There is a lot of confusion about “what is a service” and “what is a service catalog”. I have seen organizations say they provide less than thirty different services to ones that say they provide hundreds of services. What is the correct approach? What is the correct level of detail?

ITIL® v3 provides a framework, a common understanding that can be shared across the IT industry, to help clarify the confusion. The center of the Service Lifecycle is Service Strategy, encouraging us to elevate the conversation about services to a strategic level.

Definition of a Service

The formal definition of a service from ITIL v3 is:

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

Salesforce.com is an excellent example of a service. For a fixed annual subscription fee per user, they provide a Sales Force Automation (SFA) system. The customer does not need to worry about procuring the servers and other IT infrastructure to run the SFA system and they do not need to worry about how many people they need to hire to provide “care and feeding” to the system.

Many businesses switched to Salesforce.com because they know what they are getting and are attracted to the predictable easy-to-understand cost model. The interesting question is: what was preventing the internal IT organization from delivering the same value proposition?

Strategic question to ask yourself about each service that your organization provides:

• Do your customers feel like they are directly exposed to the cost and risk?

• Do your customers understand what they are getting from the service and the cost of the service?

Note: an overhead charge or an IT budget breakdown in terms of labor, software and hardware depreciation, does not explain the specific cost of each service.

The Value of a Service

The first part of the definition of a service speaks about value. There are two dimensions to value: utility and warranty.

Utility refers to how effectively the service facilitates the desired outcome, i.e. help the customer achieve its business objectives. Let us continue with our Sales Force Automation theme. Some examples of objectives for the SFA service are: ensure sales reps are following an effective standardized sales process to result in more sales, provide management with a greater visibility in the sales forecast, etc. The ability of the SFA service to affect these outcomes is a measure of its utility. When you think of utility, ask the question, “what” is the service trying to achieve and is the service “fit for purpose”.

Warranty refers to the ability of consistently delivering the service when it is required. Here, concepts like availability, performance, security, etc., are important. In our SFA example, sales reps may need access to the SFA system in the office and on the road. They may have meetings during the day (hopefully a good indication that they are productively selling) so they may only be able to update their SFA information after-hours. Hence, when you think of warranty, ask the question, “how” is the service being delivered and is the service “fit for use”.

Both utility and warranty must exist in order for the customer to perceive value in the service.

Categorizing Services

When identifying the services that your organization provides, it is useful to consider the following categories of services:

• End-user services: As the name suggests, these are services provided to an end-user, e.g. a new hire would typically get most of these services automatically. Many organizations consider them “basic” or “utility” services. Examples include: desktop/laptop service, email
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