01-3 Define and explain the concept of a service (SS 2.1.1)

ITILFND01 Service Management as a Practice

01-3 Define and explain the concept of a service (SS 2.1.1)

There are a multitude of definitions for the term service. ITIL provides an excellent definition that covers much ground but truly understanding the concept of service management and running IT like a business requires more than just this one definition. Throughout this book we will cover several definitions of service that derive from its Economic and therefore business based understanding. There are many underlying Economic principles that drive human nature in relation to services and the exchange of value. Running IT like a business means that we understand and leverage those human reactions that make free economies work so well, to include good governance and managing the overall system of exchange.

The following paragraph is straight from the ITIL Service Strategy book and describes well the idea of a service in terms of creating an organization that delivers a wide range of value through services or in other words, a service business:

Services are a means of delivering value to customers by facilitating the outcomes customers want to achieve without the ownership of specific costs and risks. Services facilitate outcomes by enhancing the performance of associated tasks and reducing the effect of constraints. These constraints may include regulation, lack of funding or capacity, or technology limitations. The end result is an increase in the probability of desired outcomes. While some services enhance performance of tasks, others have a more direct impact – they perform the task itself.

This definition is useful in a complex environment where exact replication is not sufficient to meet the needs. Instead of an exact recipe this description provides a pattern of operation that can be changed to meet changing needs as long as the key components are understood and implemented correctly.

ITIL services are described in terms of outcomes as opposed to outputs. The difference is important in relation to the scale of the service in question. Outputs can be described as precise repeatable results produced from a service request. When the service to be delivered is discrete such as deploy a specific security profile, then an output is a desirable result. However, when dealing with customers on more complex or on large collections of service requests delivered as a comprehensive service, the desires and needs of the customer are often much more important than a precisely defined output. When delivering an outcome instead of an output it is important to understand the end result the customer desires and to help facilitate that end result even if it means deviating slightly from the specifications of the service.

This concept is often expressed in the difference between IT/business alignment and IT/business integration. In alignment, delivering the specific outputs the business desires is crucial. In integration, IT seeks to understand their customer to the point where IT contributes to forming the desires. It is important to realize that as desirable as integration is it is not a replacement for alignment. IT/business integration can only happen if IT and the business are first aligned and there are many aspects of the relationship where alignment provides the maximum benefit. The most successful organizations apply each concept at the appropriate time and place.

When an IT organization operates at the integration level it generally has customer relationship managers who are the primary interface with the customer for determining business needs and ensuring that desired outcomes are understood and that they drive requirements gathering. If this activity is being run by development resources on a project by project or technology by technology basis then your organization is far from this ideal state. In the ideal state this relationship is managed on a permanent basis and all projects and technologies, no matter how big or important, are managed within the scope of this relationship. Organizational politics makes achievement of this ideal a tremendous challenge in many large organizations that I have worked with.

ITIL defines outcome specifically as: “The result of carrying out an activity, following a process, or delivering an IT service etc. The term is used to refer to intended results, as well as to actual results.”

When thinking of a service and what customers seek from a service it is helpful to consider some simple examples. Package services such as those provided by UPS or FedEx are services we are all familiar with. Before these services existed many businesses such as department stores ran their own delivery services. There was significant management overhead involved. Investments in equipment and people had to be made. And, of course, there is the risk involved in having your own employees operating vehicles all over the city. If you are the only company providing this service then it might increase your core business but once all of your competitors offer the same service it becomes nothing more than a cost of doing business that you cannot avoid. Moreover since this is a business whose cost respond significantly to scale, it is inefficient and costly to run on a small scale.

When FedEx and UPS came along they created an opportunity for department stores to get the same outcomes without having to manage the costs and risks of running their own delivery business. In addition, since these services span the country, department stores are able to centralize their delivery service away from their expensive store space and deliver all purchases from a single location. So, as a general statement, customers seek service outcomes without the need to directly manage the costs and the risks. These factors are managed by the service provider and are simply reflected in the cost. For shared-service providers the marginal costs and risks go down with each additional service delivered. This allows those service providers to provide better service, cheaper service, or both simultaneously. In this way service providers bring efficiency and therefore value to the economy.

