Service Strategy is the center and origin point of the ITIL Service Lifecycle.

It provides guidance
on clarification and prioritization of service-provider investments in services. More generally,
Service Strategy focuses on helping IT organizations improve and develop over the long term. In
both cases, Service Strategy relies largely upon a market-driven approach.
This is a view of ITIL where IT and business align their visions. Its key topics covered include
service value definition, business-case development, service assets, market analysis, and
service provider types. List of covered processes:

 Strategy Management
 Service Portfolio Management
 IT Financial Management
 Demand Management
 Business Relationship Management
Importance of this view is because this phase that is responsible to define service value. When
defining a service is important to have in mind four Ps for strategy: Perspective, Position, Plan,
Pattern.
Strategy activities are:

 Define market
 Develop strategic offer
 Develop strategic assets
 Prepare for execution

Service Strategy
Principles
When defining a service, strategist must have in mind list of principles, as stated below:

 Value creation
 Service assets
 Service provider types
 Service structure
Stages
Stages for definition of strategy are:

1. Define
2. Analyze
3. Approval
4. Charter

Service provider types[edit | edit source]

There are three types of service providers, that may include service provided as well providers
for the service:

1. Internal service provider: exists within an organization and provides service solely for a
unique business unit
2. Shared service unit: exists within an organization, but provides service for more than
one business unit
3. External service provider: operates outside organization

Processes[edit | edit source]
Service strategy has two processes: Service Portfolio Management and IT Financial
Management, as depicted below.

Service Portfolio Management[edit | edit source]

Owned by service portfolio manager, it is composed of four sub-processes:

 Strategic service assessment: assesses current service in the market.

 Service strategy definition: to define overall goals of the service, as well to define
customer and customer segmentation.
 Service portfolio update: adjusts services offered in portfolio based on strategy
definition.
 Strategic planning: defines, initiates and controls the program and projects required to
execute Service Strategy.
 Demand Management: Service Strategy.
IT Financial Management
Owned by financial manager, it is composed of four sub-processes:

 Financial management support: defines necessary structure for management of

financial planning data and costs.
 Financial planning: determines required financial resources over next planning period.
 Financial analysis and reporting: analysis of financial costs provisioning and service
profitability.
 Service invoicing: issues invoices for the provisioned service.

What is Service Strategy? Meaning, Importance and Process

June 3, 2019 By Hitesh Bhasin Tagged With: Marketing

The marketing strategy of service industry focuses on delivering experiences

processes and other intangible is to the customers and not
physical goods like product industry. It also involves a focus on all functions
equally.

Role of the functions of a company like selling, marketing, operations, human

resources, and other functions must work efficiently and together in order to create
an excellent service strategy. A service strategy is more customer-centric and is
centered on the usage of customers and their relationships.

Many of the service sectors such as hospitality healthcare transportation our

offerings of themselves and also the primary revenue-generating activities of the
respective companies. Service industries categorized into another category which is
called customer service which includes providing technical support for the product
of the company to the customers and assisting the customer with any technicalities
required.

Customer services a segment of an organization which does not produce revenue

but rather is a form of a troubleshooting service which provides answers and
solutions to the queries of the customers. Services can also be considered as a
value addition for the company.
In case of services, there is a requirement of 7 P’s of marketing instead of 4 Ps of
marketing which is product place price promotion people process and physical
evidence since 4 P’s are not enough to describe the intricacies of services
marketing. Because unlike a product, services are produced and consumed at the
same time.

The company should also take care of their employees and personal appearance
and all other small factors which influence the perceptions of the customers
towards the service. there should also be an effective calculation of the service so
as to be on par with the industry standards. There is often a gap between the
perception of the company and the expectations of the customer.

The companies of an strive to device a service strategy in such a way that the gap
is minimum. The wider the gap more difficult it will be for the company to sustain
in the market. The strategies used by the organizations vary on the nature of the
offering and the business.

However, service strategy should be formed in such a way that it satisfies

the customer expectations or comes closest to it. the success of a company is
measured in terms of the service that they provide which is why it is crucial for
organizations to not run the make good products but also provide an excellent
service.

Companies which are exclusive in service industries like hotel business or

hospitality or entertainment should constantly upgrade themselves and should
modify their offerings in order to meet the change in demand from the customers.
However, there are companies which are both into the offerings of the product as
with the service for example companies like Dell and Apple.

