Service Management in Electronic Commerce. Panos Fitsilis TEI Larissa, Greece

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1 Service Management in Electronic Commerce Panos Fitsilis TEI Larissa, Greece 1

2 Contents Introduction to e-commerce Service level management Service Development Service Delivery Service Support 2

3 E-Business Definitions Business-to-business (B2B). Both sides of the transaction are businesses, non-profit organizations, or governments. Business-to-consumer (B2C). E- commerce transactions where customers are individual consumers Consumer-to-consumer (C2C). Consumers sell directly to each other. Consumer-to-business (C2B). Individuals sell services or goods to businesses 3

4 E-Commerce (B2C) The use of computer networks, primarily the internet, to buy and sell products, services, and information. 4

5 The Dimensions of Electronic Commerce Source: Choi et al. (1997), p

6 Why Electronic Commerce? Digital Convergence Anytime, Anywhere, Anyone Changes in Organization s Make-up Widespread Access to IT Increasing Pressure on Operating Costs & Profit Margins Demand for Customized Products & Services Speed or Time Reduction 6

7 Electronic Commerce myths Setting up a website is easy. e-commerce is cheap when compared to purchasing a mainframe. e-commerce means end of mass marketing. Everyone is doing it. e-commerce is lucrative. e-commerce is revolutionary. 7

8 Electronic Commerce Myths (Cont d) Online retailing is always the low-cost channel. All products can be sold online using identical business models. Customers can be bought. Online firms face less pressure to grow and achieve economies of scale. Size is not important for online firms. The middleman is out. 8

9 Advantages of Electronic Commerce Improved, lower cost information that makes buyers and sellers more knowledgeable Available 24 hours a day, virtually any place in the world. Availability expands the market for both buyers and sellers Decreases the cost of creating, processing, distributing, storing, and retrieving paper based information Reduces the cost of information Faster delivery of digitized products Better & Quicker Customer Service Comparison Shopping Allows High Product Customization 9

10 Limitations of Electronic Commerce Lack of system security, reliability and standards Lack of privacy and trust Unknowns about the integrity of those on the other end of transaction Integrity of the transaction itself Electronic money is bits and bytes Insufficient bandwidth; some transactions are still rather slow Integrating e-commerce software with existing legacy software and databases Fulfillment is specialized Not all types of products; no physical touch with the product 10

11 Electronic Commerce Framework Source: Turban et al. (2002) 11

12 Electronic Commerce is Interdisciplinary Marketing Consumer behavior and psychology Finance Economics Accounting and auditing Business law and ethics Management Information systems Common Business Services Infrastructure Messaging and information exchange Network infrastructure Multimedia and content development Application servers Databases 12

13 Electronic commerce development process Source: Turban et al. (2002) 13

14 We will focus on.. Service Delivery Service Support for IT services. Based on ITIL (IT Infrastructure Library) OGC (Office of Government Commerce) and CCTA (Central Computer and Telecommunication Agency) at UK Managed services can give competitive advantage while at the same time is key differentiator in mission critical e-commerce applications 14

15 IT Service Management A user call the Service Desk to report a problem with an online service The Incident management deals with this incident The Problem Management process investigates causes Change Management process is used to manage the change (Request for Change- RfC) The financial aspects are checked using IT Financial Processes IT Service Continuity processes are used to ensure that recovery is possible Release Management controls the process of implementing the change Availability Management checks hardware upgrades needed to meet required availability and reliability levels Configuration Management process ensures that the CMDB information is updated. Service Level Management process ensures that services is delivered according to the required time, cost and quality. 15

16 Service Delivery What services are required in order to provide adequate support Management Service Level Management Financial Financial management for IT services Technical Capacity management Availability management IT Service Continuity Management 16

17 Service Level Management Service Level management (SLM) is the process of managing a delivered IT service, in terms of quality quantity and cost. Integrates the disparate elements that makes up service provision Packages them into an easily used and understood service Expresses that service in terms the customer can understand Service Level Agreement (SLA) is a written agreement between and IT service provider and IT consumers, defining the key service targets and responsibilities of both parties 17

