1. Service Value Agreement
In cooperation with Tieto AB
Authors: (By alphabetical order)
Farzad Ghasemzadeh Rahbardar
Seyed Merat Ziyarazavi
Department of Computer and Systems
Sciences
Degree project 30 HE credits
Degree project at the master level
Spring term 2012
Supervisor: Christer Magnusson
Reviewer: Uno Fors
Master of Science Thesis

2. i
Service Value Agreement
In cooperation with Tieto AB
Authors: (By alphabetical order)
Farzad Ghasemzadeh Rahbardar
Seyed Merat Ziyarazavi
Abstract
Traditionally, Service Level Agreement (SLA) including service level metrics is used as an
appendix in IT outsourcing agreements to define the terms and conditions of delivery and set the
expectations. However, SLA neither implies nor guarantees the added-values which are
expected by the customer. Besides, due to the nature of IT services, there always exists an
uncertainty upon purchase due to which the perceived risk for both customer and provider is
high. Moreover, the quality and quantity of delivered values are mostly hidden by hazy
marketing slogans. In order to characterize deliverable added-values and guarantee the values of
an offered service, a consistent framework is needed which is called Service Value Agreement
(SVA).
This thesis introduces a general template for SVA including two main parts namely: Service
Value Catalogue and agreement generation. The study starts with an extensive literature review
based on which the requirements (added-values) for SVA are identified. In this journey,
interview with practitioners, internal documentations of the case study – Tieto AB – and
business reports enrich the study in wide extent. The clarified added-values along with Service
Value Metrics construct the first aspect of SVA, Service Value Catalogue.
Afterwards, a sequence is introduced for value proposition to identify the relevant values for a
customer according to its needs, the available Service Value Catalogue of the provider and its
Service Catalogue. Subsequently a new pricing model is introduced to calculate the Value Co-
created by provider and customer in the service delivery to be used along with a choice of
contract models such as outcome-based and Risk/Reward for sharing the risks and moving
toward a partnership contract. Finally an agreement template is presented comprised of Price,
Service Value Targets, Business Targets, Financial Targets and the related Penalties and
Rewards.
The model is evaluated by means of a focus group interview made up of professional
practitioners who are selected according to their field of experience, from the case study
environment. The outlines for possible future research are drawn based on the results of the
study as well as the constraints the authors face.
Keywords
Service Level Agreement, Service Value Agreement, Service Governance, Added-Value, Value
Co-Creation

3. ii
Acknowledgements
Accomplishing this thesis would have not been possible without the constant helps and
assistance of Dr. Christer Magnusson, the head of Service Science and Innovation centre of
Stockholm University, as our supervisor, in carrying out the research. Hence we would like to
hereby thank him unreservedly for all of his helps. Moreover, the everlasting guidance of
Torbjörn Tergesten and his earnest support of us in the research environment during the whole
period of our thesis encouraged us every day in working toward the excellence. Therefore our
sincere and perpetual gratitude goes to Torbjörn for all the inspiration he gave us. We would
also like to thank Prithvi Gade who provided us with many technical and professional assists in
addition to his experience in different subjects. Our appreciation and gratitude are also reserved
for all others who helped us complete this research. Finally, we want to express our sincere
regards and gratefulness for our parents, who in the whole journey of life have supported us,
helped us, loved us and made sacrifices for us.

4. iii
Table of Contents
1 Introduction............................................... 1
1.1 Background ........................................................................................ 1
1.2 Research Problem................................................................................ 2
1.3 Research Questions ............................................................................. 2
1.4 Goal and Purpose ................................................................................ 2
1.5 Target Group ...................................................................................... 3
1.6 Delimitations....................................................................................... 3
1.7 Limitations.......................................................................................... 3
2 Methodology .............................................. 4
2.1 Alternative Method .............................................................................. 4
2.2 Method of choice: Design Science .......................................................... 5
2.3 Research Process................................................................................. 6
2.3.1 Awareness of problem ................................................................... 6
2.3.2 Suggestion................................................................................... 7
2.3.3 Development................................................................................ 7
2.3.4 Evaluation.................................................................................... 7
2.3.5 Conclusion ................................................................................... 8
2.4 Data Collection.................................................................................... 8
2.5 Ethical Deliberations ............................................................................ 9
3 Extended Background .............................. 10
3.1 Key Concepts .....................................................................................10
3.2 Service Level Agreement .....................................................................10
3.2.1 What is SLA and Why SLA? ...........................................................10
3.2.2 SLA Shortcomings........................................................................11
3.2.3 Current Solutions.........................................................................12
3.2.4 Non-considered Values .................................................................14
3.3 Value-Added ......................................................................................14
3.3.1 What is Value and Value Creation? .................................................14
3.3.2 Tangible Assets vs. Intangible Assets .............................................16
3.3.3 Value Proposition .........................................................................17
3.3.4 Value Co-Creation: Customer’s Role as Co-Creator...........................19
3.3.5 Value-In-Use...............................................................................20
3.3.6 Total Value of Ownership ..............................................................21
4 Artifact: Service Value Agreement model . 22
4.1 Values...............................................................................................23
4.1.1 Skills..........................................................................................23
4.1.2 End-User satisfaction....................................................................25
4.1.3 Service Efficiency/Performance ......................................................28
4.1.4 On-Time Delivery.........................................................................33
4.1.5 Proper Relationship Management (Scheduled Governance Plan).........34
4.1.6 Innovation ..................................................................................36
4.1.7 Standardization ...........................................................................39
4.1.8 Organizational Capital ..................................................................42
4.2 Agreement generation.........................................................................43
4.2.1 Understanding of customer’s service portfolio..................................44
4.2.2 Understanding the customer’s state of business...............................45
4.2.3 Value proposition .........................................................................47

5. iv
4.2.4 Contract models ..........................................................................49
4.2.5 Price models................................................................................50
4.2.6 Service Valuation .........................................................................51
4.2.7 Metrics, Penalties, Rewards ...........................................................51
4.3 Service Value Catalogue ......................................................................54
4.4 Service Value Agreement.....................................................................56
5 Evaluation and Analysis ........................... 58
5.1 Method..............................................................................................58
5.2 Application.........................................................................................58
5.3 Resolution .........................................................................................61
6 Conclusion and Discussion ....................... 63
6.1 Conclusion.........................................................................................63
6.2 Ethical and Social Impacts ...................................................................63
6.3 Discussion .........................................................................................64
6.4 Suggestion for Future Research............................................................65
7 Literature references................................ 67
8 Appendixes .............................................. 73
8.1 Appendix 1: Interview Questions ..........................................................73
8.2 Appendix 2: Focus Group Discussion Questions ......................................74

6. v
Table of Figures
Figure 1: The general methodology of design science (Vaishnavi, V.K., Kuechler,
W., 2007)..................................................................................................... 6
Figure 2: The service management lemniscates (Trienekens et al., 2004)............13
Figure 3: The theory behind SLA metrics (Hayes, 2004) ....................................13
Figure 4: Combined effects of utility and warranty on customer assets (ITIL Service
Strategy, 2007)............................................................................................15
Figure 5: Example value network including tangibles and intangibles (ITIL Service
Strategy, 2007, p.50) ...................................................................................17
Figure 6: Value-in-Use/Value-in-Exchange/Value Co-Creation (Adopted from Vargo
et al., 2008) ................................................................................................20
Figure 7: Strategy map Balanced Scorecard (Kaplan and Norton, 2004) ..............24
Figure 8: End-User Satisfaction model.............................................................26
Figure 9: A basic process (adopted from ITIL Service Operation, 2007)...............28
Figure 10: Process Auditing ...........................................................................29
Figure 11: Service Performance Components (Adopted from ITIL Service Strategy
2007; Smith, 2010) ......................................................................................31
Figure 12: Innovation gap in service outsourcing (Morgan Chambers, 2004 cited in
Krishnamurthy et al., 2009)...........................................................................37
Figure 13: Service providers’ failure in delivering innovation (Harris and Parker,
2005)..........................................................................................................37
Figure 14: Process Standardization Cycle.........................................................40
Figure 15: Understanding the customer’s Service Portfolio.................................44
Figure 16: Understanding the customer’s state of business ................................46
Figure 17: Value Proposition ..........................................................................48
Figure 18: Price-Penalty-Reward Calculation ....................................................52
Figure 19: Service Value Agreement ...............................................................56
Figure 20: Service Value Catalogue.................................................................57
Figure 21: Sales process – customer considerations..........................................65

7. vi
List of Tables
Table 1: List of interviewees ........................................................................... 9
Table 2: Value proposition alternatives (Anderson et al., 2006) ..........................18
Table 3: Value proposition and competitive differentiation (Adopted form
Matthyssens and Vandenbempt, 2008)............................................................18
Table 4: G-D logic vs. S-D logic on value creation (Adopted from Vargo et al.,
2008)..........................................................................................................19
Table 5: End-User Satisfaction survey questions...............................................27
Table 6: Standardization survey questions.......................................................41
Table7: Service Value Catalogue ....................................................................55

