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Figure 4.4 Provider business models and customer assetsA combination of service archetype and customerassets (Ux-Ay) represents an item in the Service Catalogue. Several services in a catalogue may belong to the same archetype or model (Ux). Many service archetypes may be combined with the same type of customer asset (Ay) under an asset-based service strategy. The same archetype may be used to serve different types of customer assets under a utility-based service strategy (Figure 4.5). This is a variation of need-based and access-based positioning. The strategy of the service provider will determine the contents of the Service Catalogue.
Figure 4.5 Asset-based and utility-based positioning
It is useful for managers to visualize services as value-creating patterns made up of customer assets and service archetypes (Figure 4.6). Some combinations have more value for customers than others even though they may be made of similar asset types and archetypes. Services with closely matching patterns indicate opportunity for consolidation or packaging as shared services. If the Applications asset type appears in many patterns, then service providers can have more investments in capabilities and resources that support services related to Applications. Similarly, if many patterns include the Security archetype, it is an indication that security has emerged as a core capability. These are just simple examples of how the Service Catalogue can be visualized as a collection of useful patterns. Service strategy can result in a particular collection of patterns (intended strategy) or a collection of patterns can make a particular service strategy attractive (emergent strategy).
Figure 4.6 Visualization of services as value-creating patterns
This visual method can be useful in communication and coordination between functions and processes of service management. These visualizations are the basis of more formal definitions of services. Proper matching of the value-creating context (customer assets) with the value-creating concept (service archetype) can avoid shortfalls in performance. For example, the customer’s business may involve reviewing and processing of application forms, requests, and account registrations. Questions of the following type can be useful:
Do we have the capabilities to support workflow applications?
What are the recurring patterns in processing application forms and requests?
Do the patterns vary based on time of year, type of applicants, or around specific events?
Do we have adequate resources to support the patterns of business activity?
Are there potential conflicts in fulfilling service level commitments? Are there opportunities for consolidation or shared resources?
Are the applications and requests subject to regulatory compliance? Do we have knowledge and experience of regulatory compliance?
Do we come in direct contact with the customers of the business? If yes, are there adequate controls to manage user interactions and information?
The preceding set of questions is an instance of a more generic set of probing questions that is useful to gain valuable insight into the customer’s business (Table 4.2). These are not merely questions. When effectively applied, they are tools of incision used to dissect business outcomes that customers want services to support. They reveal not only challenges associated with a particular customer or business environment but also the opportunities.
With respect to themselves
With respect to their customers
Who are our service providers?
Who are their customers?
How do services create value for them?
How do they create value?
What assets do we deploy to provide value?
Which of their assets receive value?
Which assets should we invest in?
Which of our assets do they value most?
How should we deploy our assets?
How do they deploy their assets?
Table 4.2 Probing questions to gain insight
4.2 Develop the offerings
4.2.1 Market space
A market space is defined by a set of business outcomes, which can be facilitated by a service. The opportunity to facilitate those outcomes defines a market space. The following are examples of business outcomes that can be the bases of one or more market spaces.
Sales teams are productive with sales management system on wireless computers
E-commerce website is linked to the warehouse management system
Key business applications are monitored and secure
Loan officers have faster access to information required on loan applicants
Online bill payment service offers more options for shoppers to pay
Business continuity is assured.
Each of the conditions is related to one or more categories of customer assets, such as people, infrastructure, information, accounts receivables and purchase orders, and can then be linked to the services that make them possible. Each condition can be met through multiple ways (Figure 4.7). Customers will prefer the one that means lower costs and risks. Service providers create these conditions through the services they deliver and thereby provide support for customers to achieve specific business outcomes.
Figure 4.7 Market spaces are defined by the outcomes that customers desire
A market space therefore represents a set of opportunities for service providers to deliver value to a customer’s business through one or more services. This approach has definite value for service providers in building strong relationships with customers. Customers often express dissatisfaction with a service provider even when terms and conditions of service level agreements (SLAs) are fulfilled. Often it is not clear how services create value for customers. Services are often defined in the terms of resources made available for use by customers. Service definitions lack clarity on the context in which such resources are useful, and the business outcomes that justify the expense of a service from a customer’s perspective. This problem leads to poor designs, ineffective operation and lacklustre performance in service contracts. Service improvements are difficult when it is not clear where improvements are truly required. Customers can understand and appreciate improvements only within the context of their own business assets, performances and outcomes. A proper definition of services takes into account the context in which customers perceive value from the services.
4.2.2 Outcome-based definition of services
An outcome-based definition of services ensures that managers plan and execute all aspects of service management entirely from the perspective of what is valuable to the customer. Such an approach ensures that services not only create value for customers but also capture value for the service provider.
Solutions that enable or enhance the performance of the customer assets indirectly support the achievement of the outcomes generated by those assets. Such solutions and propositions hold utility for the business. When that utility is backed by a suitable warranty customers are ready to buy.
Services are a means of delivering value to customers by facilitating outcomes customers need to achieve without owning specific costs and risks.
Well-formed service definitions lead to effective and efficient service management processes. Generic examples are given below:
Example 1: Collaboration services provide value to the customer when cooperative business communications are conducted without the constraints of location or device. Value is created when the provider operates for the customer store-and-forward and real-time methods of electronic messaging, so that (the customer’s) employees can compose, send, store and receive communications in a manner convenient, reliable and secure, for a specified community of users.
Example 2: Application-hosting services provide value to the business when business function services and processes continue to operate without the need to invest capital in a non-core business capability. Value is created when the provider maintains for the business an application software platform system and assures that employees and business systems can work continuously in a manner convenient, secure and reliable, for a specified portfolio of services.
Example 3: Mobile workplace services provide value to the customer when business activity is conducted without the constraints of fixed location. Value is created when the provider operates for the customer a wireless messaging system and assures that (the customer’s) employees and business systems can exchange voice and data messages in a manner convenient, reliable and secure, within a specified area of coverage.
Example 4: Order-to-cash services provide value to the business when purchase orders are converted to cash flows without the need to invest capital in a non-core business capability. Value is created when the provider licenses to the business an order fulfilment system and assures that the sales teams and online shoppers can enter or modify purchase orders in a manner convenient, fast and secure within a specified time schedule.
Service definitions are useful when they are broken down into discrete elements that can then be assigned to different groups, who will manage them in a coordinated manner to control the overall effect of delivering value to customers (Figure 4.8).