service strategy service offering slideshare

Rockville, MDFebruary 18, 2009

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Discussion Document

Innovation & Service StrategyDeveloping a service innovation pipeline

2Filename/RPS Number

Agenda

What do we mean by Service Strategy?

Key business challenges facing the public sector

What are the advantages and benefits of pursuing a Service Strategy?

How can Booz Allen help?


Agenda






What does Service Strategy mean to you?

ServiceProposal

ServiceProposal

ServiceProposal

ServiceProposal

ServiceProposal

New services or changes to existing services that provide

value

Is it a process or a methodology?

Is it negotiation tool?

Is it an accounting method?

Is it a methodology for organizational design?

Does it help drive key business decisions?

Is it a fancy term for financial analysis?

Is it just a marketing “thing”?


Service Strategy is best exemplified by presenting a scenario…

Hypothetical ScenarioHypothetical Scenario

A large state transportation agency has 8000 employees and 5 business units - each focused on modes of transportation: SHA, the MTA, the MPA, the MAA and the MMVA.

Due to reduced toll revenue at MTA, the Governor of that state directs the state secretary to look at cutting operational expenses by 20% - a press release to this effect is issued.

Joe is an IT Manager at MTA and discusses the press release around the water cooler. Most people in his IT group are concerned this means reduction in group size.

However, Joe is smart and realizes that the server virtualization project he has been working on for the past 6 months could be implemented across all 5 modals of the agency to reduce server hardware costs and ensure no reduction in staff.

The challenge is that this project would require an initial investment as well as obtaining the buy-in of 5 IT Managers and the CIO of the agency.

A large state transportation agency has 8000 employees and 5 business units - each focused on modes of transportation: SHA, the MTA, the MPA, the MAA and the MMVA.

Due to reduced toll revenue at MTA, the Governor of that state directs the state secretary to look at cutting operational expenses by 20% - a press release to this effect is issued.

Joe is an IT Manager at MTA and discusses the press release around the water cooler. Most people in his IT group are concerned this means reduction in group size.

However, Joe is smart and realizes that the server virtualization project he has been working on for the past 6 months could be implemented across all 5 modals of the agency to reduce server hardware costs and ensure no reduction in staff.

The challenge is that this project would require an initial investment as well as obtaining the buy-in of 5 IT Managers and the CIO of the agency.


Public and private sector executives are faced with complex challenges…

Challenge Characteristics

Macro Economic Economic pressures in the public sector are driving organizations to do more with less, resulting in wide spread cost cutting or decisions to terminate certain programs

Relationships Relationships influence decision makingImplementing innovative solutions requires building effective relationships with agency senior executives (agency head, CFO, etc.).

Objective Setting Strategic planning is critical - misalignment of IT, organizational, and agency goals result in too many rogue and/or “pet” projects

Islands of Automation Islands of Automation caused by reluctance to share innovation and/or IT success stories across lines of business (across agency)

Legacy Systems As technology progresses, legacy systems are constantly needing to be replaced This results in less funding for new projects (sometimes more innovative projects)

Innovation Most organizations focus internally when seeking new product or service innovations Great organizations practice “open innovation”

Inadequate Funding Causes many civil organizations to start with a product or service and then try to “sell” that product or service to anyone that will buy Leads to very inefficient use of time and money

…many of which stem from the absence of a comprehensive vision and strategy on service strategy.


Agenda






So, what is Service Strategy and how does it help?

Service Strategy is like a funnel with innovative service ideas going in and new services (services that provide value to customers) coming out

Service Strategy improves an organization’s service management capabilities by focusing on effectively delivering value to customers and illustrating value of the service providers

Service Strategy leverages strategic analysis, planning, positioning, and economics relating to service models, strategies, and strategic objectives to enhance an organization’s service management approach

In a moment, we’ll take a look at what happens within the funnel to make this happen

Service Strategy in a Nutshell

ServiceProposal

ServiceProposal

ServiceProposal

ServiceProposal

ServiceProposal

New services or changes to existing services that provide

value


So what happens within the Service Strategy funnel to help ensure only those ideas that provide value are implemented?

