Co-ordinating service management

The briefings in this part of the toolkit explain how to manage services after implementation to ensure that they meet business need and continue to achieve value for money. Service management brings together the processes of managing service performance, managing relationships with providers, managing changes to the business requirement and managing contracts. Successful service management seeks to influence the acquisition process and the result of it so that a manageable service is acquired. Through good service management, improvements to business processes will deliver benefits to the organisation as a whole.

You will also need to make arrangements for a formal regime of benefits realisation, without which you may not achieve the benefits of your investment in business change. You must have processes in place for business continuity, to ensure that the business can continue to deliver its objectives in the event of things going wrong. In addition, there must be support for the end-users in the form of training, help desk facilities and everything they need to make good use of IS and IT. Most IT service providers to the public sector follow the standards set out in the IT Infrastructure Library (ITIL) - see Infrastructure management.

Figure 1 shows the interfaces between the business and provider.

What is service management?

Service management aims to achieve common understanding between the customer and provider through managing service level expectations and delivering and supporting desired results. IT-based services, or business services based on IT, may be delivered direct to the customer or - in the case of e-government - to the general public on behalf of the customer. Service management also looks at the dependence that businesses and organisations have on IS/IT services to acquire and process the elements which make up many of their services. Service quality monitoring demonstrates ongoing value for money and service improvement.

Service providers may be internal or external to the customer organisation - in general, the same principles apply, except that for internal provision the contractual arrangements will not have legal force.

Why is it important?

As the customer, you are responsible for ensuring that services support the business and remain value for money. Services must evolve in order to be appropriate and effective in supporting the changing business and to continue to achieve value for money. The e-government strategy encourages innovators in government to identify new ways of working in partnership with the private sector, and possibly other public sector organisations. Service management is the means of ensuring that you, as the customer continue to get what you want and/or are entitled to.

Key factors for success

For service management to be effective, you must have:

• the 'right' service - addressing what your customers need and balancing your own business goals and priorities with those of your customer(s) and provider(s)
• an appropriate sourcing decision - understanding the value of the service to your organisation
• the right payment mechanisms and performance measures to incentivise your providers
• an appropriate regime for service and contract management - you must define where your responsibilities end and the providers begin. If you manage a number of providers and have to deal direct with each one, there may be scope for rationalising contracts. Multiple providers can be an advantage but you must be aware of what policies and standards you need and who is responsible for taking the end-to-end view. Contracts with service providers must incorporate some degree of flexibility in defining obligations on both parties to allow for business requirements to change within a rapidly changing business environment
• provision to monitor satisfaction and to modify the service as needed.
  

Principles

Service management policy
Your service management policy must scope the service requirements and objectives to be achieved. A management framework sets out the approach to take for risk assessment and management and the approach to take to monitor and continuously improve the quality of service delivery. A policy should highlight the key roles and responsibilities required within the service management team together with the use of third party suppliers.

Communications
Service management is all about achieving common understanding, managing expectations and delivering results - communications and relationships are critical to success. Good communications at senior management level are key to keeping service delivery up to date and relevant to the customer's requirements. Trust is essential, together with an understanding of business goals or each other's intentions. Mutual requirements need to be reasonable and realistic.

Interfaces - customer and provider
Figure 2 shows the key interfaces between customer and provider. Customer/provider relationships may be highly formalised, strongly contractually based and closely performance/cost-conscious. Other relationships may be more flexible, based on shared objectives (see Managing Relationships). The factors that help to establish the relationship and achieve the right benefits include:

• the provider gaining greater insight into your business and management style, and therefore more often pre-empting changed requirements and/or making proactive suggestions/contributions, in the expectation that this may improve the service and/or provide other sources of mutual benefit
• the provider having more confidence about investing for the longer term
• you, as the customer, gaining from knowing both your own and the provider's strengths and weaknesses, and focusing contract and service management effort into those areas where they will bring most return on effort.

Service management approaches must be designed to accommodate change to improve the quality and/or efficiency of service delivery; and to accommodate working with partners in both the public and private sectors.

Figure 2: Service delivery roles

See the annex to this chapter for role descriptions.

Processes

Strategy implementation
The high level process of service formulation should start when developing and interpreting your business strategy. The nature of the services required is a business decision - services delivered by the organisation to the citizen or internal services to support the business. The form of those services is partly a function of business strategy implementation and partly of the IS and IT strategies. How to deliver the services is partly a function of implementation of business, IS and IT strategies, and partly of the acquisition strategy. The delivery details may be left to the service provider under some contractual options.

Service Level Agreements (SLAs)
A service level agreement is a formal contractual arrangement specifying the required service levels and the expected quality of service to be delivered. It must state the mutual responsibilities of the customer and provider ensuring that both parties are responsible for monitoring, revising and evaluating existing Service Level Agreements (SLAs).

Service level management

The process of service management seeks to put in place SLAs with providers in order to monitor and manage service levels, improving services to ensure that end users are satisfied with the service they receive. SLAs should be reviewed when significant changes to requirements take place and at least annually to ensure that they continue to meet business need.

The level of service should be captured and baselined, at least annually. This provides a basis for measuring service improvement and achievements using defined metrics for each service management process. The results of the programme should be monitored regularly and appropriate action taken to correct any under-achievements. All service level targets and results together with their history should be maintained in an annual report.

The foundations for service management must be put in place during pre-contract negotiations. This enables relevant and realistic contract management and management of the relationship with the provider following service implementation

Managing relationships - internal, external, customers, provider

Issues include:

• the importance of selection of appropriate overall service performance metrics
• the need to provide for the ability to alter service performance criteria - qualitatively or quantitatively
• the need for clearly defined responsibilities and means for exception handling, and support for the process of problem diagnosis and deciding on and taking remedial action
• the importance of providing for appropriate levels of technology refresh
• the importance of providing means for keeping service costs at or near value for money levels
• the customer's understanding of how they are going to retain the capability to re-procure effectively
• the cases where the customer requires to 'see behind the scenes' in terms of the provider's internal reporting; this entitlement, and the circumstances where it may be invoked, need to be provided for
• the potential for conflicts of interest
• services which cross multiple service domains and/or contract boundaries can be problematic.

Note that teamworking is an essential aspect of relationship management for many construction projects. The important distinction is that management of a teamworking relationship is relatively short term and may bring together a number of contractors, where as a strategic partnership is typically long term and involves two parties.

Performance measurement

Service performance metrics should be consistent, from high-level business objectives to detailed operational criteria. At the top level there should be a focus on intended business outcome, as independent as possible of how this is to be achieved, bearing in mind that short term cost-cutting or other optimisation may sometimes compromise longer term sustainability of integrity of the business. This should be in terms of:

• what the business want
• what the customer wants
• measuring what matters - costs and value
• demonstrating continuing best value under changing circumstances
• selecting measures that will assist the service management and diagnostic process.

Procedures should be adopted for monitoring the performance of internal and external service suppliers, with meetings held at agreed intervals, at least annually, to discuss progress, achievements, issues and future plans.

The Contract Management Workbook provides related material in a stage based (easy to follow) format.

Further information

See the briefings on managing relationships, managing contracts and service performance and managing changes to requirements; see also the contract management guidelines. For construction projects see the Achieving Excellence Guides.

See OGC's commercially published guidance for detailed advice:

How to Manage Service Provision; ITIL Service Management

See the checklist for Co-ordinating Service Management