18 Benefits of SLM IT Services are designed to meet Service Level Requirements Improved relationships with satisfied customers Clearer view of roles and responsibilities Specific targets to aim for Service monitoring allows weak areas to be identified Service management underpins supplier management SLA can be used as a basis for charging 18

19 Customer/Service Level Management Relationship Customer Customer Customer Service Level Agreement (SLA) Service Level Management Service A Service B Service C Infrastructure 19

20 SLA contents Introduction Parties to the agreement Scope of the agreement Responsibilities Description of services covered Service hours Hours service is normally required Arrangements for requesting service extensions Service hours, Service calendar Availability targets within agreed hours Reliability usually expressed as number of service breaks, Mean Time Between Failures (MTBF) or Mean Time Between System Incidents (MTBSI) Support Support hours Arrangements for requesting support extensions Special hours, Support calendar Service Performance Change Management Procedures IT Service continuity Security Charging, Reporting 20

21 Agree SL Report A SLM process Establish function Implement SLA Manage proces Review 21 Monitor te Review UC, O LA Negotia Planning Implementation Catalog ue Draft Periodic Review Review SLA, UC, OLA Review SLM process

22 Financial management for IT services Budgeting which is the process of predicting and controlling the spending of money. It allows: Budget amount of money Ensure actual spending is within envelope Reduce risk of overspending IT accounting is the set of processes that enable the IT organization to account fully for the way its money is spent. Enables: Account for the money spent for providing the IT services Calculate the cost Perform cost-benefit, ROI analysis Identify cost of changes Charging is the set of processes required to bill customers for the services supplied to them. It enables: Recover cost from customers in a fair way Operate IT organisation as business unit Influence user and customer behavior 22

23 An example of the cost of IT Services Hardware Software Employment Accommodation External ServiceTransfer Direct cost Marketing and Sales (MS) Manufacturing (MF) Cost elements Finance (FIN) Absorbed overheads Indirect cost Unabsorbed overheads MS MF FIN Marketing and Sales (MS) MS Direct and Absorbed Cost X% uplift Total Cost 23

24 Capacity management/1 Capacity management ensures that the capacity of the IT infrastructure matches the evolving demands of the business in the most effective and timely manner. The process includes Monitoring the performance and throughput of IT services Undertaking tuning activities to make the most efficient use of existing resources Understanding the current demands and forecasting future needs The production of a capacity plan which enables the IT service to deliver the quality defined in the Service Level Agreement 24

25 Capacity management/2 Balancing act Cost against capacity Supply against demand Business Capacity Management Trend, forecast, model, prototype, size and document future business requirements Service Capacity management Monitor, analyze, tune and report on the service performance, establish baseline and profiles of use of services, manage demand for services Resource Capacity Management Monitor, analyze and report on the utilization of components, establish baselines and profiles of use of components 25

26 Availability management Is the process of optimizing the capability of the infrastructure, services and supporting organization to deliver a cost effective and sustained level of availability that enables the business to satisfy the business objectives. It aims to Ensure IT services are designed to deliver the levels of availability required by the business Provide a range of IT availability reporting to ensure that agreed levels of availability, reliability and maintainability are measured and monitored on an ongoing basis Optimize the availability of IT resources Reduction of incidents that impact IT availability 26

27 Availability principles Availability is at the core of business and user satisfaction Recognizing that when things go wrong, it is still possible to achieve business and user satisfaction Improving availability can only begin after understanding how the IT services support the business 27

28 The relationships with suppliers and maintainers of the IT infrastructure User User User Users Availability (Service Level Agreements) IT systems IT Services IT systems IT Service Provider Reliability + Manageability (Operational Level Agreements) S/W developers S/W maintenance Other Internal Suppliers Serviceabili (Contractua Hardware Software Environment, Telecoms External Supplier 28

29 Availability Terminology Availability Of components Resilience to failure Quality of maintenance and support Quality, pattern and extent of deployment of operational process and procedures Security, integrity and availability of data Security Confidentiality Integrity Availability Reliability Of components Level of resilience Maintainability Anticipation of failures Detection of failures Diagnosing of failures Resolving of failures Recovery from failures Restoration of the data and IT service Preventive maintenance Serviceability Vital Business Function 29

