Service Organizations

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As industries and economies thrive in the digital revolution, organizations have evolved to become service organizations. It may not seem like it, but when looking at their daily operation as well as their core, they definitely are service organizations. People working in stores such as a clothing shop may be thinking that the store they are working for just sells clothes. But the truth is, that clothing shop is a service organization as they sell clothes to serve the buyers’ need of being clothed and not just clothed for the sake of it but by being clothed well. This also reflects towards other organizations as they are in the business of creating value for their customers. And most, if not all, of these business organizations’ products and services are enabled by information technology.

Let us take into consideration a large retailer such as Walmart. Walmart sells a variety of products ranging from home products such as groceries and appliances to electronics and even car tires. They have grown so huge that they have become a household name. Testament to that is their more than 11,400 store locations spread out across the US. But what really matters in our consideration is not that Walmart does so well in selling the actual goods. Digging deeper, the real reason for their wild success is Walmart’s ability to provide a service to their customers unlike what other retailers do. And that difference revolves around services enabled by information technology. They have developed a very robust distribution and logistics system that puts their products in their stores as quick as possible in the most efficient and effective manner. This allows them to heavily rely on complex inventory tracking and logistic systems that are all run by various IT components and services. This allows for more smooth automation and less human intervention and therefore, less errors. This ultimately leads Walmart to provide products at low prices hence is the service on their tagline: “Save money. Live Better.” The service of providing products at a lower cost has given them an edge over other retailers as more customers who are also conscious about their budget, would prefer Walmart over the others. Looking at it this way, embracing IT to enable the service of low-cost products has given Walmart the day’s win. But it is not just the low cost that is the service here. The value Walmart has created for the customer also needs to be considered. And what, we may say, is that value?

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If I find myself needing to fix a dinner for my family and a few friends, I might need to run over to the nearest Walmart to purchase all the ingredients and cooking supplies I’d need. Spices, veggies, meats, the list goes on. I bring all of these home and whip up a nice warm dinner and everyone enjoys the night. The value here is not the stuff bought from Walmart but instead the payoff of the co-created value with Walmart: enjoying the thought that my family, together with my friends, had a grand time.

Just like Walmart, other organizations also provide service, in one form or another, enabled by technology. And this technology is here to stay. Industries have adopted it and our workplace will never be the same without it. But all of this technology needs managing for efficiency and effectivity. This is where a set of specialized organizational capabilities for enabling value to customers in the form of services is needed. This is called service management and is where ITIL 4 comes into the picture. ITIL 4 provides a comprehensive framework to balance the provision of fast service to customers and sustainability of quality now and in the future. This framework is designed to ensure that an effective, efficient, flexible, coordinated and integrated system for the governance and management of services is established. It also is concerned with ensuring that these services are continually improving within your organization.

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