Co u r s e b o o k

I T I L ® F o u n d ati o n

ITIL®4

ITIL® is a registered trade mark of AXELOS Limited, used under permission

of AXELOS Limited. All rights reserved.
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I T I L ® F o u n d ati o n

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Copyright and Disclaimer

ITIL® Foundation | r1.0.0

Copyright
Copyright © AXELOS Limited 2019. All rights reserved.
This is a commercial confidential publication. All rights reserved. This document may not, in a whole or
in part, be copied, reproduced, translated, photocopied, or reduced to any medium without prior and
express written consent from the publisher. This course includes copyrightable work under license and
is protected by copyright. No part of this publication may be reproduced, distributed, or transmitted
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methods, without the prior written permission of the publisher, except in the case of brief quotations
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given for any commercial use or sale of this material.

Trade Marks, Source books information

The content of this course is sourced from the ITIL® Foundation (ITIL® 4 edition) manuscript.
ITIL® is a registered trade mark of AXELOS Limited, used under permission of AXELOS Limited. All
rights reserved.
The Swirl logo™ is a trade mark of AXELOS Limited.
The ITIL Accredited Training Organization logo is a trade mark of AXELOS Limited.

Disclaimer
Information provided about the course, modules, topics and any services for courses including
simulations or handouts, are an expression of intent only and are not to be taken as a firm offer or
undertaking. The Publisher reserves the right to discontinue or vary or maintain such course, modules,
topics, or services at any time without notice and to impose limitations on enrolment in any course.
The course materials provided may have hypertext links to a number of other web sites as a reference
to users. This service does not mean that the publisher endorses those sites or material on them in
any way. The publisher is not responsible for the use of a hypertext link for which a commercial charge
applies. Individual users are responsible for any charges that their use may incur.
The information in this course is written using a blend of British and American English. Although every
effort has been made regarding the usage of correct spelling, punctuation, vocabulary, and grammar
with regard to the Standard English, publisher accepts no responsibility for any loss or inconvenience
caused due to the regional differences in the usage of the English language.

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Contents
Acknowledgements v

Module 1: Course Introduction 1

Let’s Get to Know Each Other 1
Course Overview 1
Course Learning Objectives 2
Course Structure 3
Course Agenda 3
Introduction to IT Service Management in the Modern World 4
Introduction to ITIL 4 5
Structure and Benefits of ITIL 4 5
Case Study: Axle Car Hire 6
Case Study: Meet the Key People at Axle 7
Case Study: The CIO’s Vision for Axle 7
Exam Details 8

Module 2: Service Management: Key Concepts 11

Intent and Context 11
Key Terms Covered in the Module 13
Module Learning Objectives 14
Value and Value Co-Creation 14
Value: Services, Products, and Resources 21
Service Relationships 24
Value: Outcomes, Costs, and Risks 29
Exercise: Multiple-Choice Questions 34
Module Summary 35

Module 3: The Guiding Principles 37

Intent and Context 37
Identifying Guiding Principles 38
Key Terms Covered in the Module 39
Module Learning Objectives 39
Topics Covered 39
The Seven Guiding Principles 39
Applying the Guiding Principles 54
Exercise: Multiple-Choice Questions 62
Module Summary 63

Module 4: The Four Dimensions of Service Management 65

Intent and Context 65
The Four Dimensions 66
Key Terms Covered in the Module 67
The Four Dimensions and Service Value System 67
Module Learning Objectives 69
Topics Covered 69
Organizations and People 70
Information and Technology 74
Partners and Suppliers 77
Value Streams and Processes 80
External Factors and the Pestle Model 82
Exercise: Multiple-Choice Questions 85
Module Summary 86

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Module 5: Service Value System 89
Intent and Context 89
Service Value System and Service Value Chain 90
Module Learning Objectives 90
Topics Covered 90
Overview of Service Value System 91
Overview of the Service Value Chain 94
Exercise: Multiple-Choice Questions 107
Module Summary 108

Module 6: Continual Improvement 111

Intent and Context 111
Key Terms Covered in the Module 112
Module Learning Objectives 113
Topics Covered 113
Introduction to Continual Improvement 113
The Continual Improvement Model 115
Relationship between Continual Improvement and Guiding Principles 123
Exercise: Multiple-Choice Questions 123
Module Summary 124

Module 7: The ITIL Practices 127

Intent and Context 127
ITIL Management Practices 128
Key Terms Covered in the Module 129
Module Learning Objectives 129
Topics Covered 130
The Continual Improvement Practice 130
The Change Control Practice 134
The Incident Management Practice 138
The Problem Management Practice 142
The Service Request Management Practice 148
The Service Desk Practice 151
The Service Level Management Practice 155
Purpose of ITIL Practices 159
Module Summary 168

Case Study: Axle Car Hire 169

Exam Preparation Guide 175

Mock Exam 179

Appendix A: Exam Specification 209

Appendix B: GLOSSARY 217

Appendix C: Release Notes 219

Appendix D: Participant Feedback Form 221

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Acknowledgements
We would like to sincerely thank the experts who have contributed to the design and development of
the ITIL® Foundation course.

