What are the three Service Provider business models?
A.
Internal Service provider, External Service provider, Shared Service Provider
B.
Internal Service Operations provider, External Service Operations provider, Shared Service
Unit
C.
Internal Service provider, External Service provider, Outsourced 3rd Party
D.
Internal Service provider, Outsourced 3rd party and Off-shore party
Page 41 ITIL3 Service Strategy
It is necessary to distinguish between different types of
service providers. While most aspects of service
management apply equally to all types of service
providers, others such as customers, contracts,
competition, market spaces, revenue and strategy take on
different meanings depending on the type. There are three
archetypes of business models service providers:
■ Type I – internal service provider
■ Type II – shared services unit
■ Type III – external service provider
FYI, a shared service provider and a shared service unit seem to be the same thing. ITIL made a boobo here. These terms are lacking consisting in the ITIL3 Service Strategy book.
Perspective – describes a vision and direction. A
strategic perspective articulates the business
philosophy of interacting with the customer or the
manner in which services are provided. For example, a
shared service provider (Type II) for a global law firm
may adopt the strategic perspective of, ‘We will be a
best-in-class service provider for our law firm’. The CIO
determined that his business most values a certain
type of service provider. By setting a perspective of
competing against other industry-specific providers he
not only narrows the field of competing alternatives,
but also cements his own distinctiveness in the minds
of his customers (
Service Strategy defines three broad types of Service
Providers with whom a customer is likely to engage in
accessing services.
Type I – Internal Service Provider
Type I providers are typically business functions
embedded within the business units they serve. The
business units themselves may be part of a larger
enterprise or parent organization. Business functions
such as finance, administration, logistics, human
resources and IT provide services required by various
parts of the business. They are funded by overheads
and are required to operate strictly within the
mandates of the business. Type I providers have the
benefit of tight coupling with their owner-customers,
avoiding certain costs and risks associated with
conducting business with external parties.
Type II – Shared Service Provider
Business functions such as finance, IT, human resources
and logistics are not always at the core of an
organization’s competitive advantage. Hence, they
need not be maintained at the corporate level where
they demand the attention of the chief executive’s
team. Instead, the services of such shared functions are
consolidated into an autonomous special unit called a
shared services unit (SSU). This model allows a more
devolved governing structure under which an SSU can
focus on serving business units as direct customers.
SSUs can create, grow and sustain an internal market
for their services and model themselves along the lines
of service providers in the open market. Like corporate
business functions, they can leverage opportunities
across the enterprise and spread their costs and risks
across a wider base.
Type III – External Service Provider
Type III providers can offer competitive prices and drive
down unit costs by consolidating demand. Certain
business strategies are not adequately served by
internal Service Providers such as Type I and Type II.
Customers may pursue sourcing strategies requiring
services from external providers. The motivation may
be access to knowledge, experience, scale, scope,
capabilities and resources that are either beyond the
reach of the organization or outside the scope of a
carefully considered investment portfolio. Business
strategies often require reductions in the asset base,
fixed costs, operational risks or the redeployment of
financial assets. Competitive business environments
often require customers to have flexible and lean
structures. In such cases it is better to buy services
rather than own and operate the assets necessary to
execute certain business functions and processes. For
such customers, Type III is the best choice for a given
set of services.