Sign in

Products and service taxonomy in ITIL 4 White Paper

White Paper

Products and service taxonomy in ITIL 4 White Paper

White Paper

  • White Paper
  • Information management
  • IT Services
  • Service management
  • Value
  • ITIL

Author  Tatiana Peftieva

IT Governance, with a background in quality management, process improvement and software development.

April 15, 2020 |

 12 min read

  • White Paper
  • Information management
  • IT Services
  • Service management
  • Value
  • ITIL

ITIL 4 is the first version of ITIL that actively use the terms ‘product’ and ‘service’. These terms are adopted by professional communities, and sometimes contrasted with one another. IT and service management professionals tend to focus on either products or on services, and the new taxonomy offered in ITIL 4 might feel confusing to some professionals. This paper explores the product and service taxonomy of ITIL 4 and explains why taxonomy is important to IT and service management.

New concepts in ITIL 4

The ITIL 4 Foundation publication introduced several new concepts describing and explaining the realities of today’s IT and service management. Some of these concepts are specific to ITIL such as the service value system and the four dimensions of service management, while others have been around for years, and are still new to ITIL and its audience. One of the most fundamental aspects is the concept of product and its connection with the familiar concept of service. The ITIL glossary defines product and service in the following way.

Definitions
Product - A configuration of an organization’s resources designed to offer value for a consumer.
Service - A means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risk.

These definitions do not explain how products and services are related. To prevent confusion, two more concepts should be considered.

Definitions
Resource - A person, or other entity, that is required for the execution of an activity or the achievement of an objective. Resources used by an organization may be owned by the organization or used according to an agreement with the resource owner.
Service offering - A formal description of one or more services, designed to address the needs of a target consumer group. A service offering may include goods, access to resources, and service actions.

Combining these concepts together, ITIL Foundation describes how organizations use resources to create products and provide services:

‘The services that an organization provides are based on one or more of its products. Organizations own or have access to a variety of resources, including people, information and technology, value streams and processes, and suppliers and partners. Products are configurations of these resources, created by the organization, that will potentially be valuable for its customers…Products are typically complex and are not fully visible to the consumer. The portion of a product that the consumer actually sees does not always represent all of the components that comprise the product and support its delivery. Organizations define which product components their consumers see, and tailor them to suit their target consumer groups. Service providers present their services to consumers in the form of service offerings, which describe one or more services based on one or more products. (…) Different offerings can be created based on the same product, which allows it to be used in multiple ways to address the needs of different consumer groups.’1

ITIL 4: High-velocity IT illustrates how these concepts are connected, which is highlighted in Figure 1.2

Image of Figure 1.2 Service interaction and band of visibility

Figure 1.2 Service interaction and the band of visibility

To understand this taxonomy and its application in practice, it should be considered from the perspective of the architectural relationship.

2.1 PRODUCT AND SERVICE ARCHITECTURE

From the architectural perspective, the organization’s products are a combination of resources that the organization has a legitimate right to manage. Some of these resources are owned by the organization, others are accessed through the consumption of services provided by other organizations. Human resources are hired directly or as a part of third-party services, but never owned by the organization. A product includes components that are potentially visible to service consumers (usually to users) and sometimes to other external stakeholders; other components stay behind the line of visibility, but they are still managed as part of the product. Some are critical to the product’s performance and to its very existence.

The visible part of a product is described in one or more service offerings addressing the needs of potential service consumers. Service offerings are often presented in a service catalogue for potential customers.

Internally, the organization maintains a resource model(s) of its products, including configuration items and their relationships. These models are often named service models, or service configuration models.

However, until a service offering is accepted by a customer, and a service agreement is reached by the parties, there is no service to discuss or manage. Services exist in the context of a service relationship. It is only after this relationship starts that resources in service models can be mapped to service consumers, users, their business operations, and so on.

Therefore, from an architectural perspective, organizations build products from their resources, and manage how these resources interconnect within and across products. Organizations offer services to potential service consumers based on their products.