Design Team
Marcel Foederer
As an IT Service Management trainer, consultant and line manager with
over 25 years of experience in IT, Marcel has performed strategic and
tactical assignments in a wide variety of areas. His experience includes
project and program management including process design, product
management, requirements analysis and training delivery related to the IT
Service Management international best practice, in both the private and
public sectors on a global scale. His area of consulting expertise is in advising
organizations on IT Service Management, based on ITIL best practices, and in
the management of these initiatives to improve organizational and operational
efficiencies and service delivery quality. He also excels as an experienced
facilitator, trainer and lecturer.
For the ITIL 4 update, Marcel has been part of the ITIL 4 Lead Architect Team
at AXELOS. Through his association with AXELOS, Marcel comprehends the
background, the architecture, and the underlying reasons of the ITIL 4 update.
For the ITIL® (4) Foundation course, Marcel participated as a Lead Author
in the design, development, and review of core course components and
additional learning material.

Simone Jo Moore
Simone is recognized as a leading industry thought leader and is known as
a “Service Management Mixologist” probing the hearts and minds of what
makes business and IT tick to jumpstart people’s thinking to evolve behavior
and actions at any level. People connected, knowledge shared, possibilities
discovered, and potential realized are the active values that Simone uses to
help organizations build a resilient foundation for their ongoing transformation
and digital journey.
Simone is a contributing author to VeriSM Unwrapped and Applied, is a senior
consultant, master trainer, author, podcast co-host, and mentor in various
frameworks such as BRM, ITIL, KCS, DevOps, and SFIA. Simone is a HDI
Faculty member and on the International Certification Standards Committee
(ICSC) as well as an ICMI Senior Contact Centre Manager.
For the ITIL® (4) Foundation course, Simone participated as a Lead Author
in the design and development of core course components and additional
learning material.

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Helen Morris
Helen provides quality training and consultancy to organizations, assisting
with delivery of IT service management.
Helen Morris has over 25 years of experience in service management
including operational management of services in a variety of industry sectors.
She holds the ITIL® Expert qualification and is an experienced trainer for ITIL
Foundation and ITIL Intermediate training. She has coauthored a number of
study guide publications and distance-learning courses covering the service
management qualifications.
As an experienced consultant, Helen has led a number of successful
service management improvement programs, working with organizations to
develop their service management strategy and being a key player in the
implementation of the strategy within the organizations. She has delivered
strategic improvements in customer satisfaction, service delivery, and
regulatory standards. Helen is also a certified ISO/IEC 20000 consultant.
For the ITIL® (4) Foundation course, Helen participated as a co-author in the
design and development of core course components and additional learning
material.

Madeleine Du Toit
Madeleine du Toit has been an active member of the IT Service Management
community for over 20 years, of which 15 years are focused on training and
consulting different elements of the ITIL framework. She has been part of
and led several implementation projects within the IT Service Management
framework, with a key focus on practical governance for maximum benefit.
Madeleine is an accredited trainer for all products within the ITIL v3 certification
scheme, she has assisted many thousands of people in getting their ITIL
Foundation and ITIL Expert accreditations.
For ITIL® (4) Foundation course, Madeleine participated as a co-author in the
design and development of core course components and additional learning
material.

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 Acknowledgements

Contributors and Review Board Members

A big thanks to the Contributors for their feedback, suggestion, and inputs.

Name Organization
Al Lucas Lucas Technology and Business Solutions
Arend Reehorst Operator Groep Delft BV
Ayilur Ramnath ExcelSol - Business Excellence Solutions
Carl Pitts ILX Group
Carlos Castaneda Stratera Balance Estrategico
Carlos Regalado Hawa Solutions
Cesar Monteiro IT Partners Assessoria E Consultoria
Christine Aykac Aykac Consulting Inc.
Claudio Schicht Claudio Schicht
Edgar Velazquez W Lared
Edson Abrahama Martinez Gonzalez Keepersoft Corporation SA de
Erman Taskin EDUCORE EGITIM DANISMANLIK DEN. YAZ. TIC.
LTD. STI
Falko Werner Werner Consulting
Ferran Marti Tassier ARTIC CONSULTORS Minvant Gaps
Frederico Coelho FAC Tecnologia
Gonzague PATINIER NAZ Enterprises Co. Ltd. PPP Partners
Hanson R Cochran Data Center Enhancements Inc.
Heber Viveros Soto Zoar Consultores S.C Zoar Business Consulting
Jason Dion Dion Training
John Latour OGD
Jorge Blanco Glumin Networks SC Glumin
Jorge Edo Juan Mobiliza Consulting S.L.
Joris Heirman Yoko BVBA
Jose Giori Herran Escobar ValorIT
José Luis Martínez Royo ISACA CHAPTER VALENCIA
Jurian Burgers SLA-Services
Kevin Cooper ServiceNow
Laurent Renard
Martin Vitous ict-123.com, s.r.o.

