Creating Value With Services

The key concepts of service
management
Creating value with services
Syllabus
1. Understand the key concepts of service management
1.1 Recall the definition of:
a) Service
b) Utility
c) Warranty
1.2 Describe the key concepts of creating value with
services:
a) Cost
b) Value
d) Outcome
e) Output
f) Risk
g) Utility
h) Warranty
1.3 Describe the key concepts of service relationships:
b) Service relationship management
c) Service provision
d) Service consumption
|ITIL®4 Foundation
Copyright 2022 PeopleCert International Ltd.
©
What you will learn
By the end of this topic, you will be able to:
• Describe the key concepts of
creating value with services,
including outcome, output, cost,
risk, utility and warranty.
• Recall the definitions of utility and
warranty.
|ITIL®4 Foundation
©
Do you recall?
How is value created?
• 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 monodirectional and distant.
|ITIL®4 Foundation
©
Value co-creation
Value co-creation
requires collaboration
between the provider and
the consumer;
they have a mutually
beneficial,
interactive relationship.
|ITIL®4 Foundation
©
Service provider
When provisioning services, an organization

undertakes the role of the service provider.
The provider can be external to the

consumer’s organization, or they can both be
part of the same organization.
|ITIL®4 Foundation
©
What about Axle’s
services?
Axle Car Hire acts as a
Henri: CIO, Axle Car Hire service provider. We
provide cars for hire. At
the same time, other
organizations, such as
mechanics and the
companies that we buy
our cars from, act as service
providers for Axle.
|ITIL®4 Foundation
©
What are service consumers?
The service consumer is a generic role that is used

to simplify the definition and description of the
structure of service relationships.
In practice, there are more specific roles involved in

service consumption, such as customers, users,
and sponsors.
These roles can be separate or combined.
|ITIL®4 Foundation
©
What are products and services?
The central component of service

management is, of course, the service.
The services that an organization provides

are based on one or more of its products.
|ITIL®4 Foundation
©
Definitions
A service is a means of enabling value co-creation by
facilitating desired outcomes for, without the customer
having to manage specific costs and risks.
A product is a configuration of an
organization’s resources designed
to offer value for a consumer.
|ITIL®4 Foundation
©
What are service relationships?
A cooperation between a
service provider and service
consumer.
Service relationships include

service provision, service
consumption, and service
relationship management.
|ITIL®4 Foundation
©
What is the meaning of
service provision?
Service provision activities are performed
by an organization to provide services
Management of the Ensuring access to these
provider’s resources, resources for users
configured to deliver the
service
Fulfilment of the Service level

agreed service actions management and
continual
improvement
|ITIL®4 Foundation
©
What is service consumption?
Service consumption involves activities
performed by an organization to consume services.
Service consumption includes:
• the management of the consumer’s resources
needed to use the service
• the service actions performed by the users,
including utilizing the provider’s resources and
requesting service actions to be fulfilled. Service
consumption may also include the receiving
(acquiring) of goods.
|ITIL®4 Foundation
©
Service relationship management
Joint activities performed by a service provider

and a service consumer to ensure continual
value co-creation, based on agreed and available
service offerings.
|ITIL®4 Foundation
©
Service relationships
To create value, an organization

must do more than
simply provide a service.
It must also cooperate with
the consumers in service
relationships.
|ITIL®4 Foundation
©
How organizations co-create value
Service relationships are established between two or
more organizations to co-create value. In a service
relationship, organizations will undertake the roles of
service providers or service consumers.
The two roles are not mutually exclusive,

and organizations typically both provide and
consume several services at any given time.
|ITIL®4 Foundation
©
What about Axle’s
service relationships? Axle has service relationships with many
service providers and consumers, both
internal and external. Some services
Henri: CIO, Axle Car Hire provided to Axle create new resources for
the business, such as car manufacturers
selling cars to us. Other services, such as the
work done for us by our internal car cleaning
team, and mechanics outside of Axle, change
our existing resources by ensuring that our
cars are clean and functional. Axle can use these
resources in other relationships to provide its
own services, in the form of car hire, to
consumers, i.e. our customers. These are just a
few examples of the service relationships that Axle
has. The organization as a whole has many more.
|ITIL®4 Foundation
©
The service relationship model
Figure 2.1 The service relationship model
|ITIL®4 Foundation
©
Value, outcomes, costs, and risk
Service providers help

