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9.2 Coordination and control 111

9.3 Preserving value 112

9.3.1 Deviations in performance 112

9.3.2 Operational effectiveness and efficiency 112

9.3.3 Reducing hidden costs 112

9.3.4 Substantiating hidden benefits 112

9.3.5 Leveraging intangible assets 112

9.4 Effectiveness in measurement 113

9.5 Risks 115

9.5.1 Definition of risk 115

9.5.2 Transfer of risks 115

9.5.3 Service provider risks 116

9.5.4 Contract risks 116

9.5.5 Design risks 116

9.5.6 Operational risks 116

9.5.7 Market risks 117

9.5.7.1 Reducing market risk through differentiation 117

9.5.7.2 Reducing market risk through consolidation 117

Afterword 118

Appendix A: Present value of an annuity 119

Appendix B: Supplementary guidance 129

B1 Description of asset types 129

B1.1 Management 129

B1.2 Organization 129

B1.3 Process 129

B1.4 Knowledge 129

B1.5 People 129

B1.6 Information 129

B1.7 Applications 129

B1.8 Infrastructure 129

B1.9 Financial capital 129

B2 Product managers 130

B2.1 Roles and responsibilities 130

B2.2 Critical knowledge, skills and experience 130

Further information 131

References 131

Further reading 133

Glossary 134

Acronyms list 134

Definitions list 141

Foreword

OGC’s foreword

Since its creation, ITIL has grown to become the most widely accepted approach to IT Service Management in the world. However, along with this success comes the responsibility to ensure that the guidance keeps pace with a changing global business environment. Service management requirements are inevitably shaped by the development of technology, revised business models and increasing customer expectations. Our latest version of ITIL has been created in response to these developments.

This publication is one of five core publications describing the IT Service Management practices that make up ITIL. They are the result of a two-year project to review and update the guidance. The number of service management professionals around the world who have helped to develop the content of these publications is impressive. Their experience and knowledge have contributed to the content to bring you a consistent set of high-quality guidance. This is supported by the ongoing development of a comprehensive qualifications scheme, along with accredited training and consultancy.

Whether you are part of a global company, a government department or a small business, ITIL gives you access to world-class service management expertise. Essentially, it puts IT Services where they belong – at the heart of successful business operations.

Peter Fanning

Acting Chief Executive

Office of Government Commerce

Chief Architect’s foreword

In 1997, Chinese manufacturers entered the motorcycle market with an unusual management strategy. Rather than preparing detailed models and drawings of subsystems, the country simply defined best-practice structures and standards. The supplier community remained free to innovate and adapt components within these rough designs and broad parameters. The results were stunning – the Chinese motorcycle industry now accounts for half of all global production and is considered a hotbed of innovation.1

These results are emergent. They are the outcomes of following low-level and practical guidance and gave rise to an industry that moves in self-organizing coordination in a variety of conditions. Instead of rigid frameworks, preventing graceful adaptation under changing conditions, there remains room for self-optimization. This is the philosophy of ITIL: good practice structures with room for self-optimization.