30 Unavailability Tangible costs Lost user productivity Lost IT staff productivity Lost revenue Overtime payments Wasted goods and materials Imposed fines or penalties Intangible costs Loss of customer goodwill Loss of customers Loss of business opportunity Damage to business reputation Loss of confidence in IT service provider Damage to staff morale 30

31 IT Service Continuity Management IT service continuity management enables the business to operate following a service disruption. Risks in scope Power Loss Earthquake Terrorism Flood Technical Failure 31

32 Impact of service continuity loss Failure to achieve service levels Financial loss Additional cost Immediate and long term loss o market share Breach of law, regulations or standards Risk to personal safety Embarrassment Breach of moral responsibility Loss of goodwill Loss of credibility Loss of image and reputation Loss of operational capability 32

33 IT service continuity process Requirements and strategy Business Impact Analysis Risk Assessment Business Continuity Strategy Implementation Implement Recovery Plans Implement Risk Reduction measures Implement stand by agreements Develop procedures Testing Operation Testing Review and Audit Culture and awareness Change Management 33

34 Recovery Should consider People and accommodation IT systems and networks Critical services Critical assets Recovery options Do nothing Manual work around Reciprocal recovery Gradual recovery (cold standby <72hours) Intermediate recovery (warm standby 24<recovery<72) Immediate recovery (hot standby <24 hours) 34

35 Service Support The user has access to the appropriate services to support the business functions: Service Support includes: Service Desk Incident Management Problem Management Configuration Management Change Management Release Management 35

36 Support Problem Current problems: Non structured customer support mechanisms Low customer confidence/perception Continually fire-fighting The same problems being resolved repeatedly rather than eliminated Continually interrupt driven Uncoordinated and unrecorded changes take place Inconsistent quality No management information available 36

37 Service desk inputs/outputs /Voice Requests Telephone Requests Internet Browser Request/Queries Fax Requests Hardware Application Events Service Desk Management Information & Statistics External Service Support Product Support Sales & Marketing Contract Support Internal Service Support 37

38 Service Desk functions Receiving calls, first-line customer liaison Recording and tracking incidents and complaints Keeping customers informed on request status and progress Making initial assessment of requests Monitoring and escalation procedures relative to the SLA Managing the request life-cycle, including verification and closure Communicating planned and short term changes of service levels to customers Coordinating second-line and third-party support groups Providing management information and recommendations for service improvement Identifying problems Contributing to problem identification 38

39 Service Desk benefits Service desk is known as help desk, customer hot line, call centre Service desk Improved customer service Increase accessibility through a single point of contact, communication and information Better quality and speedier turnaround of customer requests Improved teamwork and communication Better managed resources Better management information 39

40 Incident Management Any event which is not part of the standard operation of a service and which causes or may cause an interruption to, or a reduction in, the quality of that service Examples Application Service not available Application bug preventing customer from working Hardware System down Automatic alert Service request Information not available Cannot login 40

41 Incident Management process Service Request Procedures Service Desk Computer Operations Networking Procedures Other sources Of incident Routing Incident Management Process Incident detection and Recording Classification and initial support Investigation and diagnosis Resolution and recovery Incident closure Incident ownership, monitoring, tracking and communication RFC Resolution Resolution Change Management Process Configuration details Problem/error database CMDB 41

42 Incident life cycle Ownership, monitoring, tracking and communication Incident detection and recording Classification and Initial support Service Request Investigation and diagnosis Resolution and recovery Incident closure Service Request procedure Priority Critical < 1hour High < 8 hours Medium < 24 hours Low < 48 hours Planning Planned Status New Accepted Scheduled Assigned Work in Progress On hold Resolved Closed 42

43 Problem Management The objective of problem management is to reduce both the number and the severity of incidents and problems within business Problems are identified Analyzing incidents when they occur (reactive) Analyzing incidents over different time periods (proactive) Analyzing IT infrastructure The provision of a knowledge database developers/vendors when new products are introduced 43

