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ITIL4: Chapter – 4 The ITIL service value system – 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.

4 The ITIL service value system

4.1 Service value system overview

Key Message: The ITIL SVS describes how all the components and activities of the organization work together as a system to enable value creation. Each organization’s SVS has interfaces with other organizations, forming an ecosystem that can in turn facilitate value for those organizations, their customers, and other stakeholders.

Organizational agility and organizational resilience

For an organization to be successful, it must achieve organizational agility to support internal changes, and organizational resilience to withstand and even thrive in changing external circumstances. The organization must also be considered as part of a larger ecosystem of organizations, all delivering, coordinating, and consuming products and services.

Organizational agility is the ability of an organization to move and adapt quickly, flexibly, and decisively to support internal changes. These might include changes to the scope of the organization, mergers and acquisitions, changing organizational practices, or technologies requiring different skills or organizational structure and changes to relationships with partners and suppliers.

Organizational resilience is the ability of an organization to anticipate, prepare for, respond to, and adapt to both incremental changes and sudden disruptions from an external perspective. External influences could be political, economic, social, technological, legal or environmental. Resilience cannot be achieved without a common understanding of the organization’s priorities and objectives, which sets the direction and promotes alignment even as external circumstances change.

The ITIL SVS provides the means to achieve organizational agility and resilience and to facilitate the adoption of a strong unified direction, focused on value and understood by everyone in the organization. It also enables continual improvement throughout the organization.

4.2 Opportunity, demand, and value

Key Message: Opportunity and demand trigger activities within the ITIL SVS, and these activities lead to the creation of value. Opportunity and demand are always entering into the system, but the organization does not automatically accept all opportunities or satisfy all demand.

4.3 The ITIL guiding principles

Key Message: A guiding principle is a recommendation that guides an organization in all circumstances, regardless of changes in its goals, strategies, type of work, or management structure. A guiding principle is universal and enduring.

ITIL, Agile, and DevOps

Agile methods, when applied to software development, focus on the delivery of incremental changes to software products while responding to the changing (or evolving) needs of users. They foster a culture of continual learning, flexibility, and willingness to try new approaches and adapt to rapidly changing needs. Agile ways of working include techniques such as timeboxing work, self-organizing and cross-functional teams, and ongoing collaboration and communication with customers and users.

Agile software development teams often focus on the rapid delivery of product increments at the expense of a more holistic view that considers the operability, reliability, and maintainability of these products in a live environment. Similarly, continual learning and improvement initiatives can focus on bettering the articulation and prioritization of user needs, or streamlining the procedures to develop, test, and deploy working software. While these initiatives can provide valuable outcomes, they also run the risk of being out of sync with other initiatives at a service level.

Just as Agile techniques provide service organizations with a flow of product and software increments, ITIL can also provide software development organizations with a wider perspective and language with which to engage other service teams. Adopting Agile without ITIL can lead to higher costs over time, such as the costs of adopting different technologies and architectures, and costs to release, operate, and maintain software increments. Similarly, implementing ITIL without Agile techniques can risk losing focus on value for customers and users, creating slow-moving and highly centralized bureaucracies.

When Agile and ITIL are adopted together, software development and service management can progress at a similar cadence, share a common terminology, and ensure that the organization continues to co-create value with all its stakeholders. Some of the ways in which ITIL and Agile can work together include:

  • streamlining practices such as change control
  • establishing procedures to incorporate and prioritize the management of unplanned interruptions (incidents), and to investigate the causes of failure
  • separating interactions, if necessary, between ‘systems of record’ (e.g. the configuration management database) needed to manage services from ‘systems of engagement’ (e.g. collaboration tools) used by software development teams.

DevOps methods build on Agile software development and service management techniques by emphasizing close collaboration between the roles of software development and technical operations. Using high degrees of automation to free up the time of skilled professionals so that they can focus on value-adding activities, DevOps is able to shine a light on aspects such as operability, reliability, and maintainability of software products that can assist in the management of services. Cultural aspects that DevOps practitioners advocate can, and should, be extended across the value stream and all service value chain activities so that product and service teams are aligned with the same goals and use the same methods.

