SS

Service s are a means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risk s. Outcome s are possible from the performance of tasks and are limited by the presence of certain constraints. Broadly speaking, services facilitate outcomes by enhancing the performance and by reducing the grip of constraints. The result is an increase in the possibility of desired outcomes. While some services enhance performance of tasks, others have a more direct impact . They perform the task itself.

The preceding paragraph is not just a definition, as it is a recurring pattern found in a wide range of services. Patterns are useful for managing complexity, costs, flexibility and variety. They are generic structures useful to make an idea work in a wide range of environment s and situations. In each instance the pattern is applied with variations that make the idea effective, economical, or simply useful in that particular case.

Take, for example, the generalized pattern of a storage system . Storage is useful for holding, organizing or securing asset s within the context of some activity , task or performance. Storage also creates useful conditions such as ease of access, efficient organization or security from threat s. This simple pattern is inherent in many types of storage services, each specialized to support a particular type of outcome for customers (Figure 2.1).

Figure 2.1 Generalized patterns and specialized instances9

For various reasons, customers seek outcomes but do not wish to have accountability or ownership of all the associated costs and risks. For example, a business unit needs a terabyte of secure storage to support its online shopping system. From a strategic perspective, it wants the staff, equipment, facilities and infrastructure for a terabyte of storage to remain within its span of control . It does not want, however, to be accountable for all the associated costs and risks, real or nominal, actual or perceived. Fortunately, there is a group within the business with specialized knowledge and experience in large-scale storage systems, and the confidence to control the associated costs and risks. The business unit agrees to pay for the storage service provided by the group under specific terms and conditions.

The business unit remains responsible for the fulfilment of online purchase orders. It is not responsible for the operation and maintenance of fault-tolerant configurations of storage devices, dedicated and redundant power supplies, qualified personnel, or the security of the building perimeter, administrative expenses, insurance, compliance with safety regulations, contingency measures, or the optimization problem of idle capacity for unexpected surges in demand. The design complexity, operational uncertainties, and technical trade-offs associated with maintaining reliable high- performance storage system s lead to costs and risks the business unit is simply not willing to own. The service provider assumes ownership and allocates those costs and risks to every unit of storage utilized by the business and any other customers of the storage service .

2.2.2 Value composition

From the customer’s perspective, value consists of two primary elements: utility or fitness for purpose and warranty or fitness for use.

Utility is perceived by the customer from the attributes of the service that have a positive effect on the performance of tasks associated with desired outcomes. Removal or relaxation of constraints on performance is also perceived as a positive effect.

Warranty is derived from the positive effect being available when needed, in sufficient capacity or magnitude, and dependably in terms of continuity and security.

Utility is what the customer gets, and warranty is how it is delivered.

Customer s cannot benefit from something that is fit for purpose but not fit for use, and vice versa. It is useful to separate the logic of utility from the logic of warranty for the purpose of design, development and improvement (Figure 2.2). Considering all the separate controllable inputs allows for a wider range of solutions to the problem of creating, maintaining and increasing value.

Figure 2.2 Logic of value creation through services

Take the case of the business unit utilizing the high-performance online storage service. For them the value is not just from the functionality of online storage but also from easy access to no less than one terabyte of fault-tolerant storage, as and when needed, with confidentiality , integrity , and availability of data. Chapter 3 of Service Strategy provides further detail on the concepts of utility and warranty.

An outcome -based definition of service moves IT organizations beyond Business-IT alignment towards Business-IT integration. Internal dialogue and discussion on the meaning of services is an elementary step towards alignment and integration with a customer ’s business (Figure 2.3). Customer outcomes become the ultimate concern of Product Managers instead of the gathering of requirement s, which is necessary but not sufficient. Requirement s are generated for internal coordination and control only after customer outcomes are well understood. Chapter 4 of Service Strategy provides detail on the practical use of outcome-based definitions.

Figure 2.3 A conversation about the definition and meaning of services

2.3 The business process

Business outcomes are produced by business process es governed by objective s, policies and constraints. The processes are supported by resource s including people, knowledge, application s and infrastructure. Workflow coordinates the execution of tasks and flow of control between resources, and intervening action to ensure adequate performance and desired outcomes. Business process es are particularly important from a service management perspective. They apply the organization ’s cumulative knowledge and experience to the achievement of a particular outcome (Figure 2.4).

Figure 2.4 Business processes apply experience, know-how and resources

Process es are strategic asset s when they create competitive advantage and market differentiation. As a result, business processes define many of the challenges faced by service management. The nature and dynamics of the relationship between business processes and IT best explains this.

The workflow of business processes is a factor of business productivity. Business processes can span organizational and geographic boundaries, often in complex variants creating unique designs and patterns of execution (Figure 2.5). As the importance of business process has emerged, businesses have realized they must consider not only internal practices, but also their interactions with supplier s and customers. These fundamental needs form the basic motivation for the management of business processes as valuable assets.