ITIL Framework and Value Co-Creation

Podcast Beta

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is meant by co-creation of value in service relationships?

Value is only determined by the consumer's expectations.

Value is co-created through collaboration between providers and consumers. (correct)

Value is irrelevant in service management.

Value is created solely by the service provider.

The relationship between service provider and service consumer is considered bi-directional.

False

What role does the organization play when provisioning services?

Service provider

Who are considered service consumers?

Customers, users, and sponsors Signup and view all the answers

The __________ is a person who authorizes budget for service consumption.

sponsor Signup and view all the answers

Match the following stakeholders with their example of value:

Service consumers = Benefits achieved; costs and risks optimized Service providers = Funding from the consumer; business development Service provider employees = Financial and non-financial incentives; career development Society and community = Employment; taxes; organizations' contribution to the community Charity organizations = Financial and non-financial contributions from other organizations Shareholders = Financial benefits, such as dividends Signup and view all the answers

What is ITIL?

ITIL (Information Technology Infrastructure Library) is a set of practices for IT service management (ITSM) that focuses on aligning IT services with the needs of the business. Signup and view all the answers

What is the primary focus of ITIL 4?

End-to-end product and service management Signup and view all the answers

ITIL 4 is the latest version of the ITIL framework.

True Signup and view all the answers

What is the purpose of ITIL training?

To develop competencies in IT service management and support organizational digital transformation. Signup and view all the answers

Who is the CEO of AXELOS?

Mark Basham Signup and view all the answers

What fictional company is used to illustrate the concepts of ITIL in this publication?

Axle Car Hire Signup and view all the answers

What major challenges is Axle Car Hire currently facing?

Declining customer satisfaction and loss of repeat bookings. Signup and view all the answers

Who is the Axle Car Hire product manager?

Su Signup and view all the answers

What does Radhika do at Axle Car Hire?

She is the IT business analyst. Signup and view all the answers

Which of the following best describes Marco's role at Axle?

IT Delivery Manager Signup and view all the answers

ITIL has been guiding the ITSM industry for more than 20 years.

False Signup and view all the answers

What is the purpose of the ITIL service value system (SVS)?

To facilitate value creation through IT-enabled services. Signup and view all the answers

What are the four dimensions outlined by ITIL 4?

Organizations and People, Information and Technology, Partners and Suppliers, Value Streams and Processes Signup and view all the answers

The perceived benefits, usefulness, and importance of something are defined as _____ in ITIL.

value Signup and view all the answers

What key message does the ITIL framework convey about organizations?

The purpose of an organization is to create value for stakeholders. Signup and view all the answers

What are resources that organizations own or have access to?

People, information and technology, value streams and processes, partners and suppliers. Signup and view all the answers

What is a product in terms of organizational resources?

A configuration of an organization's resources designed to offer value for a consumer. Signup and view all the answers

A product is exclusive to one consumer group.

False Signup and view all the answers

What do service offerings include?

Goods supplied to a consumer Signup and view all the answers

What are the main components of a service offering?

Goods, access to resources, and service actions. Signup and view all the answers

What is the purpose of service relationships?

To co-create value between service providers and service consumers. Signup and view all the answers

Which of the following statements about service provision is true?

It includes continual improvement. Signup and view all the answers

What is the difference between an output and an outcome?

An output is a deliverable of an activity, while an outcome is a result for a stakeholder enabled by one or more outputs. Signup and view all the answers

What are two types of costs involved in service relationships from the consumer's perspective?

Costs removed from the consumer and costs imposed on the consumer. Signup and view all the answers

What is the first dimension of service management?

Organizations and people Signup and view all the answers

What are ITIL guiding principles used for?

Establishing a healthy organizational culture Signup and view all the answers

An organization needs a formally established authority structure to function effectively.

False Signup and view all the answers

Which aspects are essential for the organizations and people dimension?

All of the above Signup and view all the answers

What is the second dimension of service management?

Information and technology Signup and view all the answers

What technologies support service management?

All of the above Signup and view all the answers

The successful management of services relies on effective __________.

information management Signup and view all the answers

What question should organizations ask regarding technology for service operation?

Is this technology compatible with the current architecture? Signup and view all the answers

What is risk in the context of service management?

A possible event that could cause harm or loss, or make it more difficult to achieve objectives. Signup and view all the answers

Which of the following are types of risk concerning service consumers? (Select all that apply)

Risks removed from a consumer by the service Signup and view all the answers

What does utility refer to in the context of service management?

The functionality offered by a product or service to meet a particular need. Signup and view all the answers

What is warranty in service management?

Assurance that a product or service will meet agreed requirements. Signup and view all the answers

Utility and warranty are equally important for a service to create value.

