Organizations and People
When discussing the concept of an organization in ITIL 4, the organization is not limited to a service provider organization, or an information technology organization. Instead, it’s just a generic organization. So what is an organization in the first place? ITIL 4 defines an organization as a person or a group of people that has its own functions with responsibilities, authorities, and relationships, to achieve its objectives. This definition is pretty generic and is done on purpose by the creators of ITIL to allow ITIL to be more widely used and adapted by any organization.
In ITIL 4 there are two basic roles that an organization can fulfill. A service provider is a role performed by an organization in a service relationship to provide services to consumers. On the other hand, a consumer is a role performed by an organization in the same service relationship that uses or consumes those services. While organizations can vary in size, complexity, and legal structure, what really binds an organization together is a set of common objectives, relationships, and authorities. Now, this may seem strange, especially when considering a single person that can act as an organization, but this is how it is in the real world. Let’s look no further than Dion Training Solutions, the company behind www.itil.diontraining.com. Originally this was set up as a sole proprietorship but operated as an organization in all of its business relationships. As the company got bigger, there were now a couple of teams that handled training and operations. This is an example of how people organized around common goals within a larger business organization to achieve common objectives in a coordinated method. In most of these cases, the common objectives are usually trying to create value for the consumer, but the way value is actually achieved has changed in ITIL 4.
Previously, value was considered something that was just delivered from a service provider to the consumer of the service. But this wasn't entirely accurate. In fact, it was so inaccurate that saying something like "Delivering something is easy, but delivering something of value is hard," began to spring up all throughout the IT service management industry. So ITIL 4 recognizes that value must be co-created by the service provider and the consumer. So what does this mean for our business or organization? Let’s look back at Dion Training Solutions. The training and operations team have spent a lot of time and resources in preparing, filming, editing, and publishing their ITIL 4 course so that consumers could get value from it. But, let's look at it from the perspective of the consumer. Is the course truly valuable? Students of the course are probably going to measure this value based on the fact of seeing if it actually prepares them to pass the exam. But, for that desired value to be achieved, which is passing the exam, the training provider and the students have to co-create that value together. As the supplier, Dion Training Solutions provides all the videos, practice exam, and resources. But, as the consumer, students have to actually watch those videos, study, and take the practice exams. That's the idea of co-creation of value.
This is how it works inside of ITIL 4. In the simplest form, the provider would deliver a service, the consumer would pay for the service, and the provider then uses that money to create more services, while the consumer uses the current service they paid for. If both sides are getting the value they desire from that transaction, then this is mutually beneficial. If the value is not achieved by either of these sides though, then it's likely that this relationship will soon come to an end, and no more value will emerge from it. Unfortunately, the real world is much more complex than that. At any moment an organization can be a consumer and a provider for multiple services. Once again, let’s go back to Dion Training Solutions. They are the supplier in relation to their students, but they are also a consumer in relationship with their web hosting provider. These are just different hats being worn by the organization, depending on which perspective things are being looked from. This means that when the organization is acting as a consumer, they co-create value by consuming services, and when they're acting as a provider, they co-create value by providing service to other organizations and people. Organizations recognize that value is co-created through an active collaboration between providers and consumers, as well as other organizations that are part of the relevant service relationships. These service provider and service consumer roles are the two generic roles that an organization can fulfill.
In our previous blog entry, we talked about organizations and their two roles in the service relationship, either as a provider or consumer. But what good is talking about organizations without talking about people? After all, they are what makes up organizations. People can fulfill three types of roles in the service relationship. This is the role of a user, a customer, and a sponsor. The first role is that of a user. A user is simply a person who uses a service. The second role is that of a customer. A customer is the person who defines the requirements for a service, and takes responsibility for the outcomes of the service consumption. The third role is that of a sponsor. A sponsor is a person who authorizes the budget for service consumption. The term sponsor is also used in some organizations to describe an organization or department, or an individual that provides financial or other support for an initiative. While these are the three roles, these roles could be fulfilled by different people or all three of these roles could be fulfilled by the same person.
