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ITIL® 4: Service Value System - from opportunity to value

Herta Herzog, one of the founders of modern market research, was behind the huge success of the small advertising agency Tinker & Partners in the 1960s. As part of her work she used motivational interviews, previously only deployed in therapy. Marketing had previously explored what people buy. Herta Herzog wondered just why people buy what they buy. What’s their motivation? This change in approach helped Tinker’s clients make millions of dollars. It brought a revolution to marketing. With some exaggeration, we can say that a similar sea-change in thinking has come into IT management in recent years. WHY is it far more important than WHAT.

In our ITIL series, we’re going to talk a lot about value. IT is supposed to co-create added value. This key term can sometimes sound a little vague, incomprehensible. After all, value is largely a subjective thing. To understand what customers and users see value in, we need to act like Herta Herzog and ask why they want a particular service from us. Our tendency is to quickly slide into the technical aspects of issues and focus on our own activities. When we deal with WiFi coverage, say, we think about switches, routers and fibre optics that we need to install in the new hall. We’re thinking about WHAT they want us to do. But it is only asking WHY that will give us the right perspective. WiFi coverage means that the storekeeper does not have to drive a forklift across half the plant to get instructions, that the designer can quickly send a modified 3D model to the workshop, that people can easily communicate with each other throughout the premises. And as a result, thanks to all this, the end customer gets their order earlier, which in a way represents one of the main competitive advantages of the company.

Your task is not easy. You need to provide a service that consistently delivers real value, while you keep on top of the technical side of things. Such an assignment requires conceptual thinking. ‘One of the most important things that IT and business should be aware of is that delivering added value is not a one-time activity,’ explains ITIL expert Jan Hospes, ‘It should be a staple part of the supply of IT services. That’s why the 4th edition of ITIL defines a system that supports continual value creation.’ It is one of the main concepts of the ITIL 4 – Service Value System (SVS). In today’s article, we will present a top-level overview of this system, and in other episodes will deal with its sub-elements in more detail.

IT has a strategic role in the enterprise

The Service Value System (SVS) contains everything you need in order to deliver value to the customer (often the management or another department of the company) by way of services. For example, the SVS includes basic IT principles or best practices to build the necessary capabilities of your team. At its core is a Service Value Chain comprising a wide range of activities available to you. These are all important elements of the SVS. But on their own they are only the means to an end. That end is the creation of value based on a need or an opportunity seized.

ITIL 4 responds in this way to the changing role of IT in companies. ‘Business is the reason why the company exists,’ says Václav Chaloupka, IT Director at ComAp. ‘IT is here to enhance and simplify its operation. That’s why we as IT people need to understand the Business. An example is the implementation of CRM. This is just a tool to solve specific problems in the business process. We must understand the business process and understand the value of such an instrument to our sales. The final output is not an installed CRM. Value comes in only when the system actually helps our business people.’

If the output of the SVS is a value, then its input is a need or an opportunity. These can set the whole system in motion. However, this does not mean that the organization will automatically meet any need or seize every opportunity. It always depends on priorities, the market situation and internal decisions. Anyone can discover an opportunity in a company. However, the IT department is exceptionally well-equipped for this. ‘IT is the one with something to offer the Business,’ continues Václav Chaloupka. ‘We have been through digitization and changes to existing paradigms, we are ahead of the game…’ IT is a critical aspect for most companies today. This moves its role to a strategic level. And if IT understands the value the Business needs, it will keep an open eye for the opportunities out there.

SVS elements and the Value Chain

Now let’s take a closer look at the rest of the system, that is, what happens between the input and output. This space is the privileged domain of the IT department. ‘The customer is basically only interested in the outcome. They don’t need to know how you’re going to get there, and you shouldn’t burden them with it. They just wants to be happy at the end. And it’s up to you to arrange that somehow,’ explains my colleague Jirka Janků, who is responsible for implementation quality, ‘How you do it in IT, i.e. the core of the SVS model, is an opaque box as far as the customer is concerned. We need to understand its inner workings perfectly, but let’s only speak to the customer in their language.’

Source: AXELOS, ‘ITIL® Foundation, ITIL 4 edition’ (2019)

The SVS consists of five elements:

Guiding principles: Universal “recommendations that can guide an organization in all circumstances, regardless of changes in its goals, strategies, type of work, or management structure”

Governance: “The means by which an organization is directed and controlled.”

Practices: “Sets of organizational resources designed for performing work or accomplishing an objective.”

Continual Improvement: “Recurring organizational activity performed at all levels to ensure that an organization’s performance continually meets stakeholders’ expectations.”

Service Value Chain: “A set of interconnected activities that an organization performs to deliver a valuable product or service to its consumers and to facilitate value realization”

The Service Value Chain is at the heart of the SVS. It represents a set of activities that you can combine in order to attain value (see figure for better illustration). Each activity converts inputs into outputs. Each activity uses ITIL sub-practices that you may know from previous versions of ITIL. Taken together these give you have a variety of options to help you better organize service management in your organization and create so-called value streams for sub-parts of your organization.

We can use our company ALVAO as an example. The value chain is the model the company works to. There are value streams within the company. We have several for development, another for customer support, etc. In order for our development to deliver continual maximum value, we need quality feedback. To help us in this, we engage. We talk to customers, organize workshops, learn to better understand their needs. This feedback serves as an input into the improvement and planning activities of the new product version. Subsequently, we design and program (obtain/build) new functionality to release the next version we offer as a finished product (products and services). This we then support (deliver and support) and continually collect feedback (going back to engage). Real value arises only when the customer makes real use of the new functionality of the product.

The value stream can be complex, as in the case of the development of new functionality, or indeed quite simple. An example of a simple value stream is a WiFi signal outage in the warehouse. The prompt comes from a forklift driver who now can’t receive instructions online. The driver calls the service desk, and together with the operator sets the priority (engage). Subsequently, the incident is escalated to the appropriate (deliver and support) team that will take corrective action. The request solver calls the driver to see if everything is OK (engage). The value lies in the fact that thanks to the restored WiFi the driver can work optimally again. Subsequently, the driver will get a satisfaction questionnaire (engage, improve).

Source: AXELOS, ‘ITIL® Foundation, ITIL 4 edition’ (2019)

SVS as a check-list

So, what is the value of the model for your operation? ‘We can think of Service Value as a check-list,’ explains ITIL expert Rudolf Slaba, ‘It is a set of five elements that I try to foster in the company. At any moment, I can ask: Are we working by the book? Do we communicate sufficiently with our users? Are we neglecting opportunities for improvement? You can’t just focus on one of them and ignore the rest.’ In further episodes we will look at some elements of the SVS in greater detail and show how they will help us better manage IT.

ITIL® is a (registeredTrade Mark of AXELOS Limited. All rights reserved.

Published at: 22. September 2021

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