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Mike Vikdal Auslyn Group

Mohamed Gohar Mohamed Gohar Ahmed Gohar
Nabil Zine Abidine Ouazzani Knowledge Tree Consulting
Nadjib AitHamoudi PM-Perspective
Omar Sanchez O2 SYSTEMS SA DE CV
Oscar Corbelli Zona Busit
Patricia Fridman Comunit s.h.
Paul M. Dooley Optimal Connections, LLC
Peter Forsbeck Service Corporation
Peter Gerritsen Pepper Group
Peter Quinlan Awen APS, SL
Pier roberto Riboni Rhino Consulting
Raul Diaz Lomeli Certification Hub Mexico S.C
Ricardo Hounton NET BY US
Rigoberto González Leon iGovernance Academy Ltda
Romina Lombardi Exentia
Rony Plevnik SINHRON
Rosario Fondacaro Deloitte, IT Services
Søren Dittmer Reflect IT
Søren Dittmer Reflect IT
sutthichai OpenVision Co. Ltd
Ted Gaughan TechnoLava LLC
Virginia Araujo Xweb Integracao de Sistemas
Vladimir Zhivolkovskiy Sole Proprietorship Natallia Zhivalkouskaya

A special thanks to the Review Board members for their feedback.

Name Organization
Ahmet Malli TAC A.S.
Alejandro Canon Service Management Consultant and Trainer
(Freelance)
Alvaro Cifuentes Alvaro Hernan Cifuentes
Angel Rayo Netmind SL
Avo Raup Meriroos OU

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 Acknowledgements

Ayodeji Agbalajobi Biwdant Consult Ltd

Babak Izadi Rayzan Samaneh Gostar Management Consulting
Belisario Martinic Formaci
Ben Kalland Fenderi
Bruno GALLIER DPM bvba
Carlos Sanchez-Sicilia Talentia Corp.
César Arturo Gutiérrez Morales Mexico
Chamber Lain Law iPro IT Consulting
Chuck Spencer Flycast Partners, Inc
Claudio Schicht Independent Consultant
Cynthia Wade CierraTEC, LLC Cierra Training Services
Daniel Castillo Innovati Consulting group de C.V.
Daniel Popa IBM
David Klein ADEA Partners
Diaa Farouk Mohamed Equinox International
hamzeh habibi M.E. Solutions FZ LLC
Igor Chichev Academy Granit
Indira Anand Emirates
K S Franklin Future Frameworks IT Services
Karim Waljee NPower Canada
Kimberly Morrison ActioNet, Inc
Kumail Morawala
Maarten Bordewijk Bordewijk Training & Advies
Marc Schachteli Ninja Training | Marc Schachteli Ninja Training
Mark Jan Drenth ONYOURMARK
Maurits Baeyens DPM bvba
Michael Bardeh Aurora Red Technology
Mohamed Roshdy
Orhan Ali Önder TAC A.S
Pieter Hoekstra Begrip
Piya Chiewcharat Pholsiri Consults & Services
Radosław Gnat GSK
Rajiv K Dua Independent IT Management Consultant & Trainer

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Russell Herrell Space and Naval Warfare Systems Center

Sameh Elgawady Koala-IT Services
Santos Pardos Toptal
Stella Alexandra Salas Sanchez ASCAL
Steve Tremblay Fifalde Consultiong Inc.
Sudhakar Nagasampagi Integrated Cloud Consulting and Training Services
Thomas Fruin Servicios Inform?ticos Artefactum Thomas Anthony
Fruin E.I.R
Venkateswara Rao Lokam Billa Solutions P Ltd C/o Venkateswara Rao Lokam
Yalcin Gerek TAC A.S.
Yolande Du Plooy

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1
Course Introduction
Let’s Get to Know Each Other
Introduce yourself in the following format:
 Name
 Company
 Role and background
 Familiarity with ITIL 4 core concepts and their practice
 Experience in application development, infrastructure
development, and/or operations
 Expectations from this course

Course Overview

This 2-day course provides learners an extensive introduction

to the core concepts of ITIL 4. With the help of ITIL 4 concepts
and terminology, group discussions, case study-based activities,
and examples included in the course, you will acquire the ITIL 4
Foundation certification from the accredited training organization.
This course is designed to provide learners an extensive
understanding of the ITIL 4 principles and to show how they can
improve their work and the work of their organization as a whole
with the ITIL 4 guidance. The course will inspire you to serve as a
change champion by sharing and using what you have learned,
and continue to learn, about ITIL 4 to lead and mentor others.

