Value- Perceived benefits, usefulness and importance of something.

Perceived- subjective.

Value is based on recipient’s perception. Remember orange and its peel example.

Organization- A person or a Group of people with its own functions, authorities, responsibilities and
relationships to achieve its objectives.

ITIL service providers are of two types-

a) Service provider- A role played by an Organization in service relationship to provide services to

consumers.
b) Consumer- A role played by an organization in a service relationship to consume the service.

In a large organization, people are organized around common goals to achieve common objectives in a
coordinated manner.

Value is cocreated by the service provider and the consumer.

An organization can be both a consumer and a service provider at the same time

People- Three types- User, Customer and Sponsor. These roles can be fulfilled by different people or the
same people

 User: A person that uses a service

 Customer: A person that define requirements for a service and is responsible for the outcome of
service consumption
 Sponsor: A person who authorizes budget

Service: A means for enabling value cocreation by facilitating outcomes that customer wants to achieve
without having to manage specific risk and cost.

A service provider can not achieve value for customer. It can only facilitate.

Product: Configuration of resources created by organization that will be potentially valuable for its
customers

A product is a offering of group of services. Product combines and simplifies various services.
Service Offering: One or more services designed to address the need of the target customer group.

Services offerings includes- goods, resource access and service actions.

Goods- Goods are transferred from Service provider to the consumer, consumer is responsible for the
future use then onwards.

Access to resources: Access to resources are given to consumer under agreed terms and conditions.

Actions: Actions performed to addressed customer’s address. Ongoing things like technical support

Service relationship – A cooperation between the service provider and consumer including Service
provision, service consumption and service relationship management

Service provision: The activities performed by an organization to provide the services.

Service Consumption- all activities required to consume any services

Service Relationship: Activities that are performed by both provider and consumer to cocreate value
based on the service offering,

Service Relationship models:

Outcome:

A result for a stakeholder, enable by one or more outputs. Based on customers desired outcome, not
service providers.

When the value proposition is good, a business agreement can be made.

Value proposition changes when the surrounding factors changes.

Output: Tanglible or intangible deliverable of an activity

Outpout vs outcomes:

Outcomes achieve results. Outcomes are sometimes more intangible where as outputs tend to be more
tangible.

Outputs are easier to measure because they are typically a result of an activity.

Create metrics that measure Outcomes not outputs

Costs:

Amount of money spent on Activity or resource. Cost can be measured in terms of financial or
nonfinancial terms like Man hours or FTEs.

A service provider tries to reduce or remove the cost for consumer when providing the service.

Risk: A possible event that could cause harm, loss or make it more difficult to achieve objectives.

Like cost, service provider also wants to minimize the risks to the consumer.

Consumer should assume that it will bear some risk while consuming the services. Consumer should also
work with Service provider to reduce the risk.

Consumer should clarify requirement of the services and clarify required outcomes. Consumer should
also clarify any constraints and critical success factors.

Service provider can also put requirements on the Consumer-

Consumer must ensure that the provider has access to required resources.

Risk mitigation types:

Avoid, transfer, accept, mitigate

Avoid- SP and Consumer are trying to remove it from service.

Accept: Accept when the severity of risk is low

Transfer: Transfer to other provider

Mitigation:
Utility- Functionality offered by a product or a service to meet a need. What a product or service does.
Fitness of purpose.

Warranty: Assurance that a product or service will meet agreed requirements. How the service
performs. Fitness of use. When exam talks about availability, capacity, security levels and continuity it is
talking about warranty

Four dimensions of ITSM:

1) Organization and people

2) Information and technology
3) Partner and suppliers
4) Value streams and process

1) Organizations and people- How is our Organizational structure formed to support our services
and products. Orgainzational structure could be horizontal and vertical. Vertical structures are
more process driven.
Organization Culture: Shared values and attitudes of the organization. Culture starts at the top
and funnels down throughout the company. How do we take care of people? What is our
mission, vision ?

2) Information and technology:

Technology- a) for IT services b) for IT service management- All services that don’t serve the end
user but the business process. Sometime technology can serve both IT services and IT service
Management

Information: For many services, information management is the primary means of enabling
customer value. Information has following characteristics-
Availability, reliability, ACCESSBILITY, TIMELINESS, accuracy and relevance.(ARATAR)

Information management has challenges such as security and regulatory compliance

requirements.

Some considerations for Information and technology-

Is it compatible with current architecture?
Does it raise any regulatory, compliance or information security control issues?
Will it continue to be viable in forseeable future?
Does it align with provider or consumer strategy?
Does the organization has right skills to support and maintain the technology?
Does it have enough automation capabilities to be developed, deployed?
 Does it have additional capabilities that can be leveraged for other services and products
Does it introduces new risk or constraints?

Organizationa culture will have an impact on it’s risk tolerance.

3) Partners and suppliers:

Partners and suppliers are different.
Whether a business entity is a partner or supplier depands on each Organization’s partner and
supplier strategy.
If it something that is very critical for our business- Partners, collaborate to achieve desired
outcomes. Shares common goals and risks.
Is it something that is not crucial for our business- Suppliers, formal contracts, clear separation
of roles.