Both of these companies provide products which are electronics and they also
provide after Sales service. In both of them, Apple stands out as the best because of
efficient after sales service.

Table of Contents
Importance of service strategy

It is very important in a highly competitive business environment that there is a

service strategy present in order to address customer needs and wants. Following
are a few of the reasons which elaborate on the importance of service strategy:

1. The cost of getting a new customer is much more than entering the retention of the existing
customers. The customer strategy for service strategy should be in sync with the marketing
strategy of the company.
2. It is a well-known fact that to get a new customer the cost would be 5 to 10 times more than
that of the cost of retaining a current customer. More often than not customers are lost
 because of poor services and bad treatment which gives them unsatisfactory. It is also
estimated that an unhappy customer will talk about his dissatisfaction to at least 8 to 16 other
potential customers. Adding social media and that the satisfied customer’s voice will reach
1600 more people which is why customer retention is of crucial importance to the
organization.
3. Looking on the other side of service strategy a customer who is satisfied or who is loyal will
cost not even a single penny but will add value to the business by being word-of-mouth
ambassador. This will save millions of bucks of the company since it is free publicity from the
customer to a potential customer. This is the reason why every customer should be satisfied
with the service strategy.
4. It is also stated that customer loyalty can have any impact on the business. Making the
customer is important creates all customers and those all customers will continue to do
business in spite of increasing competition. Higher customer loyalty translates into higher
customer retention and better competitive advantage.
5. Companies should ensure that the service strategy is in sync with the vision and mission of
the organization. They should complement the strategy of the organization. Companies to
take time in order to develop and implement an efficient service strategy which will  be
responsible for the retention of the existing customers.

7 Steps to create an efficient service strategy

In most of the cases, the Service strategy depends on the nature of the business but
here are the following steps which can generally be used and implemented by most
of the service organizations.

1) Crafting a service vision

The primary step is to communicate the vision of the service to the employees
associated with the business. The employees associated with the organization
should understand and comprehend the organizational goals and the vision of the
organization and should be able to write their responsibility to help the company
achieve that vision.

2) Contemplating the customer needs

More often than not the companies fail and waste their valuable resources in
creating services of product that the company thought customers would want only
to know that the offering was not what the customers wanted at all.

The important part is to know what the customer needs and to put it in sync with
the organization’s vision and mission. Taking the feedback of customers is the first
step in order to know and determine what their expectations are so that the
company can form a strategy around the feedback obtained in order to deliver and
meet the expectations of customers.

The market needs for customer needs can be assessed using a method such as
satisfaction surveys for focus groups and the customer feedback
forms. Development of such feedback forms and questionnaires is very important
and should focus on the questions that need to be answered by the customers.
It is also very important to keep in mind that the needs of customers keep on
changing with time and are like a moving target. Since it constantly keeps
changing it is very important for the companies to form a process which will
continuously keep on updating them about the changing needs of the customer so
that the companies can prepare and modify themselves and their offerings
accordingly.

3) Right hiring

When it comes to facing the customers it is not the company who is going to face
them rather it is the employees who are going to face the customers. Employees are
the face of the organization and organization has to ensure that the face is
represented correctly.

The employees should have the right skill set which meets the goals of the
organization and helps to form a strong network and backbone to provide service
to the customers. Having a right attitude and personality is something which
companies cannot develop in the employees which is why they should take care of
these things with hearing.

Most of the things can be incepted and developed in the employees but most of the
other things have to be built in. Interacting with customers and providing services
is an art more than science and not everyone can achieve it.

4) Goal setting for the service team

Wednesday identification of customer needs and the parameters for customer

satisfaction is done then the organizations have to create goals for the service team
in order to achieve customer satisfaction. These goals should be measurable and
quantifiable so that the organization can grow the employees as well as along with
the growth of the business.

The employees should be able to understand the vision and mission and the target
of the organization so that they can align themselves to reach chief and exceed
those objectives. An example of customer satisfaction can be given as follows:

The service team of a refrigerator company provides after sales service. Once the
customer causes about the breakdown of the machine the time taken by the service
team to reach the place of the customer and correct the machine is measured.

The lesser the time to attend the customer breakdown calls the higher would be the
customer satisfaction. This can be a measurable parameter in order to appraise the
employees.

5) Constant training and development

Once the hiring is done in a proper and correct way the employees will have some
inborn cause it is which the organization will be able to utilize them in order to
serve the customers correctly. The other part of having a good service team is
providing them with constant training in order to upgrade their technical skills.