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Course Learning Objectives

Understand the key Understand how ITIL guiding
concepts of IT principles can help an
service management. SERVICE organization to adopt and
MANAGEMENT: adapt IT service management.
KEY CONCEPTS THE GUIDING
PRINCIPLES

Learn the various ITIL

practices and how
they contribute to THE ITIL Understand the four
value chain activities. PRACTICES ITIL® THE FOUR dimensions of IT
Foundation DIMENSIONS service management.
OF SERVICE
MANAGEMENT

CONTINUAL
IMPROVEMENT THE ITIL SERVICE
VALUE SYSTEM -
Understand the key SERVICE VALUE Understand the purpose and
concepts of continual CHAIN components of the ITIL service
improvement. value system, and activities of
the service value chain, and
how they interconnect.

At the end of the course, you will be able to:

 Understand the key concepts of ITIL service management.
 Understand how ITIL guiding principles can help an
organization to adopt and adapt ITIL service management.
 Understand the four dimensions of ITIL service management.
 Understand the purpose and components of the ITIL service
value system, and activities of the service value chain, and
how they interconnect.
 Understand the key concepts of continual improvement.
 Learn the various ITIL practices and how they contribute to
value chain activities.

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Course Structure

Course Modules Videos Case Study

Case Study Exam Additional

Discussions and Information Components
Activities

Course Agenda
Module Subject Start End Total Time
(In hours)
01 Introduction and Recap of ITIL 4 based on pre-reading 09:00 10:00 00:60
02 Service Management: Key Concepts - Part 1 10:00 10:30 00:30
Morning Tea 10:30 10:45 00:15
02 Service Management: Key Concepts - Part 2 10:45 11:45 00:60
03 The Guiding Principles - Part 1 11:45 12:45 00:60
Day 1

Lunch 12:45 13:35 00:50

03 The Guiding Principles - Part 2 13:35 14:15 00:40
04 The Four Dimensions of Service Management 14:15 15:10 00:55
Afternoon Tea 15:10 15:25 00:15
05 The Service Value System and Service Value Chain 15:25 16:40 00:75
Questions / Debrief Day 1 / Homework 16:40 17:00 00:20
Total (Less Lunch and Tea) 06:40
Total 08:00

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Module Subject Start End Total Time

(In hours)
Review of Day 1 / Homework 09:00 09:30 00:30
05 The ITIL Service Value System and Service Value 09:30 10:10 00:40
Chain (Contd.)
Morning Tea 10:10 10:25 00:15
06 Continual Improvement 10:25 11:00 00:35
07 The ITIL Practices 11:00 12:10 00:70
Day 2

Lunch 12:10 13:00 00:50

07 The ITIL Practices (Contd.) 13:00 14:30 00:90
Afternoon Tea 14:30 14:45 00:15
07 The ITIL Practices (Contd.) 14:45 16:00 00:75
Day 2 Wrap up / Exam Preparation Guide/ Mock 16:00 17:00 00:60
Exam / Advice
Total (Less Lunch and Tea) 06:40
Total 08:00

Note: Exam can be conducted in the class on the third day, or

participants can take the exam later through online format.

Introduction to IT Service Management in the

Modern World
https://player.vimeo.com/video/300692621

Transcript for Video

Hi, my name is Simone Jo Moore. I am one of the authors of this ITIL
4 courseware.
In an ever changing world where manufacturers of the past are becoming
service providers of the future. The digital transformation revolution
affects all industries and is about more than just technology.
Businesses are rethinking their organizational structures to stay at the top
of the game. They are breaking down barriers from the past and building
collaborative units that takes them beyond their current way of working.
Technology is advancing faster today than ever before. Developments
such as cloud computing, infrastructure as a service, machine
learning, and block chain, have opened up fresh opportunities for
value creation, and led to IT becoming an important business driver
and source of competitive advantage.
With the necessity for an organization to stay current, IT service
management is a key strategic capability. ITIL, the most adopted guidance
in the world within IT Service management (ITSM), has also evolved.
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 Module 1 | Course Introduction

Remember, ITIL is a framework and as such provides guidance in

ITSM. We don’t “do” or “implement” ITIL as an objective. There is no
“one-size-fits-all” way of working so look to ITIL as a toolbox. ITIL 4 is
designed to collaborate with many frameworks and methods in the IT
industry, such as Lean, DevOps, Agile and many more.
It is essential you strive to understand the practices across ITSM
and not take them out of context but adopt and adapt them to your
organization’s need.
So, welcome to the ITIL 4 Foundation Course and enjoy this learning
experience.

