What is the difference between a product and a service?

productfernAugust 30, 2020

It can depend on what sector you work in, but the conversation around services and products has taken off in recent years. The government digital service (GDS) has introduced the concepts of services and product in their service manual. This is the key standard which government digital teams must follow. These concepts have also expanded into other sectors.

But it can be hard to get your head around what a product or service and how they fit together. Not to mention how all the other job roles all interact as part of this structure!

Let’s start with what a service is

A service is everything you provide to deliver something of value. From a users point of view, a service is something which provides value and helps them meet a goal.

This means a service isn’t just a website or technology product. The service includes everything that surrounds that product. This includes the end to end processes, all front and back end considerations and even the people who drive the service. Services can be very diverse, but here are some examples of services and what they include:

  • A HR team could provide an annual leave service. This includes a tech product where employees can request annual leave but also all the processes to fulfil that leave. For example, it could include manual processes to amend payroll or people who answer queries about when leave can be taken.
  • A government department could provide a service for food packages for those who need additional help. This could include a tech product where a user could request a food package, but also all the processes to fulfill a package voucher and support all users.
  • A bank could offer a current account service for bank customers. This could include the bank account as a product but also all of the supporting processes such as helping to set up and close accounts.

The word service can be used to mean many things so this can get confusing. For example, a consultancy could offer professional services. However, if you come across the term in the context of digital products then this most likely follows the examples above.

Once you understand your service, you’ll likely go through a phase of service design. This will link closely to your product design.

Comparing a product to a service

As you can see from the examples above, each of the services tends to have a product which enables it. This product is usually a technology product which facilitates the service outcome and the users goal. The product should help deliver the end to end service.

It’s common to have products in the context of services, but also stand alone products. Some examples of products could include:

  • A product which is part of a service and managed within the service – like the ones defined above. Examples include the HR annual leave system, a food ticket ordering system or a current account banking product. In this example, the products are integral to the service and it’s likely the product team work directly with the service team. Or they are often just one team!
  • A product which is part of a service but the service is managed elsewhere. You may have a live service which is managed in an operations team, the product or tech side may then be managed by a tech / IT team. This is often the case while products get developed before they are handed over to the business to maintain.
  • A product which is provided by a product supplier. In some cases the product is managed completely by a different company and then utilised by a service elsewhere. This is common if you use software as a service.

What does it mean to be a product owner or service owner

Once you understand the difference between the product and service then the roles can fall into place. Generally there is always a service owner who owns the live service. For example, a head of HR or a head of Banking services. It is the Service Owner / Service Manager role to ensure the end to end service is running and delivering its outcomes. Be sure to not confuse this definition of a Service Manager with the ITIL definition as they are very different!

The product owner is then responsible for the product / technology part of the service. They need to ensure that the product aligns and delivers the services aims. The product owner works closely with the service owner to ensure that this happens. If you then wonder where a business analyst then falls into all of this, then have a read of ‘what is the difference between a business analyst and a product owner’.

How this applies to the Government Digital Standard (GDS)

This definition and split of roles is defined within the GDS service standard and service manual. It is recommended for all government services to follow GDS so it’s likely you will come across all of the above when working in a Government digital project. They also have a good blog post about how they defined a service within their manual.

It’s important to follow these GDS standards if you’re expecting to go through GDS stage gates / assessments. They will view your whole service including your product. Understanding the difference is key to making sure you have the best chance of success.

How this applies in the private sector

It may be rare to come across the same terms in the private sector. That said, GDS have done an amazing job at creating a standard which all industries may wish to follow. If you are in the private sector and hear these terms then check your understanding with someone else on your project. If your company doesn’t have these concepts then you might want to consider if you would benefit by changing to a product / service structure.

What next?

A lot of the concepts which apply to a product owner, can also apply to a service owner. It’s important for the product owner to understand and see where they fit in the overarching service. Check out these articles for more on product owner activities – ‘what is a product owner?‘ or ‘how to combine product management and user research‘.

Shareable image of the post saying what is the difference between a product and service including the product fern logo

Leave a comment

Your email address will not be published. Required fields are marked *

Prev Post

How to combine product management and user research

Next Post

The Design Thinking Playbook by Lerwick, Link and Leifer book review