data Center

Seeing the Data Center As a Factory

Optimizing the Data Center

Managing the Data Center

Supplier management

Governance and compliance

Managing the Facility

Asset optimization

Facility management

Disaster recovery

Managing Workloads

Application self-service

IT process automation

Workload automation

Managing Hardware

Desktop and device management

Hardware provisioning and virtualization

Network management

Managing Data Resources

Managing the Software Environment

Managing the Service Management Infrastructure

Cloud computing

Service management reporting

Integration infrastructure

Understanding Strategy and Maturity

Chapter 12: Service Support and the Service Desk

Watching the Service Desk in Action . . . or Inaction

Seeing How a Service Desk Works

Goals of the service desk

Functions of the service desk

Managing Events

Reporting on events

Diagnosing problems

Remediating and verifying problems

Tracking Service Key Performance Indicators

Service-level metrics

Service desk metrics

Chapter 13: Desktop and Device Management

Clients, Clients Everywhere . . .

Dividing Client Management into Five Process Areas

Asset management

Service monitoring

Change management

Security

Integration/automation

Moving the Desktop into the Data Center

Session-based computing

Operating-system streaming

True client virtualization

The PC blade

Meeting Service Expectations in Client Environments

Chapter 14: Data Management in a Service Management World

Creating a Data Management Strategy

Reviewing the Elements of Data Management

Typing your data for delivery

Getting at data: Storage and retrieval

Securing data: Backup and recovery

Preparing for the worst: Disaster management

Storing data long-term: Archiving

Chapter 15: Virtualizing the Computing Environment

Understanding Virtualization

Using a hypervisor in virtualization

Abstracting hardware assets

Managing Virtualization

Foundational issues

Abstraction layer

Provisioning software

Virtualizing storage

Hardware provisioning

Security issues

Taking Virtualization into the Cloud

Defining cloud computing

Using the cloud as utility computing

Veiling virtualization technology from the end user

Chapter 16: IT Security and Service Management

Understanding the Universe of Security Risks

Inside and outside threats

Types of attacks on IT assets

Taking a Structured Approach to IT Security

Implementing Identity Management

Benefits of identity management

Aspects of identity management

Employing Detection and Forensics

Activity logs

HIPS and NIPS

Data audit

Encrypting Data

Creating an IT Security Strategy

Chapter 17: Business Service Management

Defining Business Service Management

Using Key Performance Indicators in Risk Management

Putting Service Levels in Context

Business service levels

IT service levels

Seeing Business Service Management As a Balancing Act

Chapter 18: Planning the Evolution of the Data Center

Approaching Service Management the Google Way

Corporate and IT Strategizing, and Data Center Planning

Project portfolio management

Technology evaluation

Governance and compliance

Business service management

Drawing an Evolutionary Road Map for the Data Center

Start Developing Your Service Strategy Now!