Introduction to ITIL 4

ITIL 4 provides a practical and flexible approach to support

various organizations on their journey to the new world of digital
transformation.

ITIL 4 provides an end-to-end digital operating model for the

delivery and operation of IT-enabled products and services and
enables IT teams to continue play an important role in a wider
business strategy. ITIL 4 also provides a holistic end-to-end
approach that integrates frameworks such as Lean, Agile, and
DevOps.

Structure and Benefits of ITIL 4

The following figure shows the structure of the Service Value System.

Copyright © AXELOS Limited 2019. Reproduced under licence from AXELOS Limited.
All rights reserved
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The key components of the ITIL 4 framework are the Service Value
System (SVS) and the Four Dimensions model. The SVS represents
how the various components and activities of the organization work
together to facilitate value creation through IT-enabled services. The
SVS facilitates the integration and coordination and provides a strong,
unified, value-focused direction for the organization.
To ensure a holistic approach to service management, ITIL 4 defines
four dimensions of service management:
—— Organizations and people
—— Information and technology
—— Partners and suppliers
—— Value streams and processes

To ensure that SVS remains balanced and effective, it is important to

give each of the four dimensions an appropriate amount of focus.

Case Study: Axle Car Hire

Improvements and New Initiatives Introduction of
by Axle Car Hire new service offerings

Improvements
Improvement
to booking app AXLE Car Hire
in security of
travel app

Introduction of
Introduction new biometric
of electric cars system for staff

Introduction of
new driver assistance
system - Axle Aware

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 Module 1 | Course Introduction

This course uses the exploits of a fictional company “Axle Car Hire” to
enable a thorough analysis and understanding of the concepts of ITIL 4.
Axle Car Hire is transforming to modernize its services and improve its
customer satisfaction and retention levels, and is using ITIL 4 to do this.
In each module of the course, the employees of Axle will describe how
the company is improving its services, and explain how they are using
ITIL best practice to do this.
The introduction to the case study is provided in the Course Book.

Case Study: Meet the Key People at Axle

Four key employees of Axle Car Hire

Chief Information Officer (CIO) IT Business Analyst

Henri Durand Radhika

Product Manager for travel

experience IT Delivery Manager

Su Marco

Case Study: The CIO’s Vision for Axle

https://player.vimeo.com/video/300717123

This video is based on the Axle Car Hire case study, sourced from the ITIL® Foundation
(ITIL® 4 edition) manuscript by AXELOS.

Henri is the new Chief Information Officer (CIO) of Axle Car Hire and
he is planning to adopt ITIL 4 along with the new and improvement
initiatives that Axle is considering. Before moving on, let us hear what
message is the CIO of Axle conveying to his employees.

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Transcript for Video

Good Morning! Thank you very much for joining. I am Henri, your new
Chief Information Officer. It is an honor for me to lead and serve this
great company of ours and I look forward to working with you all!
We all know that since adapting the ITIL framework to our business,
Axle has improved its reputation in the market. But in recent years,
we are coming across new challenges, such as the digital revolution
and a need for being faster, cheaper, greener and easier. We want
to become the market leader and so we’re going through a phase of
reinventing ourselves by updating our approach through ITIL 4.
It’s time for us to consider a few important items that we need to
improve and some new ideas to experiment with. One of the items we
should consider for improvement is the booking app. Our booking app
is out of date and our technology is not keeping pace with changes in
our service offerings.
This digital era requires us to do the old things in new ways and
find a way to do things we couldn’t manage before. The complexity
of our systems goes beyond the technology - we must never forget
the human side, the people and the practices we use to make things
happen.
I think with the adoption of ITIL 4, we learn to have a balanced
focus on our technology, people, and practices. And this may also
help us to have more inclusive relationships across our enterprise.
Most importantly, ITIL 4 enables us to bring what we do into a more
encompassing value chain.
We can’t predict all the opportunities or changes this will bring to
our business, but one thing is clear, we will take our customers and
partners with us during this journey and continue to promote creative
and innovative services and products for our customers.
Axle is more than just hiring a vehicle. We focus on our customers’
whole travel experience and will continue to do so.
Let’s look forward for the best results as we start adopting ITIL 4.

Exam Details
At the end of the course, an exam will be conducted. The exam details
are:
—— Bloom Level: 1 and 2
—— Exam Format:
{{ Close Book format
{{ Web-based and paper-based
—— Questions: 40 Multiple Choice Questions (MCQs)
—— Passing Score: 65%

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—— Exam Duration:
{{ 60 minutes
{{ 15 minutes extra for non-native English speakers
—— Proctoring: Live/Webcam

After completing this training, you will be planning to take the

ITIL® Foundation certification exam. To give you an idea about the
certification exam, mock exams are included within the course.

