Organizing for Service Strategy Tutorial

Welcome to the learning unit – 6. This unit will focus Organizing for Service Strategy. This unit describes the general concepts of organizing for service management’s relation to service strategy and the related practices. It includes generic responsibilities and competencies that apply across the service Lifecycle and s aspects for the processes described in this publication. Let us go ahead and learn more about Organizing for Service Strategy.

Let us see the Objectives in this slide. This lesson will help us to learn about: •5 Stages of organizational Development •Deciding on a structure •Organizational Design Steps •Generic Roles- Service Owner, Process Owner etc •Competence and skills for Service Management •Attributes Required - Service Management •RACI Model Let us go ahead and understand the concept of Organizational Development in the next slide.

When senior managers adopt a service management orientation, they are adopting a vision for the organization. Such a vision provides a model toward which staff can work. Organizational change, however, is not instantaneous. Senior managers often make the mistake of thinking that announcing the organizational change is the same as making it happen. There is no one best way to organize. Elements of an organizational design, such as scale, scope and structure, are highly dependent on strategic objectives. Over time, an organization will likely outgrow its design. There is the underlying problem of structural fit. Certain organizational designs fit while others do not. The design challenge is to identify and select among often distinct choices. Thus the problem becomes much more solvable when there is an understanding of the factors that influence fit and the trade-offs involved, such as control and coordination. We will be learning about the stages of Organizational Development in detail in the next slide.

The focus of a Stage 1 organization is on the rapid, informal and ad hoc delivery of services. The organization is highly technology-oriented, perhaps entrepreneurial, and is reluctant to adopt formal structures. Innovation and entrepreneurship are important organizational values. The organization learns which processes and services work and adjusts accordingly. The organization believes that informal structures are far better suited to the resources required to deliver services. Past successes reinforce this belief. The key advantages of a network structure are: •It avoids the high bureaucratic costs of operating a complex organizational structure. •The organization can be kept flat with fewer managers required. •The organization can quickly adapt or alter its structure. The practical disadvantages of a network structure are: •Managers must ensure the activities of the staff are integrated. •The coordination problems are significant. •There are difficulties in externally sourcing functional activities. The focus of a Stage 2 organization is on hierarchical structures that separate functional activities. Communication is more formal and basic processes are in place. Although effort and energy are diligently applied to services, they are likely to be inefficient. Functional specialists are frequently faced with the difficult decision of whether to follow the process or take the initiative on their own. The Stage 2 crisis ends with the delegation of authority to lower-level managers, linking their increased control to a corresponding reward structure as shown in Figure 6.6. Growth through delegation allows the organization to strike a balance between technical efficiency and the need to provide room for innovation The focus of a Stage 3 organization is on the proper application of a decentralized organizational structure. More responsibility shifts from functional owners to process owners. Process owners focus on process improvement and customer responsiveness. The challenge here is when functional and process objectives clash. Functional owners feel a loss of control and seek to regain it. At this stage, top managers intervene in decision making only when necessary. The focus of a Stage 4 organization is on the use of formal systems in achieving greater coordination as shown in Figure 6.7. Senior executives acknowledge the criticality of these systems and take responsibility for success of the solutions. The solutions lead to planned service management structures that are intensely reviewed and continually improved. Each service is treated as a carefully nurtured and monitored investment. Technical functions remain centralized while service management processes are decentralized.

In continuation to our last slide, this slide explains the stages in Organizational Development. The focus of a Stage 5 organization is on stronger collaboration with the business as shown in Figure 6.8. Relationship management is more flexible, while managers are highly skilled in teamwork and conflict resolution. The organization responds to changes in business conditions and strategy in the form of teams across functions. Experiments in new practices are encouraged. A matrix-type structure is frequently adopted in this phase. The key advantages of a matrix structure are: •Reduces and overcomes financial barriers •Increases responsiveness to changing product or customer needs •Opens up communication between functional specialists •Provides opportunities for team members from different functions to learn from each other •Uses the skills of specialized employees who move from product to product, or customer to customer as needed

