Understanding Key Concepts of Service Management

Question 1

Recall the definition of Service

Answer 1

A Service is defined as 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 2

Recall the definition of Utility

Answer 2

Utility is defined as the “functionality offered by a product or service to meet a particular need. Utility can be summarized as ‘what the service does’ and can be used to determine whether a service is ‘fit for purpose’. To have utility, a service must either support the performance of the consumer or remove constraints from the consumer. Many services do both.”

Question 3

Recall the definition of Warranty

Answer 3

Warranty is defined as the assurance “that a product or service will meet agreed requirements. Warranty can be summarized as ‘how the service performs’ and can be used to determine whether a service is ‘fit for use’. Warranty often relates to service levels aligned with the needs of service consumers. This may be based on a formal agreement, or it may be a marketing message or brand image. Warranty typically addresses such areas as the availability of the service, its capacity, levels of security and continuity. A service may be said to provide acceptable assurance, or ‘warranty’, if all defined
and agreed conditions are met.”

Question 4

Recall the definition of Customer

Answer 4

A Customer is defined as a “person who defines the requirements for a service and takes responsibility for the outcomes of service consumption.”

Question 5

Recall the definition of User

Answer 5

A User is defined as a “person who uses services.”

Question 6

Recall the definition of Sponsor

Answer 6

A Sponsor is defined as a “person who authorizes budget for service consumption.”

Question 7

Recall the definition of Service Management

Answer 7

Service Management is defined as a “set of specialized organizational capabilities for enabling value for customers in the form of services.”

Question 8

Key Concepts of creating Value

Answer 8

Organizations strive to create value for their stakeholders. Those stakeholders are both within and without the organization itself.
Value is subjective it is influenced mainly by whether or not the stakeholder achieves their outcomes, but is also influenced by factors such as financial cost, perceptions, previous experiences, speed, ease of use, safety etc.

Question 9

Recall the definition of Value

Answer 9

Value is defined as “the perceived benefits, usefulness and importance of something.”

Question 10

Explain value co-creation

Answer 10

Modern organizations recognise that value is co created through an active collaboration between service providers and service consumers, as well as other stakeholder organizations that are part of the Service Value Chain.
Therefore Service Providers should actively seek to establish mutually beneficial, interactive relationships with their consumers (and other stakeholders as appropriate), empowering them to be creative collaborators in the Service Value Chain.

Question 11

Recall the definition of Organisations

Answer 11

Organizations are defined as a “person or a group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives.”

Question 12

Give 3 types of organisations

Answer 12

Service Providers - can be external to the consumer’s organization, or part of the same organization, or be part of a collaborative service alliance.

Service Consumers - “is a generic role that is used to simplify the definition and description of the structure of service relationships.” The Service Consumer organization includes Customers, Users and Sponsors.

Other Stakeholders - e.g. employees, unions, suppliers, shareholders, government bodies, independent industry bodies, social groups etc.

Question 13

Recall the definition of Outcomes

Answer 13

An Outcome is defined as a “result for a stakeholder enabled by one or more outputs”.

Question 14

Recall the definition of Outputs

Answer 14

An Output is defined as a “tangible or intangible deliverable of an activity”.

Question 15

Explain the relationship between outcomes and outputs

Answer 15

Service Providers produce outputs that help their Service Consumers to achieve their outcome(s).
For example, recordings are the Output of music companies. Customers buy them to achieve their Outcome of pleasurable listening to music.
Service Providers may produce Outputs speculatively, hoping that consumers will find that they wish to achieve new Outcomes e.g. IoT home devices.

Question 16

Recall the definition of Costs

Answer 16

Cost is defined as the “amount of money spent on a specific activity or resource”.

Question 17

What are the 2 types of cost from a Service Consumers viewpoint?

Answer 17

Costs removed by using the service e.g. staff costs

Costs imposed by using the service, e.g. the price of the service, staff training etc

Question 18

Recall the definition of Risks

Answer 18

Risk is defined as a “possible event that could cause harm or loss, or make it more difficult to achieve objectives. Risk 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 19

What are the 2 types of risk from a Service Consumers viewpoint?

Answer 19

Risks removed (or reduced) by using the service e.g. staff skill levels

Risks imposed by using the service, e.g. a security breach at the Provider, etc

Question 20

How can Service Consumers minimise risks to Service Providers?

Answer 20

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

Question 21

What is the relationship between value, utility & warranty?

Answer 21

For a service to be valuable, it must have the appropriate Utility and Warranty to allow the Service Consumers to achieve their Outcomes. However if the costs of that Utility and Warranty are too high, or the Risks are not adequately managed, the service will not be seen as
valuable by the Service Consumers.

Question 22

Recall the definition of Service Offerings

Answer 22

A Service Offering is defined as a “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 23

What may service offerings include?

Answer 23

Goods - to be supplied to a Consumer, e.g. a laptop. Goods are typically transferred from the Provider to
the Consumer , the Consumer taking responsibility for their future use.

Access to Resources - granted or licensed to a Consumer under agreed terms and conditions, e.g. access to
the Internet. The resources remain under the Provider’s
control and can be accessed by the Consumer only during the agreed service consumption period & conditions.

Service Actions - performed to address a Consumer’s needs, e.g. technical support. These actions are performed by the Provider according to the agreement with the consumer.

Question 24

Recall the definition of Service Relationship

Answer 24

A Service Relationship is defined as a “co operation between a service provider and service consumer. Service relationships include service provision, service consumption and service relationship management.”

Question 25

Recall the definition of Service Relationship Management

Answer 25

Service Relationship Management is defined as “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 26

Recall the definition of Service Provision

Answer 26

“Activities performed by an organization to provide services. Service provision includes:
• management of the provider’s resources, configured to deliver the service
• access to these resources for users
• fulfilment of the agreed service actions
• service level management and continual improvement.

Service provision may also include the supplying of goods.”

Question 27

Recall the definition of Service Consumption

Answer 27

“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 users including:
• utilizing the provider’s resources
• requesting service actions to be fulfilled

Service consumption may also include the receiving (acquiring) of goods.”

Question 28

How can consuming services by a Service Consumer create new or modified resources/capabilities for that Organisation?

Answer 28

• Training enhances the skills of the consumer’s staff
• Network services allow the consumer’s computers to communicate
• A vehicle hire service enables or enhances the consumer’s transportation
• Software development services create new applications for the consumer

The Service Consumer can then use its new or modified resources/capabilities to create its own services targeted at other Organizations.