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24G
10G
Table 5.9 User profiles matched with business activity patterns (example)
Pattern matching using PBA and UP ensure a systematic approach to understanding and managing demand from customers. They also require customers to better understand their own business activities and view them as consumers of services and producers of demand. When they are used to communicate demand, service providers have the information necessary to sort and serve the demand with appropriately matched services, service levels, and service assets. This leads to improved value for both customers and service providers by eliminating waste and poor performance.
UP communicate information on the roles, responsibilities, interactions, schedules, work environments and social context of related users.
5.5.4 Service packages
5.5.4.1 Core services and supporting services
Core services deliver the basic outcomes desired by the customer. They represent the value that the customer wants and for which they are willing to pay. Core services anchor the value proposition for the customer and provide the basis for their continued utilization and satisfaction. Supporting services either enable or enhance the value proposition. Enabling services are basic factors and enhancing services are excitement factors.
For example, the core service of a bank could be providing financial capital to small and medium enterprises. Value is created for the bank’s customer only when the bank can provide financial capital in a timely manner (after having evaluated all the costs and risks of financing the borrower). The supporting services could include the aid offered by loan officers in assessing working capital needs and collateral, the application processing service, flexible disbursement of loan funds, and the facility of a bank account into which the borrower can electronically transfer funds. The credit-reporting service that the lending department utilizes for evaluating credit-reporting, may be a core service provided to the loan officers by internal or external service providers. It is not a supporting service to borrowers because they are not its users. Supporting services for the loan officers could include a Service Desk that provides technical support for the credit reporting service, email and voice mail. These services support the outcome of approving loans to credit-worthy customers in an efficient and timely manner, compliant with all policies, procedures and regulations.
In most markets, supporting services will either provide the basis for differentiation or represent the minimum requirements for operation. As excitement factors, enhancing services provide differentiation. As basic factors, enabling services only qualify the provider for an opportunity to serve customers. Enabling services are necessary for customers to utilize the core service effectively. Like basic factors, customers take their availability for granted and do not expect to be additionally charged for the value that such services provide. Examples of commonly offered enabling services are help desk, payment, registration, and directory services.
Examples of enhancing services are harder to provide because they tend to drift with time towards being subsumed into the core service or into becoming an enabling service, depending on the customer segment and market space. In the lending service example, the bank could provide a pre-approved banking card with which small business owners can make capital purchases and cover other business expenses. The bank can also provide a comprehensive online suite of Financial Management tools that allows the borrower to manage working capital and flow of funds connected to the loan account.
5.5.4.2 Developing differentiated offerings
The packing of core and supporting services is an essential aspect of market strategy. Service providers should conduct a thorough analysis of the prevailing conditions in their business environment, the needs of the customer segments or types they serve, and the alternatives that are available to those customers. The decisions are strategic because they hold a long-term view for maintaining value for customers even as industry practices, norms, technologies and regulations change.
Bundling of supporting services with core services has implications for the design and operation of services. Decisions have to be made whether to standardize on the core or the supporting services. One can arrive at the same level of differentiation in a service offering taking different approaches to bundling (Figure 5.25). However, the costs and risks involved may be different. Service Transition processes guide such decisions. The costs and risks for supporting services may be overlooked during initial stages of planning and development. Not only that, since supporting services are often shared by several core services, there is often poor visibility and control over the demand for supporting services and their consumption.
Figure 5.25 Differentiated offerings
While service providers must focus on the effective delivery of value from core services, they should also devote enough attention to the supporting services. Satisfaction surveys show that user dissatisfaction is often with supporting services even where the core service is being effectively delivered.
Some supporting services, such as help desk or technical support services typically bundled with most service packages can also be offered on their own. This is an important consideration in strategic planning and reviews. Service providers may adopt different strategies for core services and supporting services. For example, they can drive standardization and consolidation for supporting services to leverage economies of scale and to reduce operating costs, while developing core service packages specifically designed for particular customers. Or they may standardize the core service package and use supporting services to differentiate the offerings across customers or market segments. These strategic decisions can have enormous implications for the overall success of a service provider at the portfolio level. This is particularly important for service providers who need to balance the differing needs of, typically, not one but several enterprises or business units while trying to keep costs down across that portfolio to remain competitive.