ITIL 4 Certification Scheme

ITIL® Master

ITIL® Managing ITIL® Strategic

Professional (MP) Leader (SL)

ITIL® ITIL® ITIL® ITIL® ITIL® ITIL®

Specialist Specialist Specialist Strategist Strategist Leader

Create, Drive High Direct, Direct, Digital

Deliver & Stakeholder Velocity Plan & Plan & & IT
Support Value IT Improve Improve Strategy

ITIL® Foundation

The ITIL® (4) Foundation is the entry level certification, offering a

general awareness of the key concepts, elements, and terminology of
ITIL 4. This certification is targeted at professionals who need a basic
understanding of ITIL or who would like to progress to higher levels of
the ITIL 4 certification scheme.
After attaining the ITIL® Foundation certification, a candidate may
choose to take the ITIL Managing Professional stream or the ITIL
Strategic Leader stream.
The ITIL Managing Professional stream includes four modules. All
four modules are valuable independently, but all four modules must
be completed to obtain the ITIL® Managing Professional designation.
The completion of the ITIL® (4) Foundation is a prerequisite for the
ITIL Managing Professional modules.

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The ITIL Strategic Leader includes two modules, which are both
valuable independently but both must be completed to obtain the
ITIL® Strategic Leader designation. The ITIL Strategist Direct, Plan, &
Improve module is common to both streams. The ITIL Leader Digital
& IT Strategy module requires 3 years of experience (along with the
ITIL (4) Foundation certification) as a prerequisite.
If a candidate completes all 5 modules, gaining both designations
from the two streams, they will be eligible for assessment to become
an ITIL® Master.

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2
Service Management:
Key Concepts
Intent and Context
To address the real world challenges of service management and
adopt a service management framework, such as ITIL, it is important
to understand the key concepts of service management. These key
concepts include:
—— Organizations, service providers, service consumers and other
stakeholders
—— Value and value co-creation
—— Products and services and
—— Service relationships

These are generic concepts of service management and apply to all

services and service relationships.
Let us see what the experts say about the key concepts of service
management.

https://player.vimeo.com/video/302760468

Transcript for video

Welcome to the module on key concepts of Service Management.
The concepts within this module, apply to all services and service
relationships, regardless of their nature and underpinning technology. A
shared understanding of the key concepts and terminology of ITIL by
organizations and individuals is fundamental to address real world service
management challenges as it gives a common language and focus.
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To that end, this module explains some of the important concepts of

service management, including:
—— The nature of value and value co-creation
—— Organizations, service providers, service consumers and other
stakeholders
—— Products and services
—— Service relationships
—— Outcomes, costs and risks

Before we go any deeper, let’s first understand the nature of value and
value co-creation. Value is not a complex concept, it simply means
“being of use”. Something has value to someone as long as it is useful
or important and it can offer benefits.
Value is delivered by the service provider through its products and services
and the consumer receives value; but does this mean that the consumer
plays no role in the creation of value for themselves? Not exactly!
The relationship between a service provider and the consumer is not one-
sided. Value is co-created through an active and collaborative partnership
between service provider and consumer, as well as other stakeholders.
These other stakeholders can be investors and shareholders, regulators,
partners and suppliers, communities, and societies.
Delivering a service is not a passive experience. It is important to
recognize that the role of provider and consumer are sometimes
interchangeable. Organizations also use other service providers and
are thereby recognized as a consumer.
Let’s continue with the other concepts!

Service Management

Service Management
“Service management is defined as a set of specialized organizational
capabilities for enabling value to customers in the form of services.”

Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © AXELOS Limited
2019. Material is reproduced under licence from AXELOS Limited. All rights reserved.

Developing the specialized organizational capabilities mentioned in

the definition of service management requires an understanding of:
—— the nature of value
—— the nature and scope of the stakeholders involved
—— how value creation is enabled through services

The key focus of this module is the concept of “value”. The different
key concepts of service management are discussed as concepts for
creating value with services.

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 Module 2 | Service Management: Key Concepts

The Axle Car Hire Story

“Axle’s Services
Su: At Axle, our service is travel experience. We provide this service to our customers to create
value both for them and for Axle. Service management helps us to realize this value.”
Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © AXELOS Limited 2019. Material is
reproduced under licence from AXELOS Limited. All rights reserved.

