Do you want a quick and easy definition of what is a service?

Are you working on a service catalog initiative or have been tasked with defining what your IT department does in the context of services?

Are you trying to work out how much your IT services cost – either as a provider or supplier of IT services?

Would you like to be able to charge the business back fairly based on their consumption of IT services?

Read on to find a really useful definition of a service within the service catalog?

Over the last few weeks I have had a number of on-line (forum) and off-line discussions about the service catalog. These are very typical of the main types of questions that are presented. It is unfortunate to find that, overwhelming, people are still ask the same basic question – what is a service and how do we define services in a service catalog? This is most frequently asked by people involved in IT or the provision of IT as a service to an organisation either internally, externally or both.

There is a lot of misunderstanding as to what exactly a service is, and what components make up a service. This confusion is not confined to organizations. Practitioners, consultants and vendors have struggled with defining services, not in definition, but in the context of what is perceived as a service in an organization and how best to represent these services.

In the IT space an area where many people find themselves in disagreement is with regards to the definitions of what constitutes a service, never mind what an (IT) system or an (IT) service might actually be. In one sense it may not matter if we disagree. One may argue that whether we call something an (IT) system or an (IT) service is not as important as actually mapping the service accurately and that this is just an exercise in taxonomy.

Having looked at many definitions of what is a service, I tend to use the following as a quick and easy definition:

A service is any act or performance that one person can offer to another, that is intangible, produced at the moment of delivery and does not result in transfer of ownership. Service value and quality is based on customer perception, where satisfaction is based on outcomes and is subjective.

In the context of this discussion there are three main services are:

  • Customer service: services provided to the organizations external customers.
  • Business service:  support business processes that enable the organization to achieve its desired outcomes.
  • IT service: provides IT capabilities that support and deliver business and customer services.

It is necessary to define and understand what a service is but also it is necessary to decompose services into their various components or layers in order to better understand the service end-to-end. This will help to:

•   Build accurate service maps piece by piece.

•   Price and cost services more accurately.

•   Report on services at different levels.

•   Utilize the different parts of the service catalog effectively.

• Develop a clearer picture of what it is that IT does in support of the business, from the most obvious to the most obscure.

•   Understand how the organization actually relies on IT to do business.

It is essential for organizations to state clearly how they define services within the context of their organization. This includes the definition of the service and the service model i.e. how the different services map together. Failing to correctly define services can lead to a service catalog that is ineffective and provides no real value to any part of the organization. If services are not defined with the relevant audience in mind, they will not be understood so how could they be viewed as being strategically important to the organization or necessary to the user or customer?

In chapter two of my book – The Service Catalog – there are six additional definitions of what is a service taken from leading industry best-practice frameworks, bodies of knowledge and standards.

Mark O’Loughlin elected to the Board of Directors at itSMF Ireland

It is with great pleasure that I can announce that I have been elected to the board of directors at the itSMF Ireland effective from 2012.

Further details on the recent AGM and our most successful event to date are located here: http://www.techcentral.ie/article.aspx?id=17585

itSMF Ireland is an affiliated body of itSMF International, a global membership organisation, established to promote and develop best practice in IT Service Management. itSMF Ireland has a high degree of autonomy, with the itSMF International “umbrella” body, itSMF International, providing support to the national chapters and a light directional control.

itSMF Ireland is constituted as a ‘private company limited by guarantee’, and consequently it is not a business in the traditional sense. In order to fulfil this role it must address the needs of its members as well as generate sufficient funds to maintain itself.

Vision
To be the premier community for leadership in IT Service Management in Ireland.

Mission Statement
To provide a forum for our membership to enable them to exchange views, share experiences and participate in the continuous development and promotion of best practice and standards, through a range of services that delivers significant value to their enterprises.

The Service Catalog – reviewed by itSMF Australia

Karen Ferris, board mamber and director of publications at itSMF Australia, has reviewed The Service Catalog for their chapters newsletter.

The following is a brief extract from the review:

One of the testimonials on the back of this book says “At last a practical, independent, hands on guide to design, develop, maintain an almost universal service catalog!”

That about sums it up. I love this book. Anyone who is working in (or about to work in) the area of service portfolio management and service catalogue management should have this book on their desk. This is one of those books that you will see dog-eared, well worn and notated throughout by the owner.

The book provides a full understanding of key concepts and definitions including assistance with the burning question “What is a service?”

The full review is available here 

Put a value on IT using the service catalog

How does the organisation view IT?  As a friend, foe or worst still an overhead? While it is true that the service desk can set the user’s perception of IT, business executives and finance management can struggle to understand the actual value that the IT department provides to the business in real, tangible and monetary terms.

In today’s world, there is no denying that most organisations rely to a varying degree on IT systems, services and capabilities for even the most basic functions. Intrinsically, this implies that most organisations cannot operate competitively in today’s ‘always-on, always-connected’ world without some form of reliance on IT. Therefore, one could assume that IT as a strategic asset and capability is:

  • Valued by the organisation.
  • Vital to the success of organisation.

If that is the case, then why are so many IT Leaders under pressure to reduce the costs of providing such an important and vital strategic asset? In these lean times of global austerity the mantra “do more with less” is not far from the lips of the holders of the purse strings. Even before the economic downturn this same mantra was still being trumpeted to IT service providers.

Typically, like many departments within an organisation, IT is assigned a budget from which it has to manage the provision of IT services and applications, with all their associated costs, and effectively ‘keep the lights on’. However if a budget is the only source of income or funding for the IT organisation, then effectively IT is in real danger of being viewed as an overhead at a strategic level.

