Service management

Service management (hereinafter, the 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 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.

Dimensions

Main wikipage: Management dimension

Value

Value is the perceived benefits, usefulness and importance of something. Since the Management is a set of specialized organizational capabilities, developing them requires an understanding of (a) the nature of value, (b) the nature and scope of the stakeholders involved, and (c) how value creation is enabled through services.

Classic view

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. This view treated the relationship between the service provider and the service consumer as mono-directional and distant.

Value co-creation

Main wikipage: Value co-creation

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. Organizations who deliver services are referred to as service providers. Those to whom services are delivered are referred to as service consumers.

Organizational influence

Organizations facilitate value creation. An organization is a person or a group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives. 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.

Service consumer roles

Within a service consumer, the roles are:

Role	Description
Customer	A person who defines requirements for services and takes responsibility for outcomes from service consumption.
User	A person who uses services.
Sponsor	A person who authorizes the budget for service consumption.
Other stakeholders	Beyond the consumer and provider roles, there are usually many other stakeholders such as shareholders, employees, community, that are important to value creation.

Outcomes vs outputs

Output

Main wikipage: Output

An output is a tangible or intangible deliverable of an activity. The examples are reports, bills of a consumed service, emails sent using an email service, etc.

Outcome

Main wikipage: Outcome

An outcome is a result for a stakeholder enabled by one or more outputs. The examples are being able to get to a destination in time for a meeting (which could be an outcome of using a smartphone-enabled car-sharing service) and being able to collaborate with remote coworkers (which could be an outcome of using an email service).

Costs

Costs refer to the amount of money spent on a specific activity or resource. Costs expressed in non-financial terms can be translated into financial costs.

Costs removed

Some costs are removed from the consumer by the service. For instance, using a car-sharing service, the consumer doesn't need to have a car, pay for insurance, maintenance, and gas.

Costs imposed

Some costs are imposed on the consumer by the service, including charges by the service provider. For instance, using a car-sharing service, the consumer needs to have a modern smartphone that's capable of running app, pay for a data plan to access the service and for the service itself

Risks

Risks refer to possible events that could cause harm or loss, or make it more difficult to achieve objectives.

Risks reduced

Some risks are removed or reduced for the consumer by the service. For instance, using a car-sharing service, the consumer removes a risk of not finding parking for own car. The service consumer may contribute 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

Risks imposed

Some risks are potentially imposed on the consumer by the service. For instance, using a car-sharing service, the consumer assumes a risk of failing smartphone, smartphone battery, or car-sharing app itself.

Utility vs warranty

Utility

Main wikipage: Utility

Utility is the functionality offered by a product or service to meet a particular need. Simply put, utility is what the service does. Utility can be used to determine whether a service is 'fit for purpose'; it requires that a service supports the performance of the consumer or remove constraints from the consumer.

Warranty

Main wikipage: Warranty

Warranty is the assurance that a product or service will meet agreed requirements. Simply put, warranty is how the service performs. Warranty can be used to determine whether a service is 'fit for use'. Warranty typically addresses areas such as availability, capacity, security levels and continuity. It requires that a service has defined and agreed conditions that are met.

Services vs products

Service

Main wikipage: Service

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 are based on one or more of its products.

Product

Main wikipage: Work product

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. Service providers define which product components their consumer see, and tailor them to suit their target consumer groups.

Service offering

Main wikipage: Service offering

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

Goods may be a part of a service. Their ownership is transferred to the consumer, who takes responsibility for future use.

Access to resources

With regard to access to resources, ownership is not transferred to the consumer. The access is granted or licensed under agreed terms or conditions.

Service actions

According to agreement with the consumer, a service provider performs service actions to address a consumer need.

Service relationships

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

Service provisioning consists of activities performed by a service provider to provide services including:

• Management of provider's resources configured to deliver the service.
• Provision of access to resources for users.
• Fulfillment of the agreed service actions.
• Service performance management and continual improvement.

Service consumption

Service consumption consists of activities performed by a service consumer to consume services including:

• Management of the consumer resources needed to consume the service.
• Utilization of the provider's resources.
• Requesting of service actions to fulfill.
• Receipt of or acquiring of goods.

Practices

• Service continuity management practice