ITIL 4 Foundation Certification Notes: Key Concepts of Service Management

[ITIL® 4 Foundation Study Notes] This chapter provides an overview of the Key Concepts of Service Management for ITIL® 4 Foundation Exam which accounts for 5 questions on the exam.

ITIL® 4 Foundation Exam Syllabus

Learning Outcome Assessment Criteria ITIL® Book References Bloom’s Level No. marks

1. Understand the key concepts of service management

1.1 Recall the definition of:

  • a) Service
  • b) Utility
  • c) Warranty
  • d) Customer
  • e) User
  • f) Service management
  • g) Sponsor

2.0, 2.2.2, 2.3.1, 2.5.4



1.2 Describe the key concepts of creating value with services:

  • a) Cost
  • b) Value
  • c) Organization
  • d) Outcome
  • e) Output
  • f) Risk
  • g) Utility
  • h) Warranty

2.1, 2.1.1, 2.2 and all subsections of 2.5



1.3 Describe the key concepts of service relationships:

  • a) Service offering
  • b) Service relationship management
  • c) Service provision
  • d) Service consumption

2.3.2, 2.4, 2.4.1



ITIL® Definition

  • 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
  • Value – the perceived use, benefit or importance of an object/process/product/service – successful products and services would add value to the end users/consumers
    • Value is created when a service has more positive than negative outcomes.
  • Service management (according to ITIL®) – a set of specialized organizational capabilities for enabling value for customers in the form of services. An organization would need to understand the nature of value, stakeholders and how create can be created through services.
  • Organisation – a person/group of people/teams/body that has functions with responsibilities, authorities and relationships to create values by achieving objections.
  • Service Provider – an organization that provides a service – can be internal / external to the user / consumer organization. A service provider needs to know who are the customers and stakeholders
    • need to consider these aspects of the service: cost, risk, outputs, outcomes, utility, warranty
  • Stakeholder – a person or organization that has an interest / involvement in an organization, product, service, practice or others which will be affected by them
    • e.g. service consumer, service provider, service provider employees, society and community, charity organisations, shareholders
  • Service Consumer – entities receiving the service, can be divided as 3 roles:
    • 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
  • Products – created from configurations of resources, e.g. people, information, technology, value streams, processes, suppliers, partners
  • Output – a tangible or intangible deliverable of an activity
  • Outcomes – a result for a stakeholder enabled by one or more outputs
  • Cost – the amount of money spent on a specific activity or resource
  • Risk – a possible event that could cause harm or loss or make it difficult to achieve objectives. Risk can also be defined as uncertainty of outcome and can be used in the context of measuring the probability of positive outcomes as well as negative outcomes
  • 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
  • Service Offerings – a description of one or more services, designed to address the needs of a target consumer group, may include goods, access to resources and service actions
  • Service Relationship – co-operation between a service provider and a service consumer, including service provision, service consumption and service relationship management
  • Service Provision – activities performed by an organization to provide services, including management of resources to deliver the goods, service, actionss, service performance management and continual improvement
  • Service Consumption – activities performed by an organization to consume services, including management of the consumer’s resources to use the service, service use actions and receiving goods
  • Service Relationship Management – includes activities performed jointly by a service provider and a service consumer to ensure continual value co-creation based on service offerings

Co-creation of Value

  • Value creation cannot be done through uni-directional relationship. Value is created through a bi-directional relationship between the organization and its customers by focusing on customer experience and interaction, i.e. value is co-created with customers.
  • The more active customer involvement the better. Organizations need to collaborate with their consumers as well as the suppliers that help them offer valuable services.
  • Service providers also need to collaboration with the organization (which is considered a customer) to co-create value.
  • Each product/service offered to customers is part of the total service relationships.

Conclusion: What’s needed for the ITIL® 4 Foundation Exam

This ITIL® 4 Foundation study note includes:

  • The definitions of Service, Utility, Warranty, Customer, User, Service Management, Sponsor and Service Relationship
  • Touched upon how value can be co-created with collaboration between consumers and suppliers


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Edward Chung

Edward Chung aspires to become a full-stack web developer and project manager. In the quest to become a more competent professional, Edward studied for and passed the PMP Certification, ITIL v3 Foundation Certification, PMI-ACP Certification and Zend PHP Certification. Edward shares his certification experience and resources here in the hope of helping others who are pursuing these certification exams to achieve exam success.

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