The training should focus not only on technical skills but also on interacting with
customers. Right service strategy requires suitable training to the service team so
that not only the customer but also your organization benefit from it.

The employees need to know about the goals of the organization so that they can
modify themselves to fit accordingly. The need to be trained not only on the
technical skills but also on other soft skills like answering the customer phone calls
and customer complaints and providing services.

6) Accountability

Organizations should ensure that the employees have a suitable understanding of

the importance of good customer service and how their actions affect the
organization’s performance overall. The organizations should also ensure that the
employees are held accountable in order to achieve the service goals.

This also forms the part of the performance management system and should be

embedded in the culture of the company.

For example, rewarding the employee with the highest customer satisfaction and
working on the employee with over customer satisfaction.

7) Awards and recognitions

Positive reinforcement always works in every organization which is why it is very

important to recognize the performing employees who are responsible for excellent
customer service. This will help the other employees to perform well and live up to
the set goals or exceed them.

This also reinforces the vision and mission of the organization and the service
strategy which is chalked out for everyone. A successful organization is
categorized by strong customer service.
The 5 processes of ITIL service
strategy
Reading time: about 8 min

Posted by: Lucid Content Team

In the fast-paced world of technology, IT service providers must be

agile and strategic when making decisions about their service
delivery. Businesses who understand customer needs and can
predict and meet demand accurately can position themselves ahead
of the competition.

That’s where ITIL Service Strategy comes in.

What is ITIL Service Strategy?

As a reminder: ITIL (which stands for Information Technology
Infrastructure Library) is a set of best practices for IT service
management that helps align IT services with business needs. ITIL
uses a systematic approach that helps businesses manage risk,
improve customer relations, increase efficiency, and build a stable,
scalable IT environment.  

There are five stages of the ITIL service lifecycle:

 Service Strategy
 Service Design
 Service Transition
 Service Operation
 Continual Service Improvement

We will be focusing on the first stage of the ITIL lifecycle: service

strategy.
ITIL service strategy is a market-driven stage. Service strategy helps
organizations determine the types of services they should offer and
the markets to target. The goal is to make strategic decisions when
planning and delivering targeted services to drive long-term growth
and success. 

What are the four P's in service strategy?

There are four building blocks of the service strategy stage:

perspective, position, plan, and pattern.

These four P’s guide your service strategy and play an integral role
in how you outline and implement your service plans. Strategies
that lack any of these components are less likely to succeed. Here
are the basic definitions and applications for each strategy stage: 

 Perspective: Describe your vision or direction for your

services. 
 Position: Compare your strategy with competitors to
understand how to best position yourself in the market.
 Plan: Identify the actions you will take to achieve your goals
and overarching vision.
 Pattern: The fundamental and ongoing actions your
organization will take to run smoothly over time. This includes
processes, policies, schedules, budgets, and management
systems. 
Click to use this template and start creating your service strategy

5 ITIL service strategy processes

There are five processes within the service strategy lifecycle stage:

 Strategy management for IT services

 Service portfolio management
 IT financial management
 Demand management
 Business relationship management
These processes work together to ensure IT service best practices
that lead to continual improvement. 

1. Strategy management for IT services

Strategy management for IT services is the first process under ITIL
service strategy. The goal of strategy management is to ensure IT
services and their management align with the organization. During
this stage, you will assess, define, and execute strategies for your
service offerings.

Assessment

Evaluate the current market position of the business or service

provider. What opportunities or constraints impact your services?
Consider your service offerings, current and target customers, and
your competitors’ offerings.

Definition

Based on your assessment of the business and service climate, you

can begin defining what goals your service provider should pursue,
as well as identify and recommend services for different customer
segments. 

Execution

The final step is implementation. This step is all about planning your
strategy for the successful execution of your strategic initiatives.

2. IT Financial Management
IT Financial Management (also known as financial management for
IT services) focuses on service valuation. This process involves
accounting, budgeting, and charging services so that the
organization covers costs and generates profits for those services.

These three steps are known as the “ABCs” of Financial

Management for IT Services.

Accounting
Accounting activities help you understand exactly what you’re
spending on IT services. 

Accounting processes should be overseen by a trained accountant

and include running cost-benefit analyses, organizing costs by
category (e.g., hardware, software, staff, overhead, infrastructure),
and keeping detailed records of spending. 

