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DETERMINING THE VALUE OF A SERVICE

English: A business ideally is continually see...
English: A business ideally is continually seeking feedback from customers: are the products helpful? are their needs being met? Constructive criticism helps marketers adjust offerings to meet customer needs. Source of diagram: here (see public domain declaration at top). Questions: write me at my Wikipedia talk page (Photo credit: Wikipedia)
Once again like in most things, ITIL helps to explain the common sense.  In this case it is the definition of "value" - basically while their definition is somewhat wordy, it gets the point across that Value is defined by the consumer.  What you might consider to be valuable, actually might not be ... the person purchasing it from you will actually make that decision and will base it on whether or not the service meets their demands at the price they are willing to pay for it.

ITIL however does go on to define value a bit further instead of just leaving it up to the customers decision.  They have indicated that value consists of two basic elements:

  • Utility - what does the product or service do?  Does it meet the needs of the customer?
  • Warranty - does the product or service meet the agreed upon requirements, specifically in regards to availability, capacity, continuity and security.  Warranty reduces fluctuations in the service and can to some extent be considered in the light of SLA conversations.
Both elements – Utility and Warranty – are imperative and have to be taken into account and ensured to equal extent when designing and providing a service.  Remember:

Utility = what the service does

Warranty = how is that service delivered

By working with other parts of the organization to improve the utility of a service, businesses are able to improve the functionality of service and what it is able to do for a customer.  However it bears pointing out that improving the Utility of a service does not have an automatic improvement on its Warranty - in fact, care must be taken to ensure that slippages do not occur in this area to the detriment of the service overall!

Improving the warranty of a service however has a very powerful effect allowing you to do the same things (the Utility) but more reliably, faster, cheaper and with a decreased risk to the customer that they will suffer losses due to variations in service performance.

By increasing both Utility and Warranty, organizations are able to do more and do it better.
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