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From the customer’s perspective, value consists of two primary elements: utility or fitness for purpose and warranty or fitness for use.
Utility is perceived by the customer from the attributes of the service that have a positive effect on the performance of tasks associated with desired outcomes. Removal or relaxation of constraints on performance is also perceived as a positive effect.
Warranty is derived from the positive effect being available when needed, in sufficient capacity or magnitude, and dependably in terms of continuity and security.
Utility is what the customer gets, and warranty is how it is delivered.
Customer s cannot benefit from something that is fit for purpose but not fit for use, and vice versa. It is useful to separate the logic of utility from the logic of warranty for the purpose of design, development and improvement (Figure 2.2). Considering all the separate controllable inputs allows for a wider range of solutions to the problem of creating, maintaining and increasing value.
Figure 2.2 Logic of value creation through services
Take the case of the business unit utilizing the high-performance online storage service. For them the value is not just from the functionality of online storage but also from easy access to no less than one terabyte of fault-tolerant storage, as and when needed, with confidentiality, integrity, and availability of data. Chapter 3 of Service Strategy provides further detail on the concepts of utility and warranty.
An outcome -based definition of service moves IT organizations beyond Business-IT alignment towards Business-IT integration. Internal dialogue and discussion on the meaning of services is an elementary step towards alignment and integration with a customer ’s business (Figure 2.3). Customer outcomes become the ultimate concern of Product Managers instead of the gathering of requirement s, which is necessary but not sufficient. Requirement s are generated for internal coordination and control only after customer outcomes are well understood. Chapter 4 of Service Strategy provides detail on the practical use of outcome-based definitions.
Figure 2.3 A conversation about the definition and meaning of services
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