Let's consider a simple scenario where all three roles are going to be filled by the same person. You decide to buy a brand new car. Let's say you're all excited about all the technological improvements that have been made in the world of cars, and you decide to get one that can perform semi-autonomous driving, like a Tesla. As a user, you're really excited to drive your new Tesla because it has so many cool features like the autopilot, the comfortable leather seats and a really fast electric motor. As a customer though, you may not see a big difference in the features between a Model S and a Model 3, so you're trying to decide which model best meets your needs and helps you achieve your outcomes most efficiently when you're consuming the service of this semi-autonomous vehicle.
Now in your third role as a sponsor, you start to weigh the cost of the Model 3 versus the Model S, and you try to determine which one you should budget for in order to meet the needs of your semi-autonomous car to drive anywhere and get you to work each day. Now, all three of these roles have competing interests. The user wants the best features when they consume the service, but they'd probably be happy with either the Model 3 or the Model S since they're both really nice after all. The customer in you defines the requirements for your new car such as having the ability to drive semi-autonomously, drive at least 200 miles before needing to be refueled or recharged, and other kinds of requirements. Your third role is that of the sponsor, and this is where things come from a cost perspective. While you might like the Model S, it sells for almost $100,000. Can the Model 3 still meet all of your requirements even though it sells for only 60,000? Well, if so, then the sponsor in you would rather choose the less expensive option. So, whenever you buy yourself a new car, you're really balancing these three roles before you make the decision, and you're doing this all inside your own head.
Remember our car buying scenario in our previous blog? Now let’s look back at it with a twist: we're going to buy a car for somebody else. Your daughter is almost to the age where she's old enough to drive, and so she's going to be the user in this scenario because she wants her parents to buy her first car for her. She doesn't care how much it costs. She doesn't have any requirements. She just knows that she's going to consume the resource and she needs to be able to get in and drive from point A to point B. In this case, this means that she can drive wherever she wants, and she'll be able to drive whatever you and your spouse decide to buy for her.
Now, your spouse on the other hand is going to be your customer. Your spouse is going to set the requirements for this service, this service is going to have to meet those requirements, and your spouse is going to be the one taking responsibility for your daughter's actions when she consumes that service. In this case, when your daughter is driving, your spouse is going to be responsible for whatever happens because your spouse is the customer. Also, your spouse may create some requirements for this new car such as saying that it has to have four seats and that it has to have four doors, or maybe it has to have a driver and passenger airbag or the car has to be less than 10 years old. Whatever the requirements is that your spouse decides on, your spouse has that ability because your spouse is the customer. But we aren't done yet as the car has not yet been decided on and bought.
You still have a role in this and that is the third role, the sponsor, as you are the person who is going to pay for the car. You may already have created a budget for this car. Let's say, no more than $10,000, and that means the customer, your spouse, can pick any car that she wants for the user, your daughter, but this car has to be within your budget of $10,000. So, your spouse isn't going to be able to go out and buy your daughter a brand new car, even though that is what they want. Instead, the customer and user have been allocated a specific budget, and they have to stay within that. So, this is the same type of thing that happens in businesses and organizations. Sometimes you get to act as one, two, or three of these roles depending on the scenario. For example, you may define what is needed for your business team, and you may have the authority to allocate and authorize the budget for those requirements, and you're going to be both the customer and sponsor in that case. But, your team members are going to be the users because they're going to use what you buy.
This is actually a great position to be in because the person authorizing the budget is also the person making the requirements decisions. Unfortunately though, in a lot of large organizations, the person who authorizes the budget for an IT service is not a customer or a user of that service. And this type of disconnect can actually cause problems because the sponsor who funds the requirements and the customer who creates those requirements often have arguments over what those requirements should be. Because, the sponsor's focused on the efficiency and cost savings, whereas the customers are focused on the requirements and the users are focused on the usability of this service. This can create a gap between the user and the customer's interest as well.
As a service provider, it's your responsibility to recognize these three generic roles on a consumer side, and to work with them appropriately to ensure the right service is being delivered and supplied to meet those needs. This means that you need to ensure that the financials work for the sponsor, the requirements are met for the customer, and the users get what they expect in usability of your service. At the end of the day, you want to achieve user satisfaction, customer satisfaction, and sponsor satisfaction because when all three come together you're more likely to have repeat business from the consumer's organization.