In-Depth Market

Assessment

In-Depth Market

Assessment

Market segmentation Demand forecasting Market research Portfolio Mgmt

2

1 Day - 6 weeks

Business Need, Going-In Options, and Key Issues

Business Need, Going-In Options, and Key Issues

1

Focus on the problem in the market space

Don’t develop a solution and then go looking for a problem to solve

Working Session

Competitor Strategiesand Likely

Moves

Competitor Strategiesand Likely

Moves

Customer alternatives Possible new entrants

3

AnalyzeAnalyze

Estimate costs to implement

Estimate risks and effect on value creation

Calculate ROI Consider affect on

service portfolio

4

Build vs. Buy vs. Partner Alternatives

Build vs. Buy vs. Partner Alternatives

Look for business innovation

Consider new sourcing ideas

Consider partnerships

6

Suggested Roadmap &

Initiatives

Suggested Roadmap &

Initiatives

7

Service CharterService Charter

Design goals Implementation schedule Design constraints Technology options

9

Kick-Off

Innovation & Development Strategy Development & Go-Forward Plan

Booz Allen Approach

1 Day - 6 weeks

Final Review

Use risks to form the plan Look for solutions outside the

organization


A structured Service Strategy approach is a way to…

Improve innovation by providing an objective and unbiased forum for innovative service proposals

Reinforce the need for a service proposal with analytical data that supports the business case

Improve speed of change by filtering out service proposals that are destined for failure (e.g., low ROI)

Improve legacy system replacement/upgrades by focusing on innovation

Provide an organizational (agency wide) awareness using service portfolio management

Improve financial compliance and control

Enhance value capture and creation by reducing uncertainty


Essentials of value creation though Service Strategy

Build the right team to be able to capture and quickly analyze service proposals

Organize for rapid experimentation

– Revamp entrenched routines, organizational boundaries, and incentives to encourage rapid experimentation

– Consider using small development groups that contain key people (designers, testers, engineers) with all the knowledge required to iterate rapidly

Anticipate, identify, and exploit early information

– Recognize the full value of front-loading: identifying problems upstream, where they are easier and cheaper to resolve

– Embrace failures that occur early in the development process but significantly advance organizational knowledge

Combine new and traditional technologies

– Do not assume that a new technology will necessarily replace an established one - usually, new technologies are best used in concert

– Remember, technologies evolve continuously!


What are the benefits you can expect?

Make your service “not optional”

Enhance decision making

Improve speed of change

Improve financial compliance and control

Enhance operational control

Total value capture and creation

Team members incentivized to be more innovative

Improves portfolio management – do what you do well…abandon what you don‘t do well

Organize existing services to be more efficient


Agenda

Business decisions facing public sector executives

What is Service Strategy and what are the benefits?

Where can Service Strategy help?



Filename/RPS Number

Booz Allen’s Service Strategy approach includes special emphasis on creating an innovation pipeline supporting the entire lifecycle

Innovation Pipeline

Innovation Pipeline Strategy Strategy Design Design Transition Transition Operations Operations

Portfolio Management

Financial Management

Demand Management

Portfolio Management

Financial Management

Demand Management

Intellectual Capital Management

Capacity Management

Continuity Management

Supplier Management

Intellectual Capital Management

Capacity Management

Continuity Management

Supplier Management

Change Management

Release Management

Asset and Configuration Management

Knowledge Management

Change Management

Release Management

Asset and Configuration Management

Knowledge Management

Incident Management

Event Management

Problem Management

Request Fulfillment

Incident Management

Event Management

Problem Management

Request Fulfillment

Service Development Lifecycle

Continuous Service ImprovementReporting, Measurement and Service Level Management

Source: Based on ITIL v3, The Stationary Office publishing, 2007


Filename/RPS Number

Selecting the right innovation model is critical to ensuring service development succeeds in your organization

Source: Wolcott and Lippitz. The Four Models of Corporate Entrepreneurship MIT Sloan Management Review, Vol. 49, No 1.