In our last slides, we have understood the stages in Organizational Development. This slide explains the considerations on Deciding on a Structure. When it comes to Deciding on a structure we have to notice how each phase influences the other over time. Each phase is neither right nor wrong. They are signposts to guide the organization. By understanding the current state, senior executives are better able to decide in what direction, and how far, to move along the centralized-decentralized spectrum. The key to applying service management organizational development is the following: •Where the organization is in the sequence •The range of appropriate options •Each solution will bring new challenges. No matter what type of change the organization decides on, there remains the problem of getting the organization to change. Implementing change can be thought of as a three-step process, as in Figure: unfreeze, change and refreeze the organization. Resistance to change will force the organization to revert to previous behaviors unless steps are taken to refreeze the new changes. Role and task changes are not enough. Managers must actively manage the process: The first step to change is diagnosis. Namely, acknowledge the need for change and the factors prompting it. For example, complaints about service quality have increased or operating costs have escalated. Or morale is low while turnover is high. The second step is determining the desired state. While this can be a difficult planning process with alternative courses of action, it begins with the organization’s strategy and desired structure. Is the strategy based on reducing costs or improving quality? The third step is implementation. This three-step process begins with identifying possible impediments to change. What obstacles are anticipated? For example, functional managers may resist reductions in power or prestige. The more severe the change then the greater the difficulties encountered. Next, decide who will be responsible for implementing changes and controlling the change process. These change agents can be external, as in consultants, or internal, as in knowledgeable managers. External change agents tend to be more objective and less likely to be perceived to be influenced by internal politics, while internal agents tend to have greater local knowledge. Last, decide on which change strategy will most effectively unfreeze, change and refreeze the organization. We will learn about the Organizational Departmentalization in the next slide.

It is common to think of organizational hierarchies in terms of functions. As the functional groups become larger, think of them in terms of departmentalization. A department might loosely be defined as an organizational activity involving more than a certain number of people. When a functional group grows to departmental size, the organization can reorient the group to one of the following areas or a hybrid thereof: Function Preferred for specialization, the pooling of resources and reducing duplication. Product Preferred for servicing businesses with strategies of diverse and new products, usually manufacturing businesses Market space or customer Preferred for organizing around market structures. It provides differentiation in the form of increased knowledge of and response to customer preferences. Geography The use of geography depends on the industry. By providing services in close geographical proximity, travel and distribution costs are minimized while local knowledge is leveraged Process Preferred for an end-to-end coverage of a process. Let us now discuss on the Organizational Design.

The starting point for organizational design is strategy as shown in Figure 6.10. It sets the direction and guides the criteria for each step of the design process. It is recommended to decide on a departmentalization structure prior to designing key processes. For example, if the provider’s organization will be structured by geography or aligned by customers, the process design will be guided by this criterion. We will be learning about the Organizational Design steps in the next slide.

Once the key processes are understood, it is appropriate to begin Organizational Design. The key steps are shown here with strategy with the central focus. •Departmental Structure •Key Processes •Organizational Structure •Key People •Roles and Responsibilities •Performance Measure •Training and Development The flow depends on clearly articulated strategic criteria. Processes can be thought of as organizational software - configurable to the requirements of a service strategy. Organizational designers should see each step as an iterative cycle: create basic processes and structures, learn about current and new conditions and adjust as learning evolves. Let us now move on to our next slide.

In our last slide, we understood the Organizational Design. This slide explains the Organizational Design steps, Organizational Culture and Types of organizational values. Organizational culture is the set of shared values and norms that control the IT organization’s internal and external interactions. Like an organizational structure can improve performance, so can an organization’s culture increase organizational effectiveness. There are two types of organizational values - terminal and instrumental: Terminal values are desired outcomes or end-states. IT organizations can adopt any of the following as terminal values: quality, excellence, reliability, innovativeness or profitability. Terminal values are often reflected in the organization’s strategic perspective. Instrumental values are desired modes of behavior. IT organizations can adopt any of the following as instrumental values: high standards, respecting tradition and authority, acting cautiously and conservatively or being frugal. Terminal and instrumental values are key shapers of behavior and can therefore produce very different responses in an IT organization. Many mergers and acquisitions fail because of these differences. Culture is transmitted to staff through socialization, training programs, stories, ceremonies and language. A service management organizational culture can be analyzed through the following steps: Identify the terminal and instrumental values of the organization. Determine whether the goals, norms and rules of the organization are properly transmitting the value of the organizational culture to staff members. Are there areas for improvement? Assess the methods the IT organization uses to introduce new staff. Do these practices help newcomers learn the organization’s culture? In the next slide, we will understand the functions.