8. 1
1 Introduction
1.1 Background
During the last decade the primary processes and tasks in most organizations have become
strongly IT service dependent (Trienekens et al., 2004). Consequently, integration of the
traditional systems into the new ones, system analysis and design, maintenance, and operational
services have become of supreme importance. Throughout this evolution, the concept “service
management” has advanced rapidly.
On the other hand, governmental agencies as well as multinational organizations are putting
their focus away from traditional models of delivering information technology services to a
delivering strategy that is based on global information and communication technology (ICT)
resources. The upward trend of global delivery models, where service providers utilize both
near- and offshoring to provide their customers with ICT services, is originated by
environmental demands that push for cost cutting (Krishnamurthy et al., 2009; Lacity et al.,
2009; and Tate et al., 2009). Reducing cost, globalization, new entrants (Oshri et al., 2008,
p.79), and most recently adding value to the customers’ businesses and Total Value of
Ownership (TVO) are pressures which service providers are dealing with. This trend is easily
perceptible from citations such as “global sourcing is the next wave of globalization” (Dossani
and Kenney, 2007) and statistics; in 2007, IBM’s revenue from service sector was $54B
(Spohrer and Maglio, 2008) while this number in 2011 is raised to $144B (IBM reports, 2011).
While the external and internal pressures initiated the movement toward global delivery models,
the convergence of hardware, software, and services has accelerated the adoption of this model
and has the potential to entirely transform the models of IT delivery. Indeed, this convergence
is likely to be driving the long-term growth of IT services delivery sector. Necessitate of this
convergence including software, hardware and services, even changes the expectations,
governance structures and strategies of players, both suppliers and customers over the time
(Tate et al., 2009).
Apart from the motivations of outsourcing and whatever the organizational strategy is, during
the outsourcing project, the organizations have to enter to a new world, experience new type of
engagement and try to catch a win-win situation in which both parties gain benefit. For this
purpose, there always exist contract in each outsourcing project, which usually last for several
years. Contract, in general, sets the terms and conditions, expectations, boundaries of the
project, functions and services that should be delivered by supplier, the volume of the work,
quality of deliverables, and acceptance criteria (Hayes, 2004).
Traditionally, Service Level Agreement (SLA), at the heart of service management (Trienekens
et al., 2004), is one of the main appendices of the contract which is used as an agreement
between service provider and customer. SLA defines the terms and conditions for both parties
in order to set the expectations as well as boundaries and measure whether the customer-
provider relationship is working (Hayes, 2004). However, SLA does not evaluate the added
value to the business precisely and, therefore, a new concept has emerged which is called
Service Value Agreement (SVA) and can replace SLA or enhance it. It is very critical to
understand that the SVA is completely different than SLA. SVA can be used as a competitive

9. 2
advantage by service providers and as mentioned, more emphasizes on value added to the
customer's business rather checking the service level metrics.
The result of this project has several benefits for both service providers and customers. It also
has great contribution to academic by adding a new value to the global delivery and outsourcing
trend. SVA can be an appropriate measurement tool for the real added value and, therefore, in a
long term, it can lead to boosting the quality of delivered services to the customers and
consequently leads to the customers’ satisfaction. Service providers can gain a new competitive
advantage by utilizing SVA.
This study is conducted based on Design Science methodology and follows qualitative
guidelines for data collection. As illustrated in Design Science disciplines (Vaishnavi and
Kuechler, 2007), this thesis also follows the DS research process namely: Awareness of
problem, Suggestion, Development, Evaluation and Conclusion.
1.2 Research Problem
The service providers do their best to meet the Service Level Targets (SLT) and be green in all
metrics stated in SLA. However that does not always lead to customer satisfaction. Sometimes
the provider fulfills all the targets defined in the SLA but does not really deliver any added
value to the customer’s business and, therefore, the customer satisfaction is not met. In better
words, as Dagenhardt et al. (2010) described, the customer does not get what they pay for or
they pay for getting the wrong object. As such, the need for an agreement that can characterize
deliverable added values to a customer is evident.
Moreover, perceived risk in organizational purchasing decisions is consisted of two factors of
purchase importance and uncertainty of outcome upon purchase (Wilson et al., 1991 and
Henthorne et al., 1993 cited in Hurkens and Wynstra, 2004). According to Evans et al. (2007
cited in Sakao et al., 2009) there is a need for techniques “to negotiate benefit-cost-risk sharing
among stakeholders”. The need for decreasing the formerly mentioned uncertainty of a contract
in addition to description of benefit-risk sharing would bring forth necessity of guaranteeing the
values of an offered service.
Besides, based on Anderson et al. (2000 cited in Hurkens and Wynstra, 2004), managers do not
see values and costs as same entities. While the costs are to be measured by the means of SLA,
the need for a framework that renders the quality and quantity of values can be felt by suppliers
as well as customers in the outsourcing market.
Such an agreement can be called Service Value Agreement (SVA).
1.3 Research Questions
By considering the specified problem, this study aims to provide a comprehensive definition for
Service Value Agreement and answer the following question.
How could the Service Value Agreement framework look like?
1.4 Goal and Purpose
The goal of this thesis is to provide a general framework for SVA. The purpose of the work is to
underscore the added values to the customer’s business which will be achieved as the result of

10. 3
service delivery and, gradually, increase the customer satisfaction. Besides, SVA is used as a
tool to decrease the uncertainty of outcome upon purchase due to the intangible nature of IT
services.
1.5 Target Group
There are two groups to be considered as targets of this research: Academia and IS/IT market.
As mentioned earlier, there is not any particular scientific research or reference regarding
Service Value Agreement and its belongings in the academic world. The SVA concept is in its
infancy and thus its design and architecture is yet to be formed by scholars as well as IS/IT
market players. Hence current paper would be one of the first of its kind aiming at designing a
platform for IT service offering based on SVA. The result could thus be used in future academic
research for expanding and evolving this concept.
The second target group is the Information System market that can use this framework in order
to reduce the risks during decision making process for choosing the right supplier by
guaranteeing the added values depicted in SVA. Such an offering in the sale process from
service provider side can be viewed as an advantage in the form of something extra that can
result in increased revenue stream.
1.6 Delimitations
The main aim of this study is to formulate a framework for SVA. This study does not go deep in
fundamental concepts of outsourcing however a suitable ground is provided. This study also
does not guarantee whether the defined metrics of SVA are efficient rather it emphasizes on the
general structure (definition) of SVA. Investigation of the possible advantages and
disadvantages of SVA implication for service providers’ and customers’ organizations is out of
the scope of this study as well. When the study comes to the empirical section i.e. Tieto AB’s
environment, it is not involved with evaluating the quality of current deliverable services by
Tieto. The authors make use of SLTs and KPIs existed in current services of Tieto. Since IT
services are miscellaneous in content, this study focuses on Application Management (AM) as
the main stream. However, the study does not make an assessment of how well the current AM
deliveries are done and to what extent those deliveries are carried out as they should.
1.7 Limitations
The existing literatures about SVA are limited to few unpublished papers that are studied by IT
consulting companies. So the authors try to focus on literatures relevant to the target which
make the ground for designing the SVA.
Besides, the authors have direct access to explicit documentations regarding the subject of
research in only few IT corporation i.e. Tieto AB. Due to the time and resource constraints,
access to interviewees from other IT corporations is also limited. Evaluation of the result is
limited to interviews in which deviations from expectations are evaluated. Whereas the used
method depicts an iterative design and proposal phases following evaluation phase, the time
limit of current study prohibits the authors to practice such an iterative cycle.

11. 4
2 Methodology
SVA is a newly emerged concept about which few research works, at least with a practical
perspective, have been conducted and this study intends to fill this gap. This research is
conducted in a practical environment, aimed at solving a practical problem and, meanwhile,
expanding scientific knowledge. There are practitioners who actively involved in this study and
have close collaboration with the researchers. Based on the characteristics and the goal of the
study, the authors have considered two methodologies for conducting the study namely: Action
Research and Design Science research methodologies. First, the concepts around alternative
method are discussed. Then the method of choice for performing this thesis -which is Design
Science-, is explained in detail, including the research processes existing in Design Science
method. This chapter is then followed by explanation of data collection methods.
2.1 Alternative Method
As it will be explained later on, different phases of building up SVA can be mapped to the
relevant phases of Design Science (DS) research methodology. The relevancy of each phase
of DS research to the present research is explained and thus the motivation and justification
for choice of method are argued. Hence the authors justly use DS as the method of choice.
The application of Design Science method is also fulfilled in different parts of research
according to the descriptions provided for each phase of method. However there are many
other research methods that due to their nature can be appropriate for design of SVA in a
business environment. Action research method is one of them which will be explained in
following lines. Arguments behind why it is not the superior method to be chosen
furthermore expand the motivation for the choice of method.
Action Research: Action research has several characteristics making it considerable for this
study. As Baskerville (1999) cited, since this method is grounded in practical action, it
produces as most relevant as possible results to the research question and meanwhile,
follows the theoretical framework. Action research also increases understanding of social as
well as organizational problems because of its practical nature. Practitioners have
significant effect in the action research since they act as both the subject and co-researchers.
They play an important role in different phases specifically in data collection phase.
Besides, as mentioned, the main goal of this study is to expand a new concept from both
theoretical and empirical perspectives and this is completely feasible by action research.
Based on the Wood-Harper (1989 cited by Baskerville, 1999), the studies which produce
newly invented concepts need to inject their results in the practitioner environment in order
to ensure about the health of the outcomes.
Despite all above mentioned characteristics that make action research a suitable approach, the
fundamental principal of this method is not compatible with the framework of current research.
Action research is based on introducing change(s) within complex processes of an organization
and observing the effects of change(s) (Baskerville, 1999; Brien, 1998). Since the authors do not
have any possibilities to make changes in any of in-use processes of the research environment,
Tieto, the application of the study within action research framework would be questionable. The

12. 5
research environment is an active service provider in the market with up and running processes
in which creating change is assumed as a huge risk and completely unnecessary action.
2.2 Method of choice: Design Science
Natural science research methods intend to discover facts about realities of existing phenomena
(Hevner and Chatterjee, 2010, p.13). Their planning, communication, techniques and limitations
however, make them unsuitable for the kind of problems faced by organizations in need of
innovative and novel solutions molded for particular situations. Such a gap is also sensed in
Information Systems research discipline where Design Science has emerged to resolve that
deficiency. As such, design science focuses on constructing artifacts that are utilized in
improvement of conditions of application environments.
Current research, aiming to produce a framework for added values in organizational service
offerings, lies in the context of design science methodology. The expected tangible result of
present research thus accounts for an artifact which is to be employed by consulting and service
provider companies, being the real world targets of the study, aside from target groups in
academia.
According to Hevner and Chatterjee (2010, p.28) the objective of design science research
methodology (DSRM) is providing a mental model that is a smaller scale of reality. Effective
conduct of design science research, hence, is an outcome of that mental model which depicts the
essential elements of the method. Respectively, the artifact can productively contribute to the
solution for an unsolved important business problem and should be deduced from “existing
theories and knowledge” (Peffers et al., 2007).
Current research is respectively based on existing knowledge around service science explained
in the background and addresses an emerging need in outsourcing business.
As cited in Hevner and Chatterjee’s (2010, p.26) research, Vaishnavi and Kuechler (2007) have
extended the analysis of Tekeda et al. (1990) in general design cycle so to apply it specifically
to design science research illustrated in Figure 1.

