Like patterns of business activity (PBA), User profiles should be identified and analyzed for their relationship to the patterns of demand generated in the business. User profiles are defined in the context of the roles and responsibilities within the organization for people, functions, processes and applications. In some cases a user profile will be defined for an automated process, which will have its own demand for supporting services.

When defining user profiles, they will be associated with one or more PBA, which requires both customers and the service provider to have a clear understanding of the business activities and how various roles are related.

The following table is an example of User profiles defined by Demand Management:

In the table, the PBA code would be referencing previously defined patterns of business activity, which helps clarify when will each type of user typically generate demand for IT services and what level of demand will there be. This is valuable information which can be used for then predicting the potential impact that adding or removing staff members (users) may have on the demand for IT services, and the ability of the IT service provider to meet those demands.

Service Portfolio Management; Service Catalog Management; Service Level Management; Demand Management; Supplier Management; Financial Management for IT …

The primary source of demand for IT services comes from the execution of business process within the organization(s) being served. With any business process, there will be a number of variations in workload that will occur, which are identified as patterns of business activity (PBA) so that their affect on demand patterns can be understood. By understanding exactly how the customer’s business activity operates, the IT organization can improve the way in which capacity is planned and produced for any supporting services.

Demand occurs at multiple levels. Increased workload in the business can translate to a higher utilization of services by existing employees. At the same time, additional staff members that are employed by the organization can be translated into additional demands to the IT service provider (especially the Service Desk) in terms of service requests and incidents. To manage this, regular communication is required so that the business plans of the customers and business units are synchronized with the service management plans of the service provider.

Figure 4.I: – Activity-based Demand Management

Over time, Demand Management should be able to build a profile of business processes and patterns of business activity in such a way that seasonal variations as well as specific events (e.g. adding new employees) can be anticipated in terms of associated demand. Using this information will help various elements of the Service Lifecycle, including the following:

Service Design: Particularly Capacity and Availability Management, which can optimize designs to suit demand patterns.

Service Transition: Change Management and Service Validation and Testing can ensure that appropriate levels of warranty can be provided.

Service Operation: Can optimize the availability of staff based on patterns of demand.

Continual Service Improvement: Can identify opportunities to consolidate demand or introduce improved incentives or techniques to be utilized in influencing demand.

Critical to the effective application of Demand Management is a forward-looking Capacity Plan, which should identify how capacity will be produced to meet the predicted demand patterns, including the level of excess capacity deemed appropriate in accordance with the business requirements for service value.

The primary goal of Demand Management is to assist the IT Service Provider in understanding and influencing customer demand for services and the provision of Capacity to meet these demands.

Other objectives include:

• Identification and analysis of Patterns of Business Activity (PBA) and user profiles that generate demand
• Utilizing techniques to influence and manage demand in such a way that excess capacity is reduced but the business and customer requirements are still satisfied.

Demand Management was previously an activity found within Capacity Management, and now within Version 3 of ITIL®® it has been made a separate process found within the Service Strategy phase. The reasoning behind this is that before we decide how to design for capacity, decisions must be made regarding why demand should be managed in a particular way. Such questions asked here include:

• When and why does the business need this capacity?
• Does the benefit of providing the required capacity outweigh the costs?
• Why should the demand for services be managed to align with the IT strategic objectives?

Poorly managed demand is a particular source of risk for service providers, with potential negative impacts being felt by both the IT organizations and customers. If demand is not accurately predicted and managed, idle (excess) capacity will generate cost without creating associated value that can be appropriately recovered. From the customer perspective, most would be highly reluctant to pay for idle capacity unless it provides some value for them.

On the other hand, insufficient capacity can impact the quality of services delivered, potentially limiting the growth desired for services and for the organization as a whole. Accordingly, Demand Management must seek to achieve a balance between the prediction and management of demand for services against the supply and production of capacity to meet those demands. By doing so, both the customers and IT can reduce excess capacity needs while still supporting required levels of quality and warranty in agreed services.

Keep in mind that Demand Management plays an integral part in supporting the objectives of an organization and maximizing the value of the IT Service Provider. This means that the way in which Demand Management is utilized will vary greatly between each organization. Two examples showing these differences are:

Health Organizations: When providing IT Services that support critical services being offered to the public, it would be unlikely that there would be many (if any) Demand Management restrictions that would be utilized, as the impact of these restrictions could lead to tragic implications for patients being treated.

Commercial Confectionery Organizations: Typically a confectionery company will have extremely busy periods around traditional holidays (e.g. Christmas). Demand Management techniques would be utilized to promote more cost-effective use of IT during the non-peak periods; however leading up to these holidays the service provider would seek to provide all capacity to meet demand and support higher revenue streams for the business units involved.

GOAL: The goal of Financial Management is to provide cost effective stewardship of the IT assets and the financial resources used in providing IT services. Primarily this is to enable an organization to account fully for the financial resources consumed by the IT service provider and to attribute these costs to the services delivered to the organization’s customers.

Financial Management is focused on providing both the business and IT with improved insight (in financial terms) into the value of IT services, supporting assets and operational management and support. This translates into improved operational visibility, insight and superior decision-making at all levels of the organization.

Figure 4.H – Financial Management managing conflicting perspectives

When implemented effectively, Financial Management provides the understanding and management of the distance and (sometimes) conflicting perspectives between the Business Desires/Opportunities and the Capabilities of the IT organization. It enables the business to be more IT conscious and IT to become more business-aligned.

As businesses evolve, markets change and the IT industry matures, Financial Management is becoming increasingly adopted by IT organizations, with typical benefits including:

• Enhanced decision making
• Increased speed of change
• Improved Service Portfolio Management
• Financial compliance and control
• Improved operational control
• Greater insight and communication of the value created by IT services.

Activities

There are three fundamental activities for Financial Management for IT Services. These are:

• Funding
• IT Accounting
• Chargeback.

Funding: Predicting the expected future requirements for funds to deliver the agreed upon services and monitoring adherence to the defined budgets. This ensures that the required resources to fund IT are made available and can improve the business case for IT projects and initiatives.

IT Accounting: Enables the IT organization to account fully for the way its money is spent. The definition of Cost Models can be used to identify costs by customer, by service, by activity or other logical groupings. IT Accounting supports more accurate budgeting and ensures that any charging method utilized is simple, fair and realistic.

Chargeback: Charging customers for their use of IT Services. Charging can be implemented in a number of ways in order to encourage more efficient use of IT resources. Notional charging is one particular option, in which the costs of providing Services to customers are communicated but no actual payment is required.

Other Terminology

Financial Management assists in the role of Service Valuation, which is used to help the business and the IT Service Provider agree on the value of the IT Service. It determines the balance demonstrating the total cost of providing an IT Service against the total value offered to the business by the Service. As previously described in chapter 4.2, value in services is created by the combination of Service Utility and Service Warranty.

Demand Modeling:

Financial Management works closely with the process of Demand Management to anticipate usage of services by the business and the associated financial implications of future service demand. This assists in identifying the funding requirements for services, as well as input into proposed pricing models, including any incentives and penalties used.

Strategically, financial input can be gained from key times such as product launches, entry into new markets, mergers and acquisitions, which all generate specific patterns of demand. From a customer perspective, the Service Catalog should provide the capability to regulate their demands for IT services and prepare budgets, avoiding the problem of over-consumption.