ITSM Basics: What Is a Service?

Have you ever been asked: “What’s a service?” It might seem a strange, or even silly, question to ask someone who’s already managing, delivering, and supporting IT services – as part of an IT service management (ITSM) capability – but it’s a question that not enough of us can answer without a great deal of head scratching. And even then, most of us will provide our own version of what a service is.

It’s also a question that Paul Wilkinson, an advocate of effective organizational learning and development, asks in his presentations as he travels the world. As to the response he usually gets – he’s lucky if 2-3 people out of an audience of 100 put their hands up to show that they know what a service is. And, as to whether the offered definitions are up to snuff is probably not important when there’s such a “service definition” black hole.

It’s a strange situation – there are so many of us managing IT services but so few that can succinctly articulate what a service is. In fact, take a moment – and without jumping ahead – answer the question yourself: “What’s a service?”

It’s not easy, is it?

Yup, that’s what I thought. Hope this blog will help sort it out for you.

So, What Is a Service?

The ITIL Practitioner Guidance publication (to which Paul contributed his knowledge and experience, btw) offers up the following definition:

“A service is a means of delivering value to customers by facilitating outcomes that customers want to achieve without the ownership of specific costs and risks.”

It’s a little different to, and more detailed than, what you (and I) might usually say; i.e. something like:

“A service is something that meets a need or fulfills a demand.”

I’d also add in the ability to consider and potentially measure the level of service design and delivery success.

Hence, we really should break down the ITIL definition further…

What is Value?

Again, it’s another potentially vague term – ask 10 people what value is, and you’ll probably get 11 different responses. With at least one person, probably me, stating that: “Value, like beauty, is in the eye of the beholder.”

Again, without jumping ahead, how would you define value?

Borrowing from ITIL Practitioner again, we can consider how value is generated as well as what it may or may not be (for different customers):

“Value is generated through exchange of knowledge, information, goods or services.”

“(Value is…) the benefits delivered in proportion to the resources put into acquiring them.”

“The value of a service comes from what it enables someone to do.”

“Services contribute value to an organization only when their value is perceived to be higher than the cost of obtaining the service.”

And another important point, which I don’t think is explicitly stated in the publication, is that a service often only delivers value at the point of consumption.

The value drivers will of course differ depending on the customers’ priorities and the outcomes they wish to achieve, but there’s still another aspect to consider about the value of a service – that value has two dimensions. Firstly, there’s the fitness for purpose – the service’s utility – does the service do what the customer needs it to? And secondly, there’s the fitness for use – its warranty – for instance, that the required capabilities are available when the customer needs them to be. Understanding what customers deem to be of value is difficult, but it doesn’t mean we shouldn’t try to gauge it.

What Is an Outcome?

You should know the drill by now – before continuing, how would you define an “outcome”?

“Outcome,” along with “value,” is now a popular word in the ITSM-industry lexicon – usually as part of the phrase “desired business outcomes.” Because, after all, successful IT outcomes don’t necessarily mean that there are also successful outcomes at a business (or organization) level.

Borrowing from ITIL Practitioner (again):

“An outcome is 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 actual results.”

In understanding a customer’s desired outcomes, as well as understanding what they value, it’s also important to understand the difference between outcomes and outputs.

A simple example to explain this is using a soft-drink vending machine (service). The output is the soda bottle, but the outcome will be something like – depending on the customer’s exact wants and needs – thirst being quenched; which can be influenced by aspects such as soda taste, temperature, fizziness, etc. Importantly, an output might not be enough to deliver a desired outcome, or value for that matter.

What are Costs and Risks?

You probably don’t need me to explain this. But if you do, let me complete the set of borrowed ITIL Practitioner definitions:

“A cost is the amount of money spent on a specific activity, IT service or business unit. Costs consist of real cost (money), notional cost (e.g. people’s time) and depreciation.”

“A risk is a possible event that could cause harm or loss, or affect the ability to achieve objectives.”

The important thing is to understand that these are relevant for any given customer and any given IT service. Without knowing them, it’s almost impossible to understand if desired outcomes and value expectations have been achieved.

Not understanding what these are might also make it difficult to deliver a particular IT service – to agreed service levels – on an ongoing basis.

What Does This All Mean for Me (and 4 Key Questions to Answer)?

If you’re managing IT services, and wish to do so effectively, then please ask yourself how well do you understand and address the four key components of:

1. Value
2. Outcomes
3. Costs, and
4. Risks

If you don’t understand what each of these components are, then how can you be certain that you’re actually meeting the customer’s needs when delivering an IT service?

ITIL Practitioner does a good job at summing up the potential for a disconnect – by offering 4 key questions to ask related to IT services:

1. Value: How will the service, process, partner, etc. help to deliver value to the customer?
   This might relate to additional revenues, reduced costs (or better margins), improved quality (maybe in terms of availability), greater attractiveness and better retention for external customers, the ability to meet regulatory or legal requirements, etc.
2. Outcomes: What are the specific outcomes required by the customer that the service will facilitate?
   It’s important to see these at a business rather than IT level outcomes. For example, an externally-facing online payment (revenue collection) capability/service would be tasked with ensuring that the business can successfully receive payment for goods/services from all customers 24/7.
3. Costs: What are the true and complete costs associated with achieving the outcomes?
   There’s a danger that IT departments don’t have the required level of insight into what the delivery of discrete IT services cost – from the direct costs to the indirect costs that need to be allocated and absorbed across all IT services. And without this level of granularity, how can a customer gauge value without knowing what the involved IT service(s) cost?
4. Risks: What are the risks that, if they materialize, could endanger the achievement of the outcomes?
   But it’s not just the identification of the risks that’s important. What is being done to mitigate the risks? And, in the case of the worst happening, what plans are in place to quickly get the IT service(s) back up – delivering business outcomes and value – again?

Is it time for your ITSM capabilities to be improved by a better understanding of what services are and how best to truly deliver against customer expectations?