The Service value chain (SVC) is the core part of Service value system (SVS) which has all the key activities, which are required to be performed for accomplishing the service value, through the service results (outputs) & outcomes.
The ITIL service value chain defines six key activities that can be combined in many ways, forming multiple value streams. The service value chain is flexible enough to be adapted to multiple approaches, including DevOps and centralized IT, to address the need for multiple models of service management. The adaptability of the value chain enables organizations to react to changing demands from their stakeholders in the most effective and efficient ways. (Ref: ITIL4 book from AXELOS®)
Figure 27:The Service Value Chain (Ref: ITIL4 book published by AXELOS®)
The six service value chain activities are;
Organization sustenance and success depends upon the way it responds to different scenarios. Establishing a service value stream by establishing the specific combination of activities and practices for the specific situation is very important. The value stream has to be defined and designed to suit the specific scenario, and has to provide a complete guidance to the roles, practices & activities required to address the needs of the initiative or for resolving an issue (or issues).
The different combinations of the various practices defined with certain specific set of activities are performed throughout the service value chain. ITIL®4 defines 34 practices, which are classified as General management practices, Service Management practices and Technical Management practices. The activities are performed by in-house & third-party resources with specific skills & capabilities (skills & competencies) for the practices defined to accomplish the value.
For example, the value chain activity, “engage”, might draw upon the practices like service relationship management, service desk management, service request management and (or) supplier management etc., for responding to the varying demands for services & products which would support in making the right decisions by collecting right information from various stakeholders.
An Example: HR Management Services
A HR Management of an organization will have to establish the value chain across various services provided by them like Employee engagement, Training & Development, Career Management, Employee Retention, Conflict Management, Claims Management etc. Assume a scenario, where the organization has decided to introduce an intranet application which would consolidate and provide all the service through this portal.
This requires development and management of an application which involves conceptualization, business analysis, development, release, and support. The organization has to develop a number of practices which are supported with specialized resources and techniques.
28: HR Value Chain Activities
This would involve:
The establishment of value streams happens through the combination of practices and value chain activities in various ways. This has to be improved by improving utility and warranty of products and services and by increasing the potential value for the consumers and the organization.
Further, it is very important for the organization to be able to adapt to the changing circumstances. This would involve changing the utility & warranty aspects of products & services by which organization can always align and fulfil the customer requirements in the modern dynamic world.
ITIL®4 considers the needs of becoming Agile and emphasis on adopting Agile way of doing IT Service Management in modern service environment. The Agile Manifesto was proclaimed during the year 2001, by the seventeen signatories, which are acknowledged and adopted across the IT Industry. It recommended the new approaches which help in improving customer experience through better collaboration and the ability to bring the changes rapidly which would suit the changing customer / consumer demands.
This is required to be adopted in the scenarios where;
In our scenario example; i.e. HR Service Application; the dynamics need not be agile, however, the need for agility happens while the organization wants to bring in the innovative solution to HR Services with unique features and functionalities like an automatic analysis engine for claim trends of an employee, which would recommend allocation of specific amount to that employee month on month, by default. This may help in understanding the need of the claim and its effective usage. Similarly, many such features and functionalities can be identified.
The SVC activities working together, in unison establish the service value stream. Each of the SVC activities ensures a unique contribution and complements every other service value chain activity. They establish a specific combination of activities, process, and practices and involve various different types of resources. Each activity has specific objectives, and these objectives align to value stream enablement. All the activities have specific set of inputs and specific set of outputs.
The SVC activities are Plan, Improve, Engage, Design & Transition, Obtain/Build and Deliver & Support.
The service or products being delivered by an organization would have an intended purpose and address specific objectives. This would be always in alignment to the vision and direction of the organization, as established by the governing body of an organization. The plan value chain activity has to ensure the right understanding of the vision, its current status, and improvement for all the four dimensions and all products and services across the organization.
The inputs and outputs for the activities come from (& go to) other value chain activities like engage, improve, design and transition, obtain/build and governing body.
All the services / products perform at certain levels and they should be improved on a continual basis. Improvement is not one folded, it is multi-folded. That is, improving the processes, practices, services, products, individual skills etc.are essential. This needs consideration of all the four dimensions of the service management.
The inputs and outputs for the activities come from (& go to) other value chain activities like engage, design and transition, obtain/build, deliver & support and all the value chain activities.
The service can be termed as successful, when the stakeholders realize the value. Value is always defined in customer perspective. However, the need of all the stakeholders cannot be ignored. The value realization is critical and only then the utility & warranty defined would make sense.
While the services are consumed, one has to establish a mechanism to become aware about the service value creation and acknowledgement of value realization. To accomplish this, it is very essential to engage with the stakeholders continually i.e. customer, consumers, suppliers, team etc. This will help in obtaining a good understanding of the needs of stakeholders, and will create transparency and establish a good relationship with the stakeholders.
The design and transition activity of service value chain ensures, meeting the objectives and expectations of the stakeholders by designing and transitioning the service & products as per the required cost, quality & time aspects. Design and transition have to consider all the four dimensions of the products & services i.e. people & organization, Information & Technology, value stream & process and partners & suppliers.
Releasing the services & products to market in time is a very important factor to ensure the utilization of the services and products. In our example of HR portal services, if there is a delay in introducing the portal services, the value realization will delay. Further, the required quality aspects like products features, functionalities, and performance has to meet the defined expectations and has to be produced within the defined budget. Design and transition have to justify the total cost of ownership.
The inputs and outputs for the activities comes from (& goes to) other value chain activities like engage, obtain/build, deliver & support, partners & supplier and all the improvement initiatives.
The obtain/build activity of service value chain focuses on acquiring the resources required to build the services, build them (configure and implement), integrate, test and confirm the performance, which has to be in line with the specification established in architectures (i.e. solution architecture, technology architecture, requirements established etc.)
As part of obtain/build, all the components acquired are tested at component level first and at the next level of integration till the service or product achieves the requirements.
The inputs and outputs for the activities come from (& go to) other value chain activities like engage, design & transition, deliver & support, partners & supplier and all the improvement initiatives.
The value chain activity delivers and supports focus on delivering the services or products to the customers and ensures that they are supported throughout their lifecycle. It is essential to ensure that customers realize the value required. Here all the service actions performed have to be focused towards providing the uniform customer experience and also seek the opportunities for improvements continually.
To summarize, in this module we looked at service value chain activities, their interactions to create service value streams. The six service value chain activities are;
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Thank you for sharing some of the things we will be learning in the event we take up an ITIL certification course. I like that you mentioned that students will learn about a product's lifecycle by using IT as I believe this will be advantageous for any company. Assuming that I own a business that sells a variety of products, I would definitely consider this qualification.
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