5 Critical Questions of CREATIVE SERVICE MANAGEMENT

Services & products

The service model of Creative Service Management consists of three main components:

1️⃣ Customer Facing Services (CFS) are service solutions that are built upon the backend services and products they include. These services are delivered directly to customers, which can be either internal business functions or external customer organizations.

2️⃣ Backend Services (BES) are intangible internal services of the service provider that are part of customer-facing solutions or otherwise enable their production. The typical purposes of backend services include the production, delivery, and support of services and products.

3️⃣ Products are digital, technological, or other consumable products that are delivered to the customer as part of a Customer Facing Service or utilized in some way, such as a tool or resource, in service production.

In essence, Customer Facing Services are designed to meet customer needs by integrating the necessary backend services and any required products. It can be said that backend services and products are wrapped into a Customer Facing Service before they can be delivered to the customer.

Service offering

In the service offering, the service provider defines the services it delivers, either for its internal needs or for its customers. The offering outlines the service domains it includes, the service products within those domains, and the service packages associated with each service product.

Logically, every service provider has at least two types of services:

1️⃣ Backend Services and the portfolio of internal services they form.
2️⃣ Customer Facing Services and the portfolio of external services they form.

Capabilities

The implementation of operational and business models requires organizations to possess specific types and levels of capabilities. These capabilities are critical competitive and success factors for organizations. As a result, there is a need and pressure to develop these capabilities. (JHS 179 Enterprise Architecture Design and Development, 2017).

An organization's capabilities can be either its own or those of its partners. Capabilities can be defined and grouped in various ways. In formative service management, there are five capability areas:

People and Knowledge
Processes
Technologies
Information

These four capability areas are guided and managed according to the fifth capability, which is the chosen Operational model, ensuring the support of the desired business models.

Capabilities enable flexible and adaptive operations in various situations. They foster the ability to innovate and create a competitive advantage over competitors, establish a broad resource base to support operations, and reduce risks associated with business activities.

Architecture

Maximizing the utilization of capabilities in the service factory requires architectural management at multiple levels. The functionalities embedded in various technologies and information systems are tools for processes, enabling them to efficiently process, utilize, and share information. This, in turn, allows them to fulfill their essential role in service production.

Figure: The Different Levels of Architecture as Enablers of Service Production

Managing architecture within an organization is not an easy task. The environment and its related concepts are multidimensional and complex. Justifying the investments required for development can sometimes be challenging, as the benefits are often indirect, materializing only after years, or related to operational continuity and risk management—topics that may not capture widespread interest and do not promise quick wins or immediate benefits for the organization.

Architecture can also be seen as a description of a value-generating mechanism. In the illustration below, the top section represents customer service journeys and the interaction points between us and the customer—elements that are typically identified and improved through service design. Services are produced through efficient processes, supported by technologies, information, and skilled people. Therefore, architecture is seamlessly linked to a great customer and service experience, directly impacting an organization’s business competitiveness and success.

Figure: Architecture as a Value-Generating Mechanism

Service portfolio

Organizations must have the means and tools to implement their strategy effectively. This is where the service portfolio and its dedicated management process, service portfolio management, come into play. The service portfolio is perhaps the most critical tool in service business management, as it governs the development, publication, and retirement of services.

The service portfolio provides visibility and control over the following phases of the service lifecycle:

- Service ideation and development (development pipeline)

- Published services and their key performance indicators (service catalog)

- Controlled retirement of outdated services (decommissioning)

The service portfolio management process defines the necessary governance models, roles, tasks, and tools for managing the portfolio effectively.

Six Perspectives of Service Management

As with all things, customer-centric service management involves multiple perspectives. In formative service management, these perspectives are represented as a cube, with each of its six sides representing a different aspect of service leadership, development, and delivery.

The cube can be rotated and viewed from only a few perspectives at a time. However, successful and sustainable service organization management requires consideration of all six perspectives. This means that it is essential to examine things from multiple viewpoints to ensure a comprehensive understanding and effective decision-making.