Part V: Real Life with Service Management

Chapter 19: Manufacturing

Elbit Systems of America

Implementing a service desk

Streamlining business processes

Creating a service catalog

Implementing a CMDB

Employing virtualization

Establishing best practices

Cisco

Using the multilayer service catalog

Enhancing the CMDB

Changing to a customer-experience mindset

Varian Medical Systems

Defining the challenges of the industry

Implementing a remote-access solution

Creating a rotating service desk

Measuring the impact of service management

Chapter 20: Health Care

The Medical Center of Central Georgia

Revamping the Technical Support Center

Automating processes

Establishing best practices

Independence Blue Cross

Putting transparency back into the process

Getting proactive for the business: The OCC

Identifying best practices

Sisters of Mercy Health System

Seeing the need for improved service management

Prescribing a service management solution

Providing a service management makeover

Achieving a healthy prognosis

Partners HealthCare

Monitoring services

Planning capacity needs

Identifying team roles

Chapter 21: Retail

Virgin Entertainment Group

(Store) room for improvement

The circle game

Monitor the infrastructure; think about the business

Don’t light my fire

Chapter 22: Hospitality

InterContinental Hotels Group

Creating a center of excellence

Meeting service levels

Finding a balance

Chapter 23: Education

Commission scolaire de la Région-de-Sherbrooke

Organizing to succeed

Deploying the strategy

Changing the way things are done

Establishing best practices

Chapter 24: Service Provider

CIBER

Service management solutions: Then and now

Service-level agreements: Business versus technical

Lessons learned and best practices

Part VI: The Part of Tens

Chapter 25: Ten Service Management Dos and Don’ts

Do Remember Business Objectives

Don’t Stop Optimizing after a Single Process

Do Remember Business Processes

Do Plan for Cultural Change

Don’t Neglect Governance

Do Keep Security in Mind

Don’t Try to Manage Services without Standardization and Automation

Do Remember Industry Standards and Best Practices

Do Start with a Visible Project

Don’t Postpone Service Management

Chapter 26: Ten Swell Service Management Resources

Hurwitz & Associates

ITIL

ITIL Central

ISO

ISACA and COBIT

eSCM

CMMI

eTOM

TechTarget

Vendor Sites

Service Management For Dummies®

by Judith Hurwitz, Robin Bloor, Marcia Kaufman, and Fern Halper

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About the Author

Judith Hurwitz is a technology strategist and thought leader, as well as president of Hurwitz & Associates, a business technology strategy firm that helps companies gain business benefits from their technology investments. In 1992 she founded the Hurwitz Group, a technology research group. She has worked in various corporations, including John Hancock, Apollo Computer, and Patricia Seybold Group, and she has written numerous white papers and publishes a regular blog. Judith holds BS and MS degrees from Boston University. She is a coauthor of Service Oriented Architecture For Dummies, 2nd Edition, and IBM Information on Demand For Dummies, Custom Edition (both from Wiley Publishing, Inc.). Judith provides strategic guidance to both vendors and customers of distributed technologies and is a frequent keynote speaker at industry events. She was named a distinguished alumnus of Boston University’s College of Arts & Sciences in 2005. She is also a recipient of the 2005 Massachusetts Technology Leadership Council Award.

Robin Bloor, a partner in Hurwitz & Associates, has been an IT consultant and technology analyst for almost 20 years. He lived and worked in the United Kingdom until 2002, founding the IT analysis company Bloor Research, which published comparative technology reports that covered everything from computer hardware architecture to e-commerce. Robin is the author of the 2000 UK business best seller The Electronic B@zaar: From the Silk Road to the E-Road (Nicholas Brealey Publishing), which analyzes and explains the field of e-commerce. He is a coauthor of Service Oriented Architecture For Dummies, 2nd Edition (Wiley). In 2002, Robin moved to the United States; he now resides in Austin, Texas. He merged his U.S. analyst company with Hurwitz & Associates in 2005, and in 2006, he began to take an interest in the expanding area of service oriented architecture (SOA). Robin has become an influential and respected commentator on many corporate IT issues and is in great demand as a presenter at conferences, user groups, and seminars.

Marcia Kaufman, a founding partner in Hurwitz & Associates, has 20 years of experience in business strategy, industry research, SOA, software quality, information services, and analytics. In addition to publishing a regular technology blog, Marcia has written extensively on SOA, information management, and the business value of information technology. Marcia has worked on financial services industry modeling and forecasting in various research environments, including Data Resources, Inc. She holds a BA in mathematics and economics from Connecticut College and an MBA from Boston University. Marcia is a coauthor of Service Oriented Architecture For Dummies, 2nd Edition, and IBM Information on Demand For Dummies, Custom Edition (both from Wiley).