What is your supplier strategy: Do I care about price most? Do I care about quality most?

Service integration and management: Involves the use of specially established integrators to
ensure that service relationships are properly coordinated.

Value stream and processes-define the activities, workflows, controls and procedures needed to
achieve the agreed upon objectives.
The activities undertaken, how are activities organized and how value is ensured.

Value stream: A series of steps an organization undertakes to create and deliver products and
services to consumers.
We want to optimize the value stream to minimize the amount of nonvalue adding activities,
while increasing the amount of value adding activities. Once we are there we are going to
automate the process as much as possible.

Process: A process is set of interacting activities that transform inputs into outputs. A well
defined process can increase productivity, be optimized and then become automated.

Pestle model: Political Economic Social Technological Legal Environmental – Out side our control

Service value System : SVS- Describes how components and activities of an organization work
together to enable value co-creation.
Opportunities: Represents options or possibilities to add value for stakeholders or otherwise improve
the organization.

Demand: The need and desire for products and services among internal or external customers.

Value is the output of service value system.

Service value system creates value for

The purpose of the service value system is to ensure that the

organization continually co-creates value with all stakeholders
through the use and management of products and services. It takes
opportunity and demand as its input and enables the creation of
value through the guiding principles, governance, service value
chain, practices, and continual improvement.
 The components of the service value system are 'guiding principles',
'governance', 'service value chain', 'practices', and 'continual
improvement.'

7 guiding principals:

Guiding principals: A recommendation that guides an organization in all circumstances. Guided

principals are applied universally to any initiative and relationships.

Guiding principals encourage and support organizations in continual improvement.

An Organization should consider all 7 guiding principles and determine which guiding principles
are relevant to its solution. Not all GPs will be critical in every situation.

7 Guiding principles:
A) Focus on value
B) Start where you are
C) Progress iteratively with feedback
D) Collaborate and promote visibility
E) Think and work holistically
F) Keep it simple and practical
G) Optimize and automate

1) Focus on value:
Everything an organization does should link back directly or indirectly to value for itself, its
customers and other stakeholder.

Four step method for identifying value-

a) Understand and identify the service consumer
b) Understand the consumers perspective of value
c) Map value to intended outcomes which change over time
d) Understand the customer experience or user experience
 2) Start where you are:

Don’t start over an improvement effort without first considering what is already available to be
leveraged.

Decisions on how to proceed should be based on accurate information

Measurement should be used to support the analysis of what has been observed rather then to replace
it.

Measurement sometimes can affect the results.

Goodharts law- When a measure becomes a target, it ceased to be a good measure.

Measure outcomes not outputs

a) Look at what exists as objectively as possible.

b) Determine if successful practices or services can be relicated or expanded
c) Apply risk management in decision making process and do mitigation
d) Recognize that sometimes nothing from current state can be reused
e) Identify what can be reused and what need to be improved upon.

3) Progress iteratively with feedback

Working in a timeboxed and iterative manner with embedded feedback loops allows for
greater flexibility, faster responses to needs, the ability to respond to the failure earlier and
an overall improvement in value. Organize the work into smaller or more manageable
sections.

Feedback loop- Occurs when part of the output of an activity is used as a new input. Work
chunks must be continually reevaluated to accurately reflect changes in the circumstances.
Use feedback before, throughout and after each iteration.

a) Comprehend the whole and progress with iterations.

b) Feedback is essential for constantly changing ecosystem.
c) Fast doesnot mean incomeplete. Each iteration should provide business useful
functionality

4) Collaborate and promote visibility:

Collaborate internally and externally. Collaboration is all about working together.
Collaboration increases visibility. A lack of visibility leads to poor decision making.

Collaboration does not necessarily means consensus. Take inputs but leaders take decision.
 Communicate in a way that the audience can hear.
Decision can only be made on visible data. Making sure the information is going to the right
people.

5) Think and work holistically.

A holistic approach to service management requires an understanding of how all the parts
of an organization work together in an integrated way. First understand the complexity abd
then you can simplify..

6) Keep it simple and practical- Outcome based thinking should be used to produce practical
solutions which deliver valuable outcomes using the minimum number of steps. Start with
ucomplecated approach. Keep it to few steps initially and add later. Donot produce solution
for every exception in the first go. Be mindful of how we can complete objectives.

7) Optimize and automate: Make things as effective and useful as it makes sense. Before an
activity is automated, we want to make sure that it is optimized. Automation means using
technology to perform a step or series of steps correctly and consistently with limited or no
human intervention.

Automation: Using technology to perform a step or series of steps correctly and consistently with
limited or no human intervention. Automate frequent or repetitive tasks.

Automation steps:

Simplify and optimize before automating.

Define your metrics

Use other guiding principles when appling this one.

Service value chain:

These are the steps an organization is going to take for creation or cocreation of value-

Engage, plan improve, obtain build, design and transition, obtain and build, deliver and support,
product services

Each of the above activity contributes to the service value chain by transforming specific inputs into
outputs. Service value chain activities uses different combinations of the 34 ITIL practices.
Central activities in the Service value chain:

1) Design and transition

2) Obtain/Build
3) Deliver and support