Perspective 1: Customers

Without customers, there are no services, products, or business. The purpose of service delivery is to meet customer needs and expectations while creating value. In many cases, providing services and products is also a business relationship between the service provider and the customer.

Perspective 2: Services

By defining the services and products they offer, service providers establish a value proposition, explaining how they create value for their customers. At the same time, they set expectations—both for customers and their own service production.

What can customers expect from us?
What is required from us to meet those expectations?

Perspective 3: Business

Service delivery is a business activity, or at the very least, the services provided support business operations or other organizational functions. Developing business competitiveness and profitability must be balanced with enhancing customer experience, performance, and quality.

Perspective 4: Service Factory

Service production requires resources and capabilities to deliver services and products in alignment with the promised value proposition. The service factory represents the operational capacity and efficiency behind service delivery.

Perspective 5: Architecture

The role of architecture is to ensure that the service provider has identified the necessary capabilities for producing and delivering services and products. In practice, this means a deep understanding of and continuous improvement in:

People and partners
Operating models
Technologies
Information

Perspective 6: Finance

Operations must be financially sustainable. At the same time, developing services and capabilities requires investment. Profitable service production depends on transparent revenue, cost, and financial management to ensure long-term viability.

Service strategy

When discussing service strategy, we can think of it as taking a step forward from business strategy in the refinement of strategy. Service strategy requires business strategy as its foundation, but at the same time, business strategy alone does not provide sufficient answers to what kind of service and product offerings the company believes will attract customers.

In service and product-based business, the service portfolio can also be referred to as the offering. It represents the services or products a company provides, much like a product catalog in a furniture store.

As part of the service strategy, a company must define the offerings that it believes will create competitive advantage, attract customers, increase revenue, and help achieve business goals. The service strategy guides the company’s service and product development, ensuring that services and products align with current business objectives. Additionally, it defines key aspects such as critical partners and subcontractors for service delivery, constraints and conditions for service production, and products used within the services.

Customers

Customer segmentation is a critical part of service development because it helps identify the specific needs and expectations of different customer groups. By leveraging segmentation, a company can develop and tailor services to better meet the requirements of each group, ultimately enhancing the customer experience and increasing the competitiveness of its services.

Why is segmentation important in service development?

- Targeted service design: Different customer groups may require different solutions. Segmentation helps identify these differences, allowing for more precise service development.

- Efficient resource allocation: Knowing which customer groups are particularly valuable enables the company to allocate resources to segments that generate the highest customer value.

- Innovation and personalization: Service concepts based on segment-specific needs facilitate the creation of innovative and personalized solutions that differentiate the company from competitors.

- Optimized marketing communication: Understanding the characteristics of different segments allows for more targeted and relevant marketing messages.

Different customer types

Customers have different roles that influence how they perceive delivered services and their characteristics. It is the service provider's responsibility to identify these roles and ensure that the delivered services meet the needs of different customer roles.

The term "customer" can therefore refer to several different things:

CUSTOMER TYPE	DESCRIPTION	EXAMPLE
Buyer	Negotiates, agrees on, and orders the service.	For example, the procurement department of a customer organization.
Payer	Pays for the service usage.	The customer organization or a specific unit within it that covers the service costs.
Consumer	Uses the service.	End users of the service, who may belong to the customer organization, its clients, or partner organizations.

Market & internal position

Market position refers to how a company's services are positioned relative to competitors and how this positioning is reflected in both service design and management. It is a strategic concept that influences both external marketing efforts and internal development processes.

Internal position

Service providers (referred to playfully in this guide as service factories) are organizations with the necessary capabilities to deliver value to their customers through various services.

These providers can be broadly classified into two categories:

Internal Service Provider – Delivers services to its own organization, operating under its management and aligned with its strategic objectives.

External Service Provider – Provides services as a business to organizations outside its own company.

