1. Understand the key concepts of service management 1.2 Describe the key concepts of creating value with services:

Question 1

a) Cost

Answer 1

Costs refer to the amount of money spent on a specific activity or resource

Question 2

The key concepts of cost are:

Answer 2

1. There are costs removed from the consumer by the service.
2. There are costs imposed on the consumer by the service, including charges
   by the service provider.
3. Costs expressed in non-financial terms can be translated into financial costs

Question 3

b) Value

Answer 3

the perceived benefits, usefulness and importance of something

Question 4

The key concepts of value are:

Answer 4

1. Providers and consumers co-create value, as well as other organizations that are part of the relevant service relationships.
2. Organizations Facilitate Value Creation

Question 5

c) Organization

Answer 5

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

Question 6

The key concepts of Organization are:

Answer 6

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.

Question 7

d) Outcome

Answer 7

a result for a stakeholder enabled by one or more outputs

Question 8

e) Output

Answer 8

a tangible or intangible deliverable of an activity

Question 9

f) Risk

Answer 9

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

Question 10

The key concepts of Risk are:

Answer 10

1. There are risks removed or reduced for the consumer by the service
2. There are risks potentially imposed on the consumer by the service
3. 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

Question 11

g) Utility

Answer 11

the functionality offered by a product or service to meet a particular need

Question 12

The key concepts of Utility are:

Answer 12

▪ 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

Question 13

h) Warranty

Answer 13

the assurance that a product or service will meet agreed requirements

Question 14

The key concepts of Warranty are:

Answer 14

▪ 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