If you are in the position of providing IT services to customers then you know the importance of the statement: Utility plus Warranty equals Value (U+W=V). So when we talk about value, we must consider who determines that value and what are the components that go into making up the agreements that will define how value gets created and delivered. The value of a service is normally defined as “the level of service that meets customer expectations” and is often measured by how much the customer is willing to pay for the service. An industry trend today that may have been excluded in the past is the ability of the service provider to be able to define and document the costs involved in providing that service beyond its core value.
Services being intangible and unlike products do not have much inherent value. This value does not get realized until the service is actually utilized and enables someone to create the desired business outcome, which means that the provider of the service does not determine the value. This is performed by the stakeholder who decides how they will engage the service and determines the return they achieve by using it.
For the customer it is about utility (fitness for purpose) and warranty (fitness for use) and how the service provider can make these two elements come together to realize the desired outcomes and which the customer uses for the bases of their perception of the service and its value.
“Utility”, or what functionality the service delivers, is used to define what the service is able to do and its ability to meet required outcomes. It also talks to how it enhances the customer or business assets and its ability to improve the desired business results.
So the catch is that I can have a service with phenomenal utility, but if it isn’t balance with the correct levels of warranty (FFU), my customers will be sitting dead in the water waiting for my service to become available. They will also be concerned with, will it be continuous, secure and have enough capacity to meet the dynamic levels of demand I plan on engaging in? We as a service provider must be able to balance both utility (FFP) and warranty (FFU). It is critically important that when we define and document the service and the customer requirements, that a holistic picture of both functionality and performance is taken into consideration when setting realistic expectations with our customers.
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