The EnablerThe organization provides funding and senior executive attention to

prospective projects.Example: Google

The ProducerThe organization establishes and

supports a full-service group with a mandate for corporate

entrepreneurship.Example: Cargill

Diffused Focused

Ad Hoc

Dedicated

Res

ourc

e A

uth

ority

OrganizationalOwnership

The OpportunistThe organization has no deliberate

approach to corporate entrepreneurship. Internal

networks drive concept selection and resource allocation.

Example: Zimmer

The AdvocateThe organization strongly evangelizes for corporate

entrepreneurship but business units provide the primary funding.

Example: DuPont

Four Models of Innovation

The EnablerThe organization provides funding and senior executive attention to

prospective projects.Example: Google

The ProducerThe organization establishes and

supports a full-service group with a mandate for corporate

entrepreneurship.Example: Cargill

Diffused Focused

Ad Hoc

Dedicated

Res

ourc

e A

uth

ority

OrganizationalOwnership

The OpportunistThe organization has no deliberate

approach to corporate entrepreneurship. Internal

networks drive concept selection and resource allocation.

Example: Zimmer

The AdvocateThe organization strongly evangelizes for corporate

entrepreneurship but business units provide the primary funding.

Example: DuPont

Four Models of InnovationInnovation

PipelineInnovation

Pipeline StrategyStrategy DesignDesign TransitionTransition OperationsOperations

• Portfolio Management

• Financial Management

• Demand Management




• Intellectual Capital Management

• Capacity Management

• Continuity Management




• Change Management

• Release Management

• Asset and Configuration Management

• Knowledge Management





• Incident Management

• Event Management

• Problem Management

• Request Fulfillment






Filename/RPS Number

The model to select depends on your specific strategic goal…

Source: Wolcott and Lippitz. The Four Models of Corporate Entrepreneurship MIT Sloan Management Review, Vol. 49, No 1.

InnovationPipeline

InnovationPipeline StrategyStrategy DesignDesign TransitionTransition OperationsOperations






























Filename/RPS Number

Service strategy will focus investment decisions on different aspects of the business depending on your objectives

Source: Luehrman, T.A. Strategy as a portfolio of real options. Harvard Business Review, Vol. 76, No 5, 89-99

Run – investments are centered around maintaining operations of services Grow – investments are intended to grow the scope of products and services Transform – investments are moves into new market spaces Retire - redundant or lower value services are divested

Run – investments are centered around maintaining operations of services Grow – investments are intended to grow the scope of products and services Transform – investments are moves into new market spaces Retire - redundant or lower value services are divested

Do Not Invest Invest

Exi

stin

gN

ew

Ma

rke

t S

pace

s

<1.0 >1.01.0Value-to-Cost Ratio

Over Served Under ServedCustomer Needs

Existing

Ne

wC

usto

me

rs

Unlikely Near-Term

Investment

Possible Future

InvestmentProbable Future

Investment

Likely Near-Term

Investment

Do Not Invest Invest

Exi

stin

gN

ew

Ma

rke

t S

pace

s

<1.0- >1.01.0Value-to-Cost Ratio

Over Served Under ServedCustomer Needs

Existing

Ne

wC

usto

me

rs

Unlikely Near-Term

Investment

Possible Future

InvestmentProbable Future

Investment

Likely Near-Term

Investment

Transform

Grow

Run

Run

Transform

Grow

Maintain Grow

Retire

InnovationPipeline

InnovationPipeline StrategyStrategy DesignDesign TransitionTransition OperationsOperations






























