Key Concepts of Digital Product & Service Mgmt
This module defines the basic building blocks of modern service management, introducing the core definitions of products, services, value, costs, and risks, and mapping the service offerings that connect providers to consumers.
Module Objectives
By the end of this module, you will be able to:
The Role of Digital Technology
Products and services span a spectrum from non-digital (entirely physical) to purely digital (online resources). Understanding where a product sits on this spectrum dictates the level of applicability of ITIL product management guidance.
Role of Digital Technology: Product Spectrum
Applicability of ITIL product management guidance increases as products move towards fully digital.
Non-Digital Products
No digital elements. Reliant entirely on physical delivery, materials, and resources (e.g., traditional clothing or simple equipment). Cannot be diagnosed or fixed remotely.
Core Syllabus Definitions
To establish a shared language, ITIL 5 defines these core components of value delivery:
Product
A configuration of an organization's resources designed to offer value for a consumer.
Service
A means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks.
Digital Product
A combination of an organization’s resources based on digital technology and designed to offer value to consumers.
Digital Service
A service that fully or largely relies on digital products.
Goods
Tangible resources that are transferred or available for transfer from a service provider to a service consumer, together with ownership and associated rights and responsibilities.
Relationships & Service Offerings
A Service Offering is a formal description of one or more services designed to address the needs of a target consumer group. It connects technology resources to digital services:
Service offerings combine three key components to structure service consumption options:
Physical goods are transferred from the provider to the consumer. The consumer assumes ownership and future maintenance risks.
Actions performed by the provider according to agreement. Often takes the form of service request fulfillment. Providers aim to minimize manual actions.
Resources remain owned by the provider, but the consumer is granted access under agreed terms and conditions.
Product & Service Lifecycle Model
To manage digital products and services, organizations operate within eight lifecycle stages. Hover over the lifecycle diamond stages below to inspect the details:
Lifecycle Stages
Hover over any stage in the diamond diagram above to read about its description and activities.
Outputs vs. Outcomes
Understanding value co-creation requires clearly distinguishing activity results:
Output
A tangible or intangible deliverable of an activity.
Outcome
A result for a stakeholder enabled by one or more outputs.
Value, Costs, and Risks
Services introduce new costs and risks, and may negatively affect certain outcomes. A service is perceived as valuable only when its positive effects outweigh the negative ones.
Achieving Value: Outcomes, Costs, and Risks
Hover over the container to see the scale balance: Positive effects must outweigh negative ones to realize value.
Service Consumer Costs
- Costs Removed: Costs minimized or fully eliminated from the consumer (e.g., no server hardware costs).
- Costs Imposed: New costs introduced by consuming the service (e.g., cloud subscription fees, network training).
Service Consumer Risks
- Risks Removed: Risks delegated to the provider (e.g., hardware failure, service downtime).
- Risks Imposed: New risks introduced by consumption (e.g., vendor lock-in, data security risks).
Discussion Activity — Service Value Exploration
Select a real-life service from your own professional experience. Identify and discuss the following aspects with your peers or write them down:
- The provided service: What is the core service delivery product?
- Outcomes: What outcomes does the customer aim to achieve using this service?
- Risks and Costs: Detail both the costs and risks introduced vs. removed by the service.
- Value Perspective: What makes the service valuable from the consumer's standpoint?