Create, Deliver & Support - Service Management

Key Concepts of Service Management

How is value created?

• Once seen as delivered to customers, like a package being delivered

• Relationship was one‐directional and distant

There was a time when organizations self‐identifying as ‘service providers’ 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. The provider delivers the service and the consumer receives value; the

consumer plays no role in the creation of value for themselves. This fails to take

into consideration the highly complex and interdependent service relationships

that exist in reality.

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. Providers should

no longer attempt to work in a vacuum to define what will be of value to their

customers and users, but actively seek to establish mutually beneficial,

interactive relationships with their consumers, empowering them to be creative

collaborators in the service value chain. Stakeholders across the service value

chain contribute to the definition of requirements, design of service solutions

and even to service creation and/or provisioning itself.

In order to create value, an organization must do more than simply provide a

service – it must also cooperate with the consumers in service relationships.

Service relationships are established between two or more organizations to co‐

create value. In a service relationship, organizations will take on the roles of

service providers or service consumers. The two roles are not mutually exclusive,

and organizations typically both provide and consume a number of services at

Service relationships include service provisioning, service consumption, and

service relationship management

In practice, there are more specific roles involved in service consumption, such as

customers, users and sponsors. These roles can be separate or combined.

A customer is a person who defines requirements for services and takes

responsibility for outcomes from service consumption.

A user is a person who uses services

A sponsor is a person who authorizes the budget for service consumption

For example, if a company wishes to purchase mobile phone services for its

employees from a wireless carrier (the service provider), the various consumer

roles may be distributed as follows:

• The chief information officer (CIO) and key communications team members fill

the role of customer when they analyse the mobile communications

requirements of the company’s employees, negotiate the contract with the

wireless carrier and monitor the carrier’s performance against the contracted

requirements.

• The chief financial officer (CFO) fills the role of the sponsor when they review

the proposed service arrangement and approve the cost of the contract as

negotiated.

• The employees (including the CIO, CFO and communications team members)

fill the role of users when they order, receive and use the mobile phone

services as per the agreed contract

In another example, an individual private consumer of the same wireless carrier (a

person using the mobile network) simultaneously acts as a user, customer and

sponsor.

It is important to identify these roles in service relationships to ensure effective

communication and stakeholder management. Each of these roles may have

different, and sometimes even conflicting expectations from

The purpose of an organization is to create value for stakeholders. We use the

term ‘value’ regularly in service management, and it is a key focus of ITIL 4; we

must therefore be clear on what this means.

Value is the perceived benefits, usefulness and importance of something.

Inherent in this definition is the understanding that value is subject to the

perception of the stakeholders, whether they be the customer or consumer of a

service, or part of the service provider organization(s). Value can be subjective.

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 central component of service management is, of course, the service. The

nature of services will now be considered, and an outline given of the

relationship between a service and a product.

Definition: Service

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 that an organization provides are based on one or more of its

products. Organizations own or have access to a variety of resources, including

people, information and technology, value streams and processes, and suppliers

and partners. Products are configurations of these resources, created by the

organization, that will be potentially valuable for their customers.

Definition: Product

A configuration of an organization’s resources designed to offer value for a

consumer.

Each product that an organization offers is created with a number of target

consumer groups (either internal or external to the organization) in mind, and

the products will be tailored to appeal to, and meet the needs of these groups. A

product is not exclusive to one consumer group, and can be used to address the
needs of several different groups. For example, a software service can be offered as a lite version, for
individual users, or as a more comprehensive corporate version.

Products are typically complex and are 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 consumers see, and tailor them to suit their
target consumer groups.

Service providers present their services to consumers in the form of service offerings.

A service offering is a description of one or more services designed to address the needs of a target
consumer group.

Service offerings may include:

• goods to be supplied to a consumer (for example, a mobile phone). Goods are supposed to be
transferred from the provider to the consumer, with the consumer taking the responsibility for their
future use.

• access to resources granted or licensed to a consumer under agreed terms and conditions (for
example, to the mobile network, or to the network storage). The resources remain under the
provider’s control and can be accessed by the consumer only during the agreed service
consumption period.

• service actions performed to address a consumer’s needs (for example, user support). These
actions are performed by the service provider according to the agreement with the consumer
Services are offered to target consumer groups, and those groups may be either internal or external
to the service provider organization. Different offerings can be created based on the same product,
which allows it to be used in multiple ways to address the needs of different consumer groups/.

There was a time when organizations self‐identifying as ‘service providers’ 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. The provider delivers the service and the consumer
receives value; the consumer plays no role in the creation of value for themselves. This fails to take
into consideration the highly complex and interdependent service relationships that exist in reality.

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. Providers should no longer attempt to work in a vacuum to define what will be
of value to their customers and users, but actively seek to establish mutually beneficial, interactive
relationships with their consumers, empowering them to be creative collaborators in the service
value chain. Stakeholders across the service value chain contribute to the definition of requirements,
design of service solutions and even to service creation and/or provisioning itself.

In order to create value, an organization must do more than simply provide a service – it must also
cooperate with the consumers in service relationships.