It is often said that DevOps combines software development techniques (Agile), good governance and a holistic approach to value co-creation (ITIL), and an obsession with learning about and improving the way in which value is generated (Lean). As such, the adoption of DevOps methods presents further opportunities to improve the way in which software products are developed and managed, such as:

  • creating fast feedback loops from delivery and support to software development and technology operations
  • streamlining value chain activities and value streams so that demand for work can be quickly converted to value for multiple stakeholders
  • differentiating deployment management from release management
  • advocating a ‘systems view’ that emphasizes close collaboration between enterprise governance, service teams, software development, and technology operations.

4.3.1 Focus on value

Key Message: All activities conducted by the organization should link back, directly or indirectly, to value for itself, its customers, and other stakeholders.

4.3.2 Start where you are

Key Message: In the process of eliminating old, unsuccessful methods or services and creating something better, there can be great temptation to remove what has been done in the past and build something completely new. This is rarely necessary, or a wise decision. This approach can be extremely wasteful, not only in terms of time, but also in terms of the loss of existing services, processes, people, and tools that could have significant value in the improvement effort. Do not start over without first considering what is already available to be leveraged.

4.3.3 Progress iteratively with feedback

Key Message: Resist the temptation to do everything at once. Even huge initiatives must be accomplished iteratively. By organizing work into smaller, manageable sections that can be executed and completed in a timely manner, the focus on each effort will be sharper and easier to maintain.

4.3.4 Collaborate and promote visibility

Key Message: When initiatives involve the right people in the correct roles, efforts benefit from better buy-in, more relevance (because better information is available for decision-making) and increased likelihood of long-term success.

4.3.5 Think and work holistically

Key Message: No service, practice, process, department, or supplier stands alone. The outputs that the organization delivers to itself, its customers, and other stakeholders will suffer unless it works in an integrated way to handle its activities as a whole, rather than as separate parts. All the organization’s activities should be focused on the delivery of value.

4.3.6 Keep it simple and practical

Key Message: Always use the minimum number of steps to accomplish an objective. Outcome-based thinking should be used to produce practical solutions that deliver valuable outcomes. If a process, service, action, or metric fails to provide value or produce a useful outcome, then eliminate it. Although this principle may seem obvious, it is frequently ignored, resulting in overly complex methods of work that rarely maximize outcomes or minimize cost.

4.3.7 Optimize and automate

Key Message: Organizations must maximize the value of the work carried out by their human and technical resources. The four dimensions model (outlined in Chapter 3) provides a holistic view of the various constraints, resource types, and other areas that should be considered when designing, managing, or operating an organization. Technology can help organizations to scale up and take on frequent and repetitive tasks, allowing human resources to be used for more complex decision-making. However, technology should not always be relied upon without the capability of human intervention, as automation for automation’s sake can increase costs and reduce organizational robustness and resilience.

4.4.1 Governing bodies and governance

Key Message: Every organization is directed by a governing body, i.e. a person or group of people who are accountable at the highest level for the performance and compliance of the organization. All sizes and types of organization perform governance activities; the governing body may be a board of directors or executive managers who take on a separate governance role when they are performing governance activities. The governing body is accountable for the organization’s compliance with policies and any external regulations.

4.5 Service value chain

Key Message: The six value chain activities are:

  • plan
  • improve
  • engage
  • design and transition
  • obtain/build
  • deliver and support.

These activities represent the steps an organization takes in the creation of value. Each activity transforms inputs into outputs. These inputs can be demand from outside the value chain or outputs of other activities. All the activities are interconnected, with each activity receiving and providing triggers for further action.

Example of a service value chain, its practices, and value streams

A mobile application development company has a value chain, enabling the full cycle of application development and management, from business analysis to development, release, and support. The company has developed a number of practices, supported with specialized resources and techniques:

  • business analysis
  • development
  • testing
  • release and deployment
  • support.

