What is the ITIL 4 Service Value System? Explained

The Service Value System, incorporating elements like ITIL Financial Management, is the value-oriented operating model of ITIL 4. The ITIL 4 Service Value System defines the operations that the organisations need to use to describe, monitor, optimise, and execute the activities for the organisation, processes, and technology. 

The Service Management elements are required to work collectively as a system for an organisation to function effectively. The Service Value System (SVS) introduced by ITIL 4 ensures that the organisation consistently creates value for the stakeholders. Read this blog further to understand the ITIL 4 Service Value System in detail.

Table of Contents

1) What is ITIL Service Value System?

2)  Five elements of ITIL 4 service value system

3)  Why do you need a Service Value System?

4) Significance of Service Value System in ITIL

5) ITIL Service Value Chain

6) Conclusion

What is ITIL Service Value System?

As per ITIL Advantages and Disadvantages, the updated system provides a holistic approach, emphasizing collaboration & adaptability, guiding those who have completed ITIL 4 Foundation to explore "what next after ITIL 4 Foundation". It helps organisations across the service value stream to integrate stress and coordination with a unified approach, facilitating value creation across the organization, a principle in line with ITIL Incident Management  It is highly recommended to apply Service Value System across the organisation to limit the negative impact and gain the complete determining Value. Notably, when considering the difference between ITIL v3 vs ITIL v4, the Service Value System represents a fundamental shift towards a more integrated and dynamic framework, emphasizing holistic value creation.

The outcome of an organisation in Service Management can be determined by two crucial factors,mentioned below: 

a) Organisational resilience: The organisation should be able to adapt to changes and disruptions. It must anticipate, prepare, and respond to turbulent environments from an external perspective. Example: PESTEL factors (Political, Economic, Sociological, Technological, Legal and Environmental).

b) Organisational agility: The organisation must be able to quickly adapt and flexibly support internal changes to maintain stability. Example: Online retailer who has adapted to market changes or technological changes.  

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Five elements of ITIL 4 Service Value System

The below image is the structure of the ITIL 4 Service Value System: 

The five elements that can assist in deriving the value from the demand transformation are as follows: 

1) Guiding principles

2) Governance

3) Service Value Chain

4) Practices

5) Continual improvement

Guiding Principles

These guiding principles can help an organisation create the foundation required for setting the culture, strategies, goals, management structure, or type of work, to guide the respective organisation in any circumstance.  

The seven guiding principles of the ITIL 4 Service Value System are: 

a) Focus on value 

b) Start where you are

c) Progress iteratively with feedback 

d) Collaborate and promote visibility 

e) Think and work holistically 

f) Keep it simple and practical 

g) Optimise and automate 

Governance

Governance is a way by which an organisation can be controlled and directed by a formal framework to support the business objectives and create value. The key people who perform governance activities are board members/directors or management executives. 

Service Value Chain

This operational model helps your organisation to adapt, perform, and deliver multiple sets of interconnected activities flexibly to make value realisation possible. 

There are six key activities in the Service Value Chain: 

a) Plan 

b) Engage 

c) Design & Transition 

d) Obtain/build 

e) Delivery and support 

f) Improve 

Practices

The organisational resources are grouped into a set of service dimensions and designed for accomplishing an objective or carrying out work activities to create Value outcomes.  

Continual improvement

Every level of Service Management should focus on continuously improving efficiency, optimising the cost, amplifying the effectiveness, and underlying ITIL Release Management processes to ensure performance and keep up with the stakeholders' expectations. 

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Why do you need a Service Value System? 

The organisation can progress to great lengths with a cohesive system in place. As you invest more time and bring your best effort into developing ITIL career skills and capabilities, you can expect the results to be improved swiftly and economically, especially when incorporating essential practices such as ITIL Capacity Management.

The goals of an organisation can change at any time as and when the situation demands. The built-in flexibility will assist you to achieve these goals over time. Implementing a mature Service Value System will help you gain repeated success naturally.  

To create an output value to fulfil the demands, the Service Value Systems inputs (i.e., opportunity and demand) trigger activities within the system. Demand is when the customers are clear about what they want and have comprehended the specific need precisely.

The demand can be viewed in the form of three categories as listed below:

a) Value demand: Value demands are the demands raised by the customers where the customer needs something. The Demand could be either a product or a service. The service catalogue serves its purpose here to deliver value. 

b) Information demand: To complete a task or decide on something, the customer needs information to carry out a plan. The information demands can sometimes be proactively assumed through self-service portals and push communications like memos, emails, and reports. 

c) Failure demand: The failure to do something right for the customer is the cause of failure demand. The organisations create a demand for help to fix the thing which went wrong. This failure consumes the organisation's resources because the service received by the customer was ineffective. Implementing ITIL 4 demand management processes can help optimize resource utilization and enhance the efficiency of addressing and resolving such demands for help.  

The opportunities are the possibilities to create - new services or products, improve existing products or services, and modify the course of action. Opportunities can help an organisation to create better experiences for the customer's experience, new revenue streams, increase productivity, upgrade employees' skills, cut costs, and reduce risks.  

The opportunity needs to implement innovative measures and reorganise or transform based on the demand. Sometimes, with the current capabilities of the organisation the customers' demands can be handled effectively, but occasionally you might have to adopt new transformations to get things done. An opportunity can trigger new possibilities like a project, business analytics, and plans to create a new value system.

ITIL Service Value chain

ITIL Service Value Chain is the central element in the Service Value System. As an operating model, it focuses on creating services, delivering the services and continuous improvement. It uses a result-based approach to achieve service value, which is the main objective of the Service Value Chain. 

The Service Value Chain is highly flexible and can adapt to several approaches, like Centralised IT and DevOps, to fulfil the need for various models of Service Management. This Flexibility enables an organisation to fulfil the varying demand of the clients and shareholders.

The six value chain activities are namely:

a) Planning

b) Improving

c) Engaging

d) Designing and automation

e) Obtaining

f) Building

g) Delivering and supporting

These activities in the ITIL 4 Service Value System represents the steps taken by an organisation to create value. All these activities transform the inputs into outputs. These inputs which are transformed are demanded from outside the value chain or outputs from other activities. All these six activities are interconnected with each other, at the same time, these activities receiving and providing triggers to create further actions. 

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Conclusion 

In this blog, we have discussed ITIL 4 Service Value Systems' importance of implementing Service M

anagement across all the areas in an organisational setup. Overall, the ITIL 4 Service Value System is a more appropriate and practical approach feasible for an organisation to adapt to changes and stay integrated to garner the best outcome or value. If you're delving into this topic, exploring ITIL Interview Questions can provide practical insights and further enrich your understanding.

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