Wednesday, October 3, 2012

01-5 Define and explain the concept of internal and external services Internal and external services

Internal service - A service delivered between departments or business units in the same organization.

 External Service - A service delivered to external customers.

Just as there are internal and external customers, there are internal and external services. Internal services are delivered between departments or business units in the same organization. External services are delivered to external customers.

The reason for differentiating between internal and external services is to differentiate between services that support an internal activity, and those that actually achieve business outcomes. The difference may not appear to be significant at first, since the activity to deliver the services is often similar. However, it is important to recognize that internal services have to be linked to external services before their contribution to business outcomes can be understood and measured. This is especially important when measuring the return on investment of services (see section 3.6.1).

Figure 3.5 Internal and external services

Figure 3.5 shows the difference between internal and external services for an IT service provider. These are described in more detail in the next two sections.

IT services

An IT service is a service that is provided to one or more customers by an IT service provider. An IT service is based on the use of information technology and supports the customer’s business processes. It is made up of a combination of people, processes and technology.

There are three types of IT service, as shown in Table 3.4.

Table 3.4 Types of IT service

Type of service
Supporting service, sometimes called an infrastructure service, although they are often broader than just infrastructure
A service that is not directly used by the business, but is required by the IT service provider so they can provide other IT services – for example, directory services, naming services, the network or communication services.
Supporting services are defined to allow IT teams to identify the interdependencies between ITcomponents. They will also show how these components are used to deliver internal and external customer-facing services. Supporting services enable IT processes and services, but are not directly visible to the customer. Some IT teams view recipients of supporting services as ‘customers’. Although this promotes good service quality, it is also misleading. Supporting services only exist to be combined with other supporting services to produce customer-facing services. If they cannot, they are of no value and their existence should be questioned.
There can be no service level agreements for supporting services as they are all internal to the same department. Instead, the performance of supporting services should be managed using operational level agreements.
It should be noted that Figure 3.5 only refers to services originating inside the organization. In some cases supporting services from outside the organization. In these are sourced from outside the organization. In these cases they are managed in the same way as other supporting services, but using underpinning contracts rather than operational level agreements.

Internal customer-facing service
An IT service that directly supports a business process managed by another business unit – for example, sales reporting service, enterprise resource management.
An internal customer-facing service is identified and defined by the business. If it cannot be perceived by the business as a service, then it is probably a supporting service.
Internal customer-facing services rely on an integrated set of supporting services, although these are often not seen or understood by the customer or user. Internal customer-facing services are managed according to service level agreements.
External customer-facing service
An IT service that is directly provided by IT to an external customer – for example, internet access at an airport.
An external customer-facing service is available to external customers and is offered to meet business objectives defined in the organization’s strategy.
An external customer-facing IT service is also a business service in its own right, since it is used to conduct the business of the organization with external customers.
Depending on the
strategy of the organization, the service is either provided free of charge (many government agencies provide services to the public for no fee), or it is billed directly to the person or organization using the service. In other cases, the service may be provided free to the customer, but paid for by a third party, such as an advertiser or sponsor. These services are managed using a contract – even a simple online agreement constitutes a contract of sale and purchase with terms and conditions.

Note on external customer-facing services 
Internal IT organizations are not the only providers of external services to customers. Outsourcers, internet service providers and cloud service providers are all examples of organizations that are in the business of providing external services – and the technology departments providing these services are business units, supported by internal IT service providers
 A business process can be distributed across technologies and applications, span geographies, have many users and yet still reside wholly in the data centre. To integrate business processes, IT frequently employs bottom-up integration, stitching together a patchwork of technology and application components that were never designed to interact at the business process layer. What begins as an elegant top-down business design frequently deteriorates into a disjointed and inflexible IT solution, disconnected from the goals of the business.

A better strategy for supporting these business processes is to start by defining the outcomes (see next section) and then identifying the IT services that support them, and after that defining how supporting services will be aligned to support the entire chain of dependencies.

Business services and products provided by other business units

 A business service is defined as a service that is delivered to business customers by business units; for example, delivery of financial services to customers of a bank, or goods to the customers of a retail store. Successful delivery of business services often depends on one or more IT services.

Although IT is not directly responsible for the business’s services and products, it is responsible for providing IT services which will enable the outcomes to be met. Thus it is important that IT knows what these services are, how the business uses IT services and how these services are measured. This will directly impact the way in which IT’s contribution to the organization is met.

 One way of doing this is to define the business activities needed to produce the outcomes as vital business functions. These are discussed more fully in section 4.4 on availability management in ITIL Service Design.

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