ITIL Certified ITIL Foundation 2011 Study Notes

7/29/2019 ITIL Certified ITIL Foundation 2011 Study Notes

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ITIL

Foundation

ITILis a Registered Trade Mark of the Cabinet Office. The Swirl logo is a Trade Mark of the Cabinet Office.

ITIL Foundation

User Guidev1.7

27.01.2012


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ITIL

Foundation

ITILis a Registered Trade Mark of the Cabinet Office. The Swirl logo is a Trade Mark of the Cabinet Office.


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ITIL

Foundation

ITILis a Registered Trade Mark of the Cabinet Office. The Swirl logo is a Trade Mark of the Cabinet Office. 1

1

Published by:

ITIL

Certif ied - provided by ILX Group plcGeorge HousePrinces CourtBeam Heath WayNantwichCheshireCW5 6GD

The Company has endeavoured to ensure that the information contained within this User Guide is correctat the time of its release.

The information given here must not be taken as forming part of or establishing any contractual or othercommitment by ILX Group plc and no warranty or representation concerning the information is given.

All rights reserved. This publication, in part or whole, may not be reproduced, stored in a retrieval system,or transmitted in any form or by any means electronic, electrostatic, magnetic disc or tape, optical disc,photocopying, recording or otherwise without the express written permission of the publishers, ILX Group

plc.

This document is the copyrighted intellectual property of ILX Group plc and may not be copied,disassembled or in any way modified without the express and written permission of ILX Group plc.

2011 ILX Group plc


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Foreword

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ITIL Certified, provided by ILX Group, is a leading developer and distributor of multimedia trainingproducts specialising in the area of project and programme and service management.

ITILFoundation uses the very latest multimedia educational techniques to provide a learningenvironment which is stimulating, easy-to-use and stress-free.

The aim of this course is to take students with little or no knowledge of ITIL to the level where they couldtake the Foundation (Part 1) examinations with a high degree of confidence in achieving a pass. Theexamination within the course package uses previous examination questions that are accessed at randomto provide an accurate simulation of the real thing.

We hope you enjoy the course and that you find it a useful starting point in your ITIL training programme.


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CONTENT PAGE

SECTION 1: Hardware/Software Requirements 4

SECTION 2: Installation Procedure 5

SECTION 3: Course Notes

Session 1: Overview of ITIL and Service Management 6

Session 2A: Overview of Service Strategy 19

Session 2B: Service Strategy Processes 25

Session 2C: Financial Management 35

Session 3A: Overview of Service Design 40

Session 3B: Service Level Management 50

Session 3C: Service Catalogue Management 60

Session 3D: Availability Management 63

Session 3E: Information Security Management 70

Session 3F: Capacity Management 75

Session 3G: IT Service Continuity Management 82

Session 3H: Service Design Design Coordination 87

Session 4A: Overview of Service Transition 90

Session 4B: Change Management 98

Session 4C: Service Asset and Configuration Management 105

Session 4D: Release and Deployment Management 116

Session 4E: Knowledge Management 123

Session 4F: Transition Planning and Support 127

Session 5A: Overview of Service Operation 129

Session 5B: Incident Management 140Session 5C: Other Processes 149

Session 5D: Problem Management 154

Session 5E: Service Desk 162

Session 5F: Other Functions 175

Session 6A: Overview of Continual Service Improvement 180

Session 6B: Continual Service Improvement 185

Session 7: Technology and Architecture 191

Session 8: Competence, training, skills & ITIL exams 197

Session 9: Exam Simulator 201


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Installation Procedure

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Hardware/Software Requirements

For the best experience using this multimedia course on a computer, we recommend the followingminimum specification:

Operating System: Microsoft Windows XP / Vista / Windows 7CPU: 1GHz or equivalentRAM: 128MB (2000/XP)Screen resolution: 1024 x 768 or higherPeripherals: Sound Card and Speakers, Keyboard and Mouse


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Overview of ITIL and Service Management

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S1p1 ITIL Course Overview

Hello and welcome to this e-learning training course.

This course has been designed to provide you with an overview of ITIL based IT Service Management.

This course is based on ITIL best practices as described in the ITIL Service Management publications.The course highlights how plans, processes, functions, roles, responsibilities and knowledgemanagement all work together to help organizations to plan, design, transition, operate and improve theIT services that will deliver agreed benefits.

In addition, the course provides the ideal background knowledge for anyone intending to operate in anITIL based Service Management environment.

S1p2 Course and Session Objectives

In this introductory session, we will begin by outlining the objectives of this course. These are:

To provide an awareness of ITIL best practice, its key concepts and associated terminology. To define what a service is and take a look at the service lifecycle. To outline the five core books within the IT Infrastructure Library and look at how some of the

concepts can be implemented.

In this overview session, we will:

Outline the course objectives Examine the history of ITIL, and look at why it is so successful Look at what we mean by a best practice and look at some of those in the public domain Define what Service Management is, and what is meant by best practice Well also look at the concept of utility and warranty, what a stakeholder is in Service

Management, and the concept of Internal and External services along with internal and externalcustomers

Well see how ITIL integrates with other best practice standards, frameworks and methods Well go on to describe the five service lifecycle stages and define a service, a function, a process

and familiarize you with some generic roles across the service lifecycle, and introduce you to theRACI model.

Throughout this course, you will find direct quotes from relevant ITIL guidance. These quotes are intendedto highlight important statements. Any on-screen quotes are indicated by inverted commas. Quotesincluded in the course subtitles are highlighted in the same way.

S1p3 Activity

ITIL is an acronym for Information Technology Infrastructure Library. It consists of a library of referencebooks outlining best practice guidelines for IT Service Management.

And whilst were here, lets also clarify what we mean by the term IT Infrastructure. Put simply, it isdefined as;All of the hardware, software, networks, facilities and so on, that are required to develop, test,deliver, monitor, control or support IT services.

IT Infrastructure does not include the associated people, processes and documentation.Before we go much further, heres a quick question for you.

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S1p6 The early history of ITIL

Before we go any further lets take a brief look at the history of ITIL.

The need for reliable IT Services in UK Government Departments triggered the CCTA (now known as the

OGC) to sponsor the ITIL development project. The outcome was the IT Infrastructure Library. The firstlibrary included 34 books which were published between 1992 and 1998.

The books contained comprehensive guidance on how ITIL concepts, processes and products could helporganizations to manage their IT Services and the supporting IT infrastructure.

By the late 1990s many large organizations and government agencies throughout the world used ITILbest practice guidelines for IT Service Management.

ITIL V2 was published in 2000 and became the worlds leading Service Management reference source.There is now a global community of users sharing the principles and concepts embedded in theframework.

S1p7 ITIL today

From its modest beginnings, ITIL went from strength to strength. But as technology changed a need toupdate the guidance was identified.

So the ITIL V3 project began in 2004, and involved extensive world-wide consultations with hundreds of ITService Management practitioners from the public and private sectors, including vendors, qualificationbodies, exam institutes and education providers.

May 2007 saw the launch of ITIL 3, confirming ITILs place as the worlds most credible framework for ITService Management. Importantly ITIL is now supported by the international ISO/IEC20000 standard.

Since its inception, ITIL has expanded from a library of books into a whole industry, with manyorganizations offering related products including training, consultancy and management tools.

In September 2009 OGC announced its intention to update ITIL once more The quality criteria requiredthe updates to be written in plain English and be free from inconsistencies across all five titles, andtherefore beneficial to the end user and the training community.

The ITIL updates were released in J uly 2011. At the same time the APM Group announced to the worldthat the Intellectual Property rights for the ITIL framework would move to the UK Governments CabinetOffice.

S1p8 ITIL examination bodies

ITIL is a recognised global IT industry best practice. ITIL provides common processes, language andterminology that can be used by IT Service Management professionals anywhere.

In 2006, the UK governments Office of Government Commerce appointed the APMG as the accreditingbody for ITIL. The APMG accredit the ITIL examination bodies, and authorised training organizations,such as ILX Group.

As you might expect, the ITIL qualifications are recognised by organizations worldwide, and have becomea prerequisite for appointments in many of the worlds blue chip companies.


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The ITIL qualifications and examinations are administered in the UK by ISEB, which form part of theBritish Computer Society, and the APMG. Other examination institutes include EXIN, Loyalist College,CERT-IT and PEOPLECERT Group. Due to the ever growing demand for ITIL qualifications andcertification across the globe this list is sure to grow.

If you intend to take an ITIL examination, then the qualification will be provided by one of theseorganizations.

S1p9 Complimentary standards

Service Management is also supported by several internationally recognised standards, including:

ISO/IEC20000. We mentioned this earlier, this standard covers any enterprise offering IT services tointernal or to external customers. It is often a mandatory requirement in any outsourcing tender. Bygaining ISO/IEC20000 accreditation, a service supplier may gain the competitive advantage needed towin the business

ISO/IEC27001 specifies the requirements for establishing, and maintaining a documented InformationSecurity Management System within the context of the organization's overall business risks

ISO 9001:2008 is one of the standards in the ISO 9000 family. It requires the accredited organizationsto define, follow, monitor, record and improve the procedures that cover all their key businessprocesses

Whereas BS25999 assists in implementing business continuity management

And ISO/IEC19770 is the Software Asset Management processes standard

These approaches to quality are in wide use and support the ITILapproach to Continual Service

Improvement.

This list is not definitive, however by using the standards combined with the skills, knowledge andunderstanding that you and your organization already have, provides you with the framework for bestpractice operations and effective Service Management.

S1p10 Why is best pract ice needed?

Many organizations operate in a rapidly changing environment. As such they recognise the need to learn,adapt and improve. Whilst it is always possible to improve, there are always trade-offs. For example, tohalve the pizza delivery service time from 30 minutes to 15 minutes might require less pizza choice and amuch higher charge.

The same principle applies to an IT service. For example a faster response time to a customer enquiryrequires higher performance technologies to support it. Ultimately, someone has to pay for thattechnology. If the customer demands the performance improvement then the customer must pay for it.

Whether you decide to improve or not to improve, may depend on how you compare with otherorganizations operating in similar conditions.

To compare one organization against another may involve benchmarking.


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S1p13 Activity

Heres a quick question for you.

ISO 9001:2000 is...?

FeedbackISO 9001:2000 is an internationally recognised quality standard which supports best practice in ServiceManagement.

S1p14 What is a Service?

Weve mentioned the word service several times, without really explaining what a service is, in ServiceManagement terms.

The ITIL glossary of terms defines a service as providing something of value to a customer that is notgoods.

ITIL also says that a service is a means of delivering value to customers by facilitating outcomescustomers want to achieve, without the ownership of specific costs and risks.

Typical examples of Service-oriented businesses include airlines, banks and telecoms companies. Anexample of a banking service might be the provision of current accounts, savings accounts or actuallygiving you the money you need when you need it. Thats value.

To deliver the value requires the use of people, processes and technology. In ITIL, Service and ITService mean the same thing.

If the service is an IT Service, then its an IT Service provider who will supply it.

An IT Service is based on the use of information technology and supports the customers businessprocesses. So returning to our earlier banking example, dispensing cash from an automatic teller machineis the service. IT will support the organization in the provision of that service, providing the networks, theaccount information held on servers, checking the electronic security and so on.

A Service Level Agreement or SLA, describes exactly what the agreed service is. The SLA is a writtenagreement stating what will be provided, by the IT Service provider to the IT customer and what the ITcustomer will need to provide for the IT Service provider. The SLA also describes how the level of servicewill be measured.

S1p15 What is a Service?

In our definition of Service we were introduced to another new term, namely outcomes. To define anoutcome requires the identification of three elements - an objective, or what the customer wants toachieve; metrics, how is the outcome going to be measured; and finally an expected result.

For example, an organization has the following requirement, this is to increase the number of loanapplications processed on time.

In this example the objective is to increase the volume, the metric is the number of loan applicationsprocessed, and the expected result is the number of loans processed on time.

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The ITIL definition of a service contains another interesting concept, namely that the service will beprovided without the customer having ownership of the costs and risks.

To provide an everyday example of this, imagine you are going to provide a meal as a birthday surprisefor a friend. To provide the meal you could take either of two approaches.

Firstly, as a customer, if you were prepared to accept all the costs and risks involved, you would needaccess to a kitchen, a large selection of ingredients, and the skills and know-how to prepare the meal, andall in the knowledge that it could go badly wrong.

The alternative would be to visit a local restaurant. As a customer, you wouldnt be responsible for all thecosts, and the risks and a poor quality meal would be mitigated. In other words, were using a professionalorganization to provide a service. The service usually has to be paid for, but only a portion of the overallcost and risk is included in the bill to any one customer.

S1p16 ITIL lifecycle - Service Strategy

We will now describe the five stages of the Service Lifecycle. The five stages are Service Strategy,Service Design, Service Transition, Service Operation and Continual Service Improvement.

We will describe the activities associated with each in more detail later in the course.

Stage 1 is Service Strategy.

This stage of the Service Lifecycle covers 2 aspects of strategy, namely:

Defining a strategy - whereby a service provider will deliver services to meet a customersbusiness outcomes and

Defining a strategy - for how to manage those services

Service Strategy is where the business and IT agree on what is required in the long term.

A business aligned strategy will describe what the business goals are, in other words what the businessshould be doing in the future. The strategy will also state what is required from IT to help the businessreach that goal.

The timescales set depend on the business needs and culture; the strategy is not a tablet of stone and insome agile businesses it may need reviewing several times a year.

From the IT viewpoint, one of the outcomes from the strategy will be a number of Business Cases.

The Business Cases highlight what the business as a whole needs to achieve and what new or changedIT Services are required to meet those needs. For example an organization may decide that it wants tobe in the fast food business. If so, then its strategy would focus on the processes needed for a rapid

order-to-delivery service.

This is because the market space in which the organization operates, is the fast-food business and notthe fine-food business. In other words, the fast food company is unlikely to encourage customers to lingerover the food with candles and soft-music as that is not there market space.

The true Service lifecycle really starts as soon as the Business Case for developing that Service has beenapproved. The lifecycle ends when the Service is withdrawn never to be resurrected.


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S1p17 Service Strategy - inf luences

There are all kinds of influences which may drive the IT Strategy, for example there may be a needcomply with the environmental policy or legislation.

For example, organizations that deal with US companies may be impacted by the Sarbanes-Oxley Act. Insuch cases there is a need to retain authentic and accurate records and provide an audit trail. IT ServiceManagement may be expected to guarantee, in writing, that the IT systems and data storage comply withthe act. As such, major development work may be needed to ensure compliance.

Service Strategy is also involved in Investment Appraisals and policy setting. Investment Appraisal is partof Financial Management. If you do not have the financial resources to carry out the strategy, then youneed to change the strategy.

An example of policy setting might be where a supplier who wishes to be on your short-list of preferredsuppliers may need to be ISO/IEC 20000 accredited as that is our policy.

Finally Service Strategy may be involved in Demand Management. This involves working with the

business to determine where there might be significant growth or other changes in business activity. Thismay impact on the IT services provided.

S1p18 Activity

Heres another quick question for you.

Which option shows the correctly named core publications concerned with the Service Lifecycle?

FeedbackNo, there is no core publication called Service optimisation.

No. ITIL does not mention a phase called Development in the lifecycle and Service Management is too bigas it covers IT life, the universe and everything.

No, Service Support is not an ITIL v3 Phase-although it is recognised as such in ITIL v2. ServiceImprovement is continuous so is not a phase as such. CSI is the fifth book in the ITIL series but that maybe because it was the last one to be scoped, specified or completed.

Yes, well done you are correct.

S1p19 ITIL lifecycle - Service Design

Phase two of the Service lifecycle is Service Design, and refers to the Application Management andTechnical Management Functions and some Design and Transition Processes.

Service Design evaluates the Business Case and, after agreement and approval by the responsible andaccountable. Business and IT decision makers, will design and build the service. The service now entersthe pipeline.

Depending on the complexity of the proposed service, the design stage may be a major project that needssignificant collaboration from staff from other areas such as Business, Supplier, Project, Application and

Technical Management. In ITIL the collaborators may also be referred to as stakeholders.

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The main document produced from this stage of the Service Lifecycle is called a Service DesignPackage or the SDP. This document will contain all requirements throughout the other stages of theService Lifecycle and is referred to throughout many design and transition activities as well as inreadiness for Operational support. Well look at SDPs in more detail later in this course.

The Business Systems Analyst and Designers from the Application Management function collaborate withthe Service Catalogue Manager and the Service Asset and Configuration Manager to ensure thatwherever possible new applications are built from existing service components; ideally these are linkedtogether by business-process definitions.

S1p20 ITIL li fecycle - Service Transit ion

Stage three of the Service lifecycle is Service Transition, which tests, integrates and releases the new orchanged service.

The service may consist of newly built, procured or changed applications, processes, policies, tools andtechnologies that Service Design hands over to them.

Before the applications can be deployed, Service Transition must be satisfied that the business is readyfor the Service that the business can use the Service and Service Operations can manage the Service.

This might require major business change and user education.

When you are confident that the Service will become operational and is no longer under development andtherefore not in the pipeline, you might decide to tell other customers and users about it. To do so, youcan register it in the Service Catalogue

Testing is essential. The Service Design Package should contain much of the information needed to helpwith the test and validation processes.

After testing the Release and Deployment Management process ensure that the Service is deployed intothe production or live environment.

And after the service has gone live it will need to be supported. It is unlikely that the Service Desk hasthe resources or capability to handle all the requests, events or incidents which often occur soon after aservice roll-out.

Staff that were responsible for development for example programmers or other project team membersfrequently provide Early Life Support, known as ELS. This means that they are on-call to help asneeded. Depending on the reliability or ease of use of the service Early Life Support may need to be inplace for many months.

S1p21 ITIL li fecycle - Service Operation

Service Operation is the fourth stage of the Service lifecycle. Service Operation is responsible forproviding the day-to-day Service support.

Service Operation manages different processes for example:

Request Fulfilment - Send me some new toner for my printer Event Management - The back-ups failed Access Management - Reset my password Incident Management - The customer database is off-line and therefore unavailable


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Problem Management - Find the cause of the customer database being off-line and identifysolutions

Staff from the IT Operations Management function may also manage server farms, networks, data centreaccess and job scheduling.

Staff from the Application Management function may help correct programming run-time errors whilstTechnical Management may be identifying ways to use storage space more economically.

Meanwhile the Service Desk function looks after the needs of the user community; they will need capablestaff on the Service Desk to assist users when they have difficulties.

S1p22 ITIL li fecycle Continual Service Improvement

And now the final phase, although its not really a phase, as it is Continual Service Improvement.

The Quality Management techniques and concepts described in Continual Service Improvement can beapplied to most activities and processes in the Service Lifecycle.

For example the book will help you to:

Identify potential improvements to the way the strategy is created or risks assessed and managed Implement better ways of recruiting and training staff Develop new metrics and measures to assess performance Improve Process effectiveness, efficiency and compliance Determine whether stronger levels of data encryption may be required Identify the root cause of problems faster

Supporting all the phases is a comprehensive Service Knowledge Management System; you will seewhat this contains a little later, but we have already mentioned some of the components, such as theService Catalogue and the Service Design Package. There are many more.

S1p23 Function or Process?

We need to cover a few more definitions now. We have referred to Functions and Processes severaltimes in this overview session. ITIL guidance makes a clear distinction between the two terms.

The definition of a Function and a Process is something you should be aware of if you intend to continueyour ITIL studies, or operate in an ITIL environment.

The ITIL library provides several definitions of a Function including;

Self-contained units of organizations, specialised to perform certain types of work for specificoutcomes

Self-contained units with capabilities and resources necessary for their performance and outcomes A Function can be described as providing structure and stability to organizations, and rely on

processes for cross-functional co-ordination and control

Put simply, a Function is a team or group of people and the tools they use to carry out one or moreactivities or processes. A good example of a Function in IT terms is the Service Desk.


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In smaller organizations, one person or group can perform multiple Functions - for example, a TechnicalManagement Department could also incorporate the Service Desk Function.

S1p24 Activity

ITIL may be inconsistent in its identification of Processes and Functions, however, which one of thefollowing options best meets the ITIL guidance on what Functions are? Can you also say why one ofthem is most correct and the other three options are not wholly correct?

FeedbackNo, Service Design, Transition and Operation are stages; it can be argued that each stage could be afunction but that widens the scope of Self-contained units of organizations specialised to perform certaintypes of work for specific outcomes; a little too far.

Yes, thats correct. Service Desk, Application Management, Technical Management and IT OperationsManagement are ITIL Functions. They fit all the criteria of a function we outlined on the previous page.

No, Incident Management is one of the processes that support the Service Desk, Service Operation and

other Functions.

No, Sales Management can be regarded as a Function, Service Strategy is a stage and Risk Analysis isconsidered to be a Process. It may support other Processes such as Risk Management, ChangeManagement, and Availability Management. Well look at this in more detail later.

S1p25 What are Processes?

Processes define actions, dependencies and sequence. A Process is a set of co-ordinated activitiescombining and implementing resources and capabilities in order to produce an outcome that, directly orindirectly, creates value for an external customer or stakeholder.

A car plant provides a real life example. It takes in metal, plastic and various components and through aprocess of manufacturing produces finished cars as an output.

The customer may derive value by using the car to get to work to earn money to buy a replacement car

All Processes must exhibit four main characteristics.

You could check whether these characteristics match the processes in your organization.

Firstly they should be measurable. Processes are performance driven; therefore it must be possible tomeasure a process in a relevant manner

They must produce specific results. The process must exist in order to produce a desired outcome. Thisresult must be identifiable and countable.

Each process delivers its primary result to a customer or stakeholder. These can be internal or external.

And it should respond to a specific event. There must be an identifiable event that triggers the process.For example, the Service Desk phone ringing may trigger the Incident Management process

The Process Owner is responsible for deciding what the process should do and ensuring that theirProcess is performed as agreed and documented.

Other roles to consider are the roles of the process manager and the process practitioner and serviceowner. Some of the generic responsibilities of the process manager include working closely with the

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process owner to plan and coordinate all process activities, ensuring all activities are carried out asrequired throughout the service lifecycle as well as appointing people to the required process activitiesand managing the resources aligned to the process.

Some of the generic activities of the process practitioner include the carrying out of one or more activities

of a process, as well as ensuring the inputs, outputs and interfaces for the process activities are correct,finally the process practitioner will create and update records to show that activities have been carried outcorrectly.

Finally some of the generic responsibilities of the service owner include identifying opportunities forservice improvements and discussing these with the customer and raising requests for change. Theservice owner will also be responsible for representing the service in the change advisory board meetings.

A summary of each of the roles can be viewed by clicking here.

S1p26 Activity

Which of the following statements meets all four main characteristics of a Process?

FeedbackYes, you are correct. It meets all four characteristics of a process which are that they are measurable,they produce specific results, they deliver an output to the customer and the process responds to aspecific, traceable, event or trigger.

No, this is a meaningless statement. There is no definition of quickly; it could mean seconds, days,months or millennia. There is no measure of productivity - from what to what.

No, this is a meaningless statement. The term 'several' could mean two, five or twenty five? Also we can'tbe sure if it is to develop, buy, implement, or replace the Applications?

Not really, but your almost correct. This is likely to be many processes. For example create an Invitation toTender; evaluate supplier proposals and so on.

S1p27 ITIL roles

The final ITIL definition, which we will look at in this session, is Role. ITIL defines a Role as a set ofresponsibilities defined in a process and assigned to a person or team.

A Role in ITIL terms is defined within a process. A role carries with it a set of responsibilities, which maybe carried out by an individual, or a team of people.

Roles can be combined; in fact, one person or department may well be responsible for several roles. For

example a single person may carry out the responsibilities of two roles namely the Change Manager andConfiguration Manager. The Technical Management function or department if you prefer, is where youmight find technical architects, capacity planners and network analysts. Therefore it is likely that staff fromthis department may perform some of the responsibilities of the role of Problem Management, whendiagnosing the root cause of incidents.

The same department could also be expected to play several other roles at different times, for example itmay adopt some responsibilities of the Change Management role by assessing the impact of changes,and manage the performance of devices under their control, working in the area of Capacity Management.

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Similarly if an Application does not respond, the programmer responsible, working in ApplicationManagement, may need to identify the cause and code the cure.

Service Desk staff often carry out many tasks within roles, for example password resets in the role of

Access Manager, calling in engineers with a role of Supplier Manager and so on.

There are several Generic roles that act across the whole of the service lifecycle, namely - Service Owner,Process Owner, and Business Relationship Manager. It is important for those employed in a role to haveclear understanding of their responsibilities, accountabilities. They should also know who would need tobe consulted at a key stage of a project, or who would need to be kept updated on any progress during aMajor Incident. The model to aid service providers achieve this is called the RACI model.

S1p28 Summary

That concludes this session entitled Overview of ITIL and Service Management.

In this session, we have:

Examined the history of ITIL.

And defined what is meant by best practice.

We have seen how ITIL integrates with other best practice methods and processes.

We have looked at why ITIL is so successful as well as how it is used in the public domain.

We went on to look at Value creation, and introduced you to the concept of Utility and Warranty of aservice.

We discussed the understanding of both internal and external services and customers, along withstakeholders in Service Management

We went on to outline the five lifecycle stages of Service Strategy, Design, Transition, Operationand Continuous Service Improvement.

And finally we have described a Service, a Function, a Process and a Role, in ITIL terms and haveprovided you with a tool - the RACI model that can help you to understand how to allocate roles torecognised process activities

S1Q Topic Quiz

Welcome to the topic quiz for this session. Here we will present you with a few questions based on theprinciples we have covered so far.

Don't feel under pressure as your answers are not scored. Good luck!

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Overview of ITIL and Service Strategy

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S2Ap1 Session Objectives

This overview session looks at the ITIL Service Management publication Service Strategy which is the firstof the five lifecycle stages we will be looking at. Service Strategy provides guidance on how to design,develop and implement Service Management as an organizational capability and a strategic asset.

In this overview session we will look at some of the key activities. Once youve completed this session youwill:

Gain an understanding of what a service is and different types of service, including internal andexternal service, core, enabling and enhancing services

Recognise and understand some of the key concepts of Service Strategy such as organizationalcapability, strategic asset, and Risk Management

Identify the main purpose, scope, objectives and value of Service Strategy to the business

Youll also recognise the need to identify, select and prioritise opportunities.

Well go on to consider the contents of the Business Case, including the Financial, Demand andRisk Management aspects.

Finally we will introduce you to the role, of the Business Relationship Manager.

S2Ap2 Introduct ion to Service Strategy

To operate and grow successfully in the long-term, Service providers must have the ability to think and actin a strategic manner. The purpose of the Service Strategy publication is to help organizations to developthat ability.

The main objectives of Service Strategy are to understand what Services should be offered to support theorganization.

In order for a service provider to be able to understand what services should be offered to support theorganization, the service provider needs to recognise the types of services available to the organization.

Services can be either internal or external, core, enabling or enhancing.An example of an internal service might be where a service desk exists to support services betweendepartments or business units in the same organization, whereas an external service could be a servicedesk providing support to external customers or suppliers for example.

This table shows examples of core, enabling and enhancing services.

Service Strategy should also begin setting policies and objectives for the provision of Services in supportof the business areas. Other objectives include understanding how to create value for an organization andto identify and select strategic investments. It should also define Service Quality.

As you will see shortly, these objectives can be achieved by considering Service Strategy as a series ofactivities.

But first, lets take a look at some of the key concepts associated with Service Strategy.


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S2Ap3 Key Concepts

As we mentioned earlier, Service Strategy describes how you can design, develop and implement ServiceManagement as an organizational capability and as a strategic asset.

In the next few pages well describe what capability and strategic assets may mean. Well also define

what we mean by the Service portfolio.

Organizational capability means different things in different organizations, however from the ServiceManagement view; the focus should be on developing and using IT Services and other assets to helpdeliver value.

The value will be delivered through the ways you use your capability assets and your resource assets, asboth are needed.

Resources are the things most commonly managed, such as finance and data, they are often tangibleand therefore easy to see and measure.

Capabilities include the processes you use, the management competence, the expertise and skills of the

staff. They all work together to help achieve an agreed result. Capabilities are often intangible andtherefore difficult to measure.

Value requires resources and capabilities. Value can be measured by the amount of new and profitablebusiness gained or by the costs saved.

Real life examples are the web based systems that allow passengers to book flights and check-in online.These have increased business and reduced costs for many airlines. Thats value.

Changes within IT Service Management may also be needed. There may also be a culture change, whichfocuses on becoming more responsive and improving our ability to understand and meet customer needs,more quickly than competitors.

We may also need to build better customer, supplier and employee relationships.And improve service quality, so that new or changed Services are designed, developed and delivered tothe business, meeting or exceeding expectations.

S2Ap4 Key Concepts - Strategic Asset

For Service Management to be recognised as a value adding strategic asset requires proper managementof the capability and resource assets.

From the business viewpoint Service Management is seen as a valuable strategic asset when it addsperceived value to the customer and is seen to be offering something very special that cannot be easilysupplied by another organization.

So for example, a bank might consider its branch network or customer data to be strategic assets.You might want to consider some of the following questions.

Firstly, consider Service Management in your organization.

What value does it add and what additional value could it add to the business as a whole?

Secondly, consider a Service in your organization.


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What value does it add and what additional value could it add to the business (or specificcustomer) as a whole?

And finally, what does your IT Service Management offer that would be very difficult for anotherorganization to offer?

S2Ap5 Key Concepts - Service Portfolio, Service Catalogue

Other concepts in Service Strategy that we need to recognise include the Service Portfolio, ServiceCatalogue, Service Model, Constraints, Business Case, Risk and the Management of Risk. So lets look atthose now.

Lets begin with the Service Portfolio. From the initial business case through to the final termination of theService, the information accessed via the Service Portfolio covers the complete Service lifecycle.

There are three elements of the service portfolio, namely the service pipeline, the service catalogue andthe retired services element.

Within the service pipeline we can find information relating to what services are in the design conceptstage, as well as information relating to those services that have been chartered, or are agreed and areready to be progressed through the design stage of the lifecycle.

Within the service catalogue element we can find information relating to all live operational services,including 3

rd party services.

Within the retired services element of the service portfolio, we can find information relating to thoseservices that have been retired and the reasons for their retirement.

As soon as a Business Case is approved for a new Service the details are entered into the servicePortfolio, and the Service Design stage can then begin.

By referring to the service Portfolio, which forms part of the all knowing Service Knowledge ManagementSystem, you should obtain any information required about a Service.

The Service Portfolio represents the service. This means that you should be able to read or update any ofthe information associated with a service. This includes the Business Case, project documents, risks andcosts, continuity plans, requirements and specifications, test plans, SLAs and Contracts, any changesapproved, or potential for development and so on.

Now, lets define what we mean by the Service Catalogue. The Service Catalogue is linked to the Portfolioas it identifies what is currently being provided to business customers or what is currently going throughdevelopment or being transitioned into operations. There are typically 3 views to the service cataloguehowever, service providers will need to consider both the use and number of users to determine thenumber of views when designing the service catalogue.

In many organizations it is seen as the brochure which tells people what we offer, what it looks like andhow to buy it. J ust like IKEA!

The Service Catalogue is the part of the Service Portfolio that is visible to customers!


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Service Strategy Processes

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S2Bp1 Objectives

In this session we will be looking at the key concepts of the ITIL Service Strategy publication.

In this session we will:

Look at the processes primarily concerned with the Service Strategy stage of the Service lifecycle,including:

Financial Management for IT Services Service Portfolio Management Demand Management We will introduce you to the Process Manager, Process Practitioner and Business Relationship

Manager roles

We will go on to look at the Value to the Business which Service Strategy brings And finally look at Components of Value and the Basics of Value creation

As you progress through the session you will be introduced to some new terminology, including the

Service Portfolio, Service Catalogue, Service Pipeline, Service Management and Demand Management.

You may find it beneficial to revisit this session once you have completed further sessions in the course.

S2Bp2 Funding, Account ing and ChargingEffective and Efficient Financial Management for IT services needs to cover funding (Budgets),forecasting, overspend, under-spend, costs, prices, it all happens when managing an IT Infrastructure.

How many of you have to keep profit and loss accounts for IT service delivery? What are the issues?

This ITIL process is about delivering the best possible quality service within budget.

There are 3 main areas to consider when creating an IT Financial Management framework that can beconsidered as effective and efficient.

Two of the three areas are mandatory - must haves - namely Funding and Accounting, the third is optionalnamely charging.

Please note that this applies to Type 1 service providers these are internal only, for type III serviceproviders which are external, charging will not be optional because by nature their business is to provideservices at a cost, and to recover those costs by use of recognised charging methods in order to make aprofit.

Financial management for IT Services can indeed add value to the service provider and the business,however care is needed to ensure that the activities involved in funding and accounting and if usedcharging are not seen as an overhead and that there are tools, processes and identified activities to

gather the data, analyse the data and produce meaningful and accurate bills to customers.

S2Bp3 Components of Value

Customers perceptions and preferences play a big part in understanding whether value has beendelivered to our customers, and if not why not.

Perceptions are influenced by attributes of a service, present or prior experiences with similar attributesand relative capability of competitors and other peers. Perceptions are also influenced by the customers


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self-image or actual position in the market, such as those of being an innovator, market leader and risk-taker. The value of a service takes on many forms, and customers have preferences influenced by theirperceptions. The preferences and perceptions of customers will affect how they differentiate the value ofone offering or service provider over another.

So for example, Internet Service Providers offer different levels of service for home broadband users asopposed to home business users. Similarly, mobile phone providers offer different lines of service andcosts to business and home users.

S2Bp4 The Basics of Value Creation

In order to create value for a customer, it is necessary to be able to identify the capabilities and resourcesthat already exist both internally and externally.

These capabilities and resources are referred to as the Customer Assets and are used as a basis fordefining the value of a customer or service.

The performance of Customer Assets should be a primary concern for Service Management professionalsbecause without customer resources and capabilities there is no basis for defining the value of a service.

You can see the Customer Assets identified on this diagram as being; Management, Organization,Processes, Knowledge, People, Information, Applications, Infrastructure and Financial Assets.

These Customer or Service Assets can be put into two groups, Capabilities and Resources.

Resources and capabilities are types of assets Organizations use them to create value in the form ofgoods and services.

Resources are direct inputs for production. Management, organization, people, and knowledge are usedto transform resources.

S2Bp5 The Basics of Value Creation

Capabilities represent an organizations ability to coordinate, control, and deploy resources to producevalue. They are typically experience-driven, knowledge-intensive, information-based, and firmlyembedded within an organizations people, systems, processes, and technologies.

It is relatively easy to acquire resources compared to capabilities.

People are seen to be both a Capability and a Resource.

Capabilities are the intangible assets of an organization.

A Capability can be defined as the ability of an organization, a person, a process, an application or aconfiguration item which is a component of the infrastructure or an IT service, to carry out an activity.

Take, for example, Management Structures. The Capability might be the ability to change the structure inorder to use the Resources the best way we can.

On the other hand, the business infrastructure is a tangible asset and, like financial capital and the otheritems listed here, it is a Resource.


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S2Bp6 Strategy Management for IT Services

Having been introduced to the concept of value in service management terms, lets take a look at our firstprocess, namely Strategy Management for IT services.

ITIL describes it as the process responsible for defining and maintaining an organizations perspective,position, plans and patterns with regard to its services and the management of those services.

Its this process which defines and maintains an organizations perspective, position and plans with regardto its services and the management of them. It is the responsibility of the organizations executives andallows them to set objectives and prioritize investments in order to meet them.

The process also ensures that a strategy is defined, maintained and achieves its purpose.

The process objectives include:

The analysis of the environment in which the service provider exists, both internally and externally

Spotting any constraints which might impact the achievement of business outcomes

It should regularly review the service providers perspective to ensure it is still relevant

Establishing the position of the service provider against its customers and competitors

And produce, maintain and manage changes to strategy planning documents and circulatingthem to all stakeholders

Once the strategy has been defined, strategy management for IT services is also responsible for ensuringthat it achieves its intended business outcomes.

S2Bp7 Service Portfolio

The Service Portfolio tool represents all of the resources presently engaged or being released in variousphases of the Service lifecycle. It is made up of three components: the Service Catalogue, the ServicePipeline and Retired Services.

The Service Catalogue identifies what were currently providing or whats likely to come in the very nearfuture to the customer.

It is the customers viewable information and should clarify or help answer the following questions:

Why should a customer buy these services?

Why should they buy these services from us?

What are the pricing or chargeback models?

What are our strengths and weaknesses, priorities and risk?

How should our resources and capabilities be allocated?

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Retired Services is the identification of services that we no longer need and the best way of removingthese services.

S2Bp8 Service Portfolio Management

The Service Portfolio Management process is required to link service assets to their higher-level businessservices.

On the one hand, you might find that a business process can be distributed across technologies andapplications, span geographies, have many users and yet still reside in one place, for example, the datacentre.

Whereas on the other hand, the IT function might be organised into Silos and so not have an overallunderstanding of the business requirements.

So the role of Service Portfolio Management is to provide the necessary links between Business ServiceManagement and IT Service Management.


The purpose of the Service Portfolio Management process is to ensure that the Service Provider has theright mix of services to balance the investment in IT with the ability to meet business outcomes.

As such the process ensures clearly defined services are linked to business outcomes which are alignedto the value of services.

The process also enables us to track the investments in services throughout the service lifecycle, thusensuring appropriate returns are being achieved.

The Scope of the Service Portfolio management process is whether the service provider is able to

generate value from the services.


The objectives of the Service Portfolio management process are:

To enable organisations to decide on investments by provision of a process and mechanism

To maintain the definitive portfolio of services provided

To enable evaluation of the services provided

It also enables control over services offered, conditions of service offerings and levels ofinvestment in services

The process also allows us to track the investment in services throughout their lifecycle

Finally, Informing decisions regarding which services are viable and which are to be retired isanother key objective.


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He or she will also work with service owners and other process managers to ensure the smooth running ofservices.

TheProcess Practit ioneris responsible for carrying out one or more activities of a process.He or she will also understand how their role contributes to the overall delivery of service and creation of

value for the business.

Working with other stakeholders, such as their manager, co-workers, users and customers, to ensure thattheir contributions are effective is another important responsibility. As is ensuring that inputs, outputs andinterfaces for their activities are correct and creating or updating records to show that activities have beencarried out correctly.

S2Bp15 Develop Strategic Assets

Lets take a look at the main aspects of strategic assets.

Firstly, Service Management can be considered as a Closed Loop control system. This will be explained

in a little more detail in a moment, but essentially, we are talking about the ability to support the businessby understanding how services are used and then effecting improvement by providing experience andtraining in order to improve the capabilities of Service Management focused on the customer assets.

Next, Service Management is a strategic asset and, as such, it can be developed by increasing either:

The service potential - that is to say, what can or could Service Management do that offers increasedvalue in the use of customer assets? or

The performance potential - Is there anything that Service Management can or could do better or moreeffectively utilising its service assets of resources and capabilities?

Lastly, we need to look after the demand through Demand Management. Demand is about making sure

that we have the right amount of capacity available and at the right cost.

If we store too much capacity to deliver services, we are not making it cost-effective.

If we run out of capacity, it might have a cost implication on the business. So, lets take a closer look atthese points.

S2Bp16 Service Management - A Closed Loop Contro l

In this Closed Loop control system, Service Management focuses on directly supporting the business andmaking improvements to maximise value offered.

Everything that IT does directly supports a business area. So, if the business wants to provide e-commerce, for example, then we have an IT service provider that is only supporting that area of thebusiness and therefore any change that the customer wants, IT supports directly in a closed way.

J ust to clarify the point, an example of an Open Loop system is the provision of services by an ISP, anInternet Service Provider. Here the service is available to lots of different customers and therefore eachcustomer cant drive the improvements to service in the same way as it could if it was in a Closed Loop.

Look at the diagram again, it also illustrates Demand Management.


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On the left hand side there are the customers assets, their capabilities and their resources - that is to say,what theyre trying to achieve in the business. In the middle there is the service that we can provide. Onthe right, we have the Service Provider with its service assets, the capabilities and resources at itsdisposal.

So, in this Closed Loop system, lets say the customer demands more service, we need to have thecapacity to meet that demand. If that capacity is available we can very quickly provide the additionalservice - so we can say that the service potential is available to provide additional performance to thecustomer.

However, there has to be a balance between the capacity thats laying idle waiting for a demand and theassociated costs to the organization. The more capacity we have, the more the costs go up. The more thecustomer demand varies the more capacity we will need to put on idle at certain times. So, it is all aboutunderstanding the balance.

S2Bp17 Activity

Which of these activities would you expect a Service Owner to undertake?

FeedbackThe Service Owner would be involved in all of these activities except for Updating the ConfigurationManagement Database after a Change.

S2Bp18 Demand Management Purpose, Scope and Objectives

Demand Management helps the service provider to understand, anticipate and influence customerdemand for services and the provision of capacity to meet these demands.

Poorly managed demand is a source of risk for service providers because of uncertainty in demand and

excess capacity generates cost without creating value that provides a basis for cost recovery. With this inmind, Demand management is recognised as a critical aspect of service management.

The objectives of demand management are to:

Understand the levels of demand that would be placed on a service by identifying and analyzingpatterns of business activity

Understand the typical profiles of demand for services from different types of users by definingand analyzing user profiles

Ensuring that services are designed to meet the patterns of business activity and the ability tomeet business outcomes

Maintain a balance between the cost of a service and the value that it achieves by working withcapacity management ensuring that adequate resources are available at the appropriate levels of

capacity Anticipate and prevent or manage situations where demand for a service exceeds the capacity to

deliver Be able to meet the fluctuating levels of demand for those services

The scope of the demand management process is to identify and analyse the patterns of business activitythat initiate demand for services and to identify and analyse how different types of users influence thedemand for services.

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Segmentation - Service Level Packages and Core Service Packages are made up of reusablecomponents, many of which are themselves services. SLP are combined with CSP to build a ServiceCatalogue.

S2Bp21 Activity

For which of the options shown is Demand Management used?

FeedbackWe need to understand patterns of business activity in order to be able to achieve a balance betweensupply and demand.

S2Bp22 Business Relationship Manager

The role of the Business Relationship Manager is to ensure that the required value is being created by theservice provider for all current services, and to also obtain and focus on strategic business activities andfuture requirements and needs.

The Business Relationship Manager role will also rely on other Service Management processes providinginput and feedback from all aspects of service delivery, performance and support. The BRM will workclosely with those in the role of SLM providing information from a strategic perspective in relation to dailyoperational requirements and targets.

It should be noted that the BRM role will focus primarily on strategic and tactical needs whereas the role ofSLM will focus primarily on day to day operational issues.

The business relationship manager will focus on the customer portfolio tool and ensure that the data heldin the tool is maintained.

S2Bp23 Business Relationship Management

Business Relationship Management is the process that enables BRMs to provide links between theservice provider and the customers at the strategic and tactical levels.

The processes purpose is two-fold, in that: It should maintain a business relationship between the service provider and the customer with

focus on the customers needs and This focus on customer needs ensures that the service provider can meet the evolving business

needs over time

The scope of BRM for internal service providers is typically between a senior representative formIT and the senior managers of the business units. In external service providers, the BRM functionis often carried out by a dedicated team who are focused on maximizing contract value throughcustomer satisfaction.

The objectives of BRM include: Ensuring that the service provider understands the customers perspective of service Ensuring high levels of customer satisfaction and establishing and just as importantly maintaining

constructive customer relationships

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Overview of Service Design

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S2Cp1 Objectives

The subject of this session is Financial Management for IT services, which is the subject of chapter 4.3 ofthe ITIL Service Strategy publication.

When you have completed this session you will:

Understand the purpose of IT Financial Management for IT services

Be aware of the importance of Financial Management

Have familiarised yourself with the basic concepts of Financial Management

S2Cp2 Process objectives

Budgets, Forecasting, Overspend, Underspend, Costs, Prices - theyre commonplace terms if youremanaging an IT infrastructure.

The process of Financial Management is covered in section 4 of the Service Strategy publication.Financial Management is concerned with delivering the best possible quality service within budget, andidentifying the costs associated with the provision of those services.

The purpose of Financial Management is to provide cost-effective stewardship of the IT assets andfinancial resources used in Services.

However, even though the goal appears to be straightforward, there are probably as many financialmanagement methods as there are organisations.

Fortunately ITIL provides specific guidance for IT Service Management and proves to be very useful in

choosing which approach to take.

S2Cp3 Importance of Financial Management

Operational visibility, insight and superior decision making are the core capabilities brought to theenterprise through the rigorous application of Financial Management. Financial data continues toincrease the importance of Financial Management for IT and the business as well.

Financial Management is a strategic tool for service providers. Internal service providers are increasinglyasked to operate with the same levels of financial visibility and accountability as their business unit andexternal counterparts. Moreover, technology and innovation have become the core revenue generatingcapabilities of many companies.

Financial Management provides the business and IT with the quantification, in financial terms, of the valueof IT services, the value of the assets underlying the provisioning of those services and the qualification ofoperational forecasting.

Talking about IT in terms of services is important. It can help to change the perception of IT and its valueto the business. Therefore, a significant portion of Financial Management is working in tandem with IT andthe business to help identify, document and agree upon the value of the services being received, and theenablement of service demand modeling and management.


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Like its business equivalent, IT Financial Management responsibilities and activities do not exist solelywithin the IT finance and accounting domain. Rather, many parts of the enterprise interact to generate andconsume IT financial information, including operations and support units, project managementorganisations, application development, infrastructure, change management, business units, end usersetc. These entities aggregate, share and maintain the financial data they need.

S2Cp4 Process Activit ies

Service Valuation quantifies, in financial terms, the funding sought by the business and IT for servicesdelivered, based on the agreed value of those services. Financial Management calculates and assigns amonetary value to a service or service component so that they may be disseminated across the enterpriseonce the business customer and IT identify what services are actually desired.

Service valuation focuses primarily on two key valuation concepts:

Provision ing Value - whichis the actual underlying cost to IT related to provisioning a service. Inputcomes from financial systems, and consists of payment for actual resources consumed by IT in the

provisioning of a service. These cost elements may include items such as:

Hardware and software license costs

Annual maintenance fees for hardware and software

Personnel resources used in the support or maintenance of a service

Utilities, data-centre or other facilities charges

Taxes, capital or interest charges

Compliance costs

The sum of these actual service costs typically represents the baseline from which the minimum value of aservice is calculated since providers are seldom willing to offer a service where they are unable to recoverthe provisioning cost.

Service Value Potential - is the value-added component based on the customers perception of valuefrom the service or expected marginal utility and warranty from using the service in comparison with whatis possible using the customers own assets.

S2Cp5 Activity

Try answering this Financial Management question.

FeedbackAccounting tells you where money is being spent, whereas budgeting assists with predicting futurefinancial requirements. Finally charging is concerned with the recovery of costs.

S2Cp6 Cost Optimization

Financial Management for IT services provides key inputs for Cost Optimisation.

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Cost optimization is about giving expenditure to the expected levels of activity and return it is also aboutpreventing unnecessary expenditure.

Cost optimization should not be thought of as cost savings.

The purpose of cost optimization is to ensure that levels of investment are appropriate for the level ofservice that customers demand and the levels of returns that are being projected. This may result inincreased levels of expenditure if demand and potential returns increase.

Cost optimization focuses on two perspectives:

Is it possible and cost effective to use existing services or technology to achieve the outcomes?

What is the most cost effective investment (not always the cheapest) that needs to be made if theexisting technology will not be able to work?

S2Cp7 Cost Categories

ITIL guidance on Financial Management identifies six cost categories. These can be further grouped intothree distinct pairs, namely Capital and Operational costs, Direct and Indirect costs and finally Fixed andVariable costs.

Lets begin with Capital costs versus Operational costs.

A Capital cost is an outright purchase of fixed assets, something an organization owns and has a worth.Capital items include buildings, hardware if it is owned, software, if it has been developed and it can beresold.

Capital items are usually items to which depreciation can be linked - their actual value changes over timeaccording to a policy that is set by the organization.

Operational costs are the ongoing day-to-day and longer term costs which relate to elements that theorganization doesnt own.

So, for example the lease of a building or the use of consumables are operational costs.

Another pairing is Direct versus Indirect costs. A Direct cost is a cost specific to one entity, whereas anIndirect cost relates to a resource shared by a number of entities.

And the final pairing is Fixed or Variable costs. Typical Fixed costs include salaries, standing charges andtelephone line rental. Its a fixed price, it doesnt matter how much or how little you use it.

Variable costs need to be measured in order to see the usage. Controlling the usage enables you tocontrol the costs involved. An example of a Variable cost might be a charge per megabyte downloaded,

via an Internet connection.

S2Cp8 Planning Confidence

One of the main purposes of Financial Management for IT services is to ensure proper funding for thedelivery and consumption of services.


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Planning confidence is not a tangible output or plan rather that it refers to the level of confidence thatservice stake holders have in the service provider being able to accurately forecast costs and returns.

A lack of planning confidence will result in a lack of confidence in the service provider which in turncauses an unwillingness by the business to invest in IT unless absolutely necessary.

S2Cp9 Activity

Here's a quick question on cost types

FeedbackA cost that varies depending on usage is known as a Variable cost.

S2Cp10 Service Investment Analys is

Financial management for IT services provides the shared analytical models and knowledge used

throughout an enterprise in order to assess the expected value and/or return of a given initiative, solution,program or project in a standardised fashion. It sets the thresholds that guide the organization indetermining what level of analysis is to be applied to various projects based on size, scope, resources,cost and related parameters.

The objective of service investment analysis is to derive a value indication for the total lifecycle of aservice based on upon firstly, the value received, and secondly costs incurred during the lifecycle of theservice.

S2Cp11 Accounting

Accounting within Financial Management differs from traditional accounting in that additional category and

characteristics must be defined that enable the identification and tracking of service-oriented expense orcapital items.

The key Accounting functions are:

Service recording - The assignment of a cost entry to the appropriate service

Cost Types - These are higher level expenses categories such as hardware, software, labour,administration, etc. These attributes assist with reporting and analysing demand and usage ofservices and their components in commonly used financial terms

Cost Classifications - There are also classifications within services that designate the end purposeof the cost. These include classifications such as:

Capital or Operational - This classification addresses different accounting methodologies which arerequired by the business and regulatory agencies

Direct or Indirect - This designation determines whether a cost will be assigned directly or indirectly to aconsumer or service.

Direct Costs are charged directly to a service since it is the only consumer of the expense

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Indirect or shared costs are allocated across multiple services since each service may consume a portionof the expense

Fixed or Variable costs - This segregation of costs is based on contractual commitments of time or price.The strategic issue around this classification is that the business should seek to optimise fixed service

costs and minimise the variable in order to maximise predictability and stability

Cost Units - This is the identified unit of consumption that is accounted for a particular service or serviceasset

As the IT Organizations accounting processes and practices mature toward a service orientation, moreevidence is uncovered underlining its existence and performance.

S2Cp12 Compliance

Compliance relates to the ability to demonstrate that proper and consistent accounting methods and/orpractices are being employed. This relates to financial asset valuation, capitalization practices, revenuerecognition, access and security controls etc. If proper practices are documented and known, compliance

can be easily addressed.

It is important to understand the importance and responsibility for being aware of regulatory andenvironmental risks which can affect the service operation and the customers business.

Over the past decade a number of important regulatory and standards-related issues and opportunitieshave been introduced that impact Financial Management. Certain legislation has had enormous impact onfinancial audit and compliance activities.

The implementation of public frameworks and standards such as COBIT, ISO/IEC 20000, Basel II, andother industry specific regulation may appear to be pure costs with no tangible benefits. However,regulatory compliance tends to improve data security and quality processes, creating a greater need forunderstanding the costs of compliance.

S2Cp13 Service economics

Service economics relies on four main areas, two of which we will look at in this part of the course namelybusiness impact analysis and financial management for IT services. The other two areas are serviceportfolio management and return on investment which are covered in other modules of this e-learningcourse.

Business impact analysis or BIA as it is known involves the service provider understanding the effect on abusiness if a service was not available this enables the business to prioritize investments in services andservice continuity.

Financial management for IT services provides financial data and information into BIA to help quantify the

potential effect on the business. Financial management for IT services also helps to quantify and prioritizethe actions needed to be taken in order to prevent the impact from becoming reality.

S2Cp14 Summary

In this session we have been examining Financial Management for IT services, which is the subject ofchapter 4.3 of the ITIL Service Strategy publication.


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To design IT services, together with the governing IT practices, processes and policies. To realize theservice providers strategy and to facilitate the introduction of these services into supported environmentsensuring quality service delivery, customer satisfaction and cost-effective service provision.

The main objectives of Service Design is to design IT services so effectively that minimal improvementduring their lifecycle will be required. However, continual improvement should be embedded in all service

design activities to ensure that the solutions and designs become even more effective over time, and toidentify changing trends in the business that may offer improvement opportunities. Service designactivities can be periodic or exception-based when they may be triggered by a specific business need orevent

S3Ap4 Scope

ITIL Service Design provides guidance for the design of appropriate and innovative IT services to meetcurrent and future agreed business requirements. It describes the principles of service design and looks atidentifying, defining and aligning the IT solution with the business requirement. It also introduces theconcept of the service design package and looks at selecting the appropriate service design model. Thispublication covers the methods, practices and tools to achieve excellence in service design. It discussesthe fundamentals of the design processes and attends to what are called the five aspects of service.

Additionally ITIL Service Design enforces the principle that the initial service design should be driven by anumber of factors, including the functional requirements, the requirements within service level agreementsor SLAs, the business benefits and the overall design constraints.

Service Design will also be tasked with the design of secure and resilient IT infrastructures, environments,applications and data/information resources and capabilities that meet the current and future needs of thebusiness and customers. IT Service Continuity, Information Security and Availability Management providesignificant help here.

And finally Service Design will be involved in the measurement methods and metrics for assessing theeffectiveness and efficiency of the design processes and deliverables. To ensure continuous improvementrequires agreement on what can be measured, what must be measured and what should be improved.

S3Ap5 Purpose and Objectives - continued

Continued development of the skills and capabilities within IT is important in every organization and this isanother important objective of Service Design. Commonplace as well as specialist skills are neededthroughout the Service lifecycle. Some specialist skills will be developed through user training whereasothers may need to be hired in from specialist consultants.

Service Design ensures that the solutions they help to buy and build for the business are useable by thebusiness and are supportable by IT staff. This requires business change, benefits realisation and stafftraining programmes to be developed.

Service Design will also contribute to the improvement of the overall quality of IT service within the

imposed design constraints. Wherever sensible, Service Design tries to re-use or exploit existingcomponents and services. This requires detailed knowledge of the potential as well as operationalservices and their components.

The up-to-date Service Portfolio, Service Catalogue, Service Design Package and ConfigurationManagement System provide a useful source of that knowledge.

S3Ap6 Critical Success Factor and Key Performance Indicators


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So what is a CSF? A CSF is a Critical Success Factor, its Something that must happen if a Process,Project, Plan, or IT Service is to succeed. For example high level CSFs for a supermarket could includeImage in financial market; Market share. Measures or KPIs and targets must be set for each of theseCSFs.

KPIs are Key Performance Indicators. These are metrics that are used to help manage a Process, ITService or Activity. KPIs may concentrate on Efficiency, Effectiveness, and Compliance.

An Objective is the defined purpose or aim of a process, an activity or an organization as a whole.Objectives are best expressed in SMART terms, in other words, Specific, Measurable, Agreed, Realisticand Trackable.

A Metric is something that is measured. Availability or response times are typical examples.

A Measurement often states how it will be measured. Availability as a percentage and response time inseconds measured from time the enter button is pressed to the time a useful message is seen on thescreen are typical examples.

S3Ap7 Activity

The table contains four statements. The activity here is to decide whether these are Measures, Metrics,KPIs or CSFs.

Place the most relevant term alongside each statement. Once youre happy with your choices, click thesubmit button.

FeedbackThe table should look something like this.

S3Ap8 4Ps - People, Partners, Products, Processes

In a 1995 study of US army IT projects, only 5% were used with minor changes and a miniscule 2% wereused as delivered. The remainder were either abandoned in the design transition stages or delivered butnever used.

The causemay be a combination of many things, for example insu

ITIL Certified ITIL Foundation 2011 Study Notes

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Transcript of ITIL Certified ITIL Foundation 2011 Study Notes