Market Focusand Position

DistinctiveCapabilities

CompetitiveAdvantage

Market Focusand Position

DistinctiveCapabilities

CompetitiveAdvantage

Filename/RPS Number

Service strategy helps focus your efforts on the market space

Could Play Can Play Can Lead Leader

Could Play Can PlayCan

CompeteCan Lead

Could Play but

DifficultCan Play Can Play Can Play

Cannot Play

Could Play but

DifficultCould Play Could Play

Low HighGreen

Low

Hig

hC

lea

n

Bissell Competitive Position in the Clean and Green Playing Field

IndustryBest

IndustryAvg

EntryLevel

Entry Level Industry Avg Industry Best

MarketSpace

ServicePortfolio

ServiceCatalog

SuccessFactors

CustomerPortfolio

UndervaluedMarket Space

BusinessModel

New BusinessPipeline

StrategicAssets

1 & 3 - Based on ITIL v3 Service Strategy, The Stationary Office publishing, 20072 - Source: Based on Accenture research and analysis

Analyzing the Market Space1

2

3

Illustrative

Illustrative


Filename/RPS Number

The Service Strategy approach is ideal when you require ITIL certified professionals and service management approach

IT Infrastructure Library v3.0IT Infrastructure Library v3.0

Service Strategy at Stage 1 of Service Lifecycle Formulate IT strategy from business vision

Using Financial Management process, map cost of infrastructure to cost of service for entire service lifecycle (inception to retirement)

Form IT Steering Group (business and IT) to evaluate and act on new service proposals

Engage relevant groups across lifecycle to assess impact of new services; lower risk, raise success rate of change implementation

Demand management focus on new technology to meat capacity requirements going forward

Financial Management evaluates each new or changed service for ROI; tracks actuals against budget

Make use of expertise and tools to enhance proactive communication and incident resolution.

Service Strategy at Stage 1 of Service Lifecycle Formulate IT strategy from business vision

Using Financial Management process, map cost of infrastructure to cost of service for entire service lifecycle (inception to retirement)

Form IT Steering Group (business and IT) to evaluate and act on new service proposals

Engage relevant groups across lifecycle to assess impact of new services; lower risk, raise success rate of change implementation

Demand management focus on new technology to meat capacity requirements going forward

Financial Management evaluates each new or changed service for ROI; tracks actuals against budget

Make use of expertise and tools to enhance proactive communication and incident resolution.

Booz Allen Service StrategyBooz Allen Service Strategy

Focus on organization delivering value to customers

Leverage strategic analysis, planning, positioning, economic

Provide a forum for innovative service proposals Improve speed of change by filtering out service

proposals that are destined for failure (low ROI) Improve legacy system replacement/upgrades by

focusing on innovation Provide an organizational (agency wide) awareness

using service portfolio management Improve financial compliance and control Enhance value capture and creation by reducing

uncertainty

Focus on organization delivering value to customers

Leverage strategic analysis, planning, positioning, economic

Provide a forum for innovative service proposals Improve speed of change by filtering out service

proposals that are destined for failure (low ROI) Improve legacy system replacement/upgrades by

focusing on innovation Provide an organizational (agency wide) awareness

using service portfolio management Improve financial compliance and control Enhance value capture and creation by reducing

uncertainty


How would you answer these questions? Strategy

– Can your team articulate the positioning statement for each service it provides?

– Are there economies of scale you could be capturing?

Customers vs. Stakeholders

– Can your team articulate who your target customer is?

– Can your team articulate the difference between user and customer?

– Does your organization value market research?

Competition/Alternatives

– Can your team members articulate what their customers’ alternatives are?

– How are the alternatives to your services going to change in the coming years?

Innovation (see the innovation survey for more information)

– Can your team members articulate where innovative ideas come from?

– Does your organization have a process for evaluating innovation?


Agenda

Business decisions facing public sector executives

What is Service Strategy and what are the benefits?

Where can Service Strategy help?