Unfair advantage

The factors that differentiate a company—or are expected to differentiate it—from competitors and enable the creation of so-called unfair competitive advantage. These can include, for example, a lower price than competitors, a higher-quality product, or a significantly better service concept.

Service offering areas

Recognizing and outlining service areas helps to structure the service offering clearly and with strategic intent.

This typically includes the following topics:

Analysis of the Current State

What services does the organization currently offer?
How are these services distributed across different customer needs and business areas?
Are there overlaps or gaps in the service portfolio?

Considering the Customer Perspective

How do customers perceive the services?
Which services support their business processes and objectives?
Can the services be grouped in a way that aligns with customer needs?

Defining Service Areas

Services are categorized based on their nature, purpose, and target audience.
For example, in IT services, service areas may include infrastructure services, application management and end-user services.

Strategic Importance of Service Areas

Which service areas are critical for competitiveness?
Where is development or innovation needed?
Which services act as key differentiators in the market?

Winning service production models

An organization's operating model describes how it implements its strategy and achieves its goals in daily operations and servcie production. It defines the structure, operating models and principles, resources, and ways of working that enable the organization to create significant competitive advantage and deliver value to its customers and other stakeholders. The operating model serves as the practical execution of both the business strategy and the service strategy.

Service integration

In service integration, the service-providing organization combines the services required by the customer into a cohesive, easily accessible, and effortlessly usable whole. The service provider acts as an integrator, bringing together both its own services and those offered by partners into a seamless service ecosystem, ensuring their smooth interoperability and delivering a frictionless user experience for the customer.

The service packages within a service offering consist of intangible backend service elements and products, which are provided either by the organization itself or its partners. As a result, defining and packaging services is already a form of service integration, but it involves much more than that. Operational models between partners and data exchange between information systems also require integration to ensure a seamless service experience.

Architecture board & architects

It is quite common for the architectural aspects mentioned above to lack centralized and coordinated management, with decision-making and development occurring informally alongside daily tasks and activities. This approach leads to several challenges:

- Decisions and agreed solutions are not properly documented.

- Decisions are made in isolation, making it difficult to assess their impact on the overall architecture.

- Decision-making is slow or overly dependent on individuals, as there is no common forum for architecture governance and leadership.

- Architecture-related guidelines and policies are unclear and poorly communicated.

A lack of structured architecture governance can result in uncontrolled costs, increased security risks, and a poor customer and employee experience.

To address this, designated lead architects should be responsible for different architecture domains, collaborating with system, process, and service owners to oversee planning, development, and decision-making in their respective areas. A regularly convening Service Architecture Board or Capability Board can serve as a collaborative platform for key stakeholders, ensuring centralized coordination and governance of architectural work.

Service solutions

The service solutions within a service offering are value-generating combinations of services and, when applicable, the products delivered alongside them. They are designed to meet a specific logical customer need and can be provided to customers as standalone entities.

Each service solution is assigned an owner, categorized under a service category, and linked to a cost center where its financial figures are allocated. The detailed content and features of the service are described in its versions, known as service packages.

The development and management of a service solution is the responsibility of its owner, who is accountable for the solution and all its associated service packages.

Service features

As a result of service design and packaging, a clear understanding of the different versions of a service solution, known as service packages, emerges. These packages define the core elements of the service, their features, and the value proposition for customers. This structured approach makes the overall service landscape easier to grasp, supporting both internal development efforts and external communication.

Precise definition and documentation of service packages enable effective communication across various stakeholders, including sales, marketing, customer service, and production. This information helps tailor messaging for different customer segments, highlight the added value of the service, and differentiate it from competitors. Additionally, service packages play a key role in pricing model development, customer journey design, and customer experience optimization.

When service packages are systematically structured, their use in sales and marketing becomes significantly more efficient. This allows for the creation of targeted sales messages, the clear presentation of offerings to customers, and the scalable adaptation of services to different needs and target groups.

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