Fern Halper, PhD, a partner in Hurwitz & Associates, has more than 20 years of experience in data analysis, business analysis, and strategy development. Fern has published numerous articles on data analysis and content management. She has done extensive research, writing, and speaking on the topic of text analytics. Fern publishes a regular technology blog. She has held key positions at AT&T Bell Laboratories and Lucent Technologies, where she was responsible for developing innovative data analysis systems as well as strategy and product-line plans. She has taught courses in information technology at several universities. Fern received her BA from Colgate University and her PhD from Texas A&M University. Fern is a coauthor of Service Oriented Architecture For Dummies, 2nd Edition, and IBM Information on Demand For Dummies, Custom Edition (both from Wiley).

Dedication

As a group, the authors dedicate this book to our colleague Carol Caliendo, whose spirit and attention to detail helped make this book happen.

Judith dedicates this book to her family, Warren, Sara, and David; to her mother, Elaine; and in memory of her father, David.

Robin dedicates this book to Judy, for her encouragement, support, and advice; and to his children, Maya, Jude, Hannah, Jacob, and Seth.

Marcia dedicates this book to Matt, Sara, and Emily, and to her network of family and friends whose laughter, love, and support helped her through her treatment for breast cancer in 2008.

Fern dedicates this book to her husband, Clay, and to her daughters, Katie and Lindsay. She also dedicates this book in memory of her parents, Stanley and Phyllis.

Authors’ Acknowledgments

We heartily thank our friends at Wiley, most especially Katie Feltman and our development editor, Kathy Simpson.

We learned a tremendous amount from all our interactions with IT executives who willingly and graciously shared their experiences and knowledge about those experiences with service management. We would like to acknowledge the following individuals: Elizabeth Kubycheck, George Maroulakos, and Keenan Phelan of CIBER; Guillermo Diaz, Jr. and Sean Worthington of Cisco; Philippe Caron of Commission scolaire de la Région-de-Sherbrooke; Harry K. Butler III of Elbit Systems of North America; Eric Norman and Bill Peer of InterContinental Hotels Group; Nick Robak of Independence Blue Cross; Isaac Ramsingh and Patrice Briley of The Medical Center of Central Georgia; Steve Flammini and Mary Finlay of Partners HealthCare; Michael Zucker of Sisters of Mercy Health System; Dan DuBeau and Meryl Ginsberg of Varian Medical Systems; and Robert Fort of Virgin Entertainment Group.

Thank you to our friends representing many of the vendors, systems integrators, and industry associations in the service management community: Al Zollar, Doug Brown, Kristin Hansen, Bill Powell, Caroline Robertson, Pierre Coyne, Rich Esposito, Pat Reynolds, Kathleen Holm, Alan Ganek, Laura Sanders, Terese Knicky, and Patty Rowell of IBM; Erin Smith of Axeda; Elaine Korn and Bill Emmett of BMC; Janice Thomas, Nicole Buffalino, and Julie L. Henderson of CA; Craig B. Librett and Jane Emerson of EMC; Clay Bogusky of Iron Mountain; Heath Durrans and Thomas J. Cozzolino of LiquidHub; Joy H. Garner of Numara Software, Inc.; Kristen Wilson of Blanc & Otus; Michael McDonough of Corporate Ink; Liz Boal of Greenough Communications; and Kathy Tebben of LSH Communications.

Publisher’s Acknowledgments

We’re proud of this book; please send us your comments through our online registration form located at www.dummies.com/register/.

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Media Development

Project Editor: Kathy Simpson

Acquisitions Editor: Katie Feltman

Copy Editors: Tonya Cupp and Kathy Simpson

Technical Editor: Brenda M. Michelson

Editorial Manager: Jodi Jensen

Editorial Assistant: Amanda Foxworth

Sr. Editorial Assistant: Cherie Case

Cartoons: Rich Tennant (www.the5thwave.com)