True Signup and view all the answers

The assessment of a service must consider the impact of costs and ______ on utility and warranty.

risks Signup and view all the answers

What are the four dimensions of service management identified by ITIL?

Organizations and people, information and technology, partners and suppliers, value streams and processes. Signup and view all the answers

Which aspect of service management should organizations not neglect when improving initiatives?

All of the above Signup and view all the answers

Study Notes

Welcome to ITIL 4

ITIL 4 is the latest version of the IT service management (ITSM) best practice guidance
Aims to equip businesses to deal with modern challenges in the IT industry
ITIL 4 builds upon existing knowledge and integrates modern practices to ensure continuity
Provides guidance on new methods to help individuals and organizations adopt them safely and efficiently
Aims to raise the profile of service management by setting it within a strategic context
Focuses on end-to-end product and service management
ITIL 4 is developed through global research and development work involving practitioners, trainers, consultants, vendors, technicians, and business customers.
ITIL training helps develop competencies for the current and future workplace
ITIL 4 Foundation publication introduces the ITIL 4 framework

About this Publication

ITIL Foundation is the first publication of ITIL 4
Audience includes IT and business students, and seasoned professionals
Purpose of publication
- To explain the ITIL 4 service management framework
- To support candidates preparing for the ITIL 4 Foundation exam
- To act as a reference guide for practitioners

Axle Car Hire

A fictional company used as an example throughout the publication
Axle Car Hire is undergoing a transformation to modernize services and improve customer satisfaction and retention
Axle is using ITIL to achieve this transformation

Overview of Axle Car Hire

Global company with headquarters in Seattle
Formed 10 years ago and employs 400 staff across Europe, US, and Asia-Pacific
Experienced strong growth and high customer satisfaction in the first six years
Experienced a downturn in the past four years
Customer satisfaction and repeat bookings have declined.
Competitors offer new and innovative options.
Customers expect online and app interfaces as standard

Axle Car Hire Needs Change

Board wants to increase customer satisfaction and attract and retain customers
Appointed Henri as new CIO
Henri has experience in digital services and large-scale IT transformations
Henri is a strong proponent of ITIL and ITSM
Henri wants to redefine the car-hire experience and make Axle the first choice for customers

Axle Key Employees

Henri: new CIO, experienced in digitalized services and successful IT transformations
Su: product manager for travel experience
Radhika: IT business analyst, focuses on understanding user requirements of staff and customers
Marco: IT delivery manager, process-driven
All are striving to improve services and use ITIL best practices

Introduction to IT Service Management

IT service management is a critical aspect of modern businesses.
Services are the primary way organizations create value for themselves and their customers.
IT enables almost all services today, making IT service management a crucial capability for organizations.
Advancement in technologies like cloud computing, IaaS, machine learning significantly impacts IT service management.
IT acts as a key business driver and source of competitive advantage.
IT service management plays a strategic role in ensuring organizational relevance and success.
Organizations are embracing transformational programs to exploit new technological opportunities.
These transformations aim to evolve organizational work practices to adapt to constant changes.

ITIL 4: An Evolving Framework for Service Management

ITIL (Information Technology Infrastructure Library) has been a leading guide in the IT service management industry for over 30 years.
ITIL 4 updates the traditional IT service management practices to address modern challenges and opportunities.
It focuses on customer experience, value streams, digital transformation, and embraces new working methodologies like Lean, Agile, and DevOps.
ITIL 4 provides guidance for organizations to utilize modern technology effectively.
It ensures a flexible, integrated system for the management and governance of IT-enabled services.

The Structure and Benefits of the ITIL 4 Framework

ITIL 4 Framework components are the ITIL Service Value System (SVS) and the four dimensions model.
The ITIL SVS outlines how various components and activities work together to facilitate value creation through IT-enabled services.
It emphasizes integration and coordination for consistency within the organization.
The core components of the ITIL SVS are:
- The ITIL service value chain: Provides an operating model for service creation, delivery and improvement.
- The ITIL practices: Support diverse service value chain activities.
- The ITIL guiding principles: Guide organizational decisions and ensure a shared understanding of service management approach.
- Governance: Aligns operations with strategic direction.
- Continual improvement: Maintains resilience and agility in a dynamic environment.
The four dimensions model promotes a holistic service management approach:
- Organizations and people: Focus on the human aspect of service management.
- Information and technology: Emphasizes the role of technology in service delivery.
- Partners and suppliers: Recognizes the importance of collaboration with external parties.
- Value streams and processes: Focuses on optimizing value creation through process improvements.

