Chapter 2 - Key Concepts Of Service Management

Question 1

Define ‘service management’

Answer 1

A set of specialized organizational capabilities for enabling value for customers in the form of services.

Question 2

What must one understand in order to develop specialized organizational capabilities?

Answer 2

• the nature of value
• the nature and scope of the stakeholders involved
• how value creation is enabled through services

Question 3

What is the purpose of an organization?

Answer 3

to create value for stakeholders

Question 4

Define ‘value’

Answer 4

The perceived benefits, usefulness, and importance of something.

Question 5

Value can be subjective. True or False?

Answer 5

true

Question 6

Define ‘organization’

Answer 6

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

Question 7

Define ‘customer’

Answer 7

A person who defines the requirements for a service and takes responsibility for the outcome of service consumption.

Question 8

Define ‘user’

Answer 8

A person who uses services.

Question 9

Define ‘sponsor’

Answer 9

A person who authorizes budget for service consumption.

Question 10

Define ‘services’

Answer 10

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.

Question 11

Define ‘product’

Answer 11

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

Question 12

Define ‘service offering’

Answer 12

A formal 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.

Question 13

Outline the components of a service offering.

Answer 13

• Goods (supplied to the consumer, ownership is transferred to the consumer, consumer takes responsibility for future use); example: mobile phone, physical server
• Access to resources (ownership is not transferred to the consumer, access is granted or licensed to the consumer under agreed terms and conditions, the consumer can only access the resources during the agreed consumption period and according to other agreed service terms) example: access to the mobile network, or to network storage
• Service actions (performed by the service provider to address a consumer’s needs, performed according to an agreement with the consumer); example: user support, replacement of a piece of equipment

Question 14

Define ‘service relationship’

Answer 14

A cooperation between a service provider and service consumer. Service relationships include service provision, service consumption, and service relationship management.

Question 15

Define ‘service provision’

Answer 15

Activities performed by an organization to provide services. Service provision includes:
* management of the provider’s resources, configured to deliver the service
* ensuring access to these resources for users
* fulfillment of the agreed service actions
* service level management and continual improvement
Service provision may also include the supplying of goods.

Question 16

Define ‘service consumption’

Answer 16

Activities performed by an organization to consume services. Service consumption includes:
* management of the consumer’s resources needed to use the service
* 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.

Question 17

Define ‘service relationship management’

Answer 17

Joint activities performed by a service provider and a service consumer to ensure continual value co-creation based on agreed and available service offerings.

Question 18

Define ‘output’

Answer 18

A tangible or intangible deliverable of an activity.

Question 19

Define ‘outcome’

Answer 19

A result for a stakeholder enabled by one or more outputs.

Question 20

Define ‘cost’

Answer 20

The amount of money spent on a specific activity or resource.

Question 21

Define ‘risk’

Answer 21

A possible event that could cause harm or loss, or make it more difficult to achieve objectives. Can also be defined as uncertainty of outcome, and can be used in the context of measuring the probability of positive outcomes as well as negative outcomes.

Question 22

What are two types of costs involved in service relationships (from the service consumer’s perspective)?

Answer 22

1. costs removed from the consumer by the service ie staff, technology, other resources, which the consumer does not need to provide
2. costs imposed on the consumer by the service (ie costs of service consumption), including staff training, network utilization, procurement, etc

Question 23

What are the two types of risk that are of concern to service consumers?

Answer 23

1. risks removed from a consumer by the service (part of the value prop). These may include failure of the consumer’s server hardware or lack of staff availability. In some cases, a service may only reduce a consumer’s risks, but the consumer may determine that this reduction is sufficient to support the value prop.
2. risks imposed on a consumer by the service (risks of service consumption). An example of this would be a service provider ceasing to trade, or experiencing a security breach

Question 24

Whose duty is it to manage the detailed level of risk on behalf of the consumer?

Answer 24

the provider

Question 25

How can the consumer contribute to the reduction of risk?

Answer 25

1. actively participate in the definition of the requirements of the service and the clarification of its required outcomes
2. clearly communicating the critical success factors (CSFs) and constraints that apply to the service
3. ensuring the provider has access to the necessary resources of the consumer throughout the service relationship.

Question 26

Define ‘utility’

Answer 26

The functionality offered by a product or service to meet a particular need (‘what the service does’). It can be used to determine whether a service is ‘fit for purpose’

Question 27

What must a service be to have utility?

Answer 27

must either support the performance of the consumer and/or remove constraints from the consumer

Question 28

Define ‘warranty’

Answer 28

Assurance that a product or service will meet agreed requirements. Often relates to service levels aligned with the needs of service consumers.