Composition Services

Project Coordinators: Lynsey Stanford and Patrick Redmond

Layout and Graphics: Carl Byers, Melissa Jester

Proofreader: Caitie Copple, Leeann Harney

Indexer: Sharon Shock

Publishing and Editorial for Technology Dummies

Richard Swadley, Vice President and Executive Group Publisher

Andy Cummings, Vice President and Publisher

Mary Bednarek, Executive Acquisitions Director

Mary C. Corder, Editorial Director

Publishing for Consumer Dummies

Diane Graves Steele, Vice President and Publisher

Composition Services

Gerry Fahey, Vice President of Production Services

Debbie Stailey, Director of Composition Services

Introduction

Welcome to Service Management For Dummies. We think a service-driven economy makes this topic increasingly important. Clearly, the way people manage business and IT services is changing dramatically. Companies get into trouble when they don’t look at their physical and business assets as a unified measure of their ability to manage customers’ expectations and experiences.

We think you should focus on the intersection of business strategy, IT strategy, planning, and operations. Companies that plan to create an integrated service management platform are in a great position to evolve as opportunities and threats emerge.

Service management isn’t a quick fix: It’s stages of maturity that make your company better able to compete in a changing world. We hope that this book inspires you to take a different look at this very complicated and important area.

About This Book

Service management is a big topic covering lots of important issues that you must understand, whether you’re managing a data center, virtualizing your computing environment, looking for best practices, or getting a handle on all the technologies you need. We tie our service management discussions directly to the issue that companies care about most: meeting the key performance indicators for their businesses. We think that understanding service management from a business perspective better prepares you to help your company succeed.

We recommend starting with Part I, because it puts into context the new way of thinking about managing the services that define your company. When you’re ready, dive into the technical details in Parts III and IV. In Part V, you’re rewarded with case studies that give you a taste of what real companies are doing to make their service management strategies work.

Foolish Assumptions

We think this book will be useful to many people, but we have to admit that we chose a segment of the world to focus on when writing Service Management For Dummies. Here’s who we think you are:

You’re thinking about technology from a business perspective. You care more about IT-enabled business services than about technical systems. Perhaps we’re preaching to the choir. We think you understand that you’re doomed to failure if your organization continues treating IT like an isolated fiefdom.

You’re a businessperson who wants results from the IT you’ve invested in over the past decade. You want a business-driven service management strategy.

You’re an educated IT person who’s having trouble focusing on service management (versus server or systems management). You want to see how you can better leverage your existing capabilities and resources to satisfy customer expectations and improve value.

Whoever you are, we welcome you on this journey!

How This Book Is Organized

We organized this book into six parts for easy consumption. Feel free to skip about.

Part I: Introducing Service Management

In this section, we provide an overview of how to think about service management. We summarize the business drivers and the technical focus, and provide a perspective on the all-important customer.

Part II: Getting the Foundation in Place

Before you can get into the details of service management, you need some context for best practices and standards. Starting with a strategy is important, and strategy is an important focus of Part II.

Part III: Service Management Technical Foundation

Service management has a lot of important technical underpinnings. In this part, we put the foundation in context with governance principles.

Part IV: Nitty-Gritty Service Management

The data center and its many supporting services and infrastructure are the heart of this part. If you want to know how the data center is changing — with virtualization and cloud computing becoming important, for example — this is the part for you. We cover important enablers of service management, including security, business service management, and desktop management.

Part V: Real Life with Service Management

There’s nothing like hearing from real people who’ve made a difference for their real organizations with service management. In this part, some of those people share their best practices.

Part VI: The Part of Tens

If you’re new to the For Dummies treasure trove, you may be unfamiliar with the Part of Tens. Here, Wiley editors torture For Dummies authors into creating useful, accessible lists of ten (more or less) elucidating elements. We started these chapters kicking and screaming but ultimately were very glad that they’re here. We think you’ll be glad too.

Icons Used in This Book

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Warning(bomb).eps Pay attention to this icon. The bother you save may be your own.

Remember.eps This icon means that we’re trying to make sure we’re getting our point across to you.

TechnicalStuff.eps You can ignore this icon if you insist, but you techies probably will love these details.

Where to Go from Here

In this book, we give you an overview of service management and introduce all of its significant components. Each of the issues we discuss in this book could be the subject of a full-length book, however.