their consumers to achieve
outcomes, and in doing so,
undertake some of the
associated risks and costs.
Figure 2.2 Achieving value: outcomes, costs, and risks
|ITIL®4 Foundation
©
Outcomes
Acting as a service provider, an organization produces outputs that help
its consumers to achieve a certain outcome.
An outcome is a result
An output is a tangible or
for a stakeholder,
intangible deliverable of
enabled by one or more
an activity.
outputs.
|ITIL®4 Foundation
©
Axle’s outputs and
outcomes
Henri: CIO, Axle Car Hire
At Axle, our key

output is a car that is
clean, roadworthy, and
well maintained.
|ITIL®4 Foundation
©
Axle’s outputs and
outcomes
For our service consumers,
outcomes include travel that
Su: Product Manager, Axle Car Hire is convenient and affordable,
and meets a range of needs.
This includes self-drive holidays,
client site visits, and travel to
see family and friends.
|ITIL®4 Foundation
©
Definition: cost
The amount of money spent on a specific activity or resource.
From the service consumer’s perspective, there are two types of

cost involved in service relationships:
the costs removed the costs imposed

from the consumer on the consumer by
by the service (a part the service (the
of the value costs of service
proposition) consumption).
|ITIL®4 Foundation
©
Definition: risk
A possible event that could cause harm or

loss, or make it more difficult to achieve
objectives.
Can also be defined as an uncertainty of

outcome, and can be used in the
context of measuring the probability of
positive outcomes, as well as negative
outcomes.
|ITIL®4 Foundation
©
Risk
As with costs, there are two types of risk
that are of concern to service consumers:
Risks imposed on Risks removed

a consumer from a consumer
|ITIL®4 Foundation
©
Risk
Actively participating in the definition of the
requirements of the service and the clarification
of its required outcomes.
Clearly communicating
the Critical Success Factors (CSFs) and
constraints that apply to the service.
Ensuring the provider has access to the

necessary resources of the consumer
throughout the service relationship.
|ITIL®4 Foundation
©
Definitions
+
Utility Functionality offered by a Assurance that a Warranty
product or service to meet product or service will
a particular need. meet agreed
Essentially ‘what the service requirements. ‘How the
does’ and can be used to service performs’ and
determine whether a used to determine
service is ‘fit for purpose’. whether a service is ‘fit
for use’.
|ITIL®4 Foundation
©
What can be described as utility
and warranty?
All the service characteristics are required to

facilitate that valuable outcome.
|ITIL®4 Foundation
©
Axle’s Car Hire: new
supplier case study
Axle’s recent customer
Su: Product Manager, Axle Car Hire satisfaction surveys
consistently revealed low
ratings for car cleanliness.
This hampered our customers’
travel experience and was a
contributing factor for low
repeat bookings.
|ITIL®4 Foundation
©
supplier case study
Axle Car Hire made the
decision to outsource the
cleaning of all vehicles to a
Henri: CIO, Axle Car Hire
service provider.
Previously, cleaning of our
vehicle fleet was performed
by an internal department.
The cost and effort to maintain
equipment, update rosters,
and manage an inflexible
workforce were unsustainable.
|ITIL®4 Foundation
©
supplier case study
By partnering with a specialist
Su: Product Manager, Axle Car Hire cleaning organization, Axle can
focus its resources on providing
a better service for our users.
It will also help to optimize our
costs, increasing value for the
organization.
|ITIL®4 Foundation
©

Creating Value With Services

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Creating Value With Services

Uploaded by

Copyright:

Available Formats

The key concepts of service

When provisioning services, an organization

The provider can be external to the

The service consumer is a generic role that is used

In practice, there are more specific roles involved in

These roles can be separate or combined.

The central component of service

The services that an organization provides

Service relationships include

Fulfilment of the Service level

Joint activities performed by a service provider

To create value, an organization

The two roles are not mutually exclusive,

Figure 2.1 The service relationship model

Service providers help

Figure 2.2 Achieving value: outcomes, costs, and risks

Henri: CIO, Axle Car Hire

At Axle, our key

From the service consumer’s perspective, there are two types of

the costs removed the costs imposed

A possible event that could cause harm or

Can also be defined as an uncertainty of

Risks imposed on Risks removed

Ensuring the provider has access to the

All the service characteristics are required to

You might also like