What happens with overheads during lean times, times of austerity, or after a business review? Generally plans are drawn up to reduce overheads or, as more often is the case, to remove overheads. Removing an overhead can happen by right sizing, downsizing, or outsourcing. However ineffective outsourcing can turn “do more with less” into “same mess for less” or “your mess for less”.

So what can the CIO or IT Director do about this?

The solution is simple. Stop relying on budgets to fund the cost of IT. Instead identify the cost of providing each service and charge the organisation for its use of IT. Make each organisational department’s budget accountable for funding their use of IT.

Can it be that simple? The answer is – yes it can. However three common barriers prevent IT Leaders from achieving this simple turnabout:

Barrier 1:           Identifying the services that IT provides to the organisation.

Barrier 2:           Describing these services in terms the users and customers understand.

Barrier 3:          The inability to break down the costs of providing these services and bill each department for their use of the services supported and delivered by IT in a fair and equitable manner.

The next question is – How do you achieve this?

Use the service catalog!  A records based service catalog hierarchy can be used to map customer services and business services to their supporting IT services. Lower down the hierarchy IT services are then mapped to the IT systems which are made up of configuration items (CI’s). This structure allows an organisation to understand the different components and layers of each service. This level of detail can be used in conjunction with information from the finance department to understand the actual cost of services on a service by service basis.

Many costs need to be apportioned to each department using the service based on pre-agreed methods e.g. by the number of users within the department or even better, by the actual usage of a service by the department i.e. metered usage. The more specific the method of apportionment the more complex it is to measure accurately and charge.

Example:

The service catalog outlines the IT services and IT systems that the business and customer services use. It is this breakdown that allows for transparent charging that is linked to the finance world i.e. the actual costs of providing IT.

Data hosting, LAN and WAN infrastructure, SAN and storage, telephony and communications infrastructure are all examples of IT systems and services that can be shared by multiple departments to provide them with basic business and customer services. Note: none of these IT services systems are seen as true services in the eyes of the users or customers.

Each department should be charged for their use of such shared infrastructure, applications and services in a fair and transparent manner i.e. by an apportionment or better still actual metered usage.  This service-to-finance breakdown continues to identify direct costs, indirect costs and overheads. In order to do this an appropriate cost model needs to be created and applied to each service.

Remember, before services can be costed, they need to be identified and understood at different levels, which is where the service catalog comes in.

However until the philosophy of the traditional IT budget is changed in favour of a consumption based charging mechanism, IT is likely to be consigned to the same fate as other typical overheads within the organisation.

Information on how to develop a service hierarchy by using the service catalog is explained in more detail in my book “The Service Catalog”. Decomposing services to their lower level components provides a foundation for understanding the cost of each service and therefore creating an appropriate cost model for charging for services.

Further details are available in my book “The Service Catalog” which is published by Van Haren Publishing and is available through online bookstores.

Author: Mark O’Loughlin

The rise (and fall?) of the CCO.

I recently came across an interesting read from the Harvard Business Review which discusses ‘the rise of the Chief Customer Officer (CCO). The article starts by stating that “… these individuals serve as top executives with the mandate and power to design, orchestrate, and improve customer experiences across the ever-more-complex range of customer interactions.”

A key finding in the report highlights that “…It’s not just about fixing problems — it’s about accelerating growth. While some firms turn to a customer experience leader to fix issues that are creating legions of unhappy customers, most focus on the desire to accelerate growth, better integrate acquired companies, or shift priorities for a changing competitive environment. Sometimes it’s new leadership that spurs action, other times efforts percolating within companies capture executives’ attention.”

Excellent news for customers but in general where or where are these CCO’s hiding? Where are our knights in shining armour? Where are these saviours of the humble customer? Are they a minority species limited to large multinationals i.e. those organisations with very large customer bases?

Research carried out by the CCO Council (web link below) has shown that less than 10 percent of Fortune 500 companies have CCOs suggesting that most CCOs work for small to medium sized businesses (SMBs).

The title CCO appears to be a recent enough development, notwithstanding that the job itself and the accountability it holds may not be new. However, is it that the role of the CCO is currently in vogue and likely to fall out of favour in the short to medium term? In these times of severe austerity is there a potential for the role of the CCO to ‘crash and burn’ or take a nose dive into obscurity? Is this a luxury an organisation can afford, or more to the point, cannot afford to be without during these lean economic times?

Interesting times may lay ahead for those successful in securing the title (and job, of course) of CCO!

CCO’s … If you are out there please let us know either in person or by ensuring superior customer experience is achieved by your organisation.

The full HBR article can be viewed here.

View the COO Council website here.

PS: So as not to confuse the matter there are numerous roles that are referred to as CCO! Some are listed below.

Chief communications officer

Executive responsible for communications, public relations and/or public affairs

Chief commercial officer

Executive responsible for commercial strategy and development

Chief compliance officer

Executive responsible for compliance with regulatory requirements

Chief content officer

Executive responsible for content in broadcasting

Chief creative officer    

Creative director of advertising agency or similar

Chief cultural officer

Executive responsible for specific marketing and branding initiatives

Chief customer officer

Executive responsible for the total relationship with customers

Chief channel officer

Executive responsible for indirect revenue with a partner within an organization

Civilian Communications Officer

A position in the Central Communications Command of London’s Metropolitan Police Service

Call centre operator      

Hard working!