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ITIL4: Chapter 2 – Key concepts of service management – Key Messages and Definitions

This is part of the ITIL Foundation from Axelos material and should not be copied. Use it as part of your research to help with your exam preparation. The full content will be available on the official Axelos website.

2 Key Concepts of Service Management


  • Service Management – A set of specialized organizational capabilities for enabling value for customers in the form of services.

2.1 Value and value co-creation

Key Message: The purpose of an organization is to create value for stakeholders.

Definition: ValueThe perceived benefits, usefulness, and importance of something.

2.2 Organizations, service providers, service consumers, and other stakeholders


  • Organization – A person or a group of people that has its own functions with responsibilities, authorities, and relationships to achieve its objectives.

2.2.1 Service providers

Key Message: When provisioning services, an organization takes on the role of the service provider. The provider can be external to the consumer’s organization, or they can both be part of the same organization.

2.2.2 Service consumers

Key Message: When receiving services, an organization takes on the role of the service consumer.


  • Customer A person who defines the requirements for a service and takes responsibility for the outcomes of service consumption.
  • User A person who uses services.
  • Sponsor A person who authorizes budget for service consumption.

2.3.1 Configuring resources for value creation

Key Message: The services that an organization provides are based on one or more of its products. Organizations own or have access to a variety of resources, including people, information and technology, value streams and processes, and suppliers and partners. Products are configurations of these resources, created by the organization, that will potentially be valuable for its customers.


  • Services A means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks.
  • Product A configuration of an organization’s resources designed to offer value for a consumer.

2.3.2 Service offerings

Key Message: Service providers present their services to consumers in the form of service offerings, which describe one or more services based on one or more products.


  • Service offering – A formal description of one or more services, designed to address the needs of a target consumer group. A service offering may include goods, access to resources, and service actions.

2.4 Service relationships

Key Message: Service relationships are established between two or more organizations to co-create value. In a service relationship, organizations will take on the roles of service providers or service consumers. The two roles are not mutually exclusive, and organizations typically both provide and consume a number of services at any given time.

2.4.1 The service relationship model


  • Service relationship A cooperation between a service provider and service consumer. Service relationships include service provision, service consumption, and service relationship management.
  • Service provision Activities performed by an organization to provide services. Service provision includes:
    • management of the provider’s resources, configured to deliver the service
    • ensuring access to these resources for users
    • fulfilment of the agreed service actions
    • service level management and continual improvement.

Service provision may also include the supplying of goods.

  • Service consumption Activities performed by an organization to consume services. Service consumption includes:
    • management of the consumer’s resources needed to use the service
    • service actions performed by users, including utilizing the provider’s resources, and requesting service actions to be fulfilled.

Service consumption may also include the receiving (acquiring) of goods.

  • Service relationship management Joint activities performed by a service provider and a service consumer to ensure continual value co-creation based on agreed and available service offerings.

2.5 Value: outcomes, costs, and risks

Key Message: Achieving desired outcomes requires resources (and therefore costs) and is often associated with risks. Service providers help their consumers to achieve outcomes, and in doing so, take on some of the associated risks and costs (see the definition of service in section 2.3.1). On the other hand, service relationships can introduce new risks and costs, and in some cases, can negatively affect some of the intended outcomes, while supporting others.

2.5.1 Outcomes


  • Output A tangible or intangible deliverable of an activity.
  • Outcome A result for a stakeholder enabled by one or more outputs.

2.5.2 Costs


  • Cost The amount of money spent on a specific activity or resource.

2.5.3 Risks


  • Risk A possible event that could cause harm or loss, or make it more difficult to achieve objectives. Can also be defined as uncertainty of outcome, and can be used in the context of measuring the probability of positive outcomes as well as negative outcomes.

2.5.4 Utility and warranty


  • Utility The functionality offered by a product or service to meet a particular need. Utility can be summarized as ‘what the service does’ and can be used to determine whether a service is ‘fit for purpose’. To have utility, a service must either support the performance of the consumer or remove constraints from the consumer. Many services do both.
  • Warranty Assurance that a product or service will meet agreed requirements. Warranty can be summarized as ‘how the service performs’ and can be used to determine whether a service is ‘fit for use’. Warranty often relates to service levels aligned with the needs of service consumers. This may be based on a formal agreement, or it may be a marketing message or brand image. Warranty typically addresses such areas as the availability of the service, its capacity, levels of security and continuity. A service may be said to provide acceptable assurance, or ‘warranty’, if all defined and agreed conditions are met.