Applied Business Analysis (ABA)

– Provides analyses to help DECIDE among competing alternatives and options

– Focuses on optimizing capability and acquisition development resource allocations

Integrated Financial and Resource Management (iFRM)

– Helps secure and manage the budgets that FUND programs, initiatives and procurements

– Focuses on fiscal planning, budgeting and execution, internal controls, and operational compliance and reporting

Quantitative Management Controls (QMC)

– Provides services and tools to monitor and CONTROL program execution activities

– Focuses on integrating scope, schedule, cost and risk into a comprehensive planning and management structure

Booz Allen’s EBA service offerings support the full life cycle of financial management and Service Strategy


Questions?


Appendix


Where does your organization fall on this innovation scale?

Do Not Agree

Partially Agree

Agree Activity Phase

Our culture makes it hard for people to put ideas forward 1 2 3 In house idea generation

High scores indicate that the business needs to focus on idea generation

People in our unit come up with very few good ideas on their own 1 2 3

Few of our innovation projects involve team members from different units or subsidiaries

1 2 3 Cross-pollination among business unitsOur people typically don’t collaborate on projects across business

units, businesses, or subsidiaries1 2 3

Few good ideas for new services comes from outside our business unit 1 2 3 External sourcing of ideasOur people often exhibit a “not invented here” attitude – ideas from

outside are not considered as valuable as those invented within1 2 3

We have tough rules for investment in new projects – it’s often too hard to get ideas funded

1 2 3 Selection High scores indicate that the business needs to focus on conversion of ideas to services

We have a risk adverse attitude toward investing in novel ideas 1 2 3

New development projects often don’t finish on time 1 2 3 Development

Managers typically have a hard time getting traction for developing new services

1 2 3

We’re slow to roll out new services 1 2 3 Diffusion High scores indicate the company needs to focus on diffusion of services into the organization

Our competition quickly copies our service introductions and often make pre-emptive launches in other business lines

1 2 3

We don’t penetrate all possible channels, customer groups, and regions with new services

1 2 3

Service Strategy Questionnaire


ABA provides cost, financial, and economic analyses to optimize resource allocation and regulatory decisions

Cost Estimating and Analysis

Cost Estimating and Analysis

Life Cycle Cost Estimate (LCCE) Total Cost of Ownership (TCO) Cost modeling and simulations Affordability assessments Statistical analysis and parametrics

Asset Inventory Valuation and Condition Assessment Facilities capital planning Capital Infrastructure Renewal Forecasting (CIRF™) Real Properties Portfolio Management

Capital Asset ManagementCapital Asset Management

Decision Analysis and

Resource Optimization

Decision Analysis and

Resource Optimization

Portfolio Analysis IT Capital Planning Business Case Analysis Analysis of Alternatives (AoA) Cost Benefit Analysis Value Measuring Methodology (VMM™)

Broad-Scale Economic Analysis

Broad-Scale Economic Analysis

Economic Impact Analysis Regulatory Impact Analysis Market and Industrial Base Analysis Econometric Modeling


iFRM helps clients be responsible stewards of funds, providing both financial management improvement and long-term assistance

Financial Management Process ImprovementFinancial Management Process Improvement

Core FM process expertise: A/R, A/P, Cost, GL, Reporting, Budget Structured approach to process review and improvement Repositories of generic process description, flows and data

Structured approach to systems modernization planning and management Familiarity with standard application functionality: Oracle, SAP, Peoplesoft Repositories of systems requirements Related acq strategies; RFP templates; cost estimates, program mgmt

Financial Management Systems ModernizationFinancial Management Systems Modernization

Enterprise Compliance & Controls ManagementEnterprise Compliance

& Controls Management

Structured control assessment methodology, supported by desktop tools Experience in process and related IT controls assessment and testing

Financial Management & Accounting Operations

Financial Management & Accounting Operations

Operational acctg expertise (GAAP and federal GAAP equiv + JFMIP skills) Fin statement preparation; pre-audit preparation (data analysis and cleansing)


QMC provides an analytical approach to improving program and project planning, measurement, risk management, and control

