ITIL4 Foundation Memo 1: Service Management

Introduction

The purpose of the ITIL4 Foundation publication is to introduce readers to the management of the modern IT-enabled services, provide them with an understanding of the common language and key concepts and show them how they can improve their work and the work of their organization with ITIL4 guidance.

The Need for Service Management

Technology is advancing faster today than ever before. Developments such as cloud computing, infrastructure as a service, machine learning, and blockchain, have opened fresh opportunities for value creation, and led to IT becoming an important business driver and source of competitive advantage.

• Every organization is a service organization
• Almost all services today are IT enabled
• Service management is defined as a set of specialized organizational capabilities for enabling value to customers in the form of services.

Service Management

What's Value 

• Understanding Value 
• Service management is defined as a set of specialized organizational capabilities for enabling value to customers in the form of services.
• Developing the specialized organizational capabilities mentioned in the above definition requires an understanding of:
• the nature of value 
• the nature and scope of the stakeholders involved
• how value creation is enabled through services
• Value is the perceived benefits, usefulness and importance of something.

• How is Value Created?
• There was a time when organizations saw their role as delivering value to their customers in much the way that a package is delivered to a building by a delivery company.
• This view treated the relationship between the service provider and the servie consumer as mono-directional and distant.

• Providers and Consumers Co-Create Value
• More and more, organizations recognize that value is co-created through an active collaboration between providers and consumers, as well as other organizations that are part of the relevant service relationships.
• Organizations who deliver services are referred to as service providers.
• Those to whom services are delivered are referred to as service consumers.

• Organizations Facilitate Value Creation
• An organization is a person or 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 entites from a single person or a team, to a complex network of legal entities united by common objectives, relationships and authorities.
• Example:
• IT department acting as a service provider within a wide business organization
• Service Consumer Roles
• Cusomter
• A person who defines requirements for services and takes responsibility for outcomes from service consumption
• User
• A person who uses services
• Sponsor
• A person who authorizes the budget for service consumption
• Other Stakerholders in Value
• Beyond the consumer and provider roles, there are usually many other stakeholders that are important to value creation
• Examples:
• Shareholders
• Employees
• Community
• Services and Products
• A service is a means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks.
• The services an organization providers are based on one ore more of its products.
• A product is a configuration of resources, created by the organization, that will be potentially valuable for their customers.
• Products are typically complex and 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 consumer see, and tailor them to suit their target consumer groups.
• What is a Service Offering?
• A service offering is description of one ore more services,designed to address the needs of a target consumer group. A service offering may include goods, access to resources, and service actions.
• Goods
• Ownership is transferred to the consumer
• Consumer takes responsibility for future use
• Access to Resources
• Ownership is not transferred to the consumer
• Access is granted/licensed under agreed terms or conditions
• Service Actions
• Performed by the provider to address a consumer need
• Performed according to agreement with the consumer
• What are Service Relationship?
• Service Provisioning consists of activities performed by a service provider to provide services.
• Service consumption consists of activities performed by a service consumer to consume services
• Service relationship management consists of joint activities performed by a service provider and a service consumer to ensure continual value co-creation based on agreed and available service offerings.
• Service Provisioning 
• Management of provider resources configured to deliver the service
• Provision of access to resources for users
• Fulfillment of the agreed service actions
• Service performance management and continual improvement
• Service Consumption
• Management of the consumer resources needed to consume the service
• Utilization of the provider's resources
• Requesting of service actions to fulfill
• Receipt of or acquiring of goods

• The Service Relationship Model
• Service providers are also service consumers
• Outcomes, Cost and Risks
• A service is a means of enabling value co-creation by facilitating outcomes that customers want to achieve without the customer having to manage specific costs and risks
• Service Facilitate Outcomes
• An output is a tangible or intangible deliverable of an activity.
• Examples:
• Report
• Bill(of a consumed service)
• Emails sent (using an email service)
• An outcome is a result for a stakeholder enabled by one or more outputs.
• Examples:
• Being able to get to a destination in time for a meeting(outcome of using a smartphone-enabled travel service)
• Being able to collaborate with remote coworkers(outcome of using an email service)
• Understanding Costs
• Costs refer to the amount of money spent on a specific activity or resource.
• There are costs removed from the consumer by the service.
• Example: Uber/Lyft/DiDi
• No need for a car
• No need to pay insurance, maintenance, gas
• There are costs imposed on the consumer by the service, including charges by the service provider.
• Example:Uber/Lyft/DiDi
• Need for a modern smartphone that's capable of running app
• Need for a data plan to access the service
• Costs expressed in non-financial terms can be translated into financial costs
• Examples:
• Number of man-hours(or person-hours)
• Number of FTEs(Full Time Equivalents)
• Understanding Risks
• Risks refer to possible events that could cause harm or loss, or make it more difficult to achieve objectives.
• There are risks removed or reduced for the consumer by the service.
• Example: Uber/Lyft/DiDi
• No risk of not finding parking for own car
• There are risks potentially imposed on the consumer by the service
• Example:Uber/Lyft/DiDi
• Risk of failing smartphone, smartphone battery, or app itself
• The consumer contributes to the reduction of risk through:
• Actively participating in the definition of the requirements of the service and the clarification of its required outcomes
• Clearly communicating the critical success factors and constraints that apply to the service
• Ensuring the provider has access to the necessary resources of the consumer throughout the service relationship
• Example:Uber/Lyft
• Service provider should be able to get customer's location data in order to know where to dispatch a car
• Utility and Warranty
• Utility is the functionality offered by a product or service to meet a particular need.
• What the service does
• Can be used to determine whether a service is 'fit for purpose'
• Requires that a servcie support the performance of the consumer or remove constraints from the consumer
• Warranty is the assurance that a product or service will meet agreed requirements.
• How the service performs
• Can be used to determine whether a service is 'fit for use'
• Typically addresses areas such as availability, capacity, security levels and continuity.
• Requires that a service has defined and agreed conditions that are met.