Key Terms Covered in the Module

Organization “A person or a group of people that has its own functions with responsibilities,
authorities, and relationships to achieve its objectives.”
Service “A set of specialized organizational capabilities for enabling value for customers
Management in the form of services.”
Service “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 “When provisioning services, an organization takes on the role of the service
Provider provider. The provider can be external to the consumer’s organization, or they
can both be part of the same organization.”
Service “When receiving services, an organization takes on the role of the service
Consumer consumer.”
Product “A configuration of an organization’s resources designed to offer value for a
consumer.”
Value “Value is the perceived benefits, usefulness and importance of something.”
Customer “A person who defines the requirements for a service and takes responsibility
for the outcomes of service consumption.”
User A person who uses services.”
Sponsor “A person who authorizes budget for service consumption.”
Service “A description of one or more services, designed to address the needs of a target
Offering consumer group. A service offering may include goods, access to resources,
and service actions.”
Service “A co-operation between a service provider and service consumer. Service
Relationship relationships include service provision, service consumption and service
relationship management.”
Service “Joint activities performed by a service provider and a service consumer to
Relationship ensure continual value co-creation based on agreed and available service
Management offerings.”
Output “A tangible or intangible deliverable of an activity.”
Outcome “A result for a stakeholder enabled by one or more outputs.”

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Cost “The amount of money spent on a specific activity or resource.”

Risk “A description of one or more services, designed to address the needs of a target
consumer group. A service offering may include goods, access to resources,
and service actions.”
Utility “The functionality offered by a product or service to meet a particular need.”
Warranty “The assurance that a product or service will meet agreed requirements.”

Module Learning Objectives

At the end of this module, you will be able to:
 Understand the concept of value and co-creation of value by
service provider and service consumer.
 Understand how organizations create value through products
and services.
 Identify the importance of service relationships and service
relationship management.
 Describe the key concepts of creating value with services,
including outcome, output, cost, risk, utility and warranty.

Value and Value Co-Creation

Organization

Organization
“A person or a group of people that has its own functions with
responsibilities, authorities and relationships to achieve its objectives.”
(adapted from ISO 9001:2015)

An organization can be a legal entity, a part of a legal entity, or a

number of legal entities.
Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © AXELOS Limited
2019. Material is reproduced under licence from AXELOS Limited. All rights reserved.
Example
an organization can play both Organizations vary in size and complexity. An organization can be
roles at any given moment a legal entity, a part of a legal entity, or a complex network of legal
entities united by common objectives, relationships and authorities.
An organization that coordinates
holiday packages can fill the role of The relationships between and within organizations are complex. Each
service provider when it sells a package organization depends on others in its operation and development.
to customers, while simultaneously Organizations may hold different roles, depending on the different
filling the role of service consumer perceptions. In the context of service management, an organization
when it hires cab service to pick its can act as a service provider or as a service consumer; in reality, an
customers from airport. organization can play both roles at any given moment.

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 Module 2 | Service Management: Key Concepts

Value

Value
“Value is the perceived benefits, usefulness and importance of
something.”

The purpose of an organization is to create value for stakeholders.

Different person, groups, or entities in an organization always operate
in an integrated and coordinated way to facilitate value creation and
fulfil a common set of objectives. The term ‘value’ is an important
concept in service management, and it is a key focus of ITIL 4.
Value is not a fixed term; it is subject to the perception of the
stakeholders, whether they are the service consumer or part of the
service provider organization(s).

Co-Creation of Value

There was a time when the relationship between the service provider
and service consumer was considered to be mono-directional and
distant. It was determined that the service provider delivers the service
and the service consumer receives value; the service consumer
plays no role in the creation of value for themselves. This view fails
to take into consideration the complex and interdependent service
relationships that exist in reality.
Over the time, organizations recognized that value is co-created
through an active collaboration between service providers and
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service consumers, and other stakeholders. Service providers

should not work in isolation to define the value for their customers
and users. They should establish service relationships with
consumers to co-create value. Service relationships are mutually
beneficial, interactive service relationships with their consumers to
understand the consumer’s perspective of value. This will empower
service consumers to contribute to the definition of requirements,
design of service solutions, and to service creation and/or
provisioning itself.

Service Providers, Service Consumers, and Other Stakeholders

Service Provider
(Employees,
Managers, and
Service Owners)
Consumer

Other Stakeholders
(investors and
shareholders,
regulators,
partners,
communities, and
societies)

Different stakeholders participate in

creation of value

One of the most important stakeholder groups for any organization is

service consumers – organizations and individuals that consume the
services the organization provides. However, in service management
there are many other groups of stakeholder, including investors and
shareholders, regulators, partners, communities, and societies.
Each of these stakeholders must be understood in the context of
the creation of value in the form of services. The organization itself
(service provider) is also a key stakeholder, including its employees,
managers and owners.

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For the success and the continued existence of an organization, it

is important that relationships with all key stakeholder groups are
considered and managed. If stakeholders do not relate to with what
the organization does or how it does it, the provider’s relationships
with its consumers can be impacted badly.