Although the high-level steps are universal, different products and clients need different streams of work. For example:

  • The development of a new application for a new client starts with initial engagement (pre-sale), then proceeds to business analysis, prototyping, the drawing up of agreements, development, testing, and eventually to release and support.
  • Changing an existing application to meet new requirements of existing clients does not include pre-sale and involves business analysis, development, testing, and support in a different way.
  • Fixing an error in a live application may be initiated in support, proceed with rolling back to a previous stable version (release), then moves to development, testing, and release of a fix.
  • Experiments with new or existing applications to expand the target audience may start with innovation planning and prototyping, then proceed to development, and eventually to a pilot release for a limited group of users to test their perception of the changes made.

These are examples of value streams: they combine practices and value chain activities in various ways to improve products and services and increase potential value for the consumers and the organization.

ITSM in the modern world: Agile ITSM

For an organization to be successful, it must be able to adapt to changing circumstances while remaining functional and effective. This might include changes to the products and services it provides and consumes, as well as changes to its structure and practices. In the modern world, where IT is essential for all organizations, IT and IT management are expected to be Agile.

For many IT professionals, agility refers to software development and is associated with the Agile Manifesto, proclaimed in 2001. The manifesto promoted new approaches to software development, and valued customer experience, collaboration, and rapid changes over detailed planning and documentation, controls, and requirements. Agile software development methods have been adopted by many companies and software teams since then, and in many cases have proven to be effective.

Agile software development usually includes:

  • continually evolving requirements, collected through feedback analysis and direct observation
  • breaking development work into small increments and iterations
  • establishing product-based cross-functional teams
  • visually presenting (Kanban) and regularly discussing (daily stand-ups) work progress
  • presenting a working (at least, the minimum viable) software to the stakeholders at the end of each iteration.

If applied successfully, Agile software development enables fast responses to the evolving needs of service consumers. However, in many organizations, Agile software development has not provided the expected benefits, often due to lack of Agile methods in the other phases of the service lifecycle. This fragmented agility makes little sense for the organization, as the overall performance of the value chain is defined by that of the slowest part. A holistic approach to the service value chain should be adopted to make sure that the service provider is Agile throughout the service lifecycle. This means that agility should become a quality of all service management dimensions and all service value chain activities.

One of the greatest obstacles to service value chain agility used to be the rigidity of infrastructure solutions. It could take months to deploy the necessary infrastructure for a new software program, which made all development agility invisible and irrelevant for the service consumer. This problem has, to a great extent, been solved as technology has evolved. Virtualization, fast broadband and mobile connections, and cloud computing have allowed organizations to treat their IT infrastructure as a service or as a code, thus providing infrastructure changes with a velocity that was previously only possible for software. Once the technical problem was resolved, Agile methods could be applied to infrastructure configuration and deployment. This stimulated integration between software and infrastructure teams, and consequently between development and operations.

Many principles of Agile development can and should be applied to service operations and support. Operational changes and service requests can be handled in small iterations by dedicated product or service-focused teams, with constant feedback and high visibility. Daily operational activities can and should be visible and prioritized together with other tasks. All service management activities can and should continually provide, collect, and process feedback.

Agility is not a software development feature; it is an important quality of organizations in their entirety. Agile activities require Agile funding and adjusted financial and compliance controls, Agile resourcing, Agile contracting, Agile procurement, etc. If being Agile is adopted as a key principle, an organization should be able to survive and prosper in a constantly changing environment. Applied in a fragmented way, Agile methods can become a costly and wasteful complication.

4.5.1 Plan

Key Message: The purpose of the plan value chain activity is to ensure a shared understanding of the vision, current status, and improvement direction for all four dimensions and all products and services across the organization.

4.5.2 Improve

Key Message: The purpose of the improve value chain activity is to ensure continual improvement of products, services, and practices across all value chain activities and the four dimensions of service management.

