CHAPTER 5: HOW TO ALIGN EXPECTATIONS AND AGREE SERVICE DETAILS

This chapter is focused on step 4 of the customer journey: agree.

Key topics include:

• How to plan for value co-creation;

• How to negotiate and agree service utility, warranty and experience; and

• How the service level management practice contributes to service expectation management.

The agree step aligns expectations and ensures a shared view of the service scope and quality between provider and consumer. Agree may include contractual agreement with involvement from stakeholders including legal and procurement teams. Agreed targets will be reviewed over time as the service evolves and customer needs change.

Table 33 shows more information on the purpose of aligning expectations and agreeing services.

Table 33: The Purpose of Aligning Expectations and Agreeing Services41
Agree	For the service consumer	For the service provider
Facilitate outcome and experience	To ensure that services provided meet customers’ and users’ requirements and expectations To increase potential value from services and service relationship To ensure a shared understanding of service quality among all stakeholders To ensure a shared understanding of responsibilities of the stakeholders	To ensure a shared understanding of service quality among all involved stakeholders To ensure a shared understanding of responsibilities of the stakeholders To ensure realistic expectations from services and service relationship To increase potential value from service delivery and service relationship
Optimize risk and compliance	To ensure sufficient control of service quality and transparency of services’ status To counteract misunderstandings and misalignments between the parties involved To reduce the risk of non-compliance To ensure a shared understanding of service-related risks To arrange compensating controls for risks that cannot be shared or transferred through agreements	To counteract misunderstandings and misalignments between the parties involved To reduce the risk of non-compliance To ensure a shared understanding of service-related risks To ensure a shared understanding of service price and associated payments, and reduce risks of payment disputes or delays
Optimize resources and minimize cost	To ensure a shared understanding of service consumption costs and associated payments To optimize service consumption costs To optimize cost of negotiation and agreement and overall resource utilization	To ensure a shared understanding of service provision costs To optimize service provision costs To ensure a shared understanding of service price and associated payments To optimize cost of negotiation and agreement and overall resource utilization

Value co-creation, negotiations and agreement

The service provider and consumer need a shared understanding of how value will be co-created, tracked, assessed and evaluated. This agreement will then define service measures and reports.

Key topics for this section include:

• Types of service value drivers;

• Service interaction method;

• Inherent and assigned characteristics of services;

• Converting service consumer needs into an agreement; and

• Negotiating and agreeing utility, warranty and experience.

Types of service value drivers

In the ITIL 4 service value system, service consumer objectives are achieved, which fulfil service consumer purposes. Service performance enables service consumer performance, through the utility and warranty of the product or service.

Service offerings usually have three types of service performance drivers:

• Goods transferred from provider to consumer.

• The service consumer accesses the service provider’s resources.

• Service actions are performed by the service provider and/or service users.

Technology-based services usually include access to a service provider’s resources and may include service actions. Resources are easy to identify, measure and agree. Service actions can be more challenging to define and measure.

Table 34 shows examples of service value drivers.

Table 34: Examples of Value Drivers For Different Types of Service Offerings42
Service example	Transfer of goods	Access to resources	Service actions
Corporate accounting	N/A	Employees in the financial department gain access to: the accounting application with agreed functionality; the financial and other data of agreed quality; and the service desk and other support interfaces	User action: any transaction or enquiry in the accounting system through the application Service provider action: regularly update consolidated data from different business units Joint action: registration of user-reported incidents by service desk agents
Broadband internet service for an individual consumer	A wi-fi router and user manual are sold to the user with the ownership rights	Access to local and wide area networks at agreed speeds is provided to all users authorized by the customer Access to the user interface for payments, reporting, and management of the service is provided to the customer	User actions: check account status; change the subscription; administer user accounts Service provider action: send an invoice to the customer Joint action: change the address of the service provision when the customer moves to a new place
Card payment processing for a small coffee shop	A card reader device is transferred to the customer with the ownership rights	Access to the payment processing service, integrated with the customer’s cash register and bank account Access to a mobile app for receiving and managing payments Access to a support hotline	User actions: receive a card or device payment; cancel a payment; reset the device; pair with a smartphone Service provider action: inform the customer about the app updates and other important events Joint action: replace a faulty card reader device
Infrastructure platform service for product development teams provided by an internal IT infrastructure team	N/A	Access to platform as a service	User actions: install and update applications; configure resources and install, commission, start, stop, and decommission platform components through a standardized interface Service provider actions: monitor and report service levels; patch components; invoice the customer Joint actions: perform major updates to the platform; solve shared problems

Service interaction method

The service interaction method is a way of describing and evaluating the service outcome, based on service interactions performed by the users and service provider during service consumption. The method includes:

• Identifying service interactions, including service provider, consumer and joint actions;

• Matching service interactions with the service catalogue;

• Agreeing on a service interaction performance target; and

• Agreeing metrics and measures for the services.

