Demand Management

Demand Management was previously an activity found within Capacity Management, and now within Version 3 of ITIL®® it has been made a separate process found within the Service Strategy phase. The reasoning behind this is that before we decide how to design for capacity, decisions must be made regarding why demand should be managed in a particular way. Such questions asked here include:

  • When and why does the business need this capacity?
  • Does the benefit of providing the required capacity outweigh the costs?
  • Why should the demand for services be managed to align with the IT strategic objectives?

Poorly managed demand is a particular source of risk for service providers, with potential negative impacts being felt by both the IT organizations and customers. If demand is not accurately predicted and managed, idle (excess) capacity will generate cost without creating associated value that can be appropriately recovered. From the customer perspective, most would be highly reluctant to pay for idle capacity unless it provides some value for them.

On the other hand, insufficient capacity can impact the quality of services delivered, potentially limiting the growth desired for services and for the organization as a whole. Accordingly, Demand Management must seek to achieve a balance between the prediction and management of demand for services against the supply and production of capacity to meet those demands. By doing so, both the customers and IT can reduce excess capacity needs while still supporting required levels of quality and warranty in agreed services.

Keep in mind that Demand Management plays an integral part in supporting the objectives of an organization and maximizing the value of the IT Service Provider. This means that the way in which Demand Management is utilized will vary greatly between each organization. Two examples showing these differences are:

Health Organizations: When providing IT Services that support critical services being offered to the public, it would be unlikely that there would be many (if any) Demand Management restrictions that would be utilized, as the impact of these restrictions could lead to tragic implications for patients being treated.

Commercial Confectionery Organizations: Typically a confectionery company will have extremely busy periods around traditional holidays (e.g. Christmas). Demand Management techniques would be utilized to promote more cost-effective use of IT during the non-peak periods; however leading up to these holidays the service provider would seek to provide all capacity to meet demand and support higher revenue streams for the business units involved.