SS

Figure 2.5 The end points of a business process are often defined by enterprise applications

Business managers demand IT system s that make processes more transparent, dynamically serving and expediting business process flows. End-to-end business processes have come to depend on distributed systems. Business managers challenge IT organizations to engage with them at the level of business processes. They want assurance that application s and infrastructure will support new business initiatives. However, there are coordination and cooperation problems between the two sides. Business managers may not understand the complexity and detail of creating the business process within the realm of information, applications, and infrastructure. IT managers may not have a clear understanding of exactly what business managers are trying to accomplish. The problem gets worse with complexity, duplication, and the absence of clear model s for coordination and control . The following section shows how the principles of service management are useful in solving many of these problems between the business and IT.

Process 10

A process is a set of coordinated activities combining and implementing resources and capabilities in order to produce an outcome, which, directly or indirectly, creates value for an external customer or stakeholder .

2.4 Principles of service management

Service management has a set of principles to be used for analysis, inference, and action in various situations involving services. These principles complement the function s and processes described elsewhere in the ITIL Core Library. When functions and processes are to be changed, these principles provide the necessary guidance and reference. When solving problems related to services, these principles are to be used to resolve ambiguity and conflict.

2.4.1 Specialization and coordination

The aim of service management is to make available capabilities and resource s useful to the customer in the highly usable form of services at acceptable levels of quality , cost , and risk s. Service provider s help relax the constraints on customers of ownership and control of specific resources. In addition to the value from utilizing such resources now offered as services, customers are freed to focus on what they consider to be their core competence. The relationship between customers and service providers varies by specialization in ownership and control of resources and the coordination of dependencies between different pools of resources (Figure 2.6).

Figure 2.6 Relationships defined by the dynamics of ownership, control and utilization

Customer s specialize in business management to achieve one set of outcomes using a set of resources (Pool A). Similarly, service providers specialize in service management with another set (Pool B). Service management coordinates the dependencies between the two sides through assurances and utilization. Customers are content with utilization of certain resources (Pool B) unless ownership is a prerequisite for strategic advantage.

Specialization is a necessary condition for developing organizational capabilities. Management potential accumulates from specialized knowledge and experience with a set of resources.11 Specialization drives the grouping of capabilities and resources under the same span of control to achieve focus, expertise, and excellence. Coordination of capabilities and resources is easier when they are under the same span of control because of accountability, authority and managerial attention. Capabilities and resources with high degree of dependency and interaction are grouped together to reduce the need for coordination.11 Where coordination is easy through well-defined interfaces, protocols and agreement s, they are placed under the control of the group most capable of managing them.11 The strength of specialized capabilities on one side relative to the other creates the difference in potential, which justifies the transfer of resources from Pool A to Pool B and makes the case for a new or changed service .

It is important to note in this context that scale and scope of the customer and service provider organizations vary, from large enterprises to small businesses, autonomous business unit s and sub-divisions to small internal groups and teams who provide services. The principles remain the same. What may change are the values of variables such as the transaction costs, strategic industry factors, economies of scale and regulatory environment s.

Transaction costs, the nature of resources to manage, the feasibility of encapsulating them into services, and confidence in service management drive decisions on specialization and coordination. While outsourcing is a noticeable trend, there are many instances of customers deciding to retain certain capabilities in-house or even bring them back in.

2.4.2 The agency principle

Principals employ or hire agents to act on their behalf towards some specific objectives. Agents may be employees, consultants, advisors or service provider s. Agents act on behalf of principals who provide objectives, resource s (or funds), and constraints for agents to act on. They provide adequate sponsorship and support for agents to succeed on their behalf. Agents act in the interest of their principals, for which they receive compensation and reward, and in their own self-interest (Figure 2.7). Written or implied contract s record this agreement between principals and agents. Employment contracts, service agreements and performance incentive plan s are examples.

Figure 2.7 The agency model in service management

Within the context of service management , customers are principals who have two types of agents working for them – service providers contracted to provide services, and user s of those services employed by the customer. User s need not be on the payroll of the customer. Service agents act as intermediary agents who facilitate the exchange between service providers and customers in conjunction with users. Service agents are typically the employees of the service provider but they can also be system s and processes that users interact with in self-service situations. Value for customers is created and delivered through these interlocking relationships between principals and agents. The agency model is also applied in client / server models widely used in software design and enterprise architecture . Software agents interact with users on behalf of back-end function s, processes, and systems to which they provide access.

2.4.3 Encapsulation

Customer s care about affordable and reliable access to the utility of asset s. They are not concerned with structural complexity, technical details, or low-level operations. They prefer simple and secure interfaces to complex configurations of resources such as application s, data, facilities, and infrastructure. Encapsulation hides what is not the customer’s concern and exposes as a service what is useful and usable to them. Customer s are concerned only with utilization.