Products, services and service offerings

People use the words product, service and offering loosely, often interchangeably. ITIL gives each a specific meaning, and the distinctions help providers design what they sell or provide internally and help consumers understand what they are getting. This lesson defines products and services, explains how a single product can support many different service offerings, and breaks offerings down into goods, access to resources and service actions. It ends with worked examples of designing offerings for different consumer groups.

Products

ITIL defines a product as a configuration of an organization's resources designed to offer value for a consumer. Resources here means anything the organization can draw on: people, information, technology, facilities, partners and money. A product is how those resources are put together.

Products are usually complex and are not fully visible to the consumer. A mobile network operator's product includes radio towers, spectrum licenses, billing systems, customer support teams, roaming agreements with other operators and much more. A customer sees only part of this, such as the coverage map and the app, but the whole configuration exists to offer value.

An important point is that the provider decides what goes into a product, but it is designed with consumers in mind. Products are created for target consumer groups, and different parts of a product may be exposed to different groups in different ways. That is where service offerings come in.

Services

ITIL defines a service as a means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks. Services are based on one or more products. The mobile network product enables services such as voice calls, mobile data, text messaging and international roaming.

A useful way to think about it: the product is what the provider configures; the service is what that configuration enables the consumer to achieve. The same product can enable many services, and a service may draw on several products. For the exam, remember that services facilitate outcomes and remove specific costs and risks from the customer.

Service offerings

A service offering is a formal description of one or more services, designed to address the needs of a target consumer group. Offerings are what the consumer is actually presented with: a phone plan, a support package, a software subscription tier, a menu of internal IT services. The same product can be packaged into many offerings for different groups.

ITIL describes three kinds of component that an offering may include:

• Goods: supplied to the consumer, with ownership transferred to the consumer, who then takes responsibility for their future use. A phone handset sold outright, a printed manual or a security key are goods.
• Access to resources: granted or licensed to the consumer under agreed terms and conditions, with ownership staying with the provider. Access to the mobile network, cloud storage, a software platform or a shared office space are examples.
• Service actions: performed by the provider to address a consumer need, often as agreed in the offering. Installing equipment, answering support calls, resetting a password or training users are service actions.

Why the distinction matters

Separating goods, access and actions clarifies who is responsible for what, which in turn reduces disputes. If a consumer buys a laptop outright (goods), the consumer is responsible for it after delivery, subject to warranty terms. If the laptop is provided as part of a managed device service (access to resources), the provider remains the owner and is usually responsible for repair and replacement. If the provider agrees to set up the laptop (service action), the consumer can expect it to arrive configured.

The distinction also affects cost and risk. Goods move costs and risks to the consumer over time: depreciation, breakdowns and disposal. Access keeps many of these with the provider, which charges for them through subscription fees. Service actions add cost for the provider but reduce effort for the consumer. Designing an offering is largely about choosing the mix of components that best suits a consumer group.

Designing offerings for different consumer groups

Because one product can support many offerings, providers can serve different groups without building separate products for each. A software company might offer a free tier with limited features and community support, a professional tier with full features and email support, and an enterprise tier with single sign-on, a dedicated account manager and a guaranteed response time. The underlying product is largely the same; the offerings differ in what is exposed, the access granted and the service actions included.

Internal providers design offerings too. A corporate IT department might offer a standard laptop package for most staff, a high-performance package for engineers and designers, and a loan pool for short-term contractors. Presenting these as clear offerings, often in a service catalog, helps consumers choose and helps the provider plan capacity and costs.

Products, services and offerings together

It helps to see the three terms side by side with one example. A public library system configures resources (buildings, librarians, a catalog system, e-book licenses and partnerships with publishers) into a product. That product enables services such as borrowing physical books, borrowing e-books, using computers and attending programs. The library then defines offerings for groups such as adults, children, newcomers and businesses. A newcomer offering might bundle a free card (access), a welcome tour and language-learning help (service actions) and a printed guide to local services (goods).

Offerings and the service catalog

Many organizations publish their offerings in a service catalog: a structured list of the services and offerings available, with descriptions, how to request them, costs or charges, and expected service levels. The service catalog management practice is covered in later courses; for now, notice that a good catalog describes offerings in the consumer's language. "Email account with 50 GB mailbox, mobile access and spam filtering, available within one business day" is useful. "Exchange Online Plan 2 provisioning" means little to most users.

Common classification puzzles

Some components are easy to misclassify. A phone that is leased rather than bought is access to resources, because ownership stays with the provider, even though the consumer holds it every day. Software that is "bought" as a perpetual license is still usually access to resources, since the consumer receives the right to use it under terms rather than ownership of the code. A training course is a service action, while the printed workbook handed out at the end is goods. When in doubt, ask two questions: does ownership transfer, and is this a thing or an activity? Ownership transfer points to goods; a resource used under agreed terms points to access; an activity performed by the provider points to a service action.

These rules matter in contracts too, because ownership decides who pays for repairs, insurance and eventual disposal.