Service management is a big theme for us at Hurwitz & Associates. We invite you to visit our Web site at www.hurwitz.com and sign up for our newsletter.

Part I

Introducing Service Management

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In this part . . .

Exactly what is service management, beyond what the two words themselves imply? In this part, we provide a graphical and reasonably simple way of looking at service management that explains it from both a business perspective and a technical perspective.

Chapter 1

Understanding Service Management

In This Chapter

Defining service management

Understanding that everything is a service

Measuring, managing, and optimizing

Delivering service in a complex world

Aservice can be something as simple as preparing and delivering a meal to a table in a restaurant or as complex as managing the components of a data center or the operations of a factory. We’re entering an era in which everything is a service.

A service is a way of delivering value to a customer by facilitating the expected outcome. That definition sounds simple enough, but it can be rather complicated when you look deeper. Suppose that you’re hungry, and you want to get something to eat at a restaurant. You have some decisions to make. How quickly do you want or need a meal? How much time do you have? How much money do you want to spend? Are there types of food that you prefer? We make these types of decisions every minute of the day. So if you’re hungry, have 20 minutes and a limited amount of money, and want something familiar to eat, you might go to a fast-food restaurant, and your expectations probably will be met. In fact, you probably didn’t notice or even pay attention to any of the inner workings of the fast-food service provider. If the customer can find, order, receive, and be satisfied with the service — without incident — good service management is in place.

But what if something weird happened? You walk into that fast-food restaurant, expecting to get the sandwich you always order quickly, but instead, a hostess greets you and informs you that the wait for a table will be 20 minutes. Lovely music is playing, and every table has a white tablecloth. Naturally, you’re confused. You start thinking about the inner workings of service management in that restaurant. What has gone wrong? Is someone not doing his job? Is some information about customer expectations missing? Is someone changing the expected outcomes without informing customers? You might even start trying to solve the problem by asking probing questions. In your confusion, you walk out of the restaurant and find somewhere else to get a sandwich.

Why are we telling you this crazy story? When you’re thinking about service management (monitoring and optimizing a service to ensure that it meets the critical outcomes the customer values and stakeholders want to provide), many dimensions and aspects may not be apparent at the outset.

In this chapter, we give you a glimpse into the new world of service management. Clearly, effective service management requires an alignment of the overall business goals and objectives. This type of alignment isn’t a one-time task: An iterative cycle is involved, not only on a strategy level, but also within each stage of service management. Creating a valuable customer experience requires a lot of behind-the-scenes work that the customer never sees unless something goes wrong. As we show in the examples in this chapter, you can’t ignore one element of the overall service management process without affecting the way that the entire system works.

Knowing That Everything Is a Service

In an increasingly interconnected business world, everything is becoming a service. In fact, the very definition of service has changed. In the old days, when we talked about a service, we meant labor provided by the traditional services economy: restaurants, hotels, health care, banks, retail stores, and education. The services sector of the economy is filled with jobs for people who provide services, such as a teacher who educates your children, a nurse who cares for you in the hospital, or a doorman who opens the door for you at a hotel. Jobs in the shrinking industrial sector of the economy include operating machinery or computers as part of the process of producing a product, such as securing an engine in a new automobile or welding components to make a bridge. Many people in the industrial sector continue to provide physical labor as part of the production process, but this process is increasingly augmented and transformed by technology. Now, as a result of the influx of technology, the manufacturing process has been transformed, and we need to talk about the manufactured products as services.

How is this possible? Well, think about manufactured products. At one time, manufacturing a product was straightforward. A manufacturer would decide the most efficient way to create a product and continue to improve on that process until each new product was created in the least amount of time with the best results. In fact, this was precisely what Henry Ford did when he revolutionized the car industry in the early part of the 20th century. As long as the market and the technology remained the same, tweaking processes to gain efficiencies was remarkably reliable.

