If the goal of your organization is to provide the right IT/business services to your customers, whether internal or external, service portfolio management (or “portfolio management” as it’s now called in ITIL 4 – there’s more on this later) is a vital step towards meeting governance requirements and delivering value. In terms of available best practice, service portfolio management is an enabling part of ITIL and something that IT organizations should be undertaking.
On the surface, service portfolio management seems simple. It’s the full portfolio of IT/business services available to customers, with its purpose – in my opinion – being to help provide business justification for each service by ensuring they deliver maximum value within managed risks and costs. This end-to-end practice offers many useful benefits, and yet, for many companies, it isn’t employed to its fullest extent.
Defining Service Portfolio Management
In ITIL v3/2011, service portfolio management is the management of a service portfolio, where this portfolio lists information related to the service and its current status, plus the history of each service. The service portfolio is typically viewed in three parts:
- The service catalog which provides an overview of all services that are visible, and buyable, to customer.
- The service pipeline which captures the status of any services that aren’t yet live and visible to customers, typically because they’re proposed services or under development. This portfolio segment also details the future growth and timeline for each service.
- The retired services catalog which details all services that have been retired and stores any essential historical information.
The purpose of maintaining this information isn’t just to have a service portfolio though. The real value of service portfolio management comes from justifying needs based on inherent business value.
This information enables managers to assess the quality of the services, as well as the associated costs. Ideally, managers can decide which services customers currently use, anticipate what they may need soon, and what they no longer need.
With a well-managed service portfolio helping to answer these questions:
- Why should a customer purchase this service?
- Why should a customer purchase this service from our organization?
- What’s the price and chargeback system?
- What are our strengths and weaknesses and our priorities and risks?
- How do we allocate our resources and capabilities?
Service Portfolio Management Vs. Product Portfolio Management
Some companies utilize product portfolio management and assume that it and service portfolio management are the same concepts and provide the same business justifications.
Unfortunately, this isn’t the case. Because as their names suggest, there are differences between products and services, and using them interchangeably does a disservice to the provided customer value as well as the enterprise bottom line.
Traditionally, products are the delivered, purchased good that are tangible. Of course, in IT, something tangible is commonly a digital tool such as software. Services, on the other hand, offer at least some intangible value. Whereas a product might be an application that solves a specific problem, the service can include customer service, transition assistance, and management. And the service facilitates the outcome that the customer wants and expects.
Service Portfolio Management Vs. Project Portfolio Management
Each new service, or change to an existing service, should be justified by clear business needs in order to establish the value. And service portfolio management should track these investments through the lifecycle of the service, from service design through transition and operation, and eventually to retirement and decommissioning. It should also monitor the business strategy for the service, and the ability to execute on this strategy, such that these are dynamic and transparent.
There are definitely commonalities with project portfolio management (PPM)…
While service portfolio management is tracking services, PPM is tracking projects in the same manner – making decisions on investments. But the problem with PPM is that it often stops short, when the project ceases – and as a new service reaches customers on a daily basis – with PPM no longer measuring value at this point.
This can create a rift between App Dev and IT operations, with a difference between what the business expected to the project to deliver and what the customers actually receives (in service terms).
Thus organizations need to recognize that service portfolio management and PPM are related, and that both have their place in a successful ITIL deployment. With industry experts stating that service portfolio management should determine the role of PPM, and not the other way around.
Employing service portfolio management may involve a radical re-do for all business units involved, but its benefits – and the benefits of a transparent service catalog – are measurable:
- Customers understand exactly what you, as a service provider, will deliver
- There’s cradle-to-grave transparency into value, costs, and risks
- Services in the pipeline can be monitored as well as operational services
- It helps to justify proposed services and major changes to existing services
Ultimately, tracking the value, cost, and risk of every service your service organization provides also helps to position it as indispensable to your customers, because you know – quickly – how valuable a service is.
Please Note the Changes in ITIL 4
As already mentioned, the service portfolio management process is now the portfolio management practice in ITIL. It doesn’t negate the need for service portfolio management, the revised practice is now more about how organizations should make investment decisions – with this wider than purely IT services.
This means that the guidance is elevated from “Which services should we invest in?” to “What should we invest in?” – to compare investments “across streams,” i.e. viewing services, projects, improvements, and other opportunities as competing for the same business resources.
So, how is your service portfolio management? What would you add in terms of benefits and tips? Please let me know in the comments.