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The value of a service is derived from a combination of utility and warranty. The term utility describes the service in terms of improved performance and/or reduced constraints. Warranty refers to the reliability of the service. Think of warranty as the elements that you take for granted until they are absent.

Let’s look at an example of what ITIL V3 means by utility and warranty.focus 6.jpg


Before the cable industry was deregulated in 1996, the cable companies could only deliver one type of device- analog cable. The only growth opportunity was to sign up more customers. The deregulation act removed a constraint for the cable companies, allowing them to compete in other areas, such as broadband and voice of IP (VoIP). Because cable companies use a more robust pipe than the phone lines, they can deliver a higher-quality service over competing alternatives (i.e. greater bandwidth). The end result is that they are now successfully competing in, what is for them a completely new market, using utility (bandwidth) and warranty (availability) as distinguishing factors.


The cable companies then establish an agreed-to warranty regarding a basic level of availability. Typically, this includes an associated penalty. Customers get credit for time during which the service isn’t available. Warranty can also include other measures such as recoverability, security and capacity.


How can a Business Process be a strategic Asset?

A business process is a strategic asset when it enables you to increase your profitability and be better than your competitors. Consider the insurance industry. Customers are an insurance company’s greatest asset- especially low-risk, highly profitable customers. As a result, the company wants to do everything possible to retain these low-risk customers.


So what happens if one of these customers calls to cancel a driver’s insurance policy because another company offers a better rate? The customer service representative needs to be able to immediately access the customer’s history to decide how to proceed.  A business process that provides and analyzes this customer’s history is a strategic asset because it enables the representative to make an informed decision about whether the competitors offer should or should not, be matched or bettered.


In order to create business value, it’s important to have a solid understanding of how the different service management pieces interconnect. At the same time, it’s essential to understand what we are- and are not- your core competencies, and to evaluate how you focus your resources accordingly on your core.  Think long term.


Look at the bigger picture, in terms of overall service management strategy; you can develop a strategy that looks good on paper, but if you don’t work with the transition team to set expectations and learn if it’s doable, then your strategy may not be realistic. Instead, work with the different functions and processes throughout the whole lifecycle to ensure that the requirements you are creating can be supported by the existing processes and functions.

IT can only create value for the business if you think strategically based upon a solid understanding of the desired business outcomes and how IT can influence them. 


As you set out on any initiative, think holistically and from the business perspective; for example, you’re not delivering an email application, you are actually facilitating communications for the business.


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