• Trevor Wilson

ITIL® - What is the difference between a Product and a Service?

During my Thursday evening and Friday morning 'drop-in' online one-to-one meeting sessions, which are starting to gain traction, here are a couple of questions/topics discussed.

Question: What is the difference between a Product and a Service?

My answer: This one can be as complex as one wants to make it, and there is no clear answer. However, whilst we know that ITIL® defines a product as a configuration of resources designed to offer value. And, a service as a means of enabling value co-creation by facilitating outcomes that customers want without taking on the ownership of specific costs and risks etc.

All that said, some providers will refer to something as a product and others as a service. For example, a payroll system (particularly a payroll system provided as a cloud solution), will typically incorporate as standard, provider interactions such as technical support, backup and storage management etc. Therefore, such a provider will typically refer to the payroll system as a service rather than a product, even though the configuration is made up of several tangible and intangible resources (e.g. servers, networks, back-up and storage devices). I suppose the same principle as we see platforms as a service (PaaS) and infrastructure as a service (IaaS).

In crude terms, I believe that the reason why we prefer to refer to something as a service if possible, is because it is perceived that a service means the provider is involved with the customer in creating value for the customer, i.e. the relationship is bi-directional or multi directional. Whereas a product suggests that there is no further involvement by the provider in creating value once the product has been supplied, i.e. the relationship is one-directional. Meaning, the customer will assume full responsibility to create value themselves through using the product.

I suppose this is no different to suppliers who pass themselves off as a partner. The issue is; a partner suggests that a partnership exists, and rightly so. A partnership is where both parties share common goals and objectives. A partnership means that both parties are prepared to change, and where the relationship intensifies, spirals and evolves. However, if a customer only ever considers a supplier’s pricing model and a handful of reviews about the supplier then this supplier is clearly not a partner. There is nothing wrong in this relationship (known as a basic relationship) but this supplier is most certainly not a partner!

Another Question: What is the difference between a Service Value Stream and a Process?

My answer: While on the surface they can appear to be similar, value streams primarily describe workflow whereas processes describe the inputs and the activities required to transform the inputs into the required outputs. Value streams however make it easier to identify queuing, backlogs, bottlenecks, cycle and lead times, and waste. Value streams make it easier to identify where automation and efficiency approaches can be introduced, such as swarming and shift left etc, and not to mention, value streams describe the customer journey, whereas processes typically don’t quite reach that visual expectation, albeit processes are vital.

Hope this makes sense and you find this helpful.

You can drop-in for a one-to-one online meeting, just visit our website and go to the "Test Drive" page.

Trevor Wilson