The IT Skeptic - Comments for "ITIL Demand Management misunderstood"

I have a crazy theory on how

Niels — Wed, 27 Jul 2011 09:51:18 +0000

I have a crazy theory on how Demand Management evolved in ITIL v3.

Demand Management used to be part of the v2 Capacity process/capability.
Before ITIL v3 was being worked on, Demand Management was used in all kind of other contexts (such as Sourcing Governance, Business Information Management), with possibly different meanings.

Before ITIL v3 books were written, a rough sketch was drafted, in which Demand Management was explicitly taken out of Capacity Mgt, and sent to Strategy for reasons mentioned above.

The authors of the strategy book were different than those who created the rough sketch, and when they ended up at this chapter, they took a bit from v2, a bit from the other contexts and a bit from their own. Hence you got the v2 explanation (chapter 5.5.1 - challenges in managing demand), patterns of business activity (which is highly focused on in exams) and Service (level) Packages, which sounds more Product Management type and could just as well be included in Catalog or Portfolio Management.
Alltogether a bunch of related, but not connected concepts.

Maybe IT'IL be fixed in ITIL 2011?

Demand Statement? Nailing processes to lifecycle jelly?

ianclayton — Tue, 19 Jul 2011 18:29:16 +0000

In my experience working as a product manager with a worldwide product portfolio with revenue targets in excess of $20m, I had to create 'demand statements' and a 'demand plan' developed form research of market trends and assumptions developed by my marketing research folks. The demand statement was key input to the product planning activities that called into play financial estimates of the cost of operation/support of the product.

The accuracy of the demand statement hinged heavily on understanding what activities prospective or actual customers would perform, from what locations, with what frequency and so on. Traditionally, this has been a skill resident in 'capacity management' functions, and particularly 'finite capacity scheduling' skillsets of manufacturing fame. There is a bridge from Finance to Capacity, you just cannot succeed at financial management of resources without this capability. There is also a vital bridge between capacity and continuity planning - and I would suggest the latter has challenges without information on various demand positions.

The movement of demand management to Strategy in ITIL V3, seems to make sense but illustrates the challenge the authors set themselves trying to nail 'processes' in stages of the lifecycle. They don't easily fit, because they can play a role anywhere along the lifecycle! This was exactly the proposal we tabled to the requirements team in 2005 - yes write a lifecycle book if you must be please respect existing product development methodologies that have more than addressed this topic. Remember, a service is a type of product.

As for the lifecycle itself, it does not even reflect the dated thinking of service management circa 1975, when the elements of a service management 'system' were first proposed. One clue, there is currently (Edition 2011 may address this) no real-time 'service transaction' processing component to reflect the fact that 99.999% of service requests are processed outside of the service lifecycle.....

Way back then they realized that customer activity and how they interact with products and services, and the service provider organization, DRIVES INTERNAL WORK EFFORT and costs. They created the term 'outside-in' to distinguish thinking from the customer perspective. They developed a service system concept to tackle the challenge. So far, ITIL has completely missed this and continues to speak inside-out. I look forward to seeing how the extreme makeover authors untangle the lifecycle/process nailing debacle...

The way I see it and way I

Visitor — Mon, 18 Jul 2011 19:04:52 +0000

The way I see it and way I teach it is exactly the way explained by Horacio.

Demand Management is about understanding demand and influencing it.

This is done 100% at the strategic level. That's why it is at the Service Strategy book.

Skeptic, what you are calling "demand management at the operational level" for me is part of the ITIL Capacity Management sub-process called Business Capacity Management.

two faces of demand management

Charles T. Betz — Mon, 18 Jul 2011 14:24:27 +0000

From 2007. The large outsourcer mentioned in this blog is Accenture.

http://www.erp4it.com/erp4it/2007/01/the_two_faces_o.html

There is plenty of precedent that demand front ends the service portfolio, ITIL notwithstanding.

Charles T. Betz
http://www.erp4it.com

I agree demand mechanisms

skeptic — Mon, 18 Jul 2011 10:44:10 +0000

I agree demand mechanisms are decided at the strategic level, and designed into the service. What I was getting at, but didn't say well, is that it is ALSO an operational mechanism. For most folk reading this blog, it impacts mostly due to its integration with capacity.

And as I DID say in the post, yes it can be a positive and/or negative mechanism

I don't see Demand

Horacio — Mon, 18 Jul 2011 09:58:52 +0000

I don't see Demand Management as an operational, reactive activity to be triggered when maximum capacity is about to reach a certain threshold, and only to constrain resource usage.

Demand Management is in the "Strategy Management" book for a reason.For example, a Telco company will usually charge more for a call at 11:00 a.m. than for a call at 11:30 p.m. They will even release marketing promotions so encourage customers talking during nights and weekends. And this is a strategic decision, not just operational.

Why? Because they want to encourage people to talk more during the time when their networks are less used, to get more money from this infrastructure that is being underutilized. They want to get more return of investment from this fixed asset, during typically unused time.

On the other hand, they are discouraging users from talking more during the peak hours of network utilization, because otherwise they would have to make non-optimal investments to grow their network. This is an investment related, strategic decision.

In the other hand, maybe a telco has reached 99% of penetration in a market. In this case, they want to encourage growth by introducing new services, not selling more mobiles to new users, which might not exist in this market. This would be a new market space, that will encourage new patterns of demand and different actions for demand management. In this case, for encouraging more demand for new services (like data services, media content, push-to-talk, etc). So Demand Management is not only about restricting demand, but can also be about encouraging demand to make more money or reinvent the market.

Operational reaction due to load monitoring is at resource capacity level. Demand management is at business and service capacity level, not resources capacity. Without forgetting, of course, how there are related among themselves.