2.2 SERVICE RELATIONSHIP

When a service provider and a service consumer reach an agreement, a service relationship can proceed. A service relationship includes service provision (performed by service provider), service consumption (performed by service consumer), and service relationship management (performed jointly). Depending on the nature of service, it may include:

  • transfer of goods
  • access to resources
  • service actions.

2.2.1 Transfer of goods

Some services include the transfer of goods from the service provider to the service consumer. Resources that belonged to the service provider are transferred to the service consumer and become the property of the service consumer. All risks and costs associated with ownership and management of these resources are also transferred. Usually, a certain level of quality of the resources is guaranteed by the service provider. Additional services can be offered to support the transferred resources.

2.2.2 Access to resources

Most services include access to the service provider’s resources. These resources remain under the control of the service provider, and ownership is not transferred (although physical resources can be moved to the service consumer premises and used by the service consumer with a significant level of freedom). Resources are used according to the terms and conditions of the service agreement. For most digital services, this is the main form of service provision and consumption.

2.2.3 Service actions

Service actions are activities performed by people as part of a service provision and/or service consumption. Depending on the nature of service, service actions can be an important component of service utility, or form only a part of the support in case of an incident. Most services do include service actions, even if it is only for user support.

Organizations consume services provided by other organizations, in order to achieve certain outcomes, which is by using resources provided as part of the services and outputs of service actions performed by service providers. By combining the (architecture-focused) definition of products and the (relationship-focused) definition of services, it is possible to put together a consistent and holistic picture, like the one provided in Figure 1.1.It is important to remember that when service interactions start, the resource view on products and services might include resources of service consumer organizations visible to the service provider. These might include information systems integrated with resources provided as part of the service, teams and people using the service, third-party services, business processes, and operations using the services. The level of integration and visibility depends on the type of service relationship, the closer and more mature the relationship, the higher the level of integration and visibility.

Digital products and services


The product and service taxonomy presented in ITIL and explained above is universal, it does not have any industry or technology specifics. However, ITIL is developed to help organizations in their use of information technology, so it is important to see how the ITIL view on products and services might be applied to the management of digital products and services. There are two major contexts to consider:

  • software development and service operations
  • digital transformation and digital organizations.

3.1 SOFTWARE DEVELOPMENT AND SERVICE OPERATIONS

Unlike previous versions of ITIL, ITIL 4 includes the creation of products and services in its scope. This reflects the commonly acknowledged importance of the close integration of all stages of a products’ and services’ lifecycle into end-to-end flows, as opposed to siloed specialized teams and work cycles. It is clear from the taxonomy description in section 2 that products and services cannot be managed separately, as services are impossible to perform without products and products are useless if they do not enable any services.

However, despite the emergence and development of movements such as DevOps and the growing adoption of flow-based product-focused approaches (e.g. Project to Product by Mik Kersten),2 many organizations still demonstrate a siloed approach. In these organizations, software developers are focused on the products they create, and service management teams are focused on the maintenance and support of the live environment and handling user requests and incidents.

In ITIL 4, the product is never limited to a piece of software (or a device). Products include resources from all four dimensions of service management at all technology and organizational levels, including infrastructure and platforms, monitoring and support tools, data, integrations, and management teams.3 Management of a product requires many competencies and is very likely to involve multiple teams, even in organizations where multiskilled product teams have been introduced.

Likewise, a service cannot be managed in isolation from the product(s) it is based on, especially when these products are updated constantly, and new features are delivered a few times a week. The adoption of continuous delivery and deployment makes the operation of products (including the delivery and support of related services) heavily dependent on product development. It also highlights how it is important for all the teams to have a common understanding of the products and services taxonomy. ITIL 4 provides such taxonomy and helps to develop a common vision and language.

