What is the ITIL 4 Service Value System?

by Hannah Mandapat | Jul 5, 2022 | Estimated reading time: 9 minutes | in assyst Blog | tagged governance, Information and technology, ITIL 4, Organizations and people, Partners and suppliers, Practices, Service Value Chain, Service Value System, Value streams and processes

The Service Value System is the core of ITIL 4. In this article, we’ll walk you through it to help you understand what it is, why it’s important, and how it works.

Part of our Making ITIL 4 Simple series.

What is the Service Value System?

The Service Value System is the new architecture of ITIL 4. It’s a map of the main elements/capabilities you need to have in place to run a highly efficient, effective, and agile service management organization.

It sets out, at a high level, everything you need to turn opportunities/demand into value as quickly as possible—whether that’s creating new services in the service portfolio or simply getting end users back online when there’s an issue. The components of the Service Value System are there to help you create value now and in the future. The components are:

The 7 Guiding Principles
Governance
The Service Value Chain
Practices
Continual Improvement

Why do I need a Service Value System?

The performance of anyone is largely governed by the system that he works in.

W. Edwards Deming

Success requires a system. When you have a cohesive system in place, your organization is capable of achieving so much more. It makes sense that when you put effort into developing capabilities and making them work together, you get better results, faster and cheaper.

The specific goals of your service organization will change over time. A mature system—based on capabilities that have built-in flexibility—will help you to achieve these goals as a matter of routine. Success no longer happens by accident; it becomes repeatable by design.

Opportunity/Demand

Opportunities and Demands are the inputs to the Service Value System. These trigger activities within the system to create and output value—either fulfilling demand or capitalizing on an opportunity.

Demands and opportunities are the triggers for the Service Value System

Demands are where customers have a need for something specific and well understood—they know what they want. Demands can be viewed as customers “pulling” value from the service provider and they fall into one of three categories:

Value demand: The customer needs something. This could be a product or a service. This is where a service catalog can deliver value.
Information demand: The customer needs to know something so that they can plan, complete a task, or make a decision. Some information demands can be anticipated and handled pro-actively through push communication and a self-service portal. Other information demands will be new: usually a product of change.
Failure demand: Something went wrong and must be fixed, creating demand for help. Perhaps the mobile banking app is not working. Or the customer’s car has broken down. Whatever the reason, customers will want to interact with the service desk through the channel of their choice (AKA omnichannel ITSM).

Opportunities are the possibilities. The possibilities to create new products or services, transform the way work happens, or improve something that already exists. Opportunities improve the organization by creating new revenue streams, improving the customer experience, making employees more productive, or reducing costs or risks.

The difference between a demand and an opportunity is that an opportunity requires some innovation and change. Where demands can be handled by the current capabilities of the service organization, opportunities require some work to develop new capabilities and transform the way things are done. An opportunity will trigger a project, require business analysis, involve engagement with multiple stakeholders, and follow an organizational change management plan to succeed in creating new value.

Whether the trigger is an opportunity or a demand, the Service Value System is there to support both—and the end result is always value delivered to the customer (whether internal or external).

Guiding Principles

The 7 Guiding Principles of ITIL 4 are the key messages of ITIL. They are designed to guide decisions and actions so the people who are responsible for managing and operating the organization’s service portfolio can benefit from these high-level best practices. Essentially, the 7 Guiding Principles encourage new ways of thinking.

The 7 Guiding Principles are:

These principles aren’t new. They’re influenced by ideas born in disciplines outside of service management (such as manufacturing and software development) but have now been proven in the service management context.

What is the ITIL 4 Service Value System? - guiding principles

The 7 Guiding Principles of are key tenets of ITIL 4 which help embed more productive ways of thinking into your organization.

Governance

Governance is all about alignment of activity with your organization’s objectives. The way in which governance is applied will depend on you governance culture. The highest-level of governance lies with the board of directors or executive management. These are the people who perform the main governance activities—including evaluating, directing (through policy-setting) and performance and compliance monitoring to define what good performance looks like. Monitoring enables intervention to fix any misalignments (which usually manifests as waste and poor performance).

