Chapter 2.7
A Model for IT Service Strategy
Neil McBride
De Montfort University, UK
AbstrAct
This chapter describes a suggested model for
developing a service strategy within IT services.
It considers the context, the organization of IT
services which might be appropriate for a service
strategy. It discusses the content of an IT service
strategy which it suggests should be presented as
a portfolio of services. It reviews the process of
developing the service strategy, suggesting a set
of steps which may lead to the development of
appropriate content within the right management
structure. The example of hospital information
systems is used to illustrate the strategic process.
In order to set the scene for the strategic process,
the state of information systems strategy research
is discussed and set in the context of the developing
service management research literature. The
term service-centric is used and the difference
between service-centric IT management and
service-oriented architecture is clarified. A case
is made for a migration from an IT strategy based
primarily on the development of a portfolio of IT
systems to a service-strategy based on the development
of a portfolio of business services.
IntroductIon
In the last decade there has been a significant
shift in many IT departments. IT departments
increasingly recognize that IT within an organization
is a service which, like other services
within organizations, aims to deliver value to the
organization through the way that it supports the
activities of the business. This has led to an increasing
emphasis on the delivery of IT operations
as a service which not only involves the building
and delivery of the software and hardware, but
also the execution of a wide range of activities
around the technology.
The influences that have led to the realignment
of IT as a service are complex. Economies, particularly
in the West, are changing from a goods
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A Model for IT Service Strategy
base to a service base (Rai & Sambamurthy, 2006).
In terms of business models, many companies are
repositioning themselves as service organizations.
The technological products, which were previously
the focus, become part of a larger service.
The Volvo lorry is part of a logistics service and
is seen in that context (Edvardsson, Gustafsson,
Johnson & Sanden, 2000). A technological
product is seen as a service waiting to happen.
In addition to the manufactured goods being set
in a service context, they are also surrounded by
support services involving maintenance, replacement,
and training.
In IT departments, the rise of outsourcing,
the move from making software internally to
buying it and the recasting of IT as a commodity
has further aroused a service mindset. The
service focus of these changes has particularly
been around quality. In delivering services and
IT products to clients, outsourcers had to work
on the definition of what the service was that was
being contracted by the client, how it could be
measured and how it could be judged as being
up to a mutually acceptable standard. Hence,
outsourcing led not only to a focus on contracts,
but to the development of service level agreements
and to attention to the expectations and perceptions
of the customer. It was not just the technology
that mattered—its reliability, availability
and security—but the customer-focused services
around it. IT outsourcers were no longer judged
by the number of bugs in their software and its
usability, but by the empathy, adaptability, and
competence of their staff. In IT, quality became
a much more complex subject.
A third influence on IT departments has
been ITIL which emerged in the 1980’s as a UK
government response to the need to increase the
efficiency and effectiveness of IT in the public
sector. ITIL was taken up by many companies
during the 1990’s and became the standard approach
to running IT service operations. However,
until the release of ITIL3 in 2007, the focus of
ITIL was in service operations, and particularly
in the support of information system applications.
Strategy was not effectively addressed. This recent
recognition in ITIL of the importance of IT as
a service function and of the need for a service
strategy has been recognized for some time in
industry in IS management, and expressed in a
central concern for alignment: alignment of strategy,
alignment of operations, and alignment of
culture. In ITIL3, the Service Strategy text (Iqbal
& Nieves, 2007) recognizes that the purpose of
IT, like any service organization, is to provide
value to the customer. The service must ensure
that the customer can use her assets effectively to
achieve business outcomes which are produced
by business processes. This suggests a massive
shift away from IT as technical support to IT as
a service organization delivering business value
to its customers.