Earned Value and Integrated Scheduling

Earned Value and Integrated Scheduling

PM policies, standards, structure, and processes Integrated Baseline Review (IBR) process Implementation of ANSI 748-A compliant Earned Value Mgmt Systems Analysis and validation of program EVMS Integrated Master Planning/Scheduling

Project/program risk management assessment, development and implementation RISC-IQ™ Implementations Measurement program design and implementation Organizational Project Management (OPM3) assessments

Program Risk and Performance Management

Program Risk and Performance Management

Acquisition Strategy & Planning

Acquisition Strategy & Planning

Acquisition/contract strategy development and execution Source selection planning and facilitation Life cycle documentation development Contract compliance, oversight and management


The offerings are all delivered by expert staff, armed with both industry standard and proprietary tools …

Leadership and participation: Society for Cost Estimating and Analysis (SCEA) National Property Management Association (NPMA) Chartered Financial Analyst (CFA) Institute American Economic Association (AEA) Project Management Institute (PMI) Association for the Advancement of Cost Engineering (AACE)

Leadership and participation: Society for Cost Estimating and Analysis (SCEA) National Property Management Association (NPMA) Chartered Financial Analyst (CFA) Institute American Economic Association (AEA) Project Management Institute (PMI) Association for the Advancement of Cost Engineering (AACE)

Over 50% hold advanced degrees Over 45% hold various security clearances Over 40% have 10+ yrs experience in CF&BA subject matter

Over 50% hold advanced degrees Over 45% hold various security clearances Over 40% have 10+ yrs experience in CF&BA subject matter

Professional CertificationsProfessional Certifications

Risk Integrated with Cost and Schedule-Intelligent Quantification (RISC-IQ™)

Value Measurement Methodology (VMM) Capital Infrastructure Renewal Forecasting (CIRF) Information Technology Investment Portfolio System (I-TIPS)

Risk Integrated with Cost and Schedule-Intelligent Quantification (RISC-IQ™)

Value Measurement Methodology (VMM) Capital Infrastructure Renewal Forecasting (CIRF) Information Technology Investment Portfolio System (I-TIPS)

Cost Estimating ACE-IT™ EDCAS™ Function Point

Workbench™ OSCAM PRICE™

Systems SEER-H™, -SEM™ RACER™ CostPROF™ @Risk™ Crystal Ball™ Metify™ Oros Analytics™ Planning™

Econometric Models

and Statistical Applications

IMPLAN™ SPSS™ SAS™

Decision Analysis Applications and

BenchmarksLogical Decisions™ Team Expert Choice™GartnerGroup TCO Manager™

Project Management Tools

Primavera®Active Risk ManagerDeltek CobraDeltekWelcomHomePertmasterwInsightMPMProsightWelcomRisk

Over 35% hold professional certifications Certified Cost Estimator/Analysts Certified Project Management Professionals Certified Professional Contract Managers Certified Public Accountants Certified Government Financial Managers

Over 35% hold professional certifications Certified Cost Estimator/Analysts Certified Project Management Professionals Certified Professional Contract Managers Certified Public Accountants Certified Government Financial Managers

Custom Methodologies and ToolsCustom Methodologies and Tools

Expertise in Standard Industry ToolsExpertise in Standard Industry ToolsExperience, Degrees and ClearancesExperience, Degrees and Clearances

Professional Organization LeadershipProfessional Organization Leadership


Filename/RPS Number

ITIL Expertise

For more information about Booz Allen’s Service Strategy Offering:

– Kenneth Jones

ITIL Version 3 Certified

[email protected]

(301) 838-3765

For more information about ITIL v3:

– Multithreads LLC

Mimi Struck, Ph. D.

ITIL Manager (Master) Version 2

ITIL Expert Version 3

Accredited Training Provider

25+ years of experience

www.Multithreads.com

service strategy service offering slideshare

Business

stationary

team members

team articulate

itil v3

service proposals

filenamerps

service strategy

booz allen