Value cannot be created in a vacuum or in isolation. It needs life, which can be breathed into by multiple parties. Value cannot be created by a single person or an organization. Multiple heads need to come together for its formation.
An organization is defined as: A person or a group of people that has its own functions with responsibilities, authorities, and relationships to achieve its objectives.
So an organization need not be a full fledged legal entity. It can be of any size and complexity. As long as they serve a function in the making of a service, in the creation of value, they can be termed as an organization. Think about a consultant like myself and a customer organization consults with me in developing a service catalog. As a part of this, I am tasked with defining services or rejigging the existing services. The end product is an outcome that the customer expects and I have satisfied the definition of an organization, although I am single person without a legal entity to back me up.
Let’s understand how things stack up today. No organization, I mean no organization can be completely indigenous. They need other companies to supply spare parts and provide services. Even when it comes to IT part of it, no single IT organization fulfils all the IT needs. There are a number of organizations that come together to offer services. This is partly because of customer’s choice to not create single point of failures and also the fact that no single organization will have the expertise in all areas of IT.
From the perspective of IT and ITIL, there are two major types of organizations that we need to understand in depth – service providers and service consumers.
A service provider is behind offering services to customers. In other words, the organization that is responsible for providing services is a service provider. Your internet service provider provides internet. Netflix is an entertainment service provider. Vodafone is a mobile phone service provider.
A service provider need not be outside the customer organization. Many a time, a service provider can be internal. For example, a company could hire and maintain their own staff to fix computers and servers. Then they become an internal service provider.
The official definition of a service provider is – When provisioning services, an organization takes on the role of the service provider. The provider can be external to the consumer’s organization, or they can both be part of the same organization.
The organization that receives services from a service provider is a service consumer. Like a service provider, a service consumer can be internal to the same organization or external. A service consumer is somebody who receives a service, and may or may not be a user. I will talk about the various roles in a service consumer organization in a later video.
A service provider and a service consumer is the hat that the organization puts on for the particular service in context. For a different service, the roles could be reversed. Consider an example where company danke is a service provider that provides services to company merci for services A and B. For services A and B, company danke is a service provider and company merci is a service consumer. And we have services C and D which are offered to company danke by company merci. So for services C and D, company merci is the service provider and company danke is the service consumer. My point being, the role of a service provider and a service consumer is not permanent. For particular services, companies play different roles.
Another realistic example. Microsoft provides Office 365 service for a telecom company like AT&T and could end up consuming AT&T’s fibre connectivity between two Microsoft offices. In this example, Microsoft and AT&T put on different hats for different sets of services.