13. 6
Figure 1: The general methodology of design science (Vaishnavi, V.K., Kuechler, W., 2007)
The five steps of DS research framework, according to Vaishnavi and Kuechler (2007, p.19-21),
are Awareness of problem, Suggestion, Development, Evaluation and Conclusion. Each phase
of DS research can be revisited from any of other phases (Vaishnavi and Kuechler, 2007, p 24).
2.3 Research Process
2.3.1 Awareness of problem
Vaishnavi and Kuechler (2007, p.19) stated “new developments in industry or in a reference
discipline” as possible sources of awareness of problem. Peffers et al. (2007) advised on
atomization of the problem in order to capture its intricacy in its real situation. Elucidation of
problem, he mentions, assists the target groups of research to understand and accept the results.
This research illustrates the first existing relevant problem as dissatisfaction among customers
of IT service providers despite of fulfillment of the contract requirements including SLA
conditions. Moreover, uncertainties in decision making process for choosing an IT supplier due
to the risks present in a possible choice, is another problem which the result of this research
should be able to mitigate. Other problems are also explained in Problem and Extended
background sections. These problems and the respective required solutions result in the
“Proposal” of the current research so to build a solution for them.

14. 7
2.3.2 Suggestion
The definition of suggestion phase, according to Vaishnavi and Kuechler (2007, p. 20), is
envision of a new functionality which is based on existing or new components and should be
able to mitigate or solve the previous problem definition. Hence the state of the problem in
addition to possible and existing solutions should draw the objectives for a potential solution
(Peffers, 2007). A Tentative Design as such is the outcome of Suggestion phase.
According to the definition of the problem, the authors of this research set the objectives to be a
service added value offering strategy for IT suppliers. The artifact should be called Service
Value Agreement and should be in line with current service offerings and be implementable to
the current service catalogue of IT suppliers. SVA’s objectives as such, form the Tentative
Design of suggestion phase and can be considered as prototype of the final artifact to be studied
by the relevant beneficiaries before the design is started.
2.3.3 Development
The Tentative Design which is the outcome of suggestion phase is constructed into an artifact
in Development phase (Vaishnavi and Kuechler, 2007, p. 21). The construction can have
different methods of implementation depending on the artifact and the context of design; for
example a software development or a formal proof for an algorithm. Creation of the artifact in
this phase is according to the desired functionality determined in previous phases and proposed
in Tentative Design. The findings of the research are embedded in the design of artifact (Hevner
and Chatterjee, 2010, p.29).
The used method for design and construction of SVA in the current research is text
interpretation of existing sources relevant to ITIL standard, IT governance, service management
and service level agreements. Moreover interpretation of findings during data collection by
means of interview plays a vital role in design of SVA.
Since the main goal of current thesis is to guarantee the values that are important to the
customers of IT/IS market, the authors decide to first identify those values that are cared for by
the customer. Hence keywords value, added value, service level agreement, value delivery, total
value of ownership, value proposal, customer’s value, and deliverable value are used in
searching databases of Springer Link and Elsevier Science Direct to identify such cherished
values. Moreover some internal reports of the case study Tieto and couple of reports from other
active companies in the market in addition to ITIL books contribute to this task. Thereafter, for
each identified value, an extensive research in the sources of data collection including the
aforementioned databases and ITIL books in addition to business reports is carried out to collect
the necessary information. The collected data then helps to formalize and formulate the values
in the desired framework of SVA.
2.3.4 Evaluation
After the design of artifact is complete, it is evaluated based on the problems depicted in
proposal during awareness of problem phase and deviations from objectives introduced in
suggestions should be explained (Vaishnavi and Kuechler, 2007, p. 21). According to Vaishnavi
and Kuechler, in Design Science, rarely the projections and objectives are fully met. However
the information gained from construction phase in addition to evaluation of results brings forth
new data that can lead to another Suggestion round. The experimental results can also be ground

15. 8
for suggestion of future work. Respectively, Design Science philosophy prefers Allen Newell’s
point of view (1990 cited in Vaishnavi and Kuechler, 2007, p.21) according to which, theories
should be treated like doctoral students whose works are to be reviewed wherein their flaws and
errors are identified and amended rather than facing Popperian falsification gauge.
The method that the present research is to use for evaluation and validation of the designed
artifact namely SVA, is having interviews with experts in the field of IS governance and IT
outsourcing. Such experts would provide the authors with their analysis and perceived
performance of the artifact. Experimental evaluation of SVA will depend on its perceived
quality and is out of scope of current research. However future research can analyze a real
implementation and come up with new suggestions for desired improvements.
2.3.5 Conclusion
In the final phase of Design Science, the results of the efforts and the final artifact are explained
in detail. These data are either categorized as firm facts or loose ends. Firm facts can be applied
repeatedly while loose ends are explanations that can be subject of future research. (Vaishnavi
and Kuechler, 2007, p.21-22)
2.4 Data Collection
This study investigates problem from the perspective of those who experience it in their daily
routines. The authors neither provide nor apply statistical data rather the results are presented in
form of descriptive text. The result of the study is developed based on text interpretation and
personal understanding of the authors which is formed according to the provided theoretical and
practical background. Reviewing relevant literature (both academic literature and business
reports), corporate documents of research environment (case study), and open-ended interviews
with practitioners from the case study Tieto are means for collecting data. Based on the nature
of this study and the knowledge that is produced, qualitative method is chosen for data
collection.
The objective of the semi-structured interviews is to understand what the main values that Tieto,
as the case study, adds through delivered services are and to what extend the customers are
satisfied with those added values. Besides, the interviewees are asked to share their experiences
in quantifying the depicted values. Moreover, the interviews help to understand the perception
of customers about “added-value” and what customers eager to receive as an added value
through buying a specific service. This goal is fulfilled by choosing interviewees who are
actively working with customers. The interviewees are selected according to their organizational
roles and their fields of activity. Table 1 depicts list of organizational roles as well as number of
interviews that are conducted. The interviews are carried on face-to-face in Stockholm and
further questions are sent by emails. All interviews are recorded for additional verification and
communicated emails are archived.
Interviews with other providers or consulting firms than Tieto would help gain an understanding
of how the IS market is moving toward SVA. However, due to the time and resources
limitation, this study is limited from this point of view. The authors could not conduct any
interview with other firms than Tieto rather their available documentations distributed through
their websites have been widely used.

16. 9
Organizational Role
Number of
interviews
Pre-sale Manager 1
Delivery mentor 1
Sales Specialist 2
Senior Pre-sale Specialist 1
Project Manager 1
Lead Product Manager 1
Senior Advisor 1
Table 1: List of interviewees
Literature review of business sources conducted by the like of Gartner, Forester, or Harvard
business school also helps apprehending the market pioneers’ viewpoints. While this method
provides valuable academic as well as business oriented information to the research, the
disadvantage is that the outcomes of practicing such information are mostly unknown.
Alternative data collection methods that are not used in the research are “observation” and
“experiment”. Observation method is naturally a time consuming one. Moreover, direct and full
access to research environment is a necessity. However, as mentioned, time is a constraint in the
present research. Moreover, IT providing companies’ environments are very security sensitive
that makes it an obstacle for having full access to the environment. The nature of SVA is also
more of an abstract one and direct observation of service delivery may not contribute much to
the research. On the other hand, experiment method need performing changes in the research
environment and observing the outcomes, that is not a possibility in the very risk sensitive
environment of IS market.
2.5 Ethical Deliberations
This study makes use of confidential documents of Tieto as one of the resources in data
collection. Consequently, there is an agreement to protect the corporation’s data and obtain the
necessary permissions before releasing the study to the public. It is also agreed to omit the name
of customers as well as interviewees that collaborate with the authors in case of request.
In order to keep the integrity and ethics of the research, all of the information and literature used
from other resources are referenced properly and correctly to the original author. Regarding data
collection, the results of interviews are reflected intact and unaltered in order to maintain its
truthfulness. The interviews and documentation reviews are done with the full consent of
subject participants and the results of research contributes to the academia as well as the IS
market. Consequently there is no ethical obstacle to the research data collection.
It is worth mentioning that there is no conflict of interest in conduct of present research between
interests of research environment and the authors’ interests. The results of research form a
foundation for future work on the concept of SVA and do not have any financial effect on the
value of Tieto’s stocks or assets.