44 Configuration Management Configuration Management provides a logical model of the infrastructure or a service by identifying, controlling, maintaining and verifying the versions of Configuration Items (Cist) in existence. The goals of CM are to: Account for all IT assets and configurations Provide accurate information on configurations and their documentation to support the service management process Provide a sound basis for Incident management, problem management, change management and release management Verify the configuration records against the infrastructure and correct any exceptions 44

45 Configuration Management Basic Activities Planning Defining purpose, scope, objectives, policies and procedures Identification Define structure (CI), create Configuration Management Data Base (CMDB) Control Ensures that only authorized and identifiable CIs are accepted and recorded Status accounting reporting on CI data Verification and audit 45

46 Configuration breakdown structure IT infrastructure Hardware Software Network Documentation Business system I Business system II Application I-1 Application I-2 Application I-3 Module I-2-1 Module I

47 Configuration Management DataBase (CMDB) Release contents, including component CI and their version numbers Component CIs and their version numbers in their test and live environments CI affected by a change Changes related to CIs CI history Equipment and software at a given location CIs affected by a problem 47

48 Change Management Change management is the process of moving from one defined state to another: It consists of: Raising and recording changes Assessing the impact, cost, benefits and risk of changes Developing the business justification and obtaining approval Managing the change implementation Monitoring and reporting on the implementation Closing and reviewing the change requests 48

49 Change Management procedure Request for Change (RfC) Change model scope Mega Change Log Seek Approve Estimate Seek CAB approval Build Massive Change Initial Assessment Medium Change Mini Change Scope of Change Tiny Change Minuscule Change Log Check Signature All Update actions CMDB Close Apply appropriate Change Model Implementation as defined in model 49

50 Request For Change (RFC) RFC includes RFC number Description and identity of item to be changed Reason for change Version of item to be changed Person proposing the change Date that change was proposed Change priority Change Advisory Board (CAB) recommendation Authorization signature Authorization data and time Scheduled implementation Release 50

51 Release Management Release management undertakes the planning, design, build, configuration and testing of hardware and software to create a set of release components for a live environment. The goals are: Successful rollout of software and hardware Design and implement efficient procedures for distribution and installation of changes of IT systems To ensure that H/W and S/W being changed is traceable, secure and that only correct, authorized and tested versions are installed To agree the exact content and rollout plan for the Release To implement new S/W and H/W releases into the operational environment 51

52 Major activities in Release management Development Environment Controlled Test Environment Live Environmen Release Management Release Release Policy Release Policy Planning Design, Build, Purchase S/W Build Configure Release Release Testing and Acceptance Roll out planning Communication And Training Distribution + installation Configuration Management DataBase (CMDB) Definitive Software Library (DSL) 52

53 Service Management benefits Improved Quality of Services (QoS) Clearer view of IT capacity Better information on current services Greater flexibility for the business through improved understanding of IT support Enhanced customer satisfaction Improved cycle time for changes and greater success rates Improved security, accuracy, speed availability 53

54 IT Service Management A user call the Service Desk to report a problem with an online service The Incident management deals with this incident The Problem Management process investigates causes Change Management process is used to manage the change (Request for Change- RfC) The financial aspects are checked using IT Financial Processes IT Service Continuity processes are used to ensure that recovery is possible Release Management controls the process of implementing the change Availability Management checks hardware upgrades needed to meet required availability and reliability levels Configuration Management process ensures that the CMDB information is updated. Service Level Management process ensures that services is delivered according to the required time, cost and quality. 54

55 Service Management is about customers Service management is the basis to service experience Service management is all about customer satisfaction Develop a service culture by Asking your customers what they want Listening to them Developing feeling of trust After all it is your responsibility or find excuses for business as usual Our customers are happy the number of complaints are down this year We are the market leaders we are the best We are skilled IT people we haven t trained to deal with customers 55

56 Bibliography Best Practice for Service Delivery, ITIL, Office of Government Commerce. Best Practice for Service Support, ITIL, Office of Government Commerce. Service Level Management, Jan Niessen, Paul Oldenburg, CCTA. Service Operations Management, Robert Johnston, Graham Clark, Prentice Hall, Electronic Commerce: A Managerial Perspective, Efraim Turban, Prentice Hall,

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