ITIL 4 Foundation was released in February this year. This new version of the leading best practice framework for IT service management (ITSM) introduced a number of new concepts. You can read an overview of ITIL 4 in my previous blog: Everything You Officially Need to Know About ITIL 4.
Three of the concepts introduced in ITIL 4 are:
Because these have very similar names, I’m seeing some confusion about what exactly they are, and what the difference is between them. The three ideas are related, and the names certainly help to emphasize that ITIL 4 is all about how value is created through services.
The highest-level concept is the service value system.
The service value chain refers to activities that lie at the heart of the service value system.
Value streams offer more detailed descriptions of the activities needed to respond to specific types of demand and opportunity.
The ITIL service value system includes everything needed to create value in the form of services. It encourages service providers to think about how all the different components needed to deliver services can work together to help co-create value with service consumers. The diagram below provides a way to visualize this.
My previous blog about ITIL 4 included a brief description of each of the service value system components, so I won’t repeat that here, but I will offer a few thoughts about the system as a whole.
As the diagram shows, at the heart of the ITIL service value system is the service value chain. But it’s not there on its own, because a service value chain does not exist in a vacuum. It’s both constrained and supported by the governance and practices that surround it. Moreover, as you can see in the diagram, guiding principles and continual improvement surround all three, because they support all three. They need to be embedded within the culture of an organization and practiced by everyone involved in the governance and management of services. If you want to know more about continual improvement, then see my blog The Help You Need to Adopt Continual Service Improvement. If you’re not familiar with the guiding principles, then see my blog The 7 Guiding Principles of ITIL 4.
You can’t assign continual improvement to one person or group while everyone else follows existing processes and rules. A culture of continual improvement needs everyone in the organization to think about how they could improve, and to take responsibility for making improvements that are within their area of control. Even the most junior member of staff can think about their own personal development and how they could improve.
Similarly, the guiding principles apply to everything the service provider does, all of the time. If we consider one guiding principle, for example “focus on value”, this is something that applies to everything that the service provider does, to all people, and all services. If we decide not to focus on value one day then we’ll probably do the wrong things all day!
The diagram reminds us that the 7 guiding principles and continual improvement apply to governance, as well as to practices. The governing body of a service provider that practices continual improvement and makes use of guiding principles is much more likely to make useful, consistent, and profitable decisions about how they want the organization to operate.
It is, perhaps, more obvious that practices like incident management and supplier management are part of the service value system. Each practice includes resources needed to achieve an objective. For example, an incident management practice may include:
It’s easy to get lost in the everyday detail of what we do, which is why it’s so important to stand back and think about the whole system working together to create value. When we approach what we do by thinking about the service value system we’re prompted to take a systems view, and this helps ensure that nothing gets forgotten, or over-emphasized at the expense of other equally important things. We’re also more easily able to identify areas of weakness that we can work to improve.
The service value chain describes six activities that work together to take incoming demand and create corresponding value - by creating and managing the products and services which enable the service provider to co-create value with the service consumers.
The six value chain activities identified in ITIL 4 are listed below. They can be considered as ‘archetypes’ or classes of activity. They do not describe in detail exactly how products and services are created in the co-production of value. This is because exactly what needs to be done, and exactly which of an organization’s practices will be involved in doing it, varies depending on the specific situation. Nor do the value chain activities occur in a fixed order, as we’ll see in the next section, and each may be repeated many times in a single value stream.
Although some aspects of a value chain activity will remain constant, the details are likely to vary wildly, which is why ITIL 4 avoids being prescriptive. People involved in creating value think about what they’re doing from different perspectives, depending on their specific roles and organizational contexts. For example, the culture and mindset of people contributing to engage will necessarily be different from the culture and mindset of people involved in design & transition. Similarly, these value chain activities may bear very little resemblance to the same activities being carried out in a different organization. But when you think about what you’re doing as part of a value chain, and can identify which value chain activity it belongs to, it becomes much easier to identify the skills and competencies your organization needs and ensure that they’re in place. And, as we’ll see in the next section, this systems level thinking can help us to understand the detailed value streams that are needed to co-create value.
A value stream is a specific journey through the service value chain, starting with demand and ending with value creation. There is only one value chain, but each organization may have many different value streams, and these are likely to be completely different to the value streams in another organization. Each value stream may loop around the value chain, involving many different types of engage activity for example, before finally resulting in value creation. Each value stream may also include contributions from many different practices, for example one value stream may involve relationship management, portfolio management, service design, software development and management, service validation and testing, release management, change control, and organizational change management.
ITIL describes the service value system and the service value chain in detail, as these high-level concepts can be readily adopted with little change by many organizations. Value streams are different. The ITIL Foundation publication describes four example value streams, but these are in an Appendix and it’s not intended that anyone will follow them as described.
Value streams can be used in two very different ways:
This value stream for resolving a user incident could have included many more iterations of value chain activities, depending on the exact situation.
When you document your own value streams, you’ll identify resource requirements across many different practices, including:
The word ‘value’ appears in many different places in ITIL. This is because the whole purpose of IT service management is to ensure that we co-create value with our service consumers.
The ITIL service value system provides a very high-level view of everything needed to co-create value.
The service value chain describes six activities that take in opportunity and demand and deliver products and services that in turn help to co-create value.
Value streams are a useful tool for analyzing and documenting the flow of work so that it can be understood and optimized.
I hope this was helpful. As always, feel free to comment below or you can catch me on Twitter at @StuartRance.