Governance should be fluid—continually evaluating and adapting strategy to ensure it tracks changing business circumstances. Continual Improvement applies to service management at all levels—including governance.

What is the ITIL 4 Service Value System? - governance

Governance is important to ensuring all elements of the Service Value System align with the organization’s objectives.

The modern-day reality is that large organizations are often too complex for all governance activity to happen at the top of the organization—some governance activities must be delegated to lower levels to enable greater agility. For example, many organizations apply a “cloud first” policy for technology-buying to streamline the IT ecosystem and improve agility. In other cases, governance may be devolved to allow different regional groups to apply different strategies to serve different local markets.

Service Value Chain

Where the Service Value System is the management model, the Service Value Chain (SVC) is the operating model that sits at the core of the SVS. It defines six key activity types onto which any value stream activity can be mapped.

The Service Value Chain is the operational model within the Service Value System

The important thing to know here is that the Service Value Chain is the operating model across which Service Value Streams flow from Demand/Opportunity to Value. You can think of the Service Value Chain as the railway network, and Service Value Streams as the trains that run on that network.

When we “zoom in” to the Service Value Chain we see the six activities:

Plan
Engage
Design & transition
Obtain/build
Deliver & support
Improve

Products & services aren’t activities (which is why they feature in blue). They are the vehicles by which value is transferred to the customer.

The Service Value Chain is the model across which all Service Value Streams flow.

Unlike the linear Service Lifecycle Model seen in ITIL 3, the Service Value Chain is flexible enough to map any path from Demand to Value, including iterative agile processes. Service providers can delivery early value to customers with a Minimum Viable Service (MVS) and then iterate to provide incremental value increases over time. Flexibility is built in to the Service Value Chain.

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Practices

The shift from process to practice makes ITIL 4 more holistic by expanding the scope of how we look at work—from a somewhat limiting process perspective to a more holistic practice perspective.

Practices are the capabilities which create the value outcomes for service customers

ITIL 4 presents 34 of these practices. When looking at each, you are encouraged to take a holistic view—a more complete perspective of what it takes to build an efficient capability: including the processes which guide the work and the other essential elements which are necessary to operate efficient capabilities:

Organizations and people: The teams and individuals that do the work. Do they have the skills and knowledge they need to get things done?
Value streams and processes: End-to-end processes, as defined using the ITIL 4 Service Value Chain as Service Value Streams to ensure they are framed by demand at one end and value at the other—meaning the holistic view is maintained.
Information and technology: Do your people have the information they need to run the practice properly? For example, smart queue management to help them decide what to work on next. Or performance reports to decide where improvements are required. Do they have the tools they need to give them visibility and control? Do they have the right automation tools to optimize and automate these practices?
Partners and suppliers: Are partnerships required to fill gaps where in-house capabilities don’t exist? Can a 3rd party organization perform a part of the practice better, faster, or cheaper? Do technology suppliers respond quickly when the ITSM technology that supports a practice isn’t working?

Continual Improvement

Continual Improvement should be applied across all areas of service management—from governance and strategy to operations. It’s all about having an improvement mindset, where people are actively encouraged to spot, collaborate on, and act on opportunities to do things better.

Note that Improve is an activity in the Service Value Chain model as well as the broader Service Value System—reinforcing the idea that improvement should be woven into every level of service management. For example:

Leadership should evaluate the Service Value System for high-level opportunities to improve on governance, principles, and the way practices are integrated together for the most efficient flow of value streams.
Practices managers should continually evaluate their practices to drive performance—including where staff training is required and new service management technology should be applied.
Service managers and product managers should evaluate performance of the products/services/value streams for which they are accountable to eliminate waste, mitigate risks, and accelerate delivery of value to the customer.

In short, continual improvement is part of everyone’s job.

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