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Creating Value With Services
Creating Value With Services
Creating Value With Services
management
Creating value with services
Syllabus
1. Understand the key concepts of service management
1.1 Recall the definition of:
a) Service
b) Utility
c) Warranty
1.2 Describe the key concepts of creating value with
services:
a) Cost
b) Value
d) Outcome
e) Output
f) Risk
g) Utility
h) Warranty
1.3 Describe the key concepts of service relationships:
b) Service relationship management
c) Service provision
d) Service consumption
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What you will learn
By the end of this topic, you will be able to:
• Describe the key concepts of
creating value with services,
including outcome, output, cost,
risk, utility and warranty.
• Recall the definitions of utility and
warranty.
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Do you recall?
How is value created?
• There was a time when organizations saw their role as delivering value
to their customers in much the way that a package is delivered to a
building by a delivery company.
• This view treated the relationship between the service provider and
the service consumer as monodirectional and distant.
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Value co-creation
Value co-creation
requires collaboration
between the provider and
the consumer;
they have a mutually
beneficial,
interactive relationship.
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Service provider
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What about Axle’s
services?
Axle Car Hire acts as a
Henri: CIO, Axle Car Hire service provider. We
provide cars for hire. At
the same time, other
organizations, such as
mechanics and the
companies that we buy
our cars from, act as service
providers for Axle.
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What are service consumers?
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What are products and services?
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Definitions
A service is a means of enabling value co-creation by
facilitating desired outcomes for, without the customer
having to manage specific costs and risks.
A product is a configuration of an
organization’s resources designed
to offer value for a consumer.
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What are service relationships?
A cooperation between a
service provider and service
consumer.
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What is the meaning of
service provision?
Service provision activities are performed
by an organization to provide services
Management of the Ensuring access to these
provider’s resources, resources for users
configured to deliver the
service
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Service relationship management
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Service relationships
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How organizations co-create value
Service relationships are established between two or
more organizations to co-create value. In a service
relationship, organizations will undertake the roles of
service providers or service consumers.
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What about Axle’s
service relationships? Axle has service relationships with many
service providers and consumers, both
internal and external. Some services
Henri: CIO, Axle Car Hire provided to Axle create new resources for
the business, such as car manufacturers
selling cars to us. Other services, such as the
work done for us by our internal car cleaning
team, and mechanics outside of Axle, change
our existing resources by ensuring that our
cars are clean and functional. Axle can use these
resources in other relationships to provide its
own services, in the form of car hire, to
consumers, i.e. our customers. These are just a
few examples of the service relationships that Axle
has. The organization as a whole has many more.
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The service relationship model
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Value, outcomes, costs, and risk
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Outcomes
Acting as a service provider, an organization produces outputs that help
its consumers to achieve a certain outcome.
An outcome is a result
An output is a tangible or
for a stakeholder,
intangible deliverable of
enabled by one or more
an activity.
outputs.
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Axle’s outputs and
outcomes
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Axle’s outputs and
outcomes
For our service consumers,
outcomes include travel that
Su: Product Manager, Axle Car Hire is convenient and affordable,
and meets a range of needs.
This includes self-drive holidays,
client site visits, and travel to
see family and friends.
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Definition: cost
The amount of money spent on a specific activity or resource.
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Risk
As with costs, there are two types of risk
that are of concern to service consumers:
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Risk
Actively participating in the definition of the
requirements of the service and the clarification
of its required outcomes.
Clearly communicating
the Critical Success Factors (CSFs) and
constraints that apply to the service.
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Definitions
+
Utility Functionality offered by a Assurance that a Warranty
product or service to meet product or service will
a particular need. meet agreed
Essentially ‘what the service requirements. ‘How the
does’ and can be used to service performs’ and
determine whether a used to determine
service is ‘fit for purpose’. whether a service is ‘fit
for use’.
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What can be described as utility
and warranty?
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Axle’s Car Hire: new
supplier case study
Axle’s recent customer
Su: Product Manager, Axle Car Hire satisfaction surveys
consistently revealed low
ratings for car cleanliness.
This hampered our customers’
travel experience and was a
contributing factor for low
repeat bookings.
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Axle’s Car Hire: new
supplier case study
Axle Car Hire made the
decision to outsource the
cleaning of all vehicles to a
Henri: CIO, Axle Car Hire
service provider.
Previously, cleaning of our
vehicle fleet was performed
by an internal department.
The cost and effort to maintain
equipment, update rosters,
and manage an inflexible
workforce were unsustainable.
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Axle’s Car Hire: new
supplier case study
By partnering with a specialist
Su: Product Manager, Axle Car Hire cleaning organization, Axle can
focus its resources on providing
a better service for our users.
It will also help to optimize our
costs, increasing value for the
organization.
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