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Demand Management – shaping your supply

So…you started considering a service. Where to begin? It’s easier than you might think: Understand customers’ demand. If you don’t have customers yet, you must predict it. Why? Because if you don’t manage demand, a lot of risks exist. How will you know which capacity is needed to provide a service if you don’t know the demand? If you didn’t provide enough capacity to satisfy customers’ demand – customer will be unsatisfied. If you have excess capacity (due to the incorrectly defined demand requirements) – management of your organization will be unsatisfied.

What could be done to manage demand-related risks? For example, the Service Level Agreement (SLA) can contain data which will define demand,e.g. number of transactions, data volume transfer during the service hours… If you have Business Relationship Management or Service Level Management process in place you should certainly use information gained from the customer, e.g. the customer plans to increase number of employees, who are users of your service, so increase in demand is to be expected.

Pattern of Business Activity

Pattern of Business Activity (PBA) is how a customer uses services, i.e. a workload profile of business activities. This is, basically, where everything starts. Customers’ business activities are triggers for demand for the service. The better you understand how the customer uses the service, the better your estimate of capacity required to satisfy customer needs. Here are some attributes which are used to describe PBA:

  • Frequency – how often does a particular pattern occur (e.g. daily, hourly…)?
  • Volume – how many activities, e.g. how many transactions per hour?
  • Location – where does this activity happen, e.g. building number, etc.?
  • Duration – how long does the activity last?

There are some other parameters that can be used to define PBA, like performance description, security, availability parameters, etc.

Let’s take orders placed by a customer as an example of PBA. Analysis revealed that most of the orders are placed between 8:00 and 10:00 in the morning and 14:00 to 16:00 in the afternoon. The IT department needs to ensure that enough resources (e.g. enough processing power and bandwidth) are in place to cope with orders processing.

Service belt

Why is PBA so important? It is important to understand how users consume the service that we provide so that appropriate resources can be made available to satisfy demand. As seen on the figure, users consume our services and create demand. By creating demand, they consume service resources (e.g. technical resources like bandwidth or human resources like supporting technicians). Service resources provide services to the customer and must meet demand that is set. If we understand PBA, then the right capacity will be available to satisfy customers’ demand. Particular attention should be paid to detect and understand PBA because it will dictate an organization’s activity to satisfy customer needs and provide enough capacity.

Service beltFigure: Service belt


How do you deal with demand? As mentioned previously, you can try to anticipate demand for services, but you can also influence usage of the services. This can be done by motivating usage of the service in less-utilized hours. For example, telecommunication companies have most of the resources used by businesses during working hours, but they have excess capacity outside of working hours. So, what they usually do is, they incentivize non-business users to make phone calls outside of business hours by making such phone calls much cheaper. Basically, pricing is the most commonly used mechanism to influence user demand.

Stay ahead

User demand is the reason for the existence of services (and respective service assets, as well) and therefore it is not always good enough to play catch-up with required capacities. Quite the contrary. You should stay one step ahead and be ready when demand takes place.

Download a free sample of our Demand Management process template to learn more about purpose, scope, principles, and activities of the Demand Management process.

Advisera Branimir Valentic
Branimir Valentic
Branimir is an expert in IT service management (consultancy, training and tools), IT governance (training and consulting), project management and consultancy in IT and telecommunication. He holds the following certificates: ITIL Expert, ISO 20000, ISMS Lead Auditor and PRINCE2.