Key Concepts of Service Management

Understanding key concepts and terminology is essential for using ITIL effectively.
Important concepts in service management:
- Value and value co-creation: Organizations aim to create value for stakeholders. Value is perceived benefits and importance, subjective to the stakeholders.
- Organizations, service providers, service consumers, and stakeholders: These actors play distinct roles within service management.
- Products and services: Products are tangible items, whereas services are intangible, creating value through activities.
- Service relationships: Interactions and connections between providers, consumers, and other stakeholders.
- Value outcomes: Desired results and changes achieved for stakeholders.
- Costs: Resources consumed in delivering and supporting a service.
- Risks: Potential threats and uncertainties that could affect value creation.

Value Co-Creation: A Collaborative Approach

Value co-creation recognizes the active involvement of both providers and consumers in creating value.
Stakeholders actively collaborate to define requirements, design solutions, and participate in service creation and provision.
Organizations should move away from a provider-centric mindset and build mutually beneficial relationships with their consumers.
Service providers should empower consumers to participate and collaborate in the value creation process.

Organizations

An organization is a group of individuals with set roles, authorities, responsibilities, and relationships to achieve its goals.
Organizations vary in size and complexity.
Organizations rely on each other to function and evolve.
Organizations can take on different roles depending on the perspective.

Service Providers

Provide services to an organization, which can be internal or external.
Service providers have a responsibility to understand their service consumers and other stakeholders.

Service Consumers

The role of service consumers is generic and helps define the structure of service relationships. There are specific consumer roles like customers, users, and sponsors.
Customers define service requirements and are responsible for consumption outcomes.
Users are the individuals utilizing the service being provided.
Sponsors authorize the budget for service consumption.

Other Stakeholders

Stakeholders are crucial to successful value co-creation.
Stakeholders can be internal or external.
Internal Stakeholders include employees, partners, and suppliers.
External Stakeholders include investors, shareholders, government regulators, and social groups.
Maintaining good relationships with all key stakeholders is vital for an organization's success.

Products and services

Services are a way to enable value co-creation, facilitating customer outcomes without the customer managing specific costs and risks.
Products are configurations of an organization's resources, they are designed to offer value to consumers.
Organizations own various resources like people, information, technology, processes, and partners, and configure those resources into products that offer value.
A single product can be used by multiple consumer groups.

Service Offerings

Service providers showcase their services to consumers using a service offering - a formal description of one or more services designed for a specific target consumer group.
Service offerings can include goods, access to resources, and actions performed for the consumer.
Service offerings can be tailored to different consumer groups.

Service Offerings

Services come in different forms: goods, access to resources, and service actions.
Goods are items consumers purchase and take ownership of, like mobile phones and physical servers.
Access to resources grants consumers temporary access to items like mobile networks or network storage, but ownership remains with the provider.
Service actions are tasks performed by service providers to address consumer needs, such as user support or equipment replacement.

Axle's Service Offerings

Axle provides car hire services with a variety of options to cater to different travel needs.
These options include discounted insurance, a loyalty program, and complimentary travel products like bottled water, tissues, parking permits, and baby seats.
Axle's customer base is diverse, with different expectations. Corporate customers typically don't need baby seats or weekend rates, while some individual customers aren't interested in free airport car collection.
All service offerings include access to Axle's website and booking app.

Service Relationships

Service relationships are crucial for co-creating value.
Organizations act as either service providers or consumers, often both simultaneously.

The Service Relationship Model

Service providers deliver services that create new resources or modify existing ones for service consumers.
Examples include:
- Training services improving employee skills
- Broadband services enabling communication between computers
- Car hire services allowing staff to visit clients
- Software development services creating new applications
Service consumers can use their new or modified resources to create their own products and become service providers themselves.

Axle's Service Relationships

Axle engages in service relationships with both internal and external providers and consumers.
Some services contribute to Axle's new resources, like car manufacturers selling cars to them.
Others, such as internal car cleaning and external mechanics, modify existing resources by ensuring cars are clean and functional.
Axle utilizes these resources to provide car hire services to its customers.

Value: Outcomes, Costs, and Risks

For services to be valuable, positive effects must outweigh negative ones.
Service providers help consumers achieve desired outcomes, taking on some related risks and costs.
Service relationships can simultaneously introduce new risks and costs, while supporting some outcomes and negatively impacting others.

Outcomes

Service providers produce outputs that help consumers achieve specific outcomes.
Outputs are tangible or intangible products of an activity, while outcomes are results for stakeholders enabled by these outputs.
The provider may not always fully understand the consumer's desired outcomes.
In some cases, providers work with consumers to define necessary outcomes.
Other times, consumers clearly articulate their expectations, especially with standardized services offered to a large group.
Some providers predict or even create demand for certain outcomes, targeting a specific consumer group with innovative services addressing previously unknown needs.

