ITIL®4 service value system (SVS)

3.1 Service value system (SVS) overview

The visualization and establishment of Service value system in an organization is an essential need of modern business environment. ITIL®4 considers Service Value System (SVS), which depicts the representation of various service assets (components) & Organizational activities throughout the service life cycle.

In entirety the Service Value System (SVS) depicted in ITIL®, should facilitate and stress on integration and coordination across the service value stream and should provide direction to the organization through a strong and unified approach, considering the need for flexibility, adaptability, adaptability by organizations to enable sustainability and consistency.

Figure 11: The ITIL® Service Value System (copyright of AXELOS®, reproduced under the license from AXELOS® Limited)

The various components of ITIL® Service Value System (SVS) are;

• Guiding Principles
• Governance
• Service Value Chain
• Practices
• Continual Improvement

3.2 Guiding Principles:

To ensure the shared understanding, establishing common approach for service management across the organization and making appropriate organizational decisions & actions, the ITIL® guiding principles provide the required guidance. These guiding principles create the foundation required for establishing the culture and behaviour across the organization (i.e. strategic decision making in day-to-day Operation)

There are seven guiding principles. Those are;

• Focus on value
• Start where you are
• Progress iteratively with feedback
• Collaborate and promote visibility
• Think and work holistically
• Keep it simple and practical
• Optimize and automate

For Example: Let us assume a scenario where an organization decides to implement an HR management portal with the features, attendance & leave management, claim processing, payroll processing, etc. Currently, it is done manually using MS Excel worksheet which is tedious and time consuming, which would lead to delay in processing, decreased production & employee satisfaction.

By doing this project organization can;

• improve productivity & employee satisfaction (Focus on value)
• assess the current scenario and initiate the project from there (Start where you are)
• decide on introducing the base module first and release the additional modules progressing iteratively (progress iteratively with feedback)
• engage & communicate closely with all the stakeholders to create awareness and increase usability of the application (Collaborate and promote visibility)
• Visualize, draft & provide a bigger picture of the application and its features, functionalities, modules etc. (Think and work holistically)
• Ensure the processes defined for each module have appropriate, relevant activities which makes it smoother to perform (Keep it simple and practical)
• Keep reviewing the performance for improving and optimizing the processes, resources & standardized with the use of automation (Optimize & Automate)

3.3 Governance:

Governance is a formal framework which provides a structure for an organization to ensure that there is a means for an organization to establish direction and control. All the investments made by the organization support business objectives and create value.

Aligning an IT strategy to business strategy is an essential need which is fulfilled by the establishment of a formal governing structure, both at organization level & IT. That is, an IT governance is an integral part of overall enterprise governance. Through a formally established framework, an organization can achieve its strategies and goals, by producing measurable results.

In the absence of the direction from a governing body, it is almost impossible for an organization to move forward in the specific direction and make the investments justifiable and initiatives worthwhile.

In the above-mentioned example of organization’s decision to implement an HR Application, will be made based on the direction set by the organization to accomplish business excellence through continuous evaluation and improvements. In the absence of such directions, there is no context to the organization to move forward.

3.4 Service Value Chain:

The ITIL service value chain provides an operating model for the creation, delivery, and continual improvement of services. It is a flexible model that defines six key activities that can be combined in many ways, forming multiple value streams. The service value chain is flexible enough to be adapted to multiple approaches, including DevOps and centralized IT, to address the need for multimodal service management. The adaptability of the value chain enables organizations to react to changing demands from their stakeholders in the most effective and efficient ways. (Ref: ITIL4 book from AXELOS®)

Figure 13:The Service Value Chain (Ref: ITIL4 book published by AXELOS®)

The central element of the SVS is the service value chain, an operating model which outlines the key activities required to respond to demand and facilitate value realization through the creation and management of products and services. (Ref: ITIL4 book from AXELOS®)

The concept of value change was first described by Michael Porter in his best-seller, “Competitive Advantage: Creating and Sustaining Superior Performance”, during 1985. The value chain refers to the sequence of activities / processes that an organization performs to provide a value, through its Services or products to the customer / consumers.

For Example: The figure depicts the value chain activities of HR Service in an organization, which would be appropriate to portray the contributor for value chain for the services provided by HR to the employees of the organization.

