ITSM Now!

Verizon recently ran an ad depicting an iPhone relegated to the Island of Misfit Toys (see the video below). From Rudolph the Red Nosed Reindeer, we know that the Misfit Toys are toys which have been discarded because they have some intrinsic (and fatal) flaw. Residents of the Island include a train with square wheels, an airplane that can’t fly, a squirt gun that squirts grape jelly, and now, according to Verizon at least, the iPhone.

So… is this a fair characterization of the service provided by the iPhone? For that matter, how do we actually determine whether any service is of value, or instead belongs on the Island of Misfit Toys?

One of the most significant contributions that ITIL v3 made to the world of IT Service Management is that it effectively frames the concept of what “value” actually means in terms of services: Value is created when service providers achieve appropriate levels of “Utility” and “Warranty”.

When I teach ITIL Foundations certification courses, I often use the example of the iPhone to illustrate this concept. The iPhone is heavily marketed based on an extensive feature set. Television ads show us a pair of hands attached to an invisible user enjoying games, music, applications, web browsing, visual voicemail, etc. The ad concludes with the invisible user taking a phone call. The message is clear: it’s also a phone. Apple is selling the “Utility” side of the value equation here by suggesting that the service will do everything you need and more. Need to support a desired outcome, or remove a constraint? There’s an app for that.

As a competing service provider, Verizon has taken the opposite approach. Slogans such as “Can you hear me now?”, and “It’s the Network” are meant to communicate the notion that Verizon offers superior “Warranty” – appropriate levels of Availability, Capacity, Continuity, and Security. In other words, the service will be there when you need it.

As it turns out, though, having Utility OR Warranty isn’t enough. This is precisely the concept illustrated by ad showing the iPhone relegated to the Island of Misfit toys: In order for a service to be of value, customers need to receive appropriate levels of both Utility AND Warranty. As a sidebar, it’s interesting to note that the ad is actually quite complimentary regarding the phone’s Utility factors (provided by Apple), while going for the jugular on the Warranty Factors (provided by AT&T - for now).

In fact, this issue has been a thorn in the side of both companies: Verizon has struggled to demonstrate a competitive level of Utility with V-Cast and, more recently, the Droid phone. AT&T has aggressively pushed the notion that they have “the nation’s fastest 3G Network” and “more bars in more places” while simultaneously coming under attack from Verizon for having inferior 3G network coverage.

Of course, this isn’t a purely “binary” condition (i.e. it’s not that the iPhone has NO Warranty, or that verizon provides NO Utility). Personally, I’m extremely satisfied with the Utility provided by my iPhone, but the Warranty levels (availability, in particular) are a bit disappointing. The imbalance hasn’t been enough to make me want to switch providers (so far), but that could change if service levels fluctuate on either side.

The alert reader will note that I’ve used the somewhat ambiguous term “appropriate levels” when describing Utility and Warranty. This is to illustrate the third (hidden) component of value: customer expectations.A colleague once said that “Value can never be delivered, it can only be received”. In other words, customers decide what the appropriate levels are, and service providers would do well to understand what these expectations are.

More next week on Value as it relates to Strategic Portfolio Management.