The Concept Of Service - Value proposition and composition (02/02)

Alongside value proposition, equally important aspect of services is the service
value composition.

If you remember, value proposition is all about delivering value but service value
composition is about ensuring that the service has utility and warranty.

Utility is often described as being "fit for purpose" while warranty is described as being "fit for use".

So basically, a service is said to have utility if it meets the purpose for which it is designed or it has utility if it has the functionalities that enhance performance or remove constraints, thereby helping customers achieve the outcome for which they need the service.

Decision whether a service has utility ultimately lies with the customer.

On the other hand, service has warranty if it can achieve the desired outcome securely, quickly and consistently. As with the utility, the warranty of a service is valued by the customer on the way how it is delivered.

Great thing about warranty is that it ensures that the service is always offered with the same value and is available when needed. Basically, warranty ensures customer satisfaction.

So to conclude, a service that has both utility and warranty, can create value and ensure customer satisfaction.

If the service doesn't have both utility and warranty the service provider needs to refine and improve the service until it delivers what the customer needs.

The Concept Of Service - Value proposition and composition (01/02)

By definition, a service should create value for the company, person or group. One of the most important aspects of each service is its service value proposition. Service value proposition refers to the value that the service generates for customers. Customers assess the value based on how the service enhances performance and reduces costs and risks.

A strong value proposition enables service providers to position their services in the
market. Value proposition clearly communicates the benefits of their services and can provide a competitive advantage over other service providers.

Patterns are usually used by service providers to generate the value proposition of services. Pattern is defined as a design or a model that helps simplify the delivery of a complex service. To create a pattern, you first identify the customer's needs.

You then break down the service by asking two questions:

• What tasks does the service include? 
• And how can it be delivered? 

By doing so, a pattern provides a blueprint for quickly providing a service and achieving various outcomes. A pattern also helps in determining how flexible a service is in a way that it helps identify the various ways in which a service can be delivered.

Additionally, it is also useful for service providers to break down services into small tasks. This enables service providers to better manage the costs and risks associated with the particular service.

The Concept Of Service - Definition of a service

A service is often defined as an action or a method that helps create value for customers. This value can be assessed based on how successful the action was in achieving customer outcomes.

Services increase the probability of achieving successful customer outcomes by removing constraints that hamper performance or by enhancing performance.

In some cases, services can go beyond enhancing performance and removing constraints by directly achieving desired outcome.

 An important characteristic of delivering IT services is that the risks and costs associated with them are borne by the service provider alone. The customer has no responsibility for them.

This is because only service provider has the skills to manage the risks and costs. Additionally, the service provider is better placed to manage risks and costs of services by spreading them across multiple customers.