A function is a team or group of people and the tools or other resources they use to carry out one or more processes or activities. In larger organizations, a function may be broken out and performed by several departments, teams and groups, or it may be embodied within a single organizational unit (e.g. the service desk). In smaller organizations, one person or group can perform multiple functions - e.g. a technical management department could also incorporate the service desk function. For service strategy to be successful, an organization will need to clearly define the roles and responsibilities required to undertake the processes and activities identified in units 4 and 5. These roles will need to be assigned to individuals, and an appropriate organization structure of teams, groups or functions established and managed. Let us now proceed to discuss the roles beginning with roles of Generic Service Owner in the next slide.

Generic service owner’s role is to ensure that a service is managed with a business focus, the definition of a single point of accountability is absolutely essential to provide the level of attention and focus required for its delivery. The service owner is accountable for the delivery of a specific IT service. The service owner is responsible to the customer for the initiation, transition and ongoing maintenance and support of a particular service and accountable to the IT director or service management director for the delivery of the service. The service owner’s accountability for a specific service within an organization is independent of where the underpinning technology components, processes or professional capabilities reside. Generic Service Owner has following responsibilities. Ensuring that the ongoing service delivery and support meet the agreed customer requirements. Ensuring consistent and appropriate communication with customer's) for service related enquiries and issues. Assisting in defining service models and in assessing the impact of new services or changes to existing services through the service portfolio management process Liaising with the appropriate process owners throughout the service Lifecycles Soliciting required data, statistics and reports for analysis and to facilitate effective service monitoring and performance Participating in internal service review meeting within IT Participating in external service review meetings with the business Ensuring that the service entry in the service catalogue is accurate and is maintained Participating in negotiating SLA’s (Pronounce as S-L-A), OLA’s (Pronounce as O-L-A) relating to the service Identifying improvement opportunities for inclusion in the CSI register Primary stakeholder in all the underlying IT Processes which enable or support the service they own such as Incident Mgmt (Pronounce as Management), Problem Mgmt, Release and Deployment Mgmt, Change Mgmt, Service Asset and Configuration Mgmt, Availability and Capacity Mgmt, ITSCM, ISM, Financial Management for IT Services. In the next slide we will look at the roles of Generic Process Owner.

The process owner role is accountable for ensuring that a process is fit for purpose. This role is often assigned to the same person who carries out the process manager role, but the two roles may be separate in larger organizations. The process owner role is accountable for ensuring that their process is performed according to the agreed and documented standard and meets the aims of the process definition. The process owner’s accountabilities include: •Sponsoring, Designing and change managing the process and its metrics •Defining the process strategy •Assisting with process design •Ensuring that the appropriate process documentation is available and current •Defining appropriate policies and standards to be employed throughout the process •Communicating process information or changes as appropriate to ensure awareness •Reviewing opportunities for process enhancements and for improving the efficiency and effectiveness of the process •Addressing the issues with the running of the process •Identifying improvement opportunities for inclusion in the CSI register •Working with the CSI manager and process manager to review and prioritize improvements in the CSI register The next slide talks about the roles of Generic Process Manager.

The process manager role is accountable for operational management of a process. There may be several process managers for one process, for example regional change managers or IT service continuity managers for each data center. The process manager role is often assigned to the person who carries out the process owner role, but the two roles may be separate in larger organizations. The process manager’s accountabilities include: •Working with the process owner to plan and coordinate all process activities Ensuring that all activities are carried out as required throughout the service Lifecycle Appointing people to the required roles Managing resources assigned to the process •Working with service owners and other process managers to ensure the smooth running of services •Monitoring and reporting on process performance •Identifying improvement opportunities for inclusion in the CSI register •Working with the CSI manager and process owner to review and prioritize improvements in the CSI register •Making improvements to the process implementation We will also look into the roles of Generic Process Practitioner in the next slide.

A process practitioner is responsible for carrying out one or more process activities. In some organizations, and for some processes, the process practitioner role may be combined with the process manager role; in others there may be large numbers of practitioners carrying out different parts of the process. The process practitioner’s responsibilities typically include: Carrying out one or more activities of a process Understanding how their role contributes to the overall delivery of service and creation of value for the business Working with other stakeholders, such as their manager, co-workers, users and customers, to ensure that their contributions are effective Ensuring that inputs, outputs and interfaces for their activities are correct Creating or updating records to show that activities have been carried out correctly. Let us discuss the responsibilities of process owner as well as process manager of the strategy management for IT services in the next slide.

