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Author  Akshay Anand – ITIL Ambassador, Axelos

May 16, 2019 |

 5 min read

  • Blog
  • Service management
  • ITIL

The Service Value Chain, and Service Value Streams

Welcome back! This post is the fourth (and last) in a series in which I connect the key concepts of ITIL 4.

In the last blog we briefly covered the service value system (SVS) and its five components. One of those components is the service value chain.

Service value chain diagram

The service value chain is a set of loosely coupled activities (or archetypes) that any service provider undertakes at some point (or even repeatedly). Regardless of the size of the service provider, the industry, the geography, or even the level of automation, the organization will conduct the following activities at some point (perhaps even continuously):

  • Engage: Interacting with external stakeholders to provide a good understanding of needs, to promote transparency, and to foster good relationships with all stakeholders
  • Plan: Creating a shared understanding of the vision, status and improvement directions for all four dimensions and all products and services
  • Improve: Ensuring continual improvement of products, services and practices across all value chain activities and the four dimensions
  • Design and Transition: Ensuring that products and services continually meet stakeholder expectations for quality, cost, and time to market
  • Obtain/ Build: Ensuring that service components are available when and where they are needed, and that they meet agreed specifications
  • Deliver and Support: Ensuring that services are delivered and supported according to agreed specifications and expectations.

These activities can be combined and integrated in a myriad of ways to create a “journey” from demand to value that reflects how the service provider completes work. ITIL 4 calls this “journey” a value stream, and each value stream represents how the organization responds to specific scenarios or types of demand. Techniques like value stream mapping can help organizations streamline and optimize their value streams.

Value streams can be defined at any level of the organization, so there may be value streams at the enterprise level, and completely different (yet ultimately connected) value streams for each development or support team.

The service value chain diagram with a value stream represented

A value stream can be as linear or as waterfall (or not) as the organization requires. Equally, it can be as dynamic or as agile (or not) as the organization requires. There are two key points to always keep in mind about value streams:

  • Value chain activities can repeat themselves over the course of a value stream – for example, a value stream to respond to customer incidents would have an Engage activity at the start (number 1, acknowledging the incident), and another at the end (number 6, verifying resolution and customer satisfaction). It might have additional Engage activities representing post-incident reviews or customer satisfaction surveys.
  • Value streams ALWAYS start with Demand, and ALWAYS end with Value. Remember, the goal of a value stream is to convert demand to value.

Practices support value chain activities at various points in the value stream. For example, when engaging with a customer needing help (i.e. an incident), we might call upon the following practices:

  • Service Desk: Provides us with the tools, techniques, and even an empathetic mindset and service-orientation to understand the customer’s needs
  • Relationship Management: Provides us with the information and communication skills to manage customer expectations
  • Knowledge Management: Might provide access to a knowledge base which the service provider can use to offer potential fixes
  • Incident Management: Provides us with the tools, techniques, and workflows to register, triage, classify, prioritise and assign the incident.

The list of practices above isn’t meant to be exhaustive! It serves to illustrate that practices support and contribute to value chain activities. In ITIL v3 Incident Management has been seen purely as a Service Operation activity. By decoupling the service value chain and practices, practitioners can understand how a practice can contribute to several activities – in some cases to a greater extent, and in some cases a lesser extent. In the ITIL 4 Foundation book, the reader will find a colour-coded “heatmap” for each of the 34 practices that details the degree of interaction with the service value chain, for example:

The service value chain diagram represented by common scenarios and workflows

The other interesting thing about a value stream orientation is that it allows organizations to define their common scenarios and workflows and map out the contributions needed from each practice.

In the example below, I have three value streams with seven identified contributions from the incident management practice – thus, it only needs to support these seven touchpoints, and no more.

The service value chain diagram representing bespoke designs

To put it another way, the practices can be designed to only meet the needs of defined value streams and nothing more. This is a “minimum viable service management” approach and will hopefully push practitioners away from blindly copying or implementing process guidance found in a book. It’s a very Lean way of defining service management practices!

The result of the value stream is a live, functioning product or service – something that the service provider organization uses to co-create value with consumers…and thus we come full circle.

Welcome to ITIL 4!

What next?

The ITIL 4 framework, the latest evolution of ITIL, introduces new key concepts that enables you and your organization to deliver world-class IT-enabled products and services.

Visit our ITIL 4 Concepts page to read and watch the next in our blog and video series ‘ITIL 4: Connecting key concepts’.

Read other blog posts in this series

ITIL 4: Connecting key concepts – Part 1

ITIL 4: Connecting key concepts – Part 2

ITIL 4: Connecting key concepts – Part 3