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Figure 7.13 Example of a pattern for deployment of assets based on market segmentsA template for deploying assets is defined by the need to provide high levels of warranty for services in terms of capacity and continuity. In such cases, rather than have dedicated resources, it is necessary to have shared service assets to provide multiple levels of redundancy (Figure 7.14). Such patterns are also useful for service providers to reduce the footprint of expensive infrastructure and to build economies of scale.
Figure 7.14 Example of a shared services pattern for capacity and continuity
Deployment patterns in Service operation by themselves define operational strategies for customers. Apart from the deployment of service assets, such strategies may include a particular set of service designs, service level options (or limits), and charging policies that recover the costs of assets.
7.4.2 Hosting the Contract Portfolio
The need to host service contracts influences deployment patterns. Service contracts are the context within which the Service Portfolio realizes its potential for creating value for customers. Growth in the Contract Portfolio may require a system for allocating contracts to service units that can host them. Each contract has its own set of commitments made to the customer in terms of utility and warranty. Hosting decisions seek to distribute costs and risks in the Contract Portfolio across service units (Figure 7.15). For example, a follow-the-sun model involving a visualized Service Desk located in four strategically located service units may suit one contract. Other contracts may require localized Service desks with on-site support.
Figure 7.15 Hosting of service contracts
Hosting decisions involve close coordination between Service Strategy and Service Operation. The strategy for a market space has an influence on the contents of the Customer Portfolio and the Service Portfolio. This is because particular perspectives, positions, plans, and patterns (the Four Ps) open up or close the possibilities of what services are offered, on what contractual terms and conditions, and with what type of customers. The combination of Service Portfolios and Customer Portfolios generates the Contract Portfolio (Figure 7.16). In other words, every item in the Contract Portfolio is mapped to at least one item in the Service Portfolio and at least one item in the Customer Portfolio. The mappings are one-to-one, one-to-many and many-to-one.
Figure 7.16 The Contract Portfolio
Service Operation is responsible for delivering the Contract Portfolio. Service Transition enables items in the Customer Portfolio and Service portfolio to enter the Contract Portfolio. Transition projects are of two types: services and customers. For each type of transition there are costs and risks to be evaluated by Service Transition. Items are added to the Contract Portfolio only after the necessary service assets such as infrastructure, applications, knowledge assets and staff are made available.
7.4.3 Managing demand
Customer assets or the users of services are a source of variation in demand. Service demand is not only embedded with uncertainty – it also varies significantly based on the type of customer assets that generate demand and the patterns of business activity supported. It is therefore necessary to analyse patterns of business activity. Sources of demand with similar workload characteristics are identified and classified into distinct segments. Each segment is then expected to represent a certain type of demand distinguished by variables such as frequency, patterns, and volume of business activity. Service designs, models and assets are then specialized to serve a particular type of demand most effectively and efficiently.
The resulting focus leads to higher levels of customer satisfaction within each segment since service assets are now optimized to serve relatively homogeneous groups of users. Processes and systems are simplified, standardized and stabilized leading to cost-efficiencies, higher utilization levels for resources, and reduction in errors due to excessive complexity (Figure 7.17). The segmentation of demand does not mean that economies of scale are entirely lost. They are simply captured elsewhere through sharing of resources that are common across segments and service types. The same segment of users can present more than one type of demand simultaneously or under different conditions.
Figure 7.17 Consolidation of demand across customers
7.5 Strategy and improvement
7.5.1 Quality perspectives
Industry experience shows that SLA metrics are necessary but not sufficient to measure the quality of service delivered to customers. The quality of services perceived by customers and their users rests on the utility and warranty delivered. In other words, the notions of service quality are embedded within the notions of service utility and warranty. Service quality takes into account the positive impact of the service (utility) and the certainty of impact (warranty). There are many definitions of quality that are summarized below into four broad perspectives:
Level of excellence
Value for money
Conformance to specifications
Meeting or exceeding expectations.
The dominant perspective will influence how services are measured and controlled particularly within the context of Service level management.
Each perspective has its own strengths and weaknesses with respect to measurement, general applicability, its usefulness to managers and relevance to customers. It is therefore a strategic decision for service providers to make, or a strategic imperative they support based on the customers they serve and distinctions they must make. One or more, if not all four, perspectives, are usually required to guide the measurement and control of service management processes (Figure 7.18).
Figure 7.18 Quality perspectives and strategic imperatives influence each other
Defining the meaning of service quality is one of the important decisions that senior leadership makes. Quality by itself is a basis of strategies in a market space and therefore the definition of quality influences strategic decisions and objectives. It influences the way services are designed and operated, and it influences internal performance measures, policies and incentives used by managers.
7.5.2 Warranty factors
7.5.2.1 Intangibility factor
There are differences and similarities in how goods and services are produced, and how their value is transferred to customers, verified and assured (Table 7.3). The activity and impact of a service can be visible or tangible in certain ways, as in the case of repaired equipment, shipped documents, printed reports, and physical records of completed transactions, installations and upgrades. Shipping of documents involves tangible changes in terms of location and possession. People are mobile with the use of wireless phones. However, the actual utility of services, such as the right person having the document at the right time, the flexibility to conduct business from anywhere, and the productive state of equipment, is always intangible. A document shipped late, people moving about without a signal on their phone, and equipment repaired but not usable have no utility for the customer.
Physical characteristics
Value transfer
Proof of transfer
Utility
Warranty
Goods
Always tangible
Embedded in objects and transferred to customers who subsequently extract it in use
Verifiable on arrival or exchange of goods in tangible form
Sometimes intangible
Assurance on utility over a fixed period under specific conditions for use; does not include normal wear and tear or misuse
Services
Sometimes tangible
Transferred on demand to customers at the time of service delivery
Not easily verified since it is embedded in the context of outcomes and conditions
Always intangible
Assurance on utility over the duration of the service contract under specific conditions for use
The intangibility factor makes the availability of a service almost a surrogate measure of service quality. It is more obvious than capacity, continuity and security. Users perceive the effects of capacity, continuity and security in terms of availability.
Services typically become unavailable because of failures in the underlying service assets such as applications, infrastructure, processes and people. Services are value-creating systems whose overall availability depends on a combination of factors such as reliability, maintainability, redundancy, capacity and structure. The following sections on reliability, maintainability, redundancy and accessibility refer to services simply as systems.
7.5.3 Reliability
7.5.3.1 Applications and infrastructure
Highly reliable systems function without disruptions or failures for longer periods on average. To fulfil the warranty aspect of value to customers, services must be adequately reliable. This is a critical input from Service Strategy to Service design and Service operation. The provision of highly reliable services can be the basis of strategic positioning. Some services need to be more reliable than others, depending on the business outcomes they support.
The reliability of a service depends on the reliability of underlying service assets and their configuration. The reliability of an asset depends on various factors such as the quality of its design, development, installation, obsolescence, maintenance, and security. Systems and components function properly within the parameters of their design. Operating conditions are an important factor in discussions on reliability. Scheduled and preventive maintenance activities that eliminate causes of potential and recurring failures are also an important factor.
The mean time between failures (MTBF) of a service asset is a measure of the reliability of that asset. To increase the reliability of service assets consider the following approaches:
Use service assets with high MTBF