The strategy management for IT services process owner’s responsibilities typically include: •Carrying out the generic process owner role for the strategy management for IT services process •Working with other process owners to ensure that the organization’s overall IT Strategy is effectively reflected in their services The strategy management for IT services process manager’s responsibilities typically include: •Carrying out the generic process manager role for the strategy management for IT Service process •It also Formulates, documents and maintains the organization’s overall IT Strategy, so as to best underpin the business strategy •Assisting in informing, publicizing and marketing of the key aspects of the IT strategy so that all customers, potential customers, staff members, suppliers and other relevant groups are aware of the IT strategy and how it will be taken forward •Planning and manages support for strategy management tools and processes •Coordinating interfaces between strategy management for IT services and other processes In the next slide, we will explain the roles and responsibilities of Business Strategy Manager, IT Steering Group and IT Director or Service Management Director.

Business Strategy Manager Formulates, documents and maintains the organization’s overall business strategy He also Assists in informing, publicizing and marketing of the key aspects of the business strategy so that all customers, potential customers, staff members, suppliers and other relevant groups are aware of the strategy and how it will be taken forward And carries out the Responsible to the organization’s owners shareholders, chief officers etc. for the successful implementation and operations of the business strategy IT Steering Group steers the overall direction of the IT Service, its implementation and the ongoing activities within IT organization, so as to best underpin the organization’s business strategy and meet the desired business outcomes. IT Steering Group Approves the IT Financial budgets and decides how they will be broadly spent and has overall responsibility for IT governance IT Director or Service Management Director Take’s overall responsibility for the successful implementation and operation of the organization’s overall ITSM processes and Proposes initiates and manages any ITSM service improvement initiatives. He also manages resources between the ITSM processes and functions Let us also discuss the roles and responsibilities of Service Portfolio Management and the process manager of the service portfolio management in the next slide.

The service portfolio management process owner’s responsibilities typically include: Carrying out the generic process owner role for the service portfolio management process Working with other process owners to ensure there is an integrated approach to the design and implementation of service portfolio management. The service portfolio management process manager’s responsibilities typically include: Carrying out the generic process manager role for the service portfolio management process Manages and maintains the organization’s service portfolio Managing the surrounding processes for keeping the portfolio attractive to customers and up to date Marketing the portfolio, and in particular the service catalogue, so that customers and potential customers are aware of the services available Helps in formulating service packages and associated options, so that services can be combined in logical groupings to produce products that can be marketed, sold and meet customers’ needs. Let us now discuss the different roles of Business Relationship Management. Firstly the roles of Business relationship manager, followed by the Process Owner along with the Process Manager of Business Relationship Management in the next slide.

Many organizations will have a person with the job title ‘business relationship manager* (BRM). This job may combine the roles of business relationship management process owner and business relationship management process manager and allocate it to one person. There can also be confusion between the role of the BRM, and the process of business relationship management. Business relationship managers are often required to execute activities from other processes simply because of their customer-facing position. This does not make those activities part of the business relationship management process The business relationship management process owner Carries out the generic process owner role for the business relationship management process. And Works with other process owners to ensure there is an integrated approach to the design and implementation of business relationship management. The business relationship management process manager: •Carries out the generic process manager role for the business relationship management processs •Identifies customer needs and ensures that the service provider is able to meet these needs with an appropriate catalogue of services •Ensures that customer expectations do not exceed what they are willing to pay for, and that the service provider is able to meet the customer’s expectations before agreeing to deliver the service •Ensures high levels of customer satisfaction, indicating that the service provider is meeting the customer’s requirements We will continue the discussion regarding the roles of Business Relationship Management in the next slide, where we will look at the roles of Customers and Users.

The customers and users of the IT services are the other side of business relationship management, and will need to engage with business relationship management to voice their needs and to participate in the ongoing relationship to help ensure business outcomes are supported Let us now move on to the next slide on roles of Financial Management for IT services.