17. 10
3 Extended Background
3.1 Key Concepts
IT service: a service is a means of delivering value to customers by facilitating the outputs that
customers are willing to achieve without the ownership of any specific risk. In other words, IT
service is a combination of technology, people, and processes aiming at serving customers and
should be defined in Service Level Agreement (ITIL Service Strategy, p.243).
IT service management: IT service management enables the service provider to understand the
real requirement of the customer and ensure about the value which is delivered to the customer
by means of provided service. By other words, IT service management is an integrated approach
enabling service providers to fulfill customer’s requirements by delivering IT services
effectively, efficiently and in a managed manner.
IT governance: IT governance defines the structure of relationships and processes within an
enterprise to achieve the objectives of the system by adding value and mitigate the risks that are
associated with IT. The main goal of IT governance, which is done by defining organizational
roles and responsibilities, is to assure IT services add business value.
Service Level Agreement: It is an appendix to the contract between supplier and customer
which defines the IT service(s), specifies the responsibilities of the provider and customer, and
documents the Service Level Targets (ITIL Service Strategy, p.250). Typically it is
complemented by metrics that would elucidate the service hours, service availability, the level
of support and responsiveness in addition to limitations. SLA is often complemented by metrics
to measure the customer’s satisfaction level and the level of SLA fulfillment. SLA can be
supplemented by list of penalties if it is not adequately met.
Service Level Target: SLTs are detailed targets that form the SLA goals and are linked to Key
Performance Indicators which measure each specific and detailed SLT.
Service Catalogue: According to ITIL Service Strategy (2007) customers are mostly interested
in what the supplier is able to deliver now. As such, the service catalogue is consisted of
services that are already available from the supplier side and the capability of delivery exists for
them.
Total value of ownership: This concept is a tool for not only capturing the total costs of a
purchase, but also the values and advantages that the customer would benefit from for offering
better services to its own customers (Hurkens and Wynstra, 2004).
3.2 Service Level Agreement
3.2.1 What is SLA and Why SLA?
Information Technology Infrastructure Library (ITIL) is a collection of best practices of IT
services delivery and always been used as a reference (Trienekens et al., 2004). SLA is
introduced as one of the main concepts of service management by ITIL. SLA is one of the
compulsory appendices of contracts in outsourcing projects which is agreed with service
providers and customers. An adequate SLA in a formal written agreement is assumed to be one
of the key success factors in an IT outsourcing relationship (Goo et al., 2009; Larson, 1998).

18. 11
SLA is an agreement between service provider and customer in which the services are
described, service level targets are documented, and the responsibilities of the parties are
specified (ITIL Service Strategy, 2007, p.250). All of these are interpreted as necessary
information that should be understood by parties to manage the service delivery. In other words,
“SLA is to bridge the gap between service provider and users or customers” (Trienekens et al.,
2004). In order to develop a mutually acceptable agreement, the expectations of both service
provider and customer should be defined in an unambiguous manner (Larson, 1998). For this
purpose, the service levels, which are usually measurable metrics, need to be properly selected
and implemented. Achieving an effective SLA is heavily dependent on metrics (Hayes, 2004)
since they measure several criteria namely: reliability, serviceability, response, etc. (Larson,
1998; Hayes, 2004). Hence, the service level targets should be auditable, manageable,
measurable, and give maximum value to the customer (Larson, 1998). However, all these
criteria do not guarantee a successful relationship so that the service provider and customer can
be only optimistic about a win-win situation (Goo et al., 2009). SLA does not always cover
every necessity for a reciprocal satisfactory relationship. In the next part (3.2.2) the current
shortcomings of SLA are addressed.
3.2.2 SLA Shortcomings
From business point of view, “What to measure” and “How to measure” are well-known
dilemmas in IT outsourcing assignments. Regarding this Aubert et al. (2003 cited in
Wüllenweber, 2008) state “less measurability in the outsourced activities leads to less complete
contracts and, as a consequence, to less successful outsourcing”. Poppo and Zenger (2002 cited
in Wüllenweber, 2008) illustrate that managers show lower level of satisfaction with the effects
of IT services outsourcing on cost performance when the performance is not easily measureable.
As mentioned earlier, SLA includes service metrics that measure different criteria based on
performance levels so that a “good” service can be differentiated from a typical “bad” service
(Hayes, 2004). Importance and critical role of SLA is inevitable, however several researchers
have highlighted some practical defects of SLAs (e.g. Goo et al., 2009; Kern et al., 2002; and
Trienekens et al., 2004) that hereafter are briefly described.
Firstly, most SLAs focus on specifying the amount of efforts that are to be spent on a certain
task or process rather than specifying the results that are admirable for customers in terms of
effectiveness of the service and business objectives (Trienekens et al., 2004). For instance,
usually it is stated that “in case of any fault in system X, the service provider is supposed to
solve it in a certain amount of time” while it does not consider the business objectives of the
organization thoroughly.
Secondly, service specifications are usually stated in terms of metrics that are unclear or
impossible to be measured (Trienekens et al., 2004). Effective metrics focus on two main
domains namely: “point in time” and “trending analysis” (Dagenhardt et al., 2010).
Availability of services is always evaluated by a metric called availability percentage and it is
difficult to determine its exact meaning in the context of business values. For example, what
does the following statement which is a very common service level exactly mean? “The
availability percentage of the network should be 98%”. This service level brings up several
questions; what is the difference between 98% of availability and 99%? What if the service is
available on weekend when nobody uses it and it would be unavailable in a peak time on
Monday morning? Does 98% of availability bring value to the customer?

19. 12
Thirdly, since it is difficult to measure and describe the consequences of some failures in
delivering specific services, some service specifications in SLAs are incomplete (Trienekens et
al., 2004). For instance, how it is possible to make a complete agreement on security control or
disaster control services when there is no clue about quantifying the consequences of fraud or
disaster?
Fourthly, SLA is a very technical document with deep focus on terminologies that are
understandable for the specialists whilst end-users and managers also need to have a clear
understanding about them. This problem makes SLA specification as “just an unsatisfying
tradition” (Trienekens et al., 2004).
Last but not least, apart from metric-oriented and technical issues that are not fully supported by
SLA, there are some intangible benefits that can be delivered but have been ignored by SLA
(Kern et al., 2002 cited in Goo et al., 2009). Effective provider-customer relationship and
governance-oriented concerns like communication mechanisms, joint decision making process,
partnership, the “feeling” that a provider gives to a customer, etc. are such intangible benefits.
Respectively, the numeric metrics seem essential in agreements though the real problems and
dissatisfactions mostly depend on immeasurable intangibles. In section 3.2.3 a current solution
that has been proposed by Goo et al. (2009) is discussed and section 3.2.4 specifically
elaborates about ignored values in outsourcing relationships.
3.2.3 Current Solutions
The mentioned shortcomings of SLA are defined and some suggestions are given for them by
different literatures (e.g. McBride, 1998; Passmore, 1996; Steinke, 1997; Yan et al., 2007, etc.)
most of which are in global terms and follow high level perspectives. Trienekens et al. (2004)
and Hayes (2004) have proposed practical principles from two different perspectives. The
former focuses on communication aspects of SLA and the latter discusses metrics selection
criteria. Goo et al. (2009) also provides three basic characteristics for SLA that impact relational
governance in IT outsourcing relationships. These three suggestions provide clearer perspective
around the current state of SLAs and highlight the missing points. The following lines describe
the above mentioned solutions and suggestions briefly.
Trienekens et al. (2004) recommends “continuity in SLA specification” as a specific principle
for creating an effective SLA (Figure 2). According to this principle, the quality of delivered
services should, at least, meet the customers’ expectations or exceed those (Rodriguez-Dapena
et al., 2001cited in Trienekens et al., 2004). Besides, SLA has to support the communication
about services and provide a ground for continues development and implementation of service
processes so that the requirement engineering, design, and implementation processes of service
delivery is done iteratively. In other words, service process management including design and
implementation of service processes and service level management containing control and
evaluation of services should be done iteratively and these two are managed by means of SLA.

20. 13
Figure 2: The service management lemniscates (Trienekens et al., 2004)
The primary goal of SLA is to ensure a win-win relationship between the customer and the
service provider (Hayes, 2004; Goo et al., 2009; and Yan et al., 2007). In order to achieve this
target and create a mutually acceptable agreement, Hayes (2004) suggested some basic
principles that should be followed in SLA metrics selection by both parties. The suggested
principles are simplified in Figure 3. These principles can be seen as a direct solution for metric-
oriented shortcomings highlighted in the previous section.
Figure 3: The theory behind SLA metrics (Hayes, 2004)
Hayes is of the opinion that the primary aim of metrics is to motivate the proper behavior for the
service provider and customer and is applicable if each side understands the other side’s
expectations and tests the selected metrics by “putting yourself in the place of the other side”.
Hence, the selected metrics motivate the desirable behavior and are completely objective.

