ITIL 4 - Service Value Chain

Service Value Chain

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 optimise their value streams.

Service Value Stream

Value streams support the customer journey and the customer will notice that their provider has an eye for detail. Having a focus on each value stream that affects the customer means you can define the activities to optimize where necessary and ensure the customer experiences this.

ITIL® 4 value streams are the vessel and toolset for this journey: moving from a process-driven approach to enabling you to deliver what the customer expects and wants. This perspective is more about service value management and asks the questions: are we delivering value? Can we optimize? Can the customer be happier?

It’s less about doing things right but doing the right things for the customer

Service Value Stream

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. 

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.

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