ITIL (Version 5) and the Hidden Economics of Service Management: Where Value Really Leaks Inside the Enterprise

# ITIL

# Service Management

Understanding how value is created, delayed, diluted, and lost across modern service ecosystems.

June 25, 2026

Sumit Jha

ITIL (Version 5) and the Hidden Economics of Service Management: Where Value Really Leaks Inside the Enterprise

During my consulting engagements over the years, I have often heard statements from IT leaders that directly or subtly translate to:

"We delivered everything we committed to the business."

On the surface, it sounds like success. The project is complete. The milestones are green. Service levels are being achieved. The budget has not been exceeded.

By all traditional measures, the initiative appears successful. Naturally, one would expect everyone to be happy with the outcome. Yet, more often than not, particularly from business leaders, comes a question that changes the tone of the conversation completely:

"So why aren't we seeing the benefits?"

I've heard variations of that question throughout my career. Not just in service management initiatives or transformation programmes, but across outsourcing engagements, automation and AI initiatives, service integration efforts, operating model redesigns, and enterprise-wide transformation programmes.

The question keeps appearing.

And the answer is rarely technology. It is also rarely people. More often, it is hidden somewhere in the journey between effort and outcome.

Over the years, I've become convinced that organisations spend too much time managing cost and not enough time understanding how value actually moves through the enterprise.

Cost is relatively easy to calculate. Finance can tell us what we spent. Procurement can tell us what we bought. Vendors can tell us what they delivered. Tools can tell us what was deployed.

What nobody seems particularly interested in measuring is how much value disappeared between the events/steps, or how much value was ultimately created as their outcome.

This may sound odd. After all, value is one of the most overused words in our industry. Everybody talks about it. But only a few organisations can explain how it actually travels through their business.

A few years ago, I worked with an organisation that had invested significantly in modernising a critical business capability. The programme was professionally run. It had sound governance, strong executive sponsorship and robust delivery discipline. If you looked at the programme dashboard, you would struggle to find anything wrong. Yet adoption remained disappointing.

The technology worked. The processes worked. The support model worked. But the business outcome didn't.

When we started digging deeper, we found dozens of seemingly minor issues:

Approval delays

Conflicting priorities

Teams are waiting for decisions

Multiple ownership models

Competing measures of success

Lack of meaningful value indicators

Unclear segregation of duties

None of them looked significant in isolation. However, collectively they created enough drag to dilute much of the value the programme was expected to generate.

What struck me was that nobody had been measuring those losses: everyone was measuring activity; nobody was measuring the friction beneath.

What made this particularly interesting was that nobody viewed these issues as ‘economic’ problems.

I remember one program where a relatively minor decision sat unresolved for almost six weeks because nobody wanted to own the risk. By the time the decision was made, the original business requirement had already changed. The organisation viewed approval delays as process issues, decision bottlenecks as governance issues, rework as an operational issue and ownership confusion an organisational issue.

But viewed collectively, these were all economic leakages. Every delayed decision carried a cost. Every unnecessary approval consumed management attention. Every unresolved dependency extended the time required to convert the investment into the outcome.

The organisation was not losing value because of a lack of investment. It was losing value because too much energy was being spent moving ‘work’ through the system. That is fundamentally an economic problem.

I see the same pattern repeatedly in service management. A service desk can achieve every target and still leave users frustrated. A change process can be fully compliant and still slow the organisation down. An incident process can close tickets efficiently while the business continues to experience disruption.

IT metrics tell one story, while business experience tells another.

This gap is where the hidden economics live. In traditional economics, we often discuss the cost of production.

In service management, I have come to believe that one of the most overlooked costs is the cost of coordination.

As organisations grow, increasing amounts of effort are spent obtaining approvals, aligning stakeholders, managing dependencies, resolving ownership questions, and navigating governance structures. None of these activities directly creates value. They exist to enable value creation.

The challenge is that very few organisations understand how much of their operating capacity is consumed by these activities. When they do, the numbers are often surprising. I could be wrong, but after seeing this pattern repeatedly over two decades, I've stopped believing that most service management challenges are technology problems. The more I reflect on it, the more I believe service management has spent decades focusing on visible costs while largely ignoring invisible ones, such as:

Decision latency (e.g., waiting three weeks for CAB approval on a low-risk change)

Coordination overhead (e.g., five teams attending the same status meeting without making a single decision or contribution)

Organisational complexity (e.g. an organisation carrying multiple legacy operating models, where teams performing similar functions operate under different processes, technologies, and governance structures)

Governance ambiguity (e.g. a critical business decision being discussed across multiple forums for weeks because ownership of the risk was never clearly defined)

Handoffs (e.g. work being considered ‘complete’ by one team while the receiving team spends days trying to understand the context and intent behind the request)

Waiting time (e.g. teams spending more time waiting for decisions, approvals, or dependencies than performing the work itself)

Rework (e.g. solutions being redesigned after implementation because business outcomes, success measures, or stakeholder expectations were never aligned at the outset)

These factors rarely appear as measurable business outcomes in their own right. Business stakeholders do not ask about decision latency, governance ambiguity, or coordination overhead. They ask:

Why are benefits delayed?

Why do costs continue to rise?

Why are productivity targets missed?

Why are transformation programmes struggling to deliver the expected outcomes?

What I have found over the years is that many of these seemingly operational issues are actually early indicators of future business performance. By the time their impact becomes visible in executive dashboards, operational reviews, or financial results, the value erosion has already occurred.

In other words, while the causes may remain hidden, their economic impact rarely does.

This is where I find the evolution reflected in ITIL (Version 5) particularly interesting. Not because ITIL suddenly discovered value. Value has always mattered. What has changed is the nature of the conversation.

The discussion is becoming less about individual activities and more about outcomes. Less about functions and more about flows. Less about process optimisation and more about value realisation.

Viewed through an economic lens, this shift matters. The longer it takes to transform effort into value, the higher the cost of that value. The more coordination required to achieve an outcome, the lower the economic efficiency of the system. The more friction introduced between strategy and execution, the greater the risk that intended value never reaches the business.

This is where concepts such as value streams, governance, product thinking, continual improvement, and end-to-end accountability become more than service management practices. They become mechanisms for improving the economics of how organisations create value.

One of the observations that significantly shaped my thinking over the years was that organisations are exceptionally good at reporting what they delivered, but remarkably poor at reporting what value was actually realised.

A project can be completed successfully. A platform can go live. An automation initiative can achieve every deployment target. Yet the business may still be waiting for the outcome that justified the investment in the first place.

That gap became the basis for how I started defining value indicators. Not technical indicators. Not project indicators. But indicators that helped reveal whether the expected value was genuinely reaching the business.

Where was value accelerating? Where was it slowing down? Where was it being diluted? And perhaps most importantly, where was it silently leaking away? Once those indicators were introduced, conversations changed dramatically.

Instead of discussing activities, we began discussing outcomes. Instead of defending effort, we began examining impact. Instead of reporting technology performance, we began articulating business value in a language that business stakeholders could understand, challenge, and appreciate.

Over the years, one lesson has consistently reinforced itself across every transformation, service improvement initiative, and operating model review I have been involved in: Organisations rarely struggle to identify costs. They struggle to identify where value is being created, delayed, diluted, or lost.

In many cases, the greatest opