Understanding Service Portfolio Management
We will begin this chapter by covering the service portfolio management process, which allows you to gain an understanding of the complete portfolio of services provided across the lifecycle.
In the Foundation exam syllabus, this process is covered only by the requirement to understand the purpose, scope, and objectives of the process. More information about this process is available in the lifecycle core publication of Service Strategy, and further education on the process can be found in the ITIL qualification scheme.
Purpose of SPM
The purpose of this process is to ensure that you have the appropriate mix of services delivered by the service provider to meet the requirements of the customer. The process enables you to track important information about your services, including the investment that has been made and the interaction with other services.
The information captured in the service portfolio also ensures that you clearly define the services and link them to the business outcomes they support. Once you do this, you provide the capability for alignment across the whole of the lifecycle through design, transition, and operation in order to ensure value is delivered to customers.
Objectives of SPM
The following are the objectives of service portfolio management:
- Provide a process that allows an organization to manage its overall service provision. As part of this process, you are able to develop mechanisms that allow you to investigate and decide on the services to provide to your customers, based on the analysis of the potential benefits and acceptable levels of risk.
- Maintain the definitive managed portfolio of services provided by the service provider. Each service should be identified, along with the business need and outcome it supports.
- Provide an information source that allows the organization to understand and evaluate how the IT services provided enable them to achieve their desired outcomes. It will also be a mechanism for tracking how IT can respond to organizational changes in an internal or external environment.
- Provide control over which services are offered, to whom, with what level of investment, and under what conditions.
- Track the organizational spend on IT services throughout their lifecycle, allowing for regular reviews of the strategy to ensure that the appropriate investment is being made for the chosen strategic approach.
- Provide information to enable decision making regarding the viability of services and when they should be retired.
Scope of SPM
Service portfolio management has a very broad scope, because it covers all the services a service provider delivers, as well as those that it is planning to deliver and those that have been retired from live operation.
Because the primary concern of the service portfolio management process is to understand if the services being provided are delivering value, the process should cover the ability to track investment and expenditure on services. This can then be compared to the desired business outcomes.
Internal and external service providers may have a different approach from the way they connect services to business outcomes. For an internal service provider, it will be necessary to work closely with the business units in the organization to compare the outcomes with the investment. External service providers are more likely to have this information captured as part of the agreement or contract that defines the relationship with the business. The services they provide are also more likely to be directly associated to revenue generation or support revenue generation services.
Service portfolio management should be responsible for evaluating the value of the services provided throughout the whole of their lifecycle. It is also important to be able to compare the merits of the existing services against those that are being planned or the benefits they provide in replacing retired services. In this way, you can be certain that the services provided meet the required business outcomes.
The Service Portfolio
We will now review the service portfolio, which is the output from the process. Figure 3.1 gives an overview.
FIGURE 3.1 The service portfolio
Based on Cabinet Office ITIL material. Reproduced under license from the Cabinet Office.
The service portfolio is the complete set of services managed by a service provider. This includes the contractual and financial commitments across internal, external, or third-party providers; new service development activity; and improvement initiatives. All services should be included, whether they are visible, customer-facing services or the enhancing, enabling services that support them.
The service portfolio consists of three sections: the pipeline section, which contains information about the services that are in a pre-operational state; the service catalog section, which is the customer-facing section of the service portfolio that shows details of live operational services; and the retired section, which contains details of the services that have been retired.
The service portfolio also covers the services that are currently only in a conceptual stage—potentially the services that would be developed if there were no limit on budget, resources, or capabilities. This will be maintained in the pipeline section of the service portfolio. It may seem strange to document what you currently cannot achieve, but by doing so, you will be able to allow for better assessment of your existing delivery and determine whether you are allocating resources and capabilities efficiently.
From the service portfolio, you can see the allocation of all the resources in use across the whole service lifecycle. Each stage of the lifecycle will be making demands on available resources and capabilities, and the service portfolio allows you to see those allocations and resolve any potential conflicts according to the importance of the business outcomes.
Any new project or development should have an approved financial plan and allocated budget, demonstrating the cost recovery or return on investment, and this will be captured in the service portfolio. By ensuring you have the right mix of services across the pipeline and catalog, you can make sure you have the correct funding for all of the IT service provider activities across the service lifecycle. A balanced approach to the introduction of new services and development of services, compared to the maintenance of live services, will ensure that you can manage any conflict in resource allocation.
As you will see in Chapter 6, the service catalog is the only part of the service portfolio that is customer-facing, although the other information the service portfolio contains may be used as part of customer-facing reports, presentations, and business cases. The live operational services, as captured in the service catalog, are the only services that will be expected to demonstrate cost recovery or profitability.