Service Providers

Service Provision
service alliance
“When provisioning services, an organization takes on the role Service alliance is a collaboration
of the service provider. The provider can be external to the between two or more
consumer’s organization, or they can both be part of the same organizations providing services
organization.” to consumers. For example,
in the US Abbott Laboratories
warehouses and delivers the 3M’s
It is important that the service provider has a clear understanding
medical and surgical products to
of who its consumers are in a given situation and who the other
hospitals. So, here US Abbott and
stakeholders are in the associated service relationships.
3M are working in service alliance
The service provider and service consumer can be different to provide (products and) services
organizations, or they can both be part of the same organization. to hospitals.
One simple example of provider-consumer model is where the
service provider can be the IT department of an organization and Example
other departments or units can be regarded as consumers. In
reality, different comprehensive provider-consumer models exist. For If an organization wishes to purchase
example, a service provider can sell services on the open market to cab services for its employees from a
individual consumers or other organizations, or they can be part of a car rental service provider, the three
service alliance. consumer roles may be distributed
as follows:
„„ The Administration Officer and key
The Axle Car Hire Story
communications team members fill
Service Providers the role of customer, who analyze the
cab requirements of the company’s
“Henri: Axle Car Hire acts as a service provider. We provide cars employees and negotiate the
for hire. At the same time, other organizations, such as mechanics contract with the car rental service
and the companies that we buy our cars from, act as service provider and monitor the service
providers for Axle.” provider’s performance against the
Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © contracted requirements.
AXELOS Limited 2019. Material is reproduced under licence from AXELOS „„ The Finance Manager fills the role
Limited. All rights reserved. of the sponsor, who reviews the
proposed service arrangement and
approves the cost of the contract as
Service Consumers negotiated.
„„ The employees (including the

Service Consumers Administration Officer, Finance

Manager and communications
“When receiving services, an organization takes on the role of the
team members) fill the role of users
service consumer”.
when they order, receive, and use
the cab services.

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Service consumer is a generic role; in practice, service consumption

includes more specific roles: customer, user, and sponsor.

Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © AXELOS
Limited 2019. Material is reproduced under licence from AXELOS Limited. All rights
reserved.

Service consumer is a generic role that is used to simplify the

relationship between service provider and service consumer in a
service relationship. In practice, the service consumption involves
more specific roles such as customer, users and sponsors. Each of
these roles may have different definitions of value and sometimes
even conflicting expectations from services.
If an organization wishes to purchase cab services for its employees
from a car rental service provider, the three consumer roles may be
distributed as follows:
—— The Administration Officer and key communications team
members fill the role of customer, who analyze the cab
requirements of the company’s employees and negotiate
the contract with the car rental service provider and monitor
the service provider’s performance against the contracted
requirements.
—— The Finance Manager fills the role of the sponsor, who reviews
the proposed service arrangement and approves the cost of the
contract as negotiated.
—— The employees (including the Administration Officer, Finance
Manager and communications team members) fill the role of
users when they order, receive, and use the cab services.

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 Module 2 | Service Management: Key Concepts

The Axle Car Hire Story

Axle’s Service Consumers

“Su: Our most obvious service consumers are the people and organizations who hire our cars,
visit our offices, and use our website and booking app. For example, Yoshi and Faruq are service
consumers, and so is Food for Fuel. They are also our customers.
Radhika: Users are the people who make use of our services. Our car-hire users are the drivers
and passengers in our vehicles.
Marco: Sponsors are the people who authorize budgets. For Axle Car Hire, our sponsors include
Amelia from Food for Fuel, who approves the travel budget for her organization even if she
doesn’t travel herself.
Henri: Individual service consumers such as Yoshi and Faruq approve their own budgets, define
their requirements for car hire, and drive the cars. Therefore, Yoshi and Faruq act as sponsors,
customers, and users. Sometimes, though, they may share the trip with fellow drivers (friends or
family members). In this case, their contracts will include other users.”
Quoted text Source is ITIL® Foundation (ITIL® 4 edition), 2019. Copyright © AXELOS Limited 2019. Material is
reproduced under licence from AXELOS Limited. All rights reserved.

Activity   Case Study Discussion: Value from the Perspective of Different Stakeholders

Activity Time: 10 minutes

Focus
Value is subject to the perception of different stakeholders. Here is a generic example of different
stakeholders and definition of value for these stakeholders.

Stakeholder Value (Example)

Service consumers Benefits achieved, costs and risks optimized
Service provider Funding from the consumer; business development; image improvement
Partners Financial and non-financial incentives, business development; image
improvement
Shareholders Financial benefits, such as dividends; sense of assurance and stability

Task:
In consideration to the Axle Car Hire case study, identify some key stakeholders. What is the
definition or expectation of value for each of these stakeholders?

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