From this understanding comes the standard ITIL definition of service: A means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks.  When speaking of services in their aggregate sense or in the form of a service business this definition is very useful. When we consider Enterprise IT as a service business, this definition is very appropriate. This definition is even useful when we talk of services in an aggregate sense such as networking services. Where you may begin to have trouble understanding is when you get to the level of building a service catalog and try to apply this definition to a simple service such as provide access to a team data share site. Part of the reason for this is that we are no longer dealing with customers but with consumers at this level. Another part of the reason is that this definition doesn’t articulate the concept of the value transaction at the core of any economic or business service. Services, provided to people as opposed to the technology services that programmers are familiar with, are transactions of value from one person to another. In an Enterprise IT environment the pathways that the value exchange takes may include multiple levels of budgeting but the exchanges to happen.

There are a number of ways to think about services, to label services, and to categorize services. Some are useful in one scenario and not another. ITIL provides many different ways of identifying services. Some of these work together and should be thought of together and others are completely separate concepts useful in different scenarios. Sometimes it is difficult to tell the difference.

IT services are one classification of services that distinguish the services provided by IT from other parts of the business. The key aspect of IT services is that they generally have technology at their core or they are delivered in support of a technology solution. They will include technology, people, and processes. The customers of an Enterprise IT organization are other business units within the Enterprise. Even if IT ends up directly supporting end-customers of the business, those are the business’s customers not IT’s customers. The concept of customer is complex and nuanced. Good business people understand well the different faces of their customers. When IT delivers services to its customers it should have service targets defined in a Service Level Agreement (SLA). SLA’s are specifically between a service provider and their customer.

Customers must be satisfied with the services they receive or they will seek changes. They may seek those services from an external provider or they may seek organizational changes within the IT department. It is important that IT measure its performance against service targets as well as its customer’s perceptions of that performance. A key component of perception is the expectations that the customer has about the level of service to be provided. These expectations change often and must be actively managed by the service provider. There are several categories of services that are useful in relation to managing perceptions and expectations.

Services are often named and categorized by the outcomes they produce. Core services are defined around that outcome that is most central to the needs or desires of the customer. These are the essential elements of what are often complex and elaborate services. If the service provider fails to provide the expected value from the core services often nothing else will matter.

Often the core service cannot be provided without other services that enable the core service. You can’t go to the theater and watch a movie unless the theater receives electricity and delivery of the films but as a customer you are not consciously aware of these services. These types of services are called enabling services.

There are other types of services that are not essential but that make the core service better. I could enjoy a movie without popcorn but the experience simply wouldn’t be as good. For me, providing popcorn and a drink at the theater is an enhancing service that I would not want to do without. If I had to choose between two theaters and one did not provide popcorn, I would choose the one with popcorn every time. These services that are non-essential but that enhance or make the service better are called enhancing services.

Services are often complex. Providing a movie experience to the public requires tracking and managing many services both visible and invisible to the customer. Enterprise IT is no different. The services that business customers pay for as budget items are usually made up of many smaller services that are delivered directly to that customer’s agents, end-users. Enterprise IT may not list all of these services out for the customer but they must be managed. As business owners, IT managers must determine to what level they will track and manage services. Some outcomes are so small or so routine that they need not be tracked as services but simply make up elements of work tasks. However, most Enterprise IT departments can have service catalogs with many thousands of individual services that need to each be owned and managed. These smaller services will be discussed further under the term service request and the tool used to manage them may also be distinguished as a service request catalog.

When many of these discrete services are grouped together we create a term called a service package to describe them as a group. Networking services is a service package made up of many services, some the customer sees and some they do not. Customers generally recognize wireless access as part of the networking services they receive but most would not know what a DNS service is much less an IP routing service. These packages can even contain other packages. VPN services is an example of a package within the general networking services package. There are services within VPN services that customers may never realize exist such as encryption and authentication services that are unique to VPN services.

These packages can also be created for customer segmentation reasons. They can be created to manage costs with VPN services only being offered to those who need remote access to reduce costs and maintenance issues. These packages can even be created based on the level of service to be offered to different customers. Internet service providers do this by providing different connection speeds at different price points. These are generally called service level packages.

The above content was adapted from the ITIL Service Strategy book section 2.1.1 to meet the ITIL Foundation exam requirement 01-3. This content will form the foundation for the licensed version of my updated “IT Service Management Foundations: ITIL Study Guide” book and my licensed version of the ITIL foundation course. The book and course will provide additional discussion of these topics and deliver them in an integrated format. The Course will be offered online via streaming video.

About The Author

Ron B Palmer

Ron B Palmer is an internationally recognized expert on IT Service Management who also writes on strategy as it applies universally irrespective of its application in business, war, or politics. Ron’s approach is grounded in concepts such as quality, systems theory, complexity, fractals, and Economics. Ron holds the ITIL Service Manager and ITIL Expert certifications as well as numerous ISO/IEC 20000 certifications.

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