The purpose is to build an accurate picture of your costs so you can

identify opportunities for cost savings and manage costs more
efficiently. 

Budgeting

An accurate budget is crucial for delivering IT services effectively

and consistently. IT budgeting calculates and allocates the funding
needed to keep services running smoothly and support the
business’s overall IT service strategy. 

The budget oversees three main IT spending categories:

 Capital expenditures
 Operational costs
 Strategic investments

Budget planning typically occurs once a year with regular monthly

monitoring.

Charging 

Charging covers the process for billing customers based on the

services they use, which involves developing rates and a chargeback
system that accounts for the cost and value of delivering each
service. 

3. Service portfolio management

Service portfolio management (SPM) monitors your services in the
pipeline from start to finish. The goal of SPM is to ensure each
service aligns with your service management strategy and
organizational objectives. By monitoring your services end-to-end,
you can more effectively justify service needs based on concrete
business value. 

A service portfolio has three parts: 

 Service catalog
 Service pipeline
 Retired services catalog

The service catalog is an overview of all the services you currently

offer to customers. 

Your service pipeline contains any services that are not yet visible to
the customer (such as those that are in proposal or development
stages). The pipeline also outlines projected service timelines and
growth trajectories so you can understand the strategy and plans
for each service.

The retired services catalog is essentially your services archived. Any

retired services are recorded here with relevant documentation for
your records. SPM follows each service through the pipeline from
funding, design, and development to testing and deployment. 

There are four steps to basic SPM:

 Define desired outcomes for a proposed service (or

proposed changes to an existing service).
 Analyze the impact this new or changed service will have on
your other services in the portfolio. Identify any needed
resources to offer the service.
 Approve a new service (or change) with a formal proposal
and initiate the design stage following authorization.
 Charter services, communicate decisions, and allocate
resources for successful service deployment.

This process helps you make a business case for each service and
answer questions like:
 Why does a customer need this service?
 What sets our service apart from competitors?
 What are the strengths and weaknesses of this service?
 How can we manage risk factors?
 What is the best way to allocate resources for this service?

Managing your service portfolio requires commitment and

investment, but the benefits are clear. Good SPM helps customers
understand exactly what services (and value) you deliver, improves
transparency and communication around costs and risks, and
increases efficiency in operations by tracking (and justifying) your
services at every stage.

4. Demand management
Demand management helps businesses understand, predict, and
influence customer demand for their IT services. 

Accurately understanding and adapting to service demand ensures

businesses avoid inadequate or excessive service capacity—both of
which impact costs and customer satisfaction. Demand
management typically involves three primary activities: 

Analyzing

Analyze current customer use of services by tracking service desk

data (e.g., number of incidents, requests, and problems), as well as
network usage and uptime. 

These data are called Patterns of Business Activity (PBA). You can
use PBA to measure components of customer service usage like: 

 Frequency
 Volume
 Duration
 Location

Anticipating
Communicate with your customers about their forecasted needs,
track trends and rely on your data analysis to make educated
predictions about future service requirements.  

Influencing

Businesses sometimes need to influence customer service

consumption to mitigate risks and expenses. For example, if a
customer exceeds their expected service usage, this can add
significant costs for the business to meet that demand. You can
influence demand through financial or technical means, such as
network throttling or charging fees for exceeding usage limits.

Accurately predicting service demand is crucial for meeting SLAs,

KPIs, quality standards, and budget constraints. 

5. Business relationship management

Business relationship management (BRM) focuses on developing
strong client relationships. Relationship managers do this by
optimizing the value of service delivery for the customer to ensure
continued satisfaction and loyalty.

There are several processes for executing a successful BRM

program:

 Maintain customer relationships.

 Identify service requirements.
 Acquire new customers.
 Solicit customer satisfaction feedback.
 Handle complaints.
 Monitor complaints and incidents.

BRM plays an integrated role at each stage of the ITIL lifecycle,

ensuring that customer questions, needs, and complaints are
understood and addressed.
The ITIL Service Strategy Lifecycle guides many processes, roles, and
best practices. Lucidchart’s ITIL process templates can help you
learn and implement these best practices successfully every time.

Leverage Lucid’s extensive collection of ITIL process maps,

templates, process flows, and ITIL service lifecycle diagrams to build
and track your processes, collaborate easily across the lifecycle, and
optimize your service strategy.