Service management

Service management is a set of specialized organizational capabilities for enabling value for customers in the form of services. The concept of value co-creation is central for management of those services that involve significant inputs from the customers and other stakeholders.

Definitions

According to the ITIL Foundation 4e by Axelos,

Service management. A set of specialized organizational capabilities for enabling value for customers in the form of services.

● Understanding Value
o Service management is defined as a set of specialized organizational capabilities for enabling value to customers in the form of services.
o Developing the specialized organizational capabilities mentioned in the above definition requires an understanding of:
▪ the nature of value
▪ the nature and scope of the stakeholders involved
▪ how value creation is enabled through services
o Value is the perceived benefits, usefulness and importance of something.
● How is Value Created?
o There was a time when organizations saw their role as delivering value to their customers in much the way that a package is delivered to a building by a delivery company
o This view treated the relationship between the service provider and the service consumer as mono-directional and distant
● Providers and Consumers Co-Create Value
o More and more, organizations recognize that value is co-created through an active collaboration between providers and consumers, as well as other organizations that are part of the relevant service relationships.
o Organizations who deliver services are referred to as service providers.
o Those to whom services are delivered are referred to as service consumers.
● Organizations Facilitate Value Creation
o An organization is a person or a group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives
o Organizations vary in size and complexity, and in their relation to legal entities – from a single person or a team, to a complex network of legal entities united by common objectives, relationships and authorities.
o Example:
▪ IT department acting as a service provider within a wide business organization
● Service Consumer Roles
o Customer
▪ A person who defines requirements for services and takes responsibility for outcomes from service consumption
o User
▪ A person who uses services

o Sponsor
▪ A person who authorizes the budget for service consumption
● Other Stakeholders in Value
o Beyond the consumer and provider roles, there are usually many other stakeholders
that are important to value creation
▪ Examples:
● Shareholders
● Employees
● Community
● Services and Products
o A service is a means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks.
▪ The services an organization provides are based on one or more of its products.
o A product is a configuration of resources, created by the organization, that will be potentially valuable for their customers.
▪ Products are typically complex and not fully visible to the consumer. The portion of a product that the consumer actually sees does not always represent all of the components that comprise the product and support its delivery.
▪ Organizations define which product components their consumer see, and tailor them to suit their target consumer groups.
● What is a Service Offering?
o A service offering is a description of one or more services, designed to address the needs of a target consumer group. A service offering may include goods, access to resources, and service actions.
▪ Goods
● Ownership is transferred to the consumer
● Consumer takes responsibility for future use
▪ Access to Resources
● Ownership is not transferred to the consumer
● Access is granted/licensed under agreed terms or conditions
▪ Service Actions
● Performed by the provider to address a consumer need
● Performed according to agreement with the consumer

● What are Service Relationships?
o Service provisioning consists of activities performed by a service provider to provide services.
o Service consumption consists of activities performed by a service consumer to consume services/
o Service relationship management consists of joint activities performed by a service provider and a service consumer to ensure continual value co-creation based on agreed and available service offerings.
● Service Provisioning
o Management of provider resources configured to deliver the service
o Provision of access to resources for users
o Fulfillment of the agreed service actions
o Service performance management and continual improvement
● Service Consumption
o Management of the consumer resources needed to consume the service
o Utilization of the provider's resources
o Requesting of service actions to fulfill
o Receipt of or acquiring of goods
● The Service Relationship Model
● Outcomes, Costs and Risks
o A service is a means of enabling value co-creation by facilitating outcomes that customers want to achieve without the customer having to manage specific costs and risks.

● Service Facilitate Outcomes
o An output is a tangible or intangible deliverable of an activity.
▪ Examples:
● Report
● Bill (of a consumed service)
● Emails sent (using an email service)
o An outcome is a result for a stakeholder enabled by one or more outputs.
▪ Examples:
● Being able to get to a destination in time for a meeting (outcome of using a smartphone-enabled travel service)
● Being able to collaborate with remote coworkers (outcome of using an email service)
● Understanding Costs
o Costs refer to the amount of money spent on a specific activity or resource.
▪ There are costs removed from the consumer by the service.
● Example: Uber/Lyft
o No need for a car
o No need to pay insurance, maintenance, gas
▪ There are costs imposed on the consumer by the service, including charges by the service provider.
● Example: Uber/Lyft
o Need for a modern smartphone that's capable of running app
o Need for a data plan to access the service
▪ Costs expressed in non-financial terms can be translated into financial costs
● Examples:
o Number of man-hours (or person-hours)
o Number of FTEs

● Understanding Risks
o Risks refer to possible events that could cause harm or loss, or make it more difficult to achieve objectives.
▪ There are risks removed or reduced for the consumer by the service.
● Example: Uber/Lyft
o No risk of not finding parking for own car
▪ There are risks potentially imposed on the consumer by the service.
● Example: Uber/Lyft
o Risk of failing smartphone, smartphone battery, or app itself
o The consumer contributes to the reduction of risk through:
▪ Actively participating in the definition of the requirements of the service and the clarification of its required outcomes
▪ Clearly communicating the critical success factors and constraints that apply to the service
▪ Ensuring the provider has access to the necessary resources of the consumer throughout the service relationship
● Example: Uber/Lyft
o Service provider should be able to get customer's location data in order to know where to dispatch a car
● Utility and Warranty
o Utility is the functionality offered by a product or service to meet a particular need.
▪ What the service does
▪ Can be used to determine whether a service is 'fit for purpose'
▪ Requires that a service support the performance of the consumer or remove constraints from the consumer
o Warranty is the assurance that a product or service will meet agreed requirements.
▪ How the service performs
▪ Can be used to determine whether a service is 'fit for use'
▪ Typically addresses areas such as availability, capacity, security levels and continuity
▪ Requires that a service has defined and agreed conditions that are met