The purpose of the Demand Management process is to understand the patterns of the customers’ business behaviors and relate those patterns to the impact on the supply of IT services. The intent of this process is to synchronize the consumption (demand) with the capacity (supply) of IT resources.

The benefit of demand management is to maximize the business value (value defined as benefit minus cost of the business process or business service) from the investment in IT resources. (Capacity Management focuses on the behavior of those IT resources; Demand Management understands and influences the behavior of IT resource consumers.)

Outcomes

As a result of the successful implementation of this process:

• IT understands defined and tracked patterns of business activity (user profiles and geographic distribution)
• Patterns of consumption are identified
• Service level package recommendations are provided to Service Level Management
• Instances of insufficient and excess capacity are minimized
• Consumption and production of service capacity are synchronized
• Demand policies and incentives are defined (both positive and negative)

Scope

This process understands the expected business behavior of all demand sources across all customers, both at an individual customer level and collated to represent the overall impact on IT. It translates demand from business terms into IT service terms (such as consumption units). It identifies gaps and misalignment between demand and supply, and proposes policies and incentives designed to minimize or close the gaps.

Includes

• Definition of high-level strategy and policy to influence demand
• Consideration of all mechanisms that can influence demand, including:
  • Rewards
  • Penalties
  • Service availability restrictions
  • On demand capacity allocation
• Investigation of both internal and external inhibitors to demand
• Recommendations for IT resource investment (when demand management measures are unable to reduce demand to fit within available supply)
• Translation of patterns of business activity into IT service consumption
• Recommendations on cost and price elasticity

Excludes

• Implementation of demand influencing activities, such as policies and incentives (Capacity Management, Service Pricing and Contract Administration)
• Service portfolio content definition (Portfolio Management)
• Service catalog content update (Service Catalog Management)
• Investment decisions (Portfolio Management)
• IT resource consumption monitoring and reporting (Service Execution, Capacity Management)

Key performance indicators

• Percent change in service demand
• Variance between forecasted service demand and current service demand
• Customer satisfaction for services
• Service demand forecast accuracy

Relation to other processes

• Service Marketing and Sales is one of the primary methods for increasing or decreasing service demand. 
• Solution development processes (Solution Analysis and Design, Solution Development and Integration, Solution Test, etc.)  
• The demand for services is affected by customer perception of those services (Customer Satisfaction Management).
• Capacity Management is closely related to Demand Management. Demand forecasts identify needed service capacity, whereas actual and forecasted capacity affects demand for services.
• Service catalogs (Service Catalog Management) can be adjusted to increase or decrease demand for a service. 

For further reading

Read the Demand Management in the ITIL® documentation.