3.2 DIGITAL TRANSFORMATION AND DIGITAL ORGANIZATIONS

Products and services are defined within the context of an organization. ITIL defines an organization as ‘a group of people that has its own functions with responsibilities, authorities, and relationships to achieve its objectives.’ Organizations ‘vary in size and complexity, and in their relation to legal entities, form a single person or a team to a complex network of legal entities’.4

In many companies, IT is managed as a specialized unit (internal or external) with its own management system; in ITIL terms, an organization. The management systems of IT units are focused on the creation and management of IT products and services that are provided to internal service consumers. Other units of the company integrate these services into their products that eventually contribute to external service offerings. This relationship is illustrated in Figure 3.1.

Image of figure 3.1 Business and IT management

Figure 3.1 Business and IT management

The management systems depicted in Figure 3.1 are subject to improvement and sometimes undergo significant transformations. These transformations are usually isolated. Business transformations do not change the way IT is managed and IT transformations do not change the way business is managed.

Figure-3-2-Business-transformation-and-IT-transformation-600x193.jpg

Figure 3.2 Business transformation and IT transformation

ITIL does not apply the term ‘digital transformation’ to any of these transformations. They may be useful and improve the overall performance of the business and IT units. However, they cannot transform the relationship between the two and the way digital technology contributes to the business.

In this scenario, everything described previously in this paper, applies mostly to the IT management on the left-hand side of the figures. A better understanding of IT products and services and its architecture is beneficial for the value that a business obtains from IT services. The digital transformation changes the relationship between IT and business. They are not treated as separate organizations anymore.

Image of figure 3.3 Digital business management

Figure 3.3 Digital Business Management

Definition
Digital transformation The use of digital technology to enable a significant improvement in the realization of an organization’s objectives that could not feasibly have been achieved by non-digital means.

As a result of the changing relationship, digital transformation changes the architecture of products and services. Business products and services integrate digital technologies; digital and analogue resources are managed organization-wide, and management systems cover all types of resources. This leads to shifts in the key management practices, scope of value streams, and in the key product and service management roles.

In an emerged digital organization, products and services can still be described using the ITIL taxonomy, but the scope of resources and products built on them is wider, and the services offered and delivered using these products are addressed to a wider, and usually external, service consumer audience.



Summary

ITIL 4 offers a taxonomy for the management of the organization’s resources, products, service offerings, and services. This taxonomy is applicable in any industry, for any organization, regardless of its scale and the technologies used. In a digital industry, the proposed definitions and concepts are supposed to better integrate the development and operations teams, by providing a common language and a clear architecture for the digital products and services. ITIL products and service taxonomy also helps to define the scope of digital transformation and to enable a holistic service value system in a digital organization.

About the author

Tatiana works in IT Governance, with a background in quality management, process improvement and software development.

She is passionate about continual improvement and contributes to ITIL 4 supplementary publications on the topic.

Further reading

AXELOS (2020) ITIL 4: High-velocity IT. TSO, London

AXELOS (2020) ITIL 4: Drive Stakeholder Value. TSO, London

Ownership and owners in ITIL 4. Available at http://www.axelos.com/case-studies-and-white-papers/ ownership-and-owners-in-itil-4 [Accessed 8 April 2020].

Business value from IT goods and services in a digital world: ITIL 4 - The Evolution of ITSM Part 3- Mark Smalley. Available at https://www.axelos.com/news/blogs/february-2019/business-value-it-goodsservices-in-digital-world [Accessed 8 April 2020].

End notes

1 Axelos (2019) ITIL Foundation: ITIL 4 Edition, sections 2.3.1 and 2.3.2. The Stationery Office, London.

2 Kersten, M. (2018). Project to Product: How to Survive and Thrive in the Age of Digital Disruption with the Flow Framework Portland. IT Revolution Press.

3 AXELOS (2019) ITIL Foundation: ITIL 4 Edition, Chapter 3. The Stationery Office, London.

4 AXELOS (2019) ITIL Foundation: ITIL 4 Edition, Section 2.2. The Stationery Office, London.

1. Download

Products and service taxonomy in ITIL 4 White Paper