In the definition of a service, we said that a service was a means of enabling value co-creation by facilitating outcomes that a customer wants to achieve. And this has to be without the customer having to manage the specific costs and risks. But now, we're going to dig into a single word from that definition - outcome. An outcome is a result for a stakeholder enabled by one or more outputs. It is important to note however, that this outcome is customer-focused rather than service provider-focused.
Outcomes are important to consider as part of the balancing act between lots of things. These things include the supported outcomes, the removal of costs, the removal of risks against unwanted or undesirable outcomes, and the cost itself. It even includes the risk that could be introduced by the customer if they decide to instead set up and manage resources on their own. For example, let's consider two major ride-sharing companies - Uber and Lyft. Whichever you'd prefer doesn't really matter, but some people tend to prefer one over the other. Now, as a customer, you have a desired outcome. You want to get from point A to point B in the least amount of time with a fair amount of cost. For example, you took a trip to a big city. Instead of getting a rental car, you would use either Uber or Lyft. This allows you to get the outcome that you desired, which was getting from point A to point B in less time and with less hassle. Because by using the ride-sharing app instead of the car rental, you reduced your overall costs. You didn't need to spend $75 per night to park that rental car at your hotel and didn't need to buy gas nor purchase insurance for it. You were able to remove a lot of the costs because as a customer, you simply paid for the service on demand and achieved getting from point A to B, which was your desired outcome.
Now, this feedback loop is critical inside of this principle because as you're delivering these small modular chunks, you're getting feedback from your end users or from your organization's stakeholders. And this feedback loop is a situation where part of this output is now activity that's going to be used for a new input.
Conversely, we have to consider the other side of the equation. There are certain costs and risks that you're assuming by choosing to use Uber or Lyft instead of renting a car. First, there are certain fees imposed by Uber or Lyft as the service provider. Beyond the actual service cost to get from point A to point B, there's also a requirement that you maintain a smartphone to run the app while ensuring that you have a data plan on that smartphone and it has enough battery power. All of these are things that have to happen so that you can connect the app from your phone to their central server in order to order that Uber to your location to pick you up.
Now, still remember how value is co-created? Value is co-created and a service is all about co-creating value by facilitating those outcomes that the customer wants to achieve without the customer having to manage the specific costs and risks of that service. So, as a customer of this ride-sharing service, you need to co-create the value of the service by having a smartphone and an active data plan and enough battery power to run it. Uber on the other hand, needs to ensure that all the other technical details of the service are taken care of. They're going to provide the servers that enable the service, they're going to enable the technology and the software coding, all of that other stuff. But, the customer doesn't really want to manage the specific costs and risks. What risk might there be with using an Uber instead of having your own rental car? Depending on location, time and season, there might be shortages in Uber's or Lyft's service. Hence, you'd have to wait for them to arrive if the next one available is still far from you pick-up point. If you're running late, that may not be a situation you'd want to find yourself in. But this is a risk that you're going to have to assume. If you had a rental car, you wouldn't have this risk, because you could simply jump in the car, turn the key, and start driving. Having these costs and risks that the service has now imposed on you as their customer, you now have to decide whether you would use their service or simply rent a car and drive yourself around.
Whether you're using a service or the one providing the service, this is the idea that you're going to be thinking about when thinking about a service: any decision is going to be based on value. If the value is being co-created to achieve the supported outcomes, then the removal of the costs and the removal of risk has to be greater than the unintended consequences. The introduction of these new costs or the introduction of new risks has to be balanced and shifted in the favor of the consumer if you want them to buy the service you are providing. Let’s go back to ordering an Uber or a Lyft instead of renting a car. It all boils down to balancing value. If you were in the shoes of the service provider, or a service provider organization like Uber or Lyft, you need to make sure that you're giving more value and removing more costs and risks than introducing. In this way, the customer will want to use your service. For the customer to see the value being generated, it has to tip the scales towards the customer’s side.
But as the service provider, you want to make sure that you’re also getting value in this service relationship. If you're the customer, you need to make sure that you're not creating additional costs or risks for yourself that outweigh the benefits of the service that you're going to consume. Now, each personal organization is going to weigh the value proposition and they're going to determine if it makes sense for them. If it does, they’re going to have a valid business agreement and they're going to be able to go into business together. One will be providing a service and the other will be pay that service to be done as the consumer or the customer. So, going back to the example of Uber or Lyft, you may find that it works great for traveling in a big city where the parking prices tend to be very high, traffic tends to be heavy, and the number of drivers around is quite abundant so it's easy to book one. But when travelling to more remote locations, you might prefer to have your own rental car because it solves the problem for much more efficiently because there's less risk of not finding a parking space, parking is low-cost in those areas, and traffic is less of an issue. This is the whole idea of balancing pros and cons to figure out which service gives the most value.
Now, there's also a similar concept known as output that is important to understand when you take the ITIL 4 exam. An output is a tangible or intangible deliverable or an artifact that's created by an activity. To differentiate from outcome, always remember that services facilitate outcomes through one or more outputs. In short, an output is a tangible item that comes out of using that service. Examples of an output could be a report, or a bill that you receive at the end of the service that you've consumed, or even be an email if you're using a webmail service. This is an important concept that often confuse people because the output is easily measured, but often the outcomes are not. Output is part of an outcome, but there's more to it than just output. So, when thinking of outcomes, remember that it's what you're able to achieve as a result of the activity and not just the outputs that are being created. Outcomes can be a bit more intangible while outputs tend to be much more tangible. They're things you can touch and feel like papers and reports. Outputs are easier to measure because they're the results of an activity. So, when building your service metrics, be careful not to measure just outputs, but instead, you need to put some thought behind how you're going to measure your outcomes as well, because otherwise, you're going to have people working for you that game the system. They're going to be pushing different things to make it look like all those outputs are really high, but you're never going to achieve the outcomes you want. So really think about that as you're building those metrics and be sure to measure your outcomes, not just your outputs.