Figure 14: HR Value Chain Activities

3.5 Practices

A practice is a set of organizational resources designed for performing work or accomplishing an objective. These resources are grouped into the four dimensions of service. The ITIL SVS includes;

• General management practices (14),
• 17-Service management practices (17),
• 3-technical management practices (3).

In ITIL®, a management practice is a set of organizational resources designed for performing work or accomplishing an objective. The origins of the practices are as follows:

• The 14 General management practices have been adopted and adapted for service management from general business management domains.
• The 17 Service management practices have been developed in service management and ITSM industries.
• The 3 Technical management practices have been adapted from technology management domains for service management purposes by expanding or shifting their focus from technology solutions to IT services.

For Example:

• Information Security Management is one of the General Management Practices which is applicable universally across the organization including the HR Management services provided by the HR Function, like credentials to login to portal, access cards for attendance etc.
• Incident Management is one of the Service Management Practices which is applicable only to the IT Services provided. For ex: If HR portal is not accessible (unable to browse), the portal will become unavailable to users (employees). The portal has to be brought up by resolving the incident.
• Software Development and Management being the technical management practices, very specifically focus on technical activities for software development & management.

With this bifurcation of practices, it helps ITSM organizations to focus on relevant practices and visualize correctly.

3.6 Continual improvement:

Continual improvement of services focuses on improvement by increasing the efficiency, maximizing the effectiveness and optimising the cost of services, resources and the underlying IT service management practices. The can be ensured through identification of improvement opportunities continually, throughout the lifecycle of a service & service value chain.

The primary objective is to continually align and re-align IT services to the changing business needs/demand, by identification and implementation of improvements to IT services that support business processes. Continual improvement should look at improving process effectiveness, efficiency and cost effectiveness.

In our example of HR Portal services, the service experience of the employee is improved by introduction of services through the portal. Further improving the efficiency and effectiveness through continual improvement of portal services is by adding more features like, improvement in portal performance, introducing employee connect programs, newsletter etc.

3.7 Opportunity, demand, and value

Opportunity and demand are the key inputs to the service value system. Opportunities are the ones which exist in the market and signify the available options or various possibilities enabling the service provider to add value to all the stakeholders or improve the organization’s capability to provide services. Demand also exists (or should exist) along with opportunities, which refers to the need or desire for services or products by a customer or consumers (both internal and external to the organization).

The perceived benefits to the consumers of the services, the usefulness of the services, and the importance of some needs to be fulfilled etc.should be the outcome of the service value system which can be termed as value. The value created by service value systems should also ensure the ability to create value for a wider group of stakeholders.

To create value continuously, the service management has to function as a system, and as a whole. The service value system depicted in ITIL®4 defines;

• the inputs to this system i.e. opportunity and demand,
• the elements of this system
  • organizational governance,
  • service management,
  • continual improvement,
  • organization’s capabilities and resources
• the outputs
  • achievement of organizational objectives and value for the organization,
  • its customers
  • and other stakeholders.

Opportunity & demand exist in the market to be fulfilled. A service provider, should realise these opportunities and demands in the market before strategizing & creating a service which is appropriate to address the needs and improve the customer experience.

For example, in the scenario of people purchasing tickets for movies or sports events standing in queue, there exists an opportunity to enable purchasing the ticket online by introducing an online portal service or mobile app service. This helps people to save their time & energy, plus enjoy the experience of purchasing tickets hassle-free. Before introducing the service, the service provider has to check the feasibility of introducing the services. Reason being that there should be access to internet, computer, a mobile network to the people who use these services. Else, the services introduced are not utilized and that results in a loss to the service provider.

By creating and delivering the appropriate services to customers to fulfil their need, the service should not ignore achievement of the organizational objectives and value for the organization. It is not only customer focused; the focus should be on all the stakeholders. The interest of all the stakeholders has to be considered and their objectives have to be fulfilled. In the above described scenario of online portal or mobile app service, introduction of service creates value to the service consumers, however the objectives of the service provider organization, ticket providing partners (like movie theatre owners, sports event organizers etc.) should also be considered and their objectives must be achieved.

Summary:

To summarize, in this module we looked at the various components of ITIL® Service Value System (SVS) and their brief details. The components of SVS are;

• Guiding Principles,
• Governance,
• Service Value Chain,
• Practices,
• Continual Improvement