4.5.3 Engage

Key Message: The purpose of the engage value chain activity is to provide a good understanding of stakeholder needs, transparency, and continual engagement and good relationships with all stakeholders.

4.5.4 Design and transition

Key Message: The purpose of the design and transition value chain activity is to ensure that products and services continually meet stakeholder expectations for quality, costs, and time to market.

4.5.5 Obtain/build

Key Message: The purpose of the obtain/build value chain activity is to ensure that service components are available when and where they are needed, and meet agreed specifications.

4.5.6 Deliver and support

Key Message: The purpose of the deliver and support value chain activity is to ensure that services are delivered and supported according to agreed specifications and stakeholders’ expectations.

4.6.1 Steps of the continual improvement model Step 1: What is the vision?

Key Message: Each improvement initiative should support the organization’s goals and objectives. The first step of the continual improvement model is to define the vision of the initiative. This provides context for all subsequent decisions and links individual actions to the organization’s vision for the future.

4.6.1 Steps of the continual improvement model Step 2: Where are we now?

Key Message: The success of an improvement initiative depends on a clear and accurate understanding of the starting point and the impact of the initiative. An improvement can be thought of as a journey from Point A to Point B, and this step clearly defines what Point A looks like. A journey cannot be mapped out if the starting point is not known.

4.6.1 Steps of the continual improvement model Step 3: Where do we want to be?

Key Message: Just as the previous step (Step 2) describes Point A on the improvement journey, Step 3 outlines what Point B, the target state for the next step of the journey, should look like. A journey cannot be mapped out if the destination is not clear.

4.6.1 Steps of the continual improvement model Step 4: How do we get there?

Key Message: The plan for Step 4 can be a straightforward and direct route to completing a single simple improvement, or it may be more involved. The most effective approach to executing the improvement may not be clear, and it will sometimes be necessary to design experiments that will test which options have the most potential.

4.6.1 Steps of the continual improvement model Step 5: Take action

Key Message: In Step 5 the plan for the improvement is acted upon. This could involve a traditional waterfall-style approach, but it could be more appropriate to follow an Agile approach by experimenting, iterating, changing directions, or even going back to previous steps.

4.6.1 Steps of the continual improvement model Step 6: Did we get there?

Key Message: Too often, once an improvement plan is set in motion, it is assumed that the expected benefits have been achieved, and that attention can be redirected to the next initiative. In reality, the path to improvement is filled with various obstacles, so success must be validated.

4.6.1 Steps of the continual improvement model Step 7: How do we keep the momentum going?

Key Message: If the improvement has delivered the expected value, the focus of the initiative should shift to marketing these successes and reinforcing any new methods introduced. This is to ensure that the progress made will not be lost and to build support and momentum for the next improvements.

Continual improvement and the theory of constraints

In an increasingly dynamic business environment, an enterprise’s ability to change quickly, whether in response to external factors or to disrupt the market, can make the difference between failure and success.

When planning improvements, it is crucial to focus on the work that is the highest priority. According to the theory of constraints (ToC), the weakest link in the value chain determines the flow and throughput of the system. The weakest link must be elevated as much as possible (sometimes revealing a new weakest link), and all the other steps in the value chain must be organized around it.

The weakest link of a value stream can be determined with value stream mapping. This is a Lean practice that examines the stream, quantifies its waste (for example, a delay), and in so doing, identifies its weakest link. If the weakest link is the development of information systems, then the application of Agile principles and practices can improve the quality of, and the speed with which, functionality is developed. This includes the critical interaction between business and IT in which the required functionality is defined alongside the non-functional requirements. The ITIL 4 practices that help with this include, among others, software development and management, business analysis, and relationship management.

If the weakest link is the speed and reliability of deployment, then using DevOps principles, technical practices and tools can make a significant difference. The ITIL 4 practices that are relevant to this include deployment management, release management, and organizational change management.

Finally, if the weakest link is the delivery and support of IT services, then IT operations practices and tools can be used, such as the ITIL 4 practices of incident management, problem management, service desk, and infrastructure and platform management.