Costs

Service consumers face two types of costs:
- Costs removed by the service (value proposition), such as staff, technology, and other resources clients no longer need to provide.
- Costs imposed by the service (service consumption), including the provider's price plus additional costs like staff training, network utilization, and procurement.
Understanding both types of cost is crucial for making informed decisions about service relationships.
Service providers must track the cost of service provision to meet budget constraints and financial expectations.

Risks

Service consumers also encounter two types of risks:
- Risks removed by the service (value proposition), such as the failure of consumer server hardware or staff unavailability.
- Risks imposed by the service (service consumption), such as the provider ceasing to trade or experiencing a security breach.
Service providers manage risks on behalf of consumers, balancing the provider's and consumer's priorities.
Consumers contribute to risk reduction by:
- Actively participating in defining service requirements and desired outcomes.
- Clearly communicating critical success factors and constraints.
- Granting the provider access to necessary resources throughout the relationship.

Utility and Warranty

Evaluating the utility (what the service does) and warranty (how the service performs) determines if a service fulfills consumers' needs and creates value.
Utility refers to the functionality of a product or service to meet a specific need.
Warranty assures that a product or service will meet agreed requirements, often related to service levels aligned with consumer needs.
Both utility and warranty are vital for achieving desired outcomes.
A theme park with exciting rides (utility) but frequent downtime (poor warranty) fails to create value.
Likewise, rides with minimal excitement (poor utility) but consistent availability (good warranty) fall short of consumer expectations.
A service must consider the impact of costs and risks on utility and warranty to determine its viability.### The Four Dimensions of Service Management
The four dimensions of service management: Organizations and People, Information and Technology, Partners and Suppliers, and Values Streams and Processes
Organizations and People focus on the culture of an organization, employee skills and competency, and a focus on value creation.
Information and Technology focus on the information and technology required for service management and the relationships between the components of the service.
Partners and Suppliers focus on the relationships with external organizations that provide goods and services
Value Streams and Processes focus on the processes, activities, and value chains of an organization
The dimensions of service management can be applied to the Service Value System (SVS) and apply to all services being managed.
The four dimensions do not have sharp boundaries and can overlap, often interacting unpredictably depending on the complexity of an organization.
ITIL guiding principles can be a tool to help establish a healthy organizational culture.
Each person working in an organization should have a clear understanding of their contributions to value creation, the customer, and other stakeholders.
Artificial intelligence, machine learning, and cognitive computing solutions are now being used by IT teams on a large scale for service management.
Mobile platforms, cloud solutions, and automated testing are becoming common practices.
Services that use the latest technology like blockchain, artificial intelligence, and cognitive computing can help organizations differentiate themselves in a competitive market.

Organizations and People

The effectiveness of an organization is not achieved solely by the formal organizational structure or a system of authority.
Organizations should have a culture that supports their objectives and requires the proper staff and competency.
Leadership in an organization should champion and advocate for values that motivate people to work in desirable ways.
An organization's culture is created by the way in which the organization carries out its work.
A culture of trust and transparency that encourages employees to raise issues, escalate issues, and facilitate corrective actions is essential.
Every employee in an organization should have a clear understanding of their own contributions to value creation for their organization, its customers, and stakeholders.

Information and Technology

Information and Technology is a dimension that covers both service management as well as the services being managed.
The technologies that support service management are: Workflow Management Systems, knowledge bases, inventory systems, communication systems, and analytical tools.
Artificial intelligence, machine learning, and cognitive computing solutions are used at all levels of service management, including strategic planning, portfolio optimization, system monitoring, and user support.
The use of mobile platforms, cloud solutions, remote collaboration tools, automated testing, and deployment solutions has become common practice in service management.

Partners and Suppliers

The Partners and Suppliers dimension focus on the relationship that an organization has with outside organizations that provide goods and services.### Information Management in Services
Organizations should consider the information managed by services, supporting information needed to deliver and manage them, and how to protect, manage, archive, and dispose of information assets.
Information management is crucial for customer value creation, enabling access to accurate data while ensuring privacy.
Examples include HR services, network management services, and IT services that rely on information as their key output.
Information exchange between services requires a well-understood and optimized information architecture, considering availability, reliability, accessibility, timeliness, accuracy, and relevance.
Information management challenges include security, regulatory compliance, and data protection regulations like GDPR and HIPAA.

Technology Considerations for Services

Organizations should evaluate technology compatibility with existing architecture, its ability to support performance and operation, and its security implications.
When considering technology for planning, design, transition, or operation of a product or service, organizations should consider its impact on:
- Existing infrastructure and systems
- Scalability and performance requirements
- Security and privacy compliance
- Long-term maintenance and support plans

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz explores the concepts of co-creation of value in service relationships, particularly within the ITIL framework. It covers the roles of service providers and consumers, as well as the key elements and challenges associated with ITIL 4. Test your knowledge on these important service management concepts.