5.5.4.3 Service level packages
Services packages come with one or more service level packages (SLP). Each SLP provides a definite level of utility or warranty from the perspective of outcomes, assets and the PBA of customers. Each SLP is capable of fulfilling one or more patterns of demand (Figure 5.26).
Figure 5.26 Business outcomes are the ultimate basis for service level packages
SLPs are associated with a set of service levels, pricing policies, and a core service package (CSP). CSPs are service packages that provide a platform of utility and warranty shared by two or more SLPs (Figure 5.27). Combinations of CSPs and SLPs are used to serve customer segments with differentiated value. Common attributes of SLPs are subsumed into the supporting CSPs. (This is like the popular game of Tetris in which the bottom-most layer of bricks gets subsumed when all its gaps are filled with the falling bricks.) This follows the principle of modularity to reduce complexity, increase asset utilization across SLPs, and to reduce the overall cost of services. CSPs and SLPs are loosely coupled to allow for local optimization while maintaining efficiency over the entire supported Service Catalogue. Improvements made to CSPs are automatically available to all SLPs following the principle of inheritance and encapsulation. Economy of scale and economy of scope are realized at the CSP level and the savings are transmitted to the SLP and to customers as policy permits.
Figure 5.27 Service level packages are a means to provide differentiated services
In certain contexts, CSPs are infrastructure services offered by a specialized service unit. This allows for greater economy, learning and growth from specialization. This is similar to the arrangements between product marketing groups and manufacturing.
5.5.4.4 Advantage of core service packages
Some enterprises have highly consolidated core infrastructure units that support the operations of business units at a very large scale with high levels of reliability and performance. An example is a global supply chain and logistics company famous for its brown delivery trucks and industrialized service. The high levels of performance and reliability translate into similar levels of service warranty offered to businesses and consumers on the delivery of parcels and documents. The strategy is tight control over core services used by all business units so that complexity is under control, economy of scale is extracted, and business outcomes are assured. Each business unit can develop SLPs based on applications and processes to serve their own market spaces, and have them hosted on top of the core infrastructure services (Figure 5.28).
Figure 5.28 Going to market with service packages
From the business unit perspective, where the SLP is hosted has implications for exposure to quality, cost, and risks. The company is required to negotiate the best possible terms for having their SLPs supported by appropriate CSPs. The principle of separation of concerns is applied here to increase focus on customers without compromising the economy, efficiency and stability of centralized service operations and infrastructure.
The infrastructure unit may offer their CSPs as third-party OEM services to other service providers who package them with their own set of SLPs. This further reduces the financial risks of service assets used to operate the CSP.
5.5.4.5 Segmentation
SLPs are effective in developing service packages for providing value to a segment of users with utility and warranty appropriate to their needs and in a cost-effective way. SLPs are combined with CSPs to build a Service Catalogue with segmentation (Figure 5.29). This avoids underserved and over-served customers and increases the economic efficiency of service agreements and contracts.
Figure 5.29 SLPs are targeted at customer segments
CSPs and SLPs are each made up of reusable components many of which themselves are services (Table 5.10). Other components include software applications, hardware, licences, third-party services and public infrastructure services (Figure 5.30). Some service components are assets owned by customers.
Figure 5.30 SLPs composed of service components and component services
Making component services visible to customers on the Service Catalogue is a matter of policy with respect to pricing and bundling of services. Risks described in Section 9.5 have to be considered for decisions on expanding the Service Catalogue.
Warranty SLP
Workspace SLP1
Workspace SLP2
Workspace SLP3
Availability SLP
24x7x365 Plan with High availability
Worldwide Mobility
PC Notebook
Wireless PDA Service
Desktop Phone
3G Wireless
24x7x365 Plan with Very High Availability
Worldwide Mobility
PC Notebook
Wireless PDA Service
Desktop Phone