However, even ITIL3 is weak on the processes
by which a service strategy is developed. This
chapter proposes a set of steps that may be undertaken
in developing a service strategy and develops
an IT governance approach that complements the
organizational structures suggested in ITIL3. It
also draws from the management literature to
suggest service strategy techniques.
bAcKground
The development of the field of services marketing
from the late 1980s onwards provided a new set
of concepts which could be used in the academic
development of IT as a service discipline. An
initial focus of service marketing was around
the intangible nature of services (Brown, Fisk &
Bitner, 1994; Bitner & Brown, 2006). A definition
of the characteristics of a service remains of
great significance to IT practice because of the
contrast that can be drawn with a manufactured
product. Although it should be recognized that
the definition of a “product” in marketing is wide
ranging, since a product can involve a service
as part of its makeup—financial products are a
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A Model for IT Service Strategy
good example, for the IT practitioner, the idea
that IT can be portrayed as service can come as
somewhat of a shock. For the IT professional,
whose interest and training has focused on the
technology and its construction, the idea that
the IT system is subservient to the information
delivery service it provides to customers, may be
difficult to take on board.
While the goods vs. service paradigm has
more recently been questioned (Lovelock & Gummesson,
2004), a consideration of the concepts
provides a strong marker for the types of changes
in management and attitude needed in IT services.
Services are indeed intangible (Lovelock,
Vandermerwe & Lewis, 1996). They cannot be
stored. Once a service is consumed – usually at a
time and place where the producer and consumer
are both present – it cannot be reused, sold on
or demonstrated. Unlike technical artifacts, the
customer is an integral part of the service, must
be present for the delivery of the services (excepting
some electronic services) and takes part in
service delivery.
Taking a service-centric view of IT means that
the intangible and temporary characteristics of
the service have wide-ranging consequences for
the delivery of that service. The classification of
services as service factories, service shops, mass
services, and professional services according to
the extent of customer involvement and the diversity
of demand (Verma, 2000) has significant
effects on IT delivery (Peppard, 2003; Rands,
1992). The extent of customer involvement can
be managed and used as a basis for designing the
service product.
The diffusion of service thought into the IT
department has had significant effects on the
management of quality. Service quality is itself
ephemeral and difficult to measure. While the
quality of the technical product, the IT hardware
and software remains of importance, dimensions
such as empathy, assurance and reliability
come into play. Quality is much more a matter
of customer expectation and perception, driven
by the quality of service encounters and the
perceptions of moments of truth rather than
the internal quality of IT technology as defined
in quality manuals. The development and use
of SERVQUAL (Berry & Parasuraman, 1991;
Parasuraman, Zeithaml & Berry, 1988), has had
some influence on IT services and has been well
explored in the information systems academic
literature ( Kang & Bradley, 2002; Pitt, Berthon
& Lane, 1998; Pitt, Watson & Kavan, 1995; Yoon
& Suh, 2004). Furthermore, DeLone and McLean
(2003) in their ten-year review of their information
systems success model, describe the need for
service quality, as measured by SERVQUAL, as
an extension to the model.
servIce-centrIc It
mAnAgement And
servIce-orIented
ArchItecture
The recognition of the service nature of IT has not
only been a concern of IT managers and information
systems academics, but has also come to
the attention of computer scientists. Spohrer and
Riecker (2006), in their introduction to a special
service sciences issue of Communications of the
ACM, discuss the rise of the service sector and
its influence on IT services. In that same issue,
Rust and Miu (2006) suggest that it is the rise of
the service sector which is driving a computer
revolution. In other words they are suggesting a
link between IT and Industry cemented by the
spread of service concepts.
However, for many IT professionals and
computer scientists, “service-oriented” refers to
an approach to software architecture in which
software agents are loosely coupled to fulfill
an application need. Here, customers, or rather
customers’ computers, request services from
providers through a small set of well-defined,
universally available interfaces. The service
is then the unit of work offered by the service
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A Model for IT Service Strategy
provider; and the customer can find out who can
provide that service through a registry of services.
The service-oriented architecture is used in the
implementation of Web services (Barry, 2003).
However, service-oriented architecture is ab