Chapter 6
Implementing a Service
Management Strategy
In This Chapter
Finding out what service management can do for your organization
Applying the vision to your business service infrastructure
Measuring your organization against the vision
Discovering what service management looks like inside your organization
Achieving the desired end state
If you’ve read the preceding five chapters of this book, you should have a good idea of what service management is and the role it can play in help-
ing your organization respond to customers and manage change.
In this chapter, we delve into what it means to implement service management. We give you some examples of working across all aspects of business operations in an integrated way and show how you can use this approach to improve and extend the value of your company’s brand.
Seeing What Service Management Can Do for Your Organization
A service, in many instances, is a way of delivering value to a customer by facilitating the customer’s expected outcome. Effective service management is a way to ensure that outcome. It’s also a way to prepare your company for disruptive change.
58 |
Part II: Getting the Foundation in Place |
You’re probably asking, “What does that mean — preparing your company for disruptive change?” Well, this isn’t your father’s (or mother’s) service delivery world. In the old days, the service provider might count on minimal change in the services that it delivered. In today’s markets, for most businesses, such market stability is absent. Consequently, service providers have to think differently. They have to think about how to leverage their assets and, perhaps, augment or integrate them to adapt for volatile market conditions and rising customer expectations. Service has become an area in which companies leapfrog competitors when they take new and innovative approaches to producing value from their existing assets. By enabling this services approach, they can help their customers get more value from their own assets. Service management is strategic.
Considering a real-world example
Remember when video stores dominated the way customers watched movies? When you wanted to watch a movie, you went to a video-rental retail outlet; browsed the selection of movies on the shelves; and, if you were lucky, got to take home an enticing movie. This process was the normal process of video distribution for years. Companies that survived in that competitive market did the right things. These companies were pretty smart. They realized that they needed to have the right number of copies of the most popular releases. Some of them also offered guarantees: If a movie wasn’t in stock, the customer could pick something else free of charge. They broadened their product range by renting related products such as videogames and even the game systems; they also sold candy, popcorn, soda, and other merchandise. In other words, they worked hard to improve the customer experience and to exceed customer expectations.
Then something unexpected happened. A company called Netflix introduced an alternative way of distributing movies, based on an innovative use of emerging IT that allowed the company to measure and optimize the customer experience. Rather than visiting a video store, Netflix customers can order their movies online for shipment within a few days. The company makes it simple to order, receive, and return movies. Netflix also provides a simple way to queue up for the most popular movies when they’re first released. Needless to say, this company had a dramatic impact on customer expectations, although most competitors originally paid little attention and focused on business as usual.
Netflix didn’t rest on its success; it built on it. In addition to sending physical discs through the mail, it decided to further leverage the Internet by giving customers the ability to watch movies on their computers or gaming systems
Chapter 6: Implementing a Service Management Strategy |
59 |
in real time. Now customers don’t have to wait for the mail or wait in line for the movies or TV shows they want to watch; those products are available on demand in the home.
Relating the example to service management
How does this example relate to implementing service management? It shows that by monitoring and optimizing the services you provide your customers and stakeholders, you’re in a position to make changes in your business model that set you ahead of the competition. By implementing service management techniques, you have more time and resources to devote to keeping up with market and technology changes. Also, if you’ve built a system that is flexible enough to allow for change, you should be able to respond to those market and technology changes by offering more innovative services.
The important thing to understand in this example is that the service that is ultimately delivered is the same in all distribution methods: The customer gets to enjoy watching a movie. The movie provider that was most successful, however, provided the service in the way that customers preferred.
When Netflix entered the market, it took an established idea and innovated on the delivery of the service. It replaced the traditional retail store with an online approach — an IT-enabled service. In many ways, the business service of getting movies into customers’ hands requires similar business systems in the back office, whether the distribution is through traditional retail stores or online. Both types of organizations need systems to record customers’ requests, both for billing and stocking purposes. They need an inventory system and quality control, along with the traditional set of back-office systems such as finance and human resources. When Internet technology evolved to the point at which streaming video to the household was possible, Netflix was able to change its business model again to take advantage of changing dynamics and technology evolution. Because of its ability to change dynamically, the company established strategic control of its service delivery.
Starting with the Service Strategy
To prevent confusion, we need to distinguish between a service strategy and a service management plan. For right now, we’ll just say that a service strategy
60 |
Part II: Getting the Foundation in Place |
is your road map for the future, based on your business goals. After you figure out your strategy, you need a service management plan to execute that strategy on a tactical basis (see the following section). The two concepts may sound like they’re the same thing, but they’re just close friends.
Creating a service strategy
When a company offers a distinctly new and different service or product, it can’t know for sure whether its customers — or potential customers — will want it. If you start with a known desired outcome and work backward to determine how to achieve that outcome by better leveraging all existing assets, however, you have more assurance of success in the new service offering.
To continue the Netflix example, when the company decided to offer its customers a new service — streaming video — it went beyond trying to satisfy known customer demand for certain movies in certain formats and in certain capacities. The company moved to a plan to provide the desired outcome in a way that better leveraged all existing capabilities and resources. Many customers now have Internet connections with networked devices plugged into their TV sets at home, for example. Because the desired outcome is to enjoy a movie at home, the provider considers what assets it has and what assets the customer has, and then determines how to integrate everything in a new configuration to provide a new service.
Finding out what customers really want
Companies aren’t always shooting in the dark. They leverage market research involving surveys and focus groups, and they have a pretty good idea of what customers think they want. Even so, it is entirely possible for any new product or service to be rejected — even by customers who, when asked, were convinced that they wanted or needed it.
Be aware of the difference between what customers ask for and what they really want. Consider Henry Ford’s experience in creating his horseless carriage. Ford’s customers may have asked for horses that ran faster, ate less, and required less training and maintenance, but focusing on a desired outcome instead gave him more assurance of success. Customers really wanted to travel to certain destinations that were connected by roads or paths; they wanted to steer; they didn’t want to walk; and they liked bringing other people