In our last slide, we understood the roles of Business Relationship Management. This slide explains the Financial Management for IT services roles. Here, we will know the roles and responsibilities of Process Owner, process manager as well as Budget holder of the financial management for IT services. The financial management for IT services process owner: Carries out the generic process owner role for the financial management for IT services process Works with other process owners to ensure there is an integrated approach to the design and implementation of financial management for IT services. The financial management for IT services process manager: •Carries out the generic process manager role for the financial management for IT services process •Compiles and formulates the annual IT budgets and submits them for scrutiny and approval by the IT steering group •Manages the IT budgets on a daily, monthly and annual basis, initiating corrective actions to balance income and expenditure in line with the budgets •Produces regular statements of accounts for management information and to allow relevant managers to manage their own areas of the budgets •Formulates and manages any recharging systems for IT customers •Examines and reports on value-for-money of all major activities, projects and proposed expenditure items within IT. Various IT managers may be nominated as budget holders, to estimate, agree and manage the budgets for their own particular area(s). Budget holder responsibilities is to : •Submit annual budget estimate •Negotiate and agrees their annual budget •Manage their budget on an ongoing basis •Report budget activities and outcomes on a regular basis. We will learn about the responsibilities of Process Owner and Process Manager of The Demand Management, in the next slide.

The demand management process owner: •Carries out the generic process owner role for the demand management process •Works with other process owners to ensure there is an integrated approach to the design and implementation of demand management. The demand management process manager: •Carries out the generic process manager role for the demand management process •Identifies and analyses patterns of business activity to understand the levels of demand that will be placed on a service •Defines and analyses user profiles to understand the typical profiles of demand for services from different types of user •Helps design services to meet the patterns of business activity and the ability to meet business outcomes •Ensures that adequate resources are available at the appropriate levels of capacity to meet the demand for services, thus maintaining a balance between the cost of service and the value that it achieves •Anticipates and prevents or manages situations where demand for a service exceeds the capacity to deliver it Let us understand the Competence and skills required for service management.

Delivering service successfully depends on personnel involved in service management having the appropriate education, training,, skills and experience. People need to understand their role and how they contribute to the overall organization, services and processes to be effective and motivated. As changes are made, job requirements, roles, responsibilities and competencies should be updated if necessary, The specific roles within ITIL service management all require specific skills, attributes and competences from the people involved to enable them to work effectively and efficiently. However, whatever the role, it is imperative that the person carrying out that role has the following attributes: Awareness of the business priorities, objectives and business drivers Awareness of the role IT plays in enabling the business objectives to be met Customer service skills Awareness of what IT can deliver to the business, including latest capabilities The competence, knowledge and information necessary to complete their role The ability to use, understand and interpret the best practice, policies and procedures to ensure adherence. The next slide explains the Attributes, required for several roles.

The following are examples of attributes required in many of the roles, dependent on the organization and the specific roles assigned: Management skills - both from a person management perspective and from the overall control of process Ability to handle meetings - organizing, chairing, and documenting meetings and ensuring that actions are followed up Communication skills - an important element of all roles is raising awareness of the processes in place to ensure buy-in and conformance. An ability to communicate at all levels within the organization will be imperative Articulateness - both written (e.g. for reports) and verbal Negotiation skills are required for several aspects, such as procurement and contracts. An analytical mind - to analyze metrics produced from the activity We will look into a figure describing the Responsibility Model – RACI, in the next slide.

The RACI matrix provides a compact, concise, easy method of tracking who does what in each process and it enables decisions to be made with pace and confidence. RACI is an acronym for the four main roles of being: Responsible is the person or people responsible for correct execution - for getting the job done Accountable: is the person who has ownership of quality and the end result only one person can be accountable for each task Consulted are the people who are consulted and whose opinions are sought. They have involvement through input of knowledge and information Informed are the people who are kept up to date on progress. They receive information about process execution and quality. When using RACI, there is only one person accountable for an activity for a defined scope of applicability. Several people may be responsible for executing parts of the activity. In this model, accountable means end-to-end accountability for the process. Accountability should remain with the same person for all activities of a process. The next slide summarizes the topics covered in this learning unit.

The topics covered under this learning unit are: •5 Stages of organizational Development •Deciding on a structure •Organizational Design Steps •Generic Roles- Service Owner, Process Owner etc •Competence and skills for Service Management •Attributes Required - Service Management •RACI Model Now, we have come to an end of learning unit 6. Complete the Quiz section before proceeding to the next learning unit on Technology considerations.