21. 14
Hayes also states that the selected metrics should be within the parties’ control. As a result, both
the service provider and the customer should watch out for the influence of a potential third
party in meeting of an objective. The service providers do not rely on their own capabilities if
delivering a specific service is also dependent on client actions. As a result, a refinement is
needed in the SLA metrics that dictates how and under what circumstances a service has to be
delivered.
Besides, Hayes suggested that SLA metric should be limited number of measurements
providing an appropriate baseline for meeting the organizational objectives. The metrics should
be easy to understand, collect, and measure.
From Hayes’ (2004) perspective, as illustrated in Figure 3, the SLA metrics need to have
capability to measure the volume of requested work, the volume of produced work, the overall
costs, quality, efficiency and responsiveness of delivered services.
On the other hand, Goo et al. (2009) provided three characteristics for SLAs which impact the
relational governance in IT outsourcing relationships. As they stated, these characteristics not
only improve the performance of service providers in delivering the services but also enable the
development of partnership and effective relationship management. The first category of criteria
that each SLA should state is called “Foundation” characteristics. Foundation characteristics
specify the key principals and roles and responsibilities of parties. The second category is
“Change” characteristics which cover determination of solution for the unforeseeable and
foreseeable future demands. “Governance” characteristics form the third category that specifies
the contractual terms such as performance metrics and penalties.
3.2.4 Non-considered Values
IT service delivery is not a simple provider-customer relationship rather is a complex chain of
stakeholders that construct “service value chains”. SLA is an enabling infrastructure for service
supply chains of added value in form of respective service provider-customer relationships (Haq
et al., 2011). As mentioned earlier, SLA covers a lot of issues which are vital for an IT service
delivery agreement in order to fulfill the legal requisites and ensure a win-win situation.
However, there are a lot of critical intangible as well as tangible values in business level that are
ignored or not fully supported by SLA (Goo et al., 2009). In better words, there are business
metrics such as financial performance besides service metrics which are not covered by SLA.
Models introduced by Trienekens et al. (2004) and Hayes (2004) concentrate on metric-oriented
aspect of SLA whereas Goo et al. (2009) try to investigate non-measurable side of IT
outsourcing contracts by highlighting the intangibles of service provider-customer relationship.
However, these intangibles are not necessarily added-values for the customer’s business in
collaboration with service provider. Besides, they are more in service level rather business and
strategic level.
3.3 Value-Added
3.3.1 What is Value and Value Creation?
The core purpose in business-to-business relationships is exchanging value between parties so
that both customer and provider gain as much advantages as possible out of this relationship. On
the other side, due to commoditization of product market, value creation process has moved

22. 15
away toward service market (Matthyssens and Vandenbempt, 2008). Regarding this trend, as
these authors illustrated, a central strategic and marketing theme, in service provider firm, is the
ability to provide value for customers continuously. As Osterm et al. (2010 cited in Macdonald
et al., 2011) have also emphasized, proposing tools for “capturing value in use” and
“communicating value to customers” are two upmost considerations in managers’ agenda.
From customer’s point of view, value is composed of two components namely: “utility” and
“warranty” (ITIL Service Strategy, p.17). As best of practices gathered in ITIL define, utility is
whatever perceived by customer as attributes or outcomes of service (p.17) while warranty
ensures a level certainty in service delivery (p.93). In better words, utility is “what” the
customer perceives and warranty is “how” the service is delivered (ITIL Service Strategy, p.17).
As ITIL explained, value is created based on combined effect of utility and warranty (p.37).
However, each should be taken into account as segregated factors. Figure 4 adopted from ITIL
Service Strategy illustrate the combined effect of warranty and utility from customer
perspective.
Figure 4: Combined effects of utility and warranty on customer assets (ITIL Service Strategy, 2007)
Traditionally, cost reduction was distinguished as the core value in all firms (Brynjolfsson and
Yang, 1996) while as Ulaga and Eggeret (2006) explicitly demonstrated, price does not bring so
much differentiation anymore and instead, service support, skills, close relationship, and more
abstract “know-how” process have become core. This idea is directly reflected from the Service-
Dominant logic (S-D logic) perspective expressed by Vargo and Lusch in which competence,
value proposition and value co-creation are highlighted interactively (Matthyssens and
Vandenbempt, 2008). From “service” point of view, the fundamental basis of exchange value is
the “application of competences, e.g. skills and knowledge, by one party for the benefit of
another” (Vargo et al., 2008). However, despite of massive conducted researches, the concept
“value” is still elusive and always gives rise to lots of questions; how the value should be
expressed (Moyle, 2008), how to clarify the complicated character of value (Möller, 2006), how
do the parties know if they gain their desirable value and for whom the value is created (Moyle,
2008), etc. This complicated situation become even more complex in IT outsourcing
relationships in which the level of risk and uncertainty of outcome upon purchase is high
(Wilson et al., 1991 and Henthorne et al., 1993 cited in Hurkens and Wynstra, 2004) and,

23. 16
relatively, provider and customer cannot be agree on what constitute “value” (Möller, 2006;
Macdonald et al., 2011).
On the other point of view, in academia, the definition of “value” is discussed extensively and
there exist different points of view; At an abstract level, Anderson and Narus (1999 cited in
Hurkens and Wynstra, 2004) expressed value as “the worth in monetary terms of the economic,
technical, service, and social benefits a customer firm receives in exchange for the price it pays
for a market offering”. Ulaga and Eggert (2005 cited in Möller, 2006) specified value as the
“trade-off between the benefits and the sacrifices in a market exchange” while Hurkens and
Wynstra (2004) defined it from more intangible perspective as an equivalent to provider-
customer relationship.
Different aspects of value are also analyzed in academia; Henneberg et al. (2005) have
disaggregated the concept of “value” into three different aspects, exchange value - relational
value - and proprietary value, in order to explain the single-side and dyadic-side of value.
Exchange value is the output of provider’s activities through which benefits are delivered to
customer. These benefits can be in form of cost reduction in customer’s operational activities,
reducing the customer’s resources which are in use, etc. The main goal of each provider is to
increase the perceived offering value in compare to competitors. Relational value, on the other
hand, is produced by interrelated activities of provider and customer so that it cannot be
delivered without mutual trust and commitment. “Value co-creation” which is discussed greatly
in section 3.3.4, follows an upward trend in IT outsourcing sector and is widely used in
nowadays collaborations as the real instance of relational aspect of value (Möller, 2006). Last
but not least, the proprietary aspect of value refers to the value which is produced by provider
for its own benefits rather offering to customers.
3.3.2 Tangible Assets vs. Intangible Assets
Apart from different interpretations existing for value and value creation (see also section
3.3.6), several researches have studied value from new perspective which investigate the nature
of value assets; tangible vs. intangible assets (Hurkens and Wynstra, 2004; Kaplan and Norton,
2004; Vargo and Lusch, 2004; Moyle, 2008; etc.). ITIL Service Strategy has also considered
value as a network generating tangibles and intangibles; “a value network is a web of
relationships that generates tangible and intangible value through complex dynamic
exchanges” (ITIL Service Strategy, 2007, p.48). Tangible assets are those which traditionally
are measured in quantitative terms. In IT context, costs and hardware are instances of tangible
assets. While intangible values have rather qualitative nature such as service provider
experiences, or trustworthiness of provider (Oshri et al., 2008, p. 57). Figure 5 shows an
example of a value network including both tangible and intangible assets.
Though, intangible assets are difficult to quantify and their measurement is problematic (Moyle,
2008) so that there is very few international standard, model, or agreement for assessing
intangibles (Kaplan and Norton, 2004) which are not well-known or extensively in use. As
Kaplan and Norton stated, the critical role of intangible assets is inventible and have been
increasingly recognized in strategic planning in business-to-business market.
However, these authors have distinguished the intangibles into three kinds of capitals:
- Human capital such as employee’s competences, knowledge, talent, and skills.
- Information capital such as organization’s network and databases or, generally
speaking, technology infrastructure.

24. 17
- Organization capital such as organization’s leadership, culture, goodwill in relation,
competences to align IT and skills with strategic objectives, and knowledge transfer.
Figure 5: Example value network including tangibles and intangibles (ITIL Service Strategy, 2007, p.50)
Organizational capital will be more discussed as part of intangible aspect of SVA during the
artifact creation process.
3.3.3 Value Proposition
In this section a brief explanation about value proposition, its definition, and why it is needed is
given. Two types of value proposition classifications which deducted from two different
perspectives will also be discussed in short and will be used in artifact development process.
Value proposition is a proper analysis of value exchange in the service system and configuration
of resources, i.e. people - technology - and information, connected to other systems (Vargo et
al., 2008; Vargo and Lusch, 2004). Nowadays, “customer value proposition” is one of the most
in use terms in business markets especially in IT outsourcing sector (Anderson et al., 2006). As
these authors have mentioned, a service may offer a superior value but if the service provider
does not demonstrate it in a proper way, the customer will probably misunderstood it as a faint
marketing slogan. In order to avoid these situations and stress on the points that deliver
relatively great value to the customer, the service provider needs to have in deep understanding
about the customer’s business, lacks, objectives, and requirements. However, despite of wide
use of this term in growing IT outsourcing trend, both service providers and customers try to
find out whether the delivered benefits outweigh the costs and risks (Levina and Ross, 2003).
As Anderson and his colleagues have classified, term “value proposition” is used in three
different ways namely:
- All benefits
- Favorable points of difference
- Resonating focus
Most managers usually indicate all benefits that customer can receive out of specific service,
when asked for value proposition. They even may demonstrate the simple features of the service