Service interactions can be identified by mapping service provider and consumer value streams. If there are no current value stream maps, data can be drawn from other organisational documents and standards. Service interaction identification and agreement will include stakeholders such as:

• Service and/or product owners

• Customer(s)

• Architects

• Business analysts

• Service catalogue manager

Service characteristics

What does quality look like? Organisations need to define service quality and associated service levels to measure quality.

Service quality is “the totality of a service’s characteristics that are relevant to its ability to satisfy stated and implied needs”. A service level is “one or more metrics that define expected or achieved service quality”.

Services can be defined using inherent (resource based) and assigned (service/service offering based) characteristics. The service provider decides which characteristics to include in service quality specifications, and which are associated with service delivery.

Inherent characteristics could include:

• “Functionality and performance

• Architecture

• Interfaces and compatibility

• Costs”

Assigned characteristics could include:

• “Price

• Risks and compliance

• Monitoring

• Reporting

• Flexibility”

• Etc.

From needs to agreement

Defined service consumer needs form the basis of the consumer/provider agreement. Service quality needs to be negotiated, and the negotiations will be affected by factors including:

• Whether the relationship is internal or external;

• The size of the organisations involved, and level of formality associated;

• If the services are basic or strategic; and

• The level of service customisation that is possible.

Figure 21 shows how the negotiation will narrow down the scope of the service quality characteristics, focusing on what is important and can be measured.

It’s much better to have a concise, precise set of targets that can be measured and reported on. Having a huge range of measures makes it challenging to see what really matters. The customer will express their needs and expectations, which can then be distilled into requirements, working together with the service provider. The service provider’s input is then included to create a shared view of what ‘service quality’ looks like. This includes the customer requirements and what the service provider is confident it can deliver and measure.

The targets that form this shared view of service quality then form the basis of the agreed service level. This will be measured and is likely to change and evolve over time as the customer requirements and the service provider’s capabilities change and evolve.

Negotiating and agreeing utility, warranty and experience

A service level agreement (SLA) is a “documented agreement between a service provider and a customer that identifies both the services required and the expected level of service”.

A simple SLA includes these three areas:

• Service – description and scope.

• Level – including metrics and targets for each characteristic.

• Agreement – terms and conditions for service provision and consumption.

SLAs may be very simple or, sometimes, very complex; they should be reviewed regularly to ensure they remain fit for purpose. SLAs usually include agreed targets for utility and warranty.

Utility is the functionality the product or service offers – whether it is ‘fit for purpose’. Utility is often described in a binary way – it works, or it doesn’t work. Warranty is the assurance a product or service will meet agreed requirements – whether it is ‘fit for use’. Warranty is not described in a binary way, for example performance may be ‘slow’ or ‘degraded’ as well as available or unavailable.

Service providers need to negotiate and agree targets for utility, warranty and experience with their consumers. Effective SLAs should be holistic, yet written in a simple (and often, non-technical) manner to ensure that they are clearly understood by both service provider and customer. For example, an SLA that contains an uptime goal can be meaningless to a customer who doesn’t understand how to interpret this statistic or how it’s calculated. All of this is focused on delivering value co-creation and fulfilling customer needs.

Many organisations are now trying to agree and measure targets associated with user experience (UX). UX is “the sum of functional and emotional interactions with a service and service provider as perceived by a user”.

For digital services, user experience metrics could include:

• User errors

• Unfinished service interactions

• Cancellations at the end of a trial period

• Etc.

The service level management practice

The service level management practice creates and manages a shared view of quality services between the service provider and consumer. The practice purpose is:

“to set clear business-based targets for service levels, and to ensure that delivery of services is properly assessed, monitored, and managed against these targets.”

The shared view is documented (normally in a service level agreement) and the focus is on service quality and value. Service agreements are in place throughout the entire service relationship, and may need to be updated as the relationship progresses and requirements evolve.