But technology has changed dramatically over the past decade, and it has fundamentally changed the way we can build products. Technology can become the essence of both cost reduction and strategic differentiation between winners and losers. As building new, innovative products and bringing them to market in novel ways has become easier, the nature of creating products and managing services is changing.

Looking at How the Digital World Has Turned Everything Upside Down

Most manufacturers have replaced the traditional assembly line with a computer-driven process that focuses as much on capabilities and innovation as on efficiency. But this transformation has gone far beyond the manufacturing plant, extending to the way that products function after they leave the manufacturer. Today, products themselves have evolved to the point at which they are actually based on digital services.

Many types of manufactured products have been transformed into digitally based services. Some examples are medical devices, bridges, air-traffic-control systems, digital cameras, and even toasters. In the old days, all these products were mechanical. A typical toaster, for example, had a mechanical timing mechanism that popped up your toast based on how you tuned the dial. If you wanted very dark toast, you set the dial to dark, which set the toaster’s timer for 75.4 seconds or so. You, the consumer, decided how much time was needed to make your toast. From a service management perspective, the service provider (toaster) and the customer (you) collaborated to provide the value that you wanted. The service provider made an asset that you owned (bread) into something that was more valuable to you (toast). Today, a toaster may have sensors that detect that you’re toasting a large bagel, for example; therefore, it adjusts the toasting time to that type of bread. The new toaster requires additional understanding on the part of the customer to get the full value from the service relationship.

Take this idea to the next level. X-ray machines have evolved from devices that put images on film into digital imaging machines that transform images into huge volumes of digital data — and that example is just the tip of the iceberg. Products today are designed with complex sensors, scanners, and wireless systems based on radio-frequency identification (RFID); therefore, a vast array of manufactured goods is actually a complex array of digital services that need to be managed, monitored, optimized, and transformed based on the market, as well as on regulatory and business demands. We are indeed entering a new world in which everything has become a service. For many organizations, the implications of managing in a service-based world are dramatic.

Implementing Service Management

What does “everything is a service” mean for how you implement service management? In brief, you need to do a lot more management of the services representing your business if they’re going to work efficiently.

We start with an example from the real world that everyone is familiar with: the automated teller machine (ATM). If you need to deposit money or get cash quickly, you use an ATM. To the casual observer, this idea may seem simple. (In fact, in the early days of the evolution of the ATM, its innovation was to help solve the process bottleneck caused by too many customers standing in line for too few tellers.) Behind the scenes, however, an ATM involves a complex business process.

The world of service management has two sides: the customer experience and the behind-the-scenes services that support the customer. True success in service management means that customers’ expectations are met or exceeded in a predictable way. The behind-the-scenes activity is a complex business process, however. Whereas the service requires active collaboration between you (the customer) and the ATM (the service provider), the customer isn’t required to understand the complexities of service management that occur behind the scenes. The customer must perform activities according to agreed-to rules and terms, and the provider must perform activities according to the same set of rules and terms, but the customer isn’t required to understand the complexities of the entire service management system that makes everything work.

Start with the customer view of the service. You walk up to the machine, insert your bank card, input your personal identification number (PIN), and tell the system what type of transaction you want to make (such as “I need $20 from my checking account”). An automated system reads your account information and matches it against your PIN; then it checks to make sure that you have enough cash in your account. Within a few seconds (assuming that your PIN is right and you do have the money), cash appears in the tray. You get a printed receipt verifying that your balance has been debited $20. Then you go about your business, never really thinking about what happened behind the scenes.

In a competitive business world, banks recognize that it isn’t enough to use the familiar ATM only as a cash-transaction machine. The ATM is part of a (fictional) financial corporation that we call ABC Financial, which offers products and services such as insurance, loans, and certificates of deposit (CDs). ABC Financial decides that it could increase revenue if it leverages its relationship with the ATM customer.

From a customer experience perspective, the marketing department adds some new screens to the ATM, displaying messages such as this: “We offer wonderful new CDs at incredible interest rates. Do you want to learn more?”

