What is Demand Management, and How Does it Fit Into IT?

As the pace of innovation accelerates, companies must keep up with the latest trends to remain competitive. This, in turn, places a significant burden on the IT department to manage and maintain the technological infrastructure and to identify and implement new technologies. As a result, IT professionals are under mounting pressure to deliver high-quality services in a timely and cost-effective manner, all while ensuring the security and reliability of critical systems.

In this blog post, we'll explore the concept of demand management within the ITIL framework, including the process, roles and responsibilities involved, and benefits for implementing demand management in your organization.

Examples of Demand Management Outside of IT

But first, let's review demand management in more commonly-understood ways.

The term "demand management" is used across a spectrum of industries outside of IT — a few notable demand management examples include:

Retail: Forecasting customer demand for specific products and services and aligning inventory and supply chain operations accordingly. This process helps retailers optimize their inventory levels, reduce waste, and improve customer satisfaction by ensuring that products are available when customers want them.

Energy: The process of balancing energy supply and demand in real time. Technologies such as smart grids, sensors, and analytics monitor and adjust energy usage based on changing demand patterns.

Healthcare: Optimizing healthcare resources such as hospital beds, staff, and medical supplies based on patient demand. Doing this helps healthcare organizations reduce costs, improve patient outcomes, and enhance the overall quality of care.

Cloud computing: Demand management in cloud computing involves monitoring resource utilization, predicting future demand, and scaling resources up or down as needed to ensure that the provider can meet the needs of their customers.

For example, a cloud service provider may use demand management techniques to anticipate increases in demand for certain services during peak usage periods, and automatically scale up their infrastructure to meet that demand. This helps to improve service availability and reliability.

Demand Management Definition in IT

Demand management is a crucial component of IT service management, particularly within the framework of ITIL® (Information Technology Infrastructure Library). At its core, demand management is concerned with forecasting, understanding, and fulfilling the IT needs of an organization. By aligning IT resources with business goals and priorities, demand management helps ensure that IT services are delivered efficiently while enabling organizations to make informed decisions about allocating their IT resources.

Benefits of Demand Management

The benefits of IT Demand Management are numerous and significant and can help organizations better manage their services to meet the needs of the business and their customers. The demand management process and its benefits affect many critical areas of a business — whether you are a service provider or recipient.

• Better resource utilization: By forecasting and managing demand, IT organizations can better allocate their resources to meet the needs of their customers, improving resource utilization and reducing waste.
• Increased efficiency: By managing demand, IT organizations can reduce the need for reactive and unplanned work, allowing them to focus on proactive work. Think about running out of cloud storage space — IT departments should rarely find themselves in this situation!
• Improved financial management: Demand Management helps organizations understand the cost of IT services, allowing them to manage their budgets and investments more effectively. Whether providing or receiving, IT teams should know what their product is worth or how much needs to be ordered to be fiscally responsible yet functionally efficient.
• Improved service levels: Demand Management helps IT organizations better understand the demand for their services, allowing them to ensure that service levels are appropriate and meet customer needs.

Good to know — Change Management vs. Demand Management: Change management focuses on controlling and managing changes to IT services and infrastructure, while demand management focuses on forecasting and managing demand for IT services to meet business needs. Learn more: ITIL Change Enablement Framework

How Does Demand Management Work? 

Are you interested in getting a more efficient demand management structure in place at your workplace? Getting started can be daunting. Follow these steps towards a more streamlined demand management process (with a side of emphasis on the importance of demand management in supply chain):

1. Forecast demand: The first step in demand management is to gauge demand for the product or service. This process can happen through historical sales data, market research, and other relevant data sources. For example, an organization may analyze past sales trends and use that data to project future demand.
2. Analyze demand patterns: Once demand has been forecast, the next step is to analyze demand patterns. This process involves identifying the factors that affect demand, such as seasonality, customer behavior, and market trends. For example, an organization may analyze customer behavior and identify the times of the year when demand is highest.
3. Plan production/purchasing: Through the demand forecast and demand patterns, the company can then plan production or purchasing. This process involves determining the optimal production level to meet the expected demand while minimizing excess inventory. For example, an organization may adjust its production schedule to align with periods of high demand.
4. Adjust pricing: Pricing is a critical part of demand management. By adjusting prices, the company can influence demand and increase revenue. For example, an organization may offer discounts or promotions during slow periods to stimulate demand.
5. Monitor and adjust: Demand management is an ongoing process that requires constant monitoring and adjustment.The organization must track demand and adjust production, pricing, and marketing strategies.

The Bottom Line: Demand Management is a Never-Ending Process

In today's fast-paced world, technology advances at an unprecedented rate while customer demands evolve in tandem. This dynamic creates a challenging and perpetual job for IT professionals. The task of keeping up with changing patterns and trends can become overwhelming for IT teams, particularly when they are already responsible for ensuring the security and reliability of critical systems.

However, implementing a demand management process, as described earlier, can help your organization stay competitive by leveraging the latest technologies and keeping your customers satisfied with a wide range of products.