Practice success factors

There are four practice success factors (PSFs) for service level management. The PSFs are:

• “Establishing a shared view of target service levels with customers

• Overseeing how the organization meets the defined service levels through the collection, analysis, storage, and reporting of the relevant metrics for the identified services

• Performing service reviews to ensure that the current set of services continues to meet the needs of the organization and its customers

• Capturing and reporting on improvement opportunities, including performance against defined service levels and stakeholder satisfaction.”

Table 35: PSF: Establishing a Shared View of Target Service Levels With Customers

PSF: Establishing a shared view of target service levels with customers

Customer interactions will differ depending on the service relationship model – consider, for example, the difference between a tailored/customised relationship and an ‘out of the box’ relationship. The ‘out of the box’ customer will need to accept the available services (or have minimal negotiation) while a tailored service offers great flexibility. In a tailored service, there is great flexibility in defining the service level targets. However, these targets still need agreement before the service is delivered and consumed. To establish a tailored service, customer needs and expectations form the basis of the discussions about service quality. It is important to ensure that both the customer, including users and sponsors, and service provider, represented by service delivery teams, service provision sponsors, service architects, service designers, business analysist, and service development teams, can agree to the service specifications. As these discussions progress, the scope of service quality is refined and narrowed until it represents a service level that can be delivered at the necessary levels of assurance and liability. In ‘out of the box’ services, service levels are typically predefined. These definitions come from analysing the market to create a generic profile need for that specific service. There might be a tiered set of service delivery options (gold, silver, bronze) for those who wish to use (and pay for) additional functionality. Regardless of the type of relationship, all agreed service levels should have a clear method for measurement and reporting. If possible, define the metrics early and ensure that measurement and reporting tools are integrated into the service. Metrics that measure overall service quality include functionality, availability, performance, timeliness, user support, accuracy and UX measures. What happens when the agreed service level quality differs from the expected quality levels? This is where good relationship management skills are needed. The ITIL guiding principles can also help develop a mutually shared view of service quality.

Table 36: PSF: Overseeing How the Organisation Meets Service Levels

PSF: Overseeing how the organisation meets service levels

Once the service level targets are established, services are being delivered and consumed. The service provider should control the quality of the service keeping in mind these three views: • Achieved service level – compared to what was agreed. • User satisfaction – such as feedback from the service desk, surveys, etc. • Customer satisfaction – such as feedback from reviews, surveys, social media comments, etc. The service provider will collect, store, analyse and report on this data to relevant stakeholders for both the provider and consumer. The service level management practice does not usually design or execute data collection. Other practices, specifically service design, monitoring and event management, and measuring and reporting, will perform this work. The service level management practice will make sense of the data and then communicate and review it with stakeholders.

Table 37: PSF: Performing Service Reviews

PSF: Performing service reviews

The purpose of a service review is to share the achieved service quality and value enabled by the service. As a result, service improvements may be initiated. Service reviews can be one of two types: event based or interval based. An event-based review is triggered by events (for example, major incidents, a request for a significant change to a service, a change in business need, etc.). An interval-based review is scheduled at regular and agreed periods. The interval between meetings is usually based on factors including previous satisfaction with the service, number of changes to the service, and the likelihood of changes to the service expectations or requirements. The typical time frame is monthly but should be no longer than every three months. No matter what the form of the review and when it takes place, service reviews are critical in the service relationship. There is a distinct relationship between the quality of a service review and the quality of the services and stakeholder satisfaction. Additionally, service reviews are the main source for service improvements – another practice PSF.

Table 38: PSF: Improvement Opportunities

PSF: Improvement opportunities

Service reviews provide the opportunity to improve services – based on underperformance of the service or to improve the level of satisfaction from users and customers. Of course, improvements can also be made to practices and processes, tools or other resources. Transparency is critical with improvements – ensure that any improvement suggestion is visible so that those who have made the suggestions know that they have been considered. This promotes the ITIL guiding principle of ‘collaborate and promote visibility’. All improvements to the product or service are owned by the role that is accountable (product owner or service owner). For effective implementation of practice, product and service improvements, follow the guidance in the continual improvement practice.

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⁴¹ ITIL^® 4: Drive Stakeholder Value, table 6.1. Copyright © AXELOS Limited 2020. Used under permission of AXELOS Limited. All rights reserved.

⁴² ITIL^® 4: Drive Stakeholder Value, table 6.2. Copyright © AXELOS Limited 2020. Used under permission of AXELOS Limited. All rights reserved.

⁴³ ITIL^® 4: Drive Stakeholder Value, figure 6.1. Copyright © AXELOS Limited 2020. Used under permission of AXELOS Limited. All rights reserved.