If the customer indicates that she is interested in the CD, ABC Financial has a series of screens set up that immediately display information or provide options to receive a brochure or set up an appointment with a sales rep.

Such components, both technical and business, transform the ATM from a simple box that allows customers to avoid the teller line to a sophisticated service engine.

Managing Services Effectively

Managing services is not a one-time process. It involves making sure that all the moving parts work together as a system. You need to establish checks and balances for customer goals, financial goals, and marketing goals. Therefore, service management must be understood based on many dimensions, ranging from customer experience metrics and business performance indicators to how individual components operate and interrelate. In Chapter 2, we show you the building blocks that you need to begin your journey toward service management.

Behind-the-scenes management activities

Behind the brightly colored ATM screen, a lot is going on. Here’s a sample of the type of service management that happens in the background:

Data center management ensures that the banking transactions are handled in a secure, predictable, and reliable manner.

The financial institution manages the ATM machines. In addition, the institution may support ATMs owned by other financial institutions. The contact between banks and banking systems has to be managed on both business and operational levels.

A service desk is designed to help customers and the branch location deal with problems with the ATM.

A business process is designed based on the way the company interacts with customers on marketing, regulatory, and oversight issues.

Management ensures that the performance indicators that support business objectives are met by new and existing product offerings.

A system collects data generated by the various systems to make sure that the systems are operating in the correct manner, such as ensuring that each ATM has enough cash.

A process is in place to handle incidents when they occur.

The company also has to answer a variety of questions such as these:

What happens when an ATM fails? Who gets notified, and what happens next?

How do we track where problems are happening?

Do we know whether the network behind the ATM is the problem?

Where do we keep track of the configuration of the parts that make up the ATM and the relationships among the parts, and how do we make changes in one part without interrupting the service?

What level of service is required? Is the level of service something that we can dictate, or is it dictated by customer expectations?

Can customer expectations be influenced? With a better understanding of customer expectations, could we build the service in such a way that customers prefer our service to other options, and what are those other options?

Because many systems have to interact to ensure that ABC’s ATM business is performing well, ABC needs a way to optimize the performance of the business. Some regulations may apply in a particular state or region but not in another, for example. ABC needs to ask itself the following questions:

Are we in compliance with both state and national rules?

Can we prove that we’re in compliance?

In addition, the competitive market is changing. ABC needs to consider its approach to influencing customer behavior — how this year’s approach differs from last year’s, for example, and what factors influence customers’ buying and use behaviors.

Provider/customer collaboration

Remember.eps Service is a complex and dynamic collaboration between provider and customer. Therefore, companies continually need to optimize the interactions of all the components that make up the service to ensure that changing business objectives are met, and they need to improve both the customer interaction and relationship over time.

Clearly, many issues affect the way that the seemingly simple ATM affects a business on a regular basis. If all systems of checks and balances are in place, and all components are managed in an efficient and effective manner, life is good. As in every process and every business, however, small issues can have a major impact — which is where service management comes in.

Suppose that ABC Financial is pleased with its ATM network; the network is well managed and secure, so everyone is happy. One day, an ATM services manager comes up with an idea to improve efficiency and save money: A third party could take over ATM repairs, which could save ABC as much as $100 million by replacing its in-house repair staff. ABC Financial learns a hard lesson, however. It doesn’t spend the time managing the effectiveness of the service provided by the third party; therefore, repair times are double what they had been. The repair processes may be efficient, but customers are unhappy, and they begin to call the support line in great numbers — and ABC Financial is forced to hire more call-center staff to address service issues.

A critical distinction exists between a management process and the service itself. In the ABC example, the company could establish a task force to try to find out why the level of customer satisfaction has dropped so rapidly, but as managers research the problem, customers begin to move to competing banks.

In the next couple of chapters, we walk through a holistic view of service management and show how all the parts relate to one another. This journey is a fun one, so we hope that you’ll jump onboard.