Why these five terms come first
Level 1 introduced digital product and service management. This level covers what is actually being managed and provided. ITIL (Version 5) uses five terms for it: product, service, digital product, digital service and goods. They sit in the Key terms area of the syllabus, the 30% block of the exam.
A note on wording. The definitions quoted below are PeopleCert's wording, as reported by published training-provider sources. They are not reproduced from the official book, which is not attached to this course. Check them against PeopleCert's own ITIL Foundation (Version 5) publication and glossary before exam day. Do not rely on ITIL 4 wording you may find online, because several definitions have been reworded.
Term 1: Product
Product: "A configuration of organizational resources designed to offer value to a consumer."
In plain terms:
- Resources are what an organization has or can use: people, technology, information, processes, suppliers.
- Configuration means those resources are deliberately arranged to work together.
- Designed to offer value means the arrangement exists to be useful to someone else, the consumer.
Example: A gym's product is the whole arrangement of building, equipment, trainers, booking system and cleaning contract. Members never see all of it, but it is what makes the gym possible.
Do this: When you see "configuration of resources", answer product.
Term 2: Service
Service: "A way of enabling value co-creation by helping consumers achieve desired outcomes without requiring them to manage particular costs and risks themselves."
The terms value co-creation, outcome, cost and risk are taught in a later level. For now, read the definition as three plain ideas:
- A service helps the consumer get a result they want.
- The provider and consumer both play a part.
- The provider takes on some costs and risks so the consumer does not have to.
Example: A gym member gets fit (the result they want) without buying treadmills, repairing them or insuring the building. The gym carries those burdens.
Product versus service: the product is what the organization has assembled. The service is what the consumer experiences when that product is used to help them.
Term 3: Digital product
Digital product: "A combination of organizational resources built around digital technology and designed to offer value to consumers."
This is the product definition with one added test: the resources are built around digital technology.
- Digital product: a banking app together with its servers, data, developers and support team.
- Non-digital product: a carpenter's workshop, tools and skills used to make hand-built furniture.
A digital product is more than software. It is still a combination of resources, including people.
Term 4: Digital service
Digital service: "A service that depends fully or substantially on digital products."
The test is dependence. Ask: if the digital product stopped working, could the service still be provided?
- Fully dependent: music streaming. No platform, no service.
- Substantially dependent: taxi booking through an app. A car and driver are physical, but the service cannot run in its normal form without the app.
- Not digital: a haircut. The salon may use a card reader, but cutting hair does not depend on it.
Term 5: Goods
Goods: "Tangible resources transferred, or available for transfer, from a provider to a consumer along with the associated ownership, rights, and responsibilities."
Three checks identify goods:
- Tangible: a physical item you can touch.
- Transferred, or available for transfer: it passes, or can pass, from provider to consumer.
- Ownership moves: the consumer now owns it and is responsible for it.
Example: A broadband company posts you a router that is yours to keep. The router is goods. If the company only lends you the router and wants it back, ownership has not moved, so it does not meet the definition.
How to classify items in a scenario
Use these steps in order for each item in an exam scenario.
- Is it a physical item whose ownership passes to the consumer? If yes, it is goods. Stop.
- Is it an arrangement of the organization's resources designed to offer value? If yes, it is a product.
- Is it a way of helping the consumer achieve a result without managing particular costs and risks? If yes, it is a service.
- Add "digital" if the test is met. A product built around digital technology is a digital product. A service that depends fully or substantially on digital products is a digital service.
Worked scenario: An online grocery company runs a website and app, a warehouse system and delivery vans. Customers order through the app and receive food at home.
- Website, app, data and the teams running them, arranged together: digital product.
- Ordering and home delivery, which cannot work without the app: digital service.
- The food handed over at the door: goods.
What the exam asks about this
- Recognition questions. You are given a definition and asked which term it defines, or the reverse. The four options are often these same terms, so learn the distinguishing phrase for each.
- Short scenarios. You are asked to classify an item as goods, a product or a service.
- Common traps: treating "digital product" as software only, calling any service that uses a computer a digital service, and calling a borrowed item goods.
Key takeaways
- Product: a configuration of organizational resources designed to offer value to a consumer.
- Service: a way of helping consumers achieve desired outcomes without managing particular costs and risks themselves.
- Digital product: a product built around digital technology.
- Digital service: a service that depends fully or substantially on digital products.
- Goods: tangible resources whose ownership, rights and responsibilities pass to the consumer.
- Classify in order: goods first, then product or service, then decide whether "digital" applies.
- The quoted wording is PeopleCert's as reported by training providers. Confirm it in the official publication.