Warranty, cost, risk and service offerings

Warranty as the other half of fitness, the two directions cost and risk both run in when a consumer adopts a service, and the difference between a product the provider builds and the offerings it markets from it.

Lesson 2 of 3 in objective 1. Key concepts of service management, part of ITIL 4 Foundation.

Cost and risk both run in two directions at once. Removed by the service — Costs: What the consumer no longer buys or runs; Risks: Failures now carried by the provider; A worked example: No more buying and patching mail servers. Imposed by the service — Costs: The fee, and retraining on the new way; Risks: The provider could fail or withdraw; A worked example: A monthly subscription, and a service desk to retrain Removed by the service Imposed by the service Costs What the consumer no longer buys or runs The fee, and retraining on the new way Risks Failures now carried by the provider The provider could fail or withdraw A worked example No more buying and patching mail servers A monthly subscription, and a service desk to retrain
Cost and risk both run in two directions at once.

Warranty, and why both halves are required

Warranty is the assurance that the service will perform as agreed — availability, capacity, security, continuity. It is what makes a service fit to USE, as distinct from utility, which makes it fit for a purpose. Both are needed. A service with every feature the customer asked for that falls over twice a week is not delivering value, and neither is a rock-solid service that does the wrong job.

The word to watch in a warranty answer is "agreed". Warranty is not "as good as possible"; it is performance against something that was settled in advance, which is why service level management later in the paper is the practice that gives warranty its numbers.

Warranty and utility must both hold, or there is no value. A grid of Warranty against Utility. Performs as agreed: Does the job needed gives Value; Does the wrong job gives Dependable, and still no value. Short of what was agreed: Does the job needed gives Every feature, and still no value; Does the wrong job gives No value on either count. Utility → Warranty ↓ Does the job needed Does the wrong job Performs as agreed Value Dependable, and still no value Short of what was agreed Every feature, and still no value No value on either count
Warranty and utility must both hold, or there is no value.

Cost and risk run both ways, and the exam only tests the second way

Every candidate can name the costs and risks a service removes, because that is why anyone buys a service. The marks are in the other direction. Adopting a service imposes new costs — the subscription, the migration, the retraining, the integration work — and new risks, of which the sharpest is that the provider is now a single point of failure you do not control. A cloud backup provider going out of business is the standard illustration, and it is a risk that simply did not exist while the consumer ran its own tapes.

So when a question lists four things and asks which is a cost or risk IMPOSED, ignore everything the consumer stopped doing and look for what the arrangement newly requires or newly exposes them to. Judging value means netting both directions off against each other, not counting only the relief.

Products and service offerings are not the same layer

A product is the configuration of resources a provider assembles and manages: the applications, the infrastructure, the staff, the supplier contracts, taken together. It is the provider's side of the arrangement and it is not itself what a consumer buys.

A service offering is how a piece of that product is described and presented to a particular group of consumers — the features, the terms, the price. One product commonly supports several offerings aimed at different groups, which is the shape almost every question here takes: a single platform underneath, a "personal" package and a "business" package on top. The platform is the product; the two packages are offerings.

One product underneath, and the offerings sold from it above. From What the consumer is sold to What the provider assembles and runs: Service offerings (several from one product; features, terms and price set for each group), then The product (applications, infrastructure, staff and supplier contracts, taken as one; not itself bought). What the consumer is sold Service offerings several from one product; features, terms and price set for each group The product applications, infrastructure, staff and supplier contracts, taken as one; not itself bought What the provider assembles and runs
One product underneath, and the offerings sold from it above.

Worth carrying in

Warranty
Assurance of agreed performance — fit for use. Availability, capacity, security, continuity.
Costs removed
What the consumer no longer has to fund or run itself.
Costs imposed
The price, the migration, the retraining. New because of the service.
Risks removed
Failures the provider now carries instead of the consumer.
Risks imposed
Dependence on the provider, and whatever the provider might do or fail to do.
Product
The resources a provider assembles and manages. One product, several offerings.
Service offering
A described package aimed at a target consumer group.

What the exam does with this

Objective
1. Key concepts of service management
Share of the exam
12.5% (the whole objective)
Questions in this lesson
5
Signed for by a person
0

Partly checked. None of the 5 questions here has been read against the cited source by a person. 5 questions have been checked against their cited clause by an automated pass — which is not the same thing, and is not a signature.

Only questions a person has signed for are used in mock exams here. That is the whole difference between the two kinds of checking above.

How these questions are written — where each question comes from, what the verification ledger records, and what happens when one is found wrong.

Drill this lesson

A lesson is one sitting: the trainer draws a short run from these questions alone and spaces the ones you get wrong.

Practise Warranty, cost, risk and service offerings

Questions in this lesson

Practise Warranty, cost, risk and service offerings

The rest of objective 1