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Service units are like business unit s, a bundle of service asset s that specializes in creating value in the form of services (Figure 3.10). Service s define the relationship between business units and service units. In many instances, business units (customers) and service units are part of the same organization. In other instances service units are separate legal entities.
Figure 3.10 Customer assets are the basis for defining value
There are many possible relationships between business units and service units (Figure 3.11). In the example below, Service X is provided to Business Unit A by Enterprise 2. It is hosted by Service Unit 1 and Service Unit 2. Service Y is provided to Enterprise 1 by Service Unit 2. It is shared by Business Units A, B and C. Demand for Service Y is consolidated across Enterprise 1. By pooling demand across the business units, Enterprise 1 negotiates better terms and conditions for Service Y, including pricing discounts. Enterprise 2 is willing to accept those terms and conditions because consolidated demand represents a lower risk of poor return on asset s for Service Unit 2 – thereby reaching the break-even point sooner.
Service Z is provided to Business Unit D by Service Unit 3, both of which exist within Enterprise 3. Service Unit 3 commercially offers Service Z to the business units of Enterprise 1. This increases the return on assets required for the service and potentially reduces the unit cost s of providing the service internally to Business Unit D.
Figure 3.11 Common relationships between business units and service units
Customer s and service provider s are usually a part of a larger value chain or value network. Customers have their own customers to serve, and service providers are in turn served by their service providers
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