25. 18
which deliver no value to the customer. In the second category, favorable point of difference,
the service provider aware about the alternative option that customer has and tries to phrase its
main competitive advantages. Though, it needs a detailed knowledge about the customer
business, their preferences as well as the competitor capabilities. In the third type of value
proposition the provider has to choose one or two upmost point(s) of differences (and, perhaps,
a point of parity) by which the most value is delivered to the customer. Table 2 briefly explains
the value proposition alternatives and their pitfalls.
Value
Proposition
All Benefits
Favorable Points of
Difference
Resonating Focus
Consists of
All benefits
customers receive
from a market
offering
All favorable points of
difference a market
offering has relative to
the next alternative
The one or two points of difference
(and, perhaps, a point of parity)
whose improvement will deliver the
greatest value to the customer for
the foreseeable future
Answers the
customer
question
“Why should our
firm purchase your
offering?”
“Why should our firm
purchase your offering
instead of your
competitor’s?”
“What is most worthwhile for our
firm to keep in mind about your
offering?”
Requires Knowledge of own
market offering
Knowledge of own
market offering and next
best alternative
Knowledge of how own market
offering delivers superior value to
customers, compared with next best
alternative
Pitfall Benefit assertion Value presumption Requires customer value research
Table 2: Value proposition alternatives (Anderson et al., 2006)
Matthyssens and Vandenbempt (2008) investigated value proposition from another perspective,
competitive and monetary points of view. As they discussed and is shown in Table 3,
competitive differentiation is achieved by means of three types of value propositions namely:
- Product leadership including product quality and product innovation
- Customer linking inclusive of service innovation and customer relationship
- And cost leadership containing operational excellence.
From monetary perspective, they discussed the first two categories as non-price-based value
offers while the latter is price-based.
Value Proposition
Product leadership:
product innovation,
product qualities
Customer linking:
service innovation,
customer relationship
Cost leadership:
operational excellence
Price-base 
Non-price-base  
Table 3: Value proposition and competitive differentiation (Adopted form Matthyssens and
Vandenbempt, 2008)

26. 19
By considering these two value proposition assortments, Table 2 and Table 3, a value
proposition can have monetary value or noncommercial value while at the same time it might
consist of all benefits that the customer receives, favorable points of difference, or single point
of difference and possible point of parity.
3.3.4 Value Co-Creation: Customer’s Role as
Co-Creator
Nowadays, due to the nature of contracts, the dynamics of the IT service delivery move away
from individually value creation mode to value “co-creation” and “co-production” mode (Ng et
al., 2009). Traditionally each party focused on its own contractual obligations while this trend
has changed to co-creation of value; meaning that the service provider do not produce value
individually rather the value-added is created as the result of collaboration. Regarding this,
Vargo and Lusch (2004) argue that the market is being shifted from “goods-dominant” oriented
to “service-dominant” oriented and, consequently, the role of customers is being changed from
an isolated and passive one to being active and connected to the service provider. As such,
customers demonstrate the value on the basis of “value-in-use” (S-D logic) and co-creation of
value while service providers measure values on the basis of “exchange-value” and goods-
dominant logic (G-D logic).
In order to clarify the demarcation line between S-D logic and G-D logic referring to value-in-
use and value-in-exchange respectively, we can consider a computer as an example. A
manufacturing firm assembles a computer out of series of raw material including metal, plastic,
etc. These substances cannot execute a sequence of logical and arithmetic operations in their
raw form while, based on G-D logic, the production process of manufacturing firm creates value
by delivering a computer. In other words, the manufacturing firm creates value in form of a
good by transforming the raw material into computer which is in demand. On the other hand,
the alternative perspective, S-D logic, describes the roles of producer and customer in value
creation jointly so that the computer acts as an intermediary element (Vargo and Lusch, 2004)
and gives input into the value creation chain. The computer does not provide any value if no one
knows how to use it as a computational and arithmetical tool. That is the customer (end user)
who co-creates the value by using the computer. As a result, inherently value is co-created by
more than one service system and “reciprocal and mutually beneficial relationship” should be
always under consideration (Vargo et al., 2008). Table 4 compares roles of customer and
provider from G-D as well as S-D logics in brief.
G-D logic vs. S-D logic
Goods-dominant logic
(G-D logic)
Service-dominant logic
(S-D logic)
Value driver Value-in-exchange
Value-in-use
Role of firm (provider) Produce and distribute value
Propose and co-create value, provide
service
Role of customers To “use up” or “destroy” value created
by the firm
Co-create value through the integration
of firm provided resources with other
private and public resources
Table 4: G-D logic vs. S-D logic on value creation (Adopted from Vargo et al., 2008)

27. 20
By considering G-D logic perspective, the role of “provider” and “customer” are distinguished,
and value creation is usually reasoned as a set of tasks performed by provider (Vargo et al.,
2008). While, as is depicted in Figure 6, the concept of value co-creation in IT service delivery
involves division of responsibilities between the service provider and customer along with
structured governance plan.
Figure 6: Value-in-Use/Value-in-Exchange/Value Co-Creation (Adopted from Vargo et al., 2008)
However, some might argue that it can open the space for service provider to abdicate from
some responsibilities and possible faults and push them toward the customer. Ng et al. (2009)
discuss that if both the service provider’s and customer’s definition of value proposition is
understood by the other party, the outcome would be desirable.
Möller (2006) also discussed about the potential challenges that exist in relational value
creation. As he stated, usually the management of value co-creation relationship is more
complicated than ordinary provider-customer relationships. Besides, the cost estimation and
assessment of the share of each party in creating value is very difficult.
3.3.5 Value-In-Use
Macdonald et al. (2011) by considering customer as a “value co-creator” have defined value-
in-use as a customer’s output and the objective of service which is obtained by customer. As
they illustrated, value-in-use is multi-dimensional concept acting as a bridge between customer-
provider relationship outputs and service quality. In better words, value-in-use is the presence of
set of service attributes as outcomes of relationship for which the customer has been agreed and
prepared to pay. As Macdonald and his colleagues understood, the level of service quality,
which is assumed as customer perceived value from provider’s point of view, is not a suitable
assessment for evaluating value-in-use. They argued that there are two other factors affecting
value-in-use which have not been covered by service quality namely: the customer’s role as
value co-creator and the provider-customer relationship. Therefore, in order to provide the
highest level of perceived value for customers, two pre-requisites should be fulfilled; Roles and
responsibilities of parties in value creation chain need to be defined and, meanwhile, provider
and customer set suitable communication channels and facilitate “win” situation for other party.
These two factors prepare a condition for high quality service delivery and win-win situation.
Service System 1
(Provider)
Value-in-Use
Service System 2
(Customer)
Value-in-Use
Value-in-Exchange
Value
Proposition/Money

28. 21
3.3.6 Total Value of Ownership
Nowadays, customers are more eager to buy services delivering strategic benefits in order to
gain strategic position in the market (Hurkens and Wynstra, 2004). As these authors described, a
well-known management-accounting approach called Total Cost of Ownership (TCO) is the
consequent of this movement aiming at decreasing the total cost of a purchase including the
interest costs as well as maintenance costs. Application rationalization is the way to examine the
entire IT organization (department). Rationalization has special focus on TCO by identifying
duplicate applications, applications with few users, and high cost ratio modules (Dagenhardt et
al., 2010). TCO approach mainly focuses on costs of development, infrastructure, software, etc.
but no value such as “revenue enhancement” (Luftman and Hunter, 2005; Hurkens and
Wynstra, 2004). In 2004 a new concept called Total Value of Ownership (TVO) has been
suggested by Wouters and his colleagues which not only considers the total cost but also it
pinpoints the advantages and values that a firm gains from a specific purchase such as revenue
enhancement, end user satisfaction, quality, etc. (Hurkens and Wynstra, 2004). Hurkens and
Wynstra have also discussed that the value has two dimensions, increasing the efficiency and
effectiveness for both the customers and customers of customers. Efficiency and effectiveness
are generated in three different ways namely: reduce costs, reduce costs for customers of
customer, and revenue enhancement for customers. As they explained, the first category is
depicted by TCO while the two latter ones which are “indirect value possibilities” should be
illustrated in TVO.
In order to maximize TVO, clearly the latest technology and greatest IT facilities do not deliver
so much value to the business unless, as stated by Luftman and Muller (2005), the business
processes and objectives would be aligned with IT investments. For this purpose they have
highlighted three factors; portfolio management, governance, and options which is the
combination of two latter ones. Portfolio management and options are not in the scope of this
study; however, governance has been scrutinized in more details in section 4.1.4 as a critical
value for customer.
Generally speaking, during the process of value creation, customers of customers have same
importance as customers and both encompass same weight in increasing TVO. Hence, end users
(customer’s customers) need to be considered in value proposition and value creation chain
including co-creation process. By this, not only the service provider delivers value to customer
by fulfilling their requirements but also conveying something extra which is giving some
thoughts to customers of customer.

29. 22
4 Artifact: Service Value
Agreement model
Section 1 and section 3 produce a good perception of the problems that should be solved by the
means of an artifact in addition to what the solution should look like, following the steps of
design science research mentioned in section 2.3. The artifact of such an objective hence should
be developed according to the research process described in section 2.3.3 to form the
Development phase of DS research process.
Subsequently, this chapter pays to the development of the desired artifact according to the
research method.
This model is thoroughly introduced according to the theoretical as well as practical literature,
interviews with practitioners active in the market, business reports and surveys produced by the
like of Gartner and Forrester, and personal interpretations of authors made from the available
documentations. As it is mentioned in section 1.3, the main goal of this research is to introduce
a general framework for SVA. Hence in this chapter the components of SVA including Service
Value Catalogue, pricing models, and agreement generation framework are introduced.
Initially, in order to answer to the research question and find out what makes SVA valuable for
the parties, the following question should be answered: “What are the added-values desired by
customers that should be delivered by providers?” For this purpose the Service Value
Catalogue is introduced. Service Value Catalogue illustrates the added-values to the customer’s
business in which series of Service Value Metrics (KPIs) are assigned to the correspondent
added-values. However, some of the values which are named as “intangibles” do not have
measurement metric rather are stated based on parties’ consent. Hence the values are divided
into two main parts namely: tangible values and intangible values.
Afterwards, a flow for understanding customer’s services and business, designing a value
proposition, calculating the price and formalizing metrics and their respective targets in addition
to relative penalties is introduced.
At the end of this chapter the research question is answered by presenting a general framework
for SVA.
The artifact and its constructs are initiated by accommodating constituents of theories from
various approaches. From theoretical perspective, the study offers several contributions by
means of using several theoretical frameworks in artifact design process.
According to ITIL definition, value has two different aspects; warranty and utility. SVA
framework including prior customer’s values focuses on utility aspect of value with getting
inspirations from warranty facet.
Ideally, SVA will be used as an agreement for provider’s value proposition. For this purpose,
two value proposition frameworks defined by Anderson et al. (2006) and Matthyssens and
Vandenbempt (2008) are considered by the authors in developing the SVA framework.
According to the former, service provider can propose values in three ways among which
“resonating focus” is at the center of attention in SVA. To abide by the necessities of such a
value proposition, the framework introduced tries to identify the needs of customer and map
them to the services and added-values that the provider can offer. Moreover, as the concept of
risk sharing and partnership is accentuated by both customers and providers (Sakao et al., 2009)

30. 23
and the financial benefits of providers and customer can be prolonged and increased by such an
approach (Sakao et al., 2009), the need for a model to formalize the “benefit-cost-sharing
among stakehlders” is felt in the market (Evans et al., 2007 cited in Sakao et al., 2009).
Consequently, the presented artifact introduces different alternatives for pricing and financial
risk-benefit sharing that satisfy the mentioned goals.
Matthyssens and Vandenbempt (2008), on the other hand, categorize value proposition in term
of “price base” and “non-price base”. The proposed model by this study includes both aspects
so that part of SVA includes measureable metrics with monetary characteristics and the other
part involves values which cannot be priced initially e.g. intangibles and innovation.
As mentioned in section 3.2.3, Hayes (2004) provides a framework for identifying appropriate
metrics within SLA. According to this model, the volume of produced work and the volume of
requested work should be defined. Moreover, Goo et al. (2009) introduce three basic
characteristics for constructing SLA namely: foundation, change, and governance. This study
gets inspiration from these approaches in a wide extent in defining the components of SVA as
well as forming the Service Value Metrics (indexes).
From practical point of view, demand management, financial management, supply management,
and service portfolio are four areas from which value is delivered to customer (ITIL Service
Strategy, 2007 & Smith, 2010). By considering this recommendation, the authors present the
added-values as well as KPIs which have contribution in these areas.
4.1 Values
4.1.1 Skills
Alonso-Rasgado et al. (2004, cited in Sakao et. al., 2009) mention the human skills as the most
important source of risks in service products. Rouse (2009) names technology used by providers
along with the skills they provide as basic elements of technical service quality. The
competencies and capabilities offered by service providers set free managerial resources
enabling them to concentrate on the core business. Temporarily sharing competencies and skills
is a choice by enterprises in order to respond to business opportunities that is impossible to
accomplish individually. Hence the risk issue regarding the competencies of new potential
partners who are unknown is another considerable (Sari et al., 2008) and is taken into account in
purchasing and sourcing situations. As such, the illustration of partners’ performance in a
specific field can contribute to the trust between subject parties. One of building elements of
performance is then human skills and competencies. Sari et al. mention that customers are
willing to pay over the lowest available bid if there is confidence in high performance of a
product.
On the other hand, engineering skills in developed countries are being replaced through
offshoring, further contributing to distrust regarding evaluation of competency in distant
countries. Globally integrated markets demand new breed of engineers that have competencies
in entrepreneurship, innovation and global practice of engineering (Duderstadt, 2010). Such
engineers can then offer higher value to providers and consequently their customers. Many
graduates are forced to change their careers in the current market that makes them participate in
retraining programs (Duderstadt, 2010). The retraining programs in a provider company can
then be an indicator of multiple and high skills of resources. New employees are mostly

31. 24
required to be reeducated or retrained in order to achieve a satisfactory level of productivity and
get integrated in the hosting business (Siddiqui et al., 2011). Refresher courses are also often
necessary for existing employees to update their knowledge (Siddiqui et al., 2011) or train them
for new duties. Kaplan and Norton (2004) mention “competency gap” as the measurement
criterion of Human Capital Readiness; which itself is one of building elements of Strategic
Readiness. The competency gap is the difference between needed competencies at positions in
the organization’s critical processes, and the company’s currently available competencies.
Kaplan and Norton’s model depicts a “Balanced Scorecard” that links Human Capital,
Information Capital and Organization Capital to “Sustained Shareholder Value” through a four
layer structure in which the lower-supportive layer is devoted to Learning and Growth
perspective of the company. The Balanced Scoreboard is shown in Figure 7. Human capital
consisting (1) skills, (2) training and (3) knowledge is one of building blocks of learning and
growth perspective.
Figure 7: Strategy map Balanced Scorecard (Kaplan and Norton, 2004)
Smith (2010) proposes a Training Index to evaluate an organization’s commitment for training
its employees in order to adapt to and gain knowledge about the customers’ needs. By changing
Smith’s index in order to adapt it to the nature of service value added offering, authors introduce
the following index to be included in Service Value Agreement:
Index 1:
Where:
Learning and Growth Perspective
Human Capital Information Capital Organization Capital
Internal Process Perspective
Operations Management Customer Management Innovation Regulatory and Social
Customer Perspective
Price Quality Availability Selection Functionality Service Partnership Brand
Financial Perspective
Productivity Strategy Revenue Growth Strategy
Skills Training Knowledge

32. 25
Service FTE Training in a time period = Full Time Equivalent training of employees working in
a specific service delivery a time period
Service Person FTE in a time period = Full Time Equivalent of employees working in a specific
service delivery in a time period
The target is to achieve and retain a specific percentage for Service Person Training Index.
The next Index aims to estimate the abilities of internal skills to fulfill the requirements of a
service. As mentioned before, skills are an important point of uncertainty and risk while
customers consider partnership/outsourcing. A third party subcontracting may only add to that
uncertainty. Moreover, outside skills sometimes cost more than internal skills and are an
indicator of deficiency in the company. Relatively, Smith (2010) has proposed an index to
evaluate internal skills of an organization. By tweaking the index so that it meets the needs of a
contract for service delivery, the authors introduce the following index for SVA:
Index 2:
The target is to retain and possibly improve Service Skills Inventory Index.
4.1.2 End-User satisfaction
The service solutions should support the customers’ priorities by the means of enhanced and
structured relationships. “Front line engagement” personnel are important aspects of a service
design through which customer priorities are attended to and taken care of (Mills and Snyder,
2009). Sheth and Mittal (1996) also mention that failure in customer satisfaction carries high
costs. Hence realistic expectations by customers about offered services play an important factor
in provider-customer relationships. Moreover, meeting or exceeding the expectations of
customers is a message that consultants have been delivering to organizations for satisfaction
and quality insurance (Sheth and Mittal, 1996). The product design phase is an important stage
to help providers co-create value for customers and customers’ customers (Hurkens and
Wynstra, 2004) and increase Total Value of Ownership. End user satisfaction is an indicator of
accomplishing this kind of value added. Lee and Min (2005) introduce five end-users belief
criteria about a service that form their perception of quality of a service namely Reliability,
Empathy, Assurance, Tangibles and Responsiveness from provider side. They mention that end-
user satisfaction is so important that it is used by researchers as an alternate to system success.
A lower bound of customer satisfaction is considered below which the customer would stop
using a service and start considering other alternative sources (Bailey and Pearson, 1983). As
such, a thorough measurement of user satisfaction is needed to weigh the shared added value of
a delivered service. Bailey and Pearson (1983) introduce a list of 38 factors to measure different
criteria for service end-user satisfaction. Their research results rely on the fact that psychologists
consider satisfaction as the sum of one’s feeling toward something and hence they suggest the
average point of survey criteria to be considered as the satisfaction benchmark. Their research
also confirms five factors of the mentioned list to be the most important ones in user satisfaction
measurements namely Accuracy, Reliability, Timeliness, Relevancy and Confidence in system.
ITIL Continual Service Improvement (2007, p. 74) suggests a number of KPIs some of which

33. 26
directly support customer satisfaction: (1) Improved availability (2) Reduction of service level
breaches.
Aforementioned literature review in addition to internal practice of the case study Tieto reveals
some shared factors in measuring end-user satisfaction. Moreover, an interviewed project
manager of the case study Tieto who has direct relations with customers indicates that
reliability, promptness and trustworthiness are values that are highly cared for by customers,
equally. He also mentions that overall feeling of end-users about a service can have the same
impact as three former factors.
Based on the models of Bailey and Pearson (1983), Lee and Min (2005), ITIL recommended
KPIs (2007) and interviewee’s opinion about end-user satisfaction, the authors recommend a
model depicted in Figure 8 for end-user satisfaction.
End-UserSatisfaction
Figure 8: End-User Satisfaction model
In order to examine the maturity of each factor depicted in authors’ End-user Satisfaction
Model, some questions are designed to be included in monthly or quarterly surveys which are
available at Table 5.
The answering option for questions of Table 5 should be provided in a 1 to 5 scale rating.
Bigger ratios than 5 result in uncertainty regarding the intention of responders from the number
they assign to their feelings. This problem was emphasized by a senior advisor of the case study
Tieto when asked about measuring the end-user satisfaction.
Thereafter the mean score of the four sections of End-User Satisfaction are averaged in order to
calculate the final Satisfaction Index.

34. 27
Index 3:
Reliability
R1: Are the services delivered as promised by provider?
R2: Are the outcomes accurate, correct and of satisfactory quality?
R3: Are the delivering staffs knowledgeable?
R4: Are the hardware and facilities of high quality?
Promptness
P1: The Response Time for service requests/incidents satisfactory.
P2: The time to come up with resolution/repair is satisfactory.
P3: Is the uptime of the service satisfactory?
Trustworthiness
T1: The service provider/service provider staff is willingness to help.
T2: Is the politeness of points of contact/service desk staff satisfactory?
T3: The provider (staff) is interested in delivering quality service and
solving incidents.
Overall feeling The overall service delivery is satisfactory.
Table 5: End-User Satisfaction survey questions
The answers to questions in Table 5 make up the data feeding the KPI for measuring the
delivered “End-User Satisfaction” value and can affect SVA’s financial agreement. Hence
honesty of end-users of delivered services plays an important role. Whatever the delivered
service’s end-user group is, the measurement should address that target group. The target group
can be customer’s employees, customer’s customers or both of them. As such, there should be a
plan for situations that there is a conflict of interest in answering a survey such as when service
end-users are customer’s employees. It is recommended that a random auditor be assigned for
having the last say in potential disagreements between the service provider and the customer.
However in case that service end-users are customer’s customers, naturally there is no such
conflict of interests whilst measuring the introduced index.
In addition to factors indicated in Figure 8, each specific service can have its own criteria of
end-user satisfaction that can be added to the model.

35. 28
4.1.3 Service Efficiency/Performance
In this section service performance is investigated from different practical and theoretical
perspectives. The authors have chosen the unanimous elements as different aspects of service
performance in this context. Accordingly, based on Smith (2010) recommendation, the number
of indexes have been limited to six easy to measure formulas each of which have been defined
for correspondent performance facets.
Process Auditing
What we have been discussing thoroughly in this study is all about delivering added values to
the customers. But how the so called “value” is delivered? In order to answer this question, this
study sticks to ITIL definition. From the general point of view, service is the means for
delivering values. As mentioned in section 3.1 and is defined by ITIL Service Operation (p.11),
a service is “a means of delivering value to customers by facilitating outcomes customers want
to achieve, without the ownership of specific costs and risks” where service itself is set of
capabilities reflecting in form of processes. Processes including activities and sub-processes are
type of “closed-loop systems” and have several characteristics. A process should be
measurable, have specific result, delivers an outcome to a specific user, and be placed for
responding to an event (p.12). As it is shown in Figure 9, in order to deliver a good service
(delivering a valid value to the customer) the processes should be perfectly run and their quality
monitored.
Process
Input Output
Quality Control
Figure 9: A basic process (adopted from ITIL Service Operation, 2007)
According to the interview with a delivery mentor of the case study Tieto, providers need to
audit processes to ensure the service is delivered as it is planned and according to the defined
processes. As he describes and also is understood from fundamental definitions, process
performance assessment is the starting point, or better to say a pre requisite, for service
performance evaluation. For this purpose, the extent of processes implementation is observed
and potential corrections should be done. The auditing process is named differently by various
providers; however, Process Implementation Level (PIL) is one of the well-known titles used by
practitioners (e.g. IBM and Tieto). PIL includes questions reflecting the minimum requirements
for conducting a basic process. Hence, PIL measurement, which is usually carried out by
surveys, verifies the compliance of the service provider in process implementation (Figure 10).
As noticed form documentations of a service provider, if a customer requirement would be
service delivery based on their own processes, auditing can also be done on customer processes
and find the needed improvements for delivering services.
………Activity1 Activity2 Activity3
Activity
(n)

36. 29
Service X
Figure 10: Process Auditing
According to the existing method for process evaluation, the authors believe PIL measurement
can also be used as a tool for assessing the maturity and capability of service provider in
utilizing the agreed processes and, consequently, agreed services. In other words, since services
are based on set of processes, the quality of delivered services highly relies on quality of
processes implementation. So, it is not unreasonable to conclude PIL measurement indirectly
evaluates the quality of service. In order to assess the result of PIL, the authors propose the
following KPI in which the threshold is settled based on nature of the service and customer’s
priorities.
Index 4:
To put it differently, PIL measurement evaluates process performance. As already mentioned,
the result of auditing shows the degree to which processes comply with minimum requirements.
Process auditing can be done during the contract periodically or when the delivery team is
established.
Supplier Care (SLA fulfillment):
Reducing cost (Brynjolfsson and Yang, 1996; Oshri et al., 2008; Hurkens and Wynstra, 2004),
increasing performance, effectiveness, and efficiency of business processes are initial goals of
outsourcing IT services to professional IT service providers (Hurkens and Wynstra, 2004).
However, as the authors notice, these terms are rather abstract terms and salespeople use them
more in marketing context while practically there is no specific method or metric to measure
these indicators, except SLA. As described comprehensively in sections 3.2.1 and 3.2.3, apart
from legal issues making SLA as a “must” in agreements, it consists of description of essential
technical as well as organizational assets on which parties agree (Paschke and Schnappinger-
PIL
Measurement
Process1
Process2
Process3

37. 30
Gerull, 2006). Service level targets monitor the extent of objectives fulfillment and the ability of
service provider to react according to contract.
On the other hand, service provider and customer agree upon several meetings in different
organizational levels, strategic - tactical - operational, in order to ensure about the health of
processes and mutual expectations gratification. There are several agendas for meetings in
different levels. As noticed from internal documentations of the service provider, one of the
main objectives of meetings in delivery level is to review the extent of SLA fulfillment. Smith
(2010) also considers the gravity of SLA fulfillment and proposes assorted metrics on SLA in
different contexts.
By considering the crucial role of SLA, goal of operating teams meetings, and by getting
inspiration from Smith (2010) metrics, the authors have proposed an index for assessing the
extent of fulfillment of SLA targets by provider.
Index 5:
This KPI shows the ability of service provider to respond to agreed objectives within SLA and,
consequently, delivering service with high performance ratio. It is worth to mention that this
index does not indicate the extent of SLA fulfillment in overall rather the SLA fulfillment is
assessed per service.
Service Performance Components
As mentioned beforehand, SLA includes metrics aiming at indicating performance criteria based
on which the provider promises to deliver services. As extracted from one of the service
provider’s documentations, reviewing overall service performance is one of the agenda in
management team meetings in order to meet the primary goal of SLA. As Smith (2010)
categorized, performance can be assessed in different context: the overall IT-support
performance, performance of specific system, and performance of specific service which itself
can be divided into continuous and discrete services. However, as Paschke and Schnappinger-
Gerull (2006) have precisely stated, there is almost no explicit and appropriate metric
pinpointing service performance in detail in SLA and, therefore, measuring the overall
performance is problematic. A lead product manager and a senior advisor of the service
provider unanimously confirmed this fact that overall performance is measured by wrong
metrics or it is not measured at all. Moreover, ITIL Service Strategy (2007, p.197) verifies the
lack of suitable performance metric in organizations due to the reality that service providers are
not brave enough to accept more risks.
“…Performance measurements in service organizations are frequently out of step with the
business environments they serve. This misalignment is not for the lack of measurements.
Rather, traditional measurements focus more on internal goals rather than the external realities
of customer satisfaction” (ITIL Service Strategy 2007, p.197).
The importance of performance measurement is not limited to understanding the quality of
services but it affects the governance management (Shadid et al., 2008) and project management
processes (ITIL Service Strategy 2007, p.197) as well. “If you cannot measure it, you cannot

38. 31
manage it”, ITIL mentioned as a principal. Nevertheless, concept “performance” is still hazy
and does not imply a particular definition neither in practice nor in literatures. Ramachandran
and Gopal (2010) introduce performance in term of project completion and availability of
service while Krallmann et al. (2008) define it as throughput, availability and response time.
Meanwhile, Calabrese (2012) clarifies performance as service quality and productivity although
“quality” and “productivity” are inherently subjective and hint several meanings. From the other
point of view, ITIL, which is a practical approach, communicates performance in warranty
aspect of value with regard to “levels of certainty” including availability, capacity, and
continuity (ITIL Service Strategy, p.35). Nonetheless, as ITIL defined, capacity is valid in
infrastructure management while the other two are used both in infrastructure and application
management. From Application Management point of view, a pre-sale manager of the service
provider highlighted availability of the service as the core instance of performance.
Since the main focus of this study is on application service management, the authors interpret
performance as “service performance” defined by Smith (2010). On the other hand, as far as the
authors have noticed and it is already mentioned, both practice and theory unanimously
elucidates availability, throughput, and continuity of service as different components of
performance. Besides, SLA fulfillment index, as already illustrated, can be used for measuring
the service performance. Figure 11 demonstrate the service performance and its components. In
the following, the three aspects of service performance are elaborated and accordingly four
indexes for their assessment are defined.
Service Performance
Figure 11: Service Performance Components (Adopted from ITIL Service Strategy 2007; Smith, 2010)
Service Availability: availability, on one hand, is the foremost fundamental aspect of service
which assures value for customer and, on the other hand, is the most readily sensed aspect of
service (ITIL Service Strategy, p. 35). As ITIL elaborate, service should be designed with fault
tolerance graceful for customer. Hence, importance of a metric for measuring the availability
amount of service is inevitable so that ensures customer about retention of critical processes to
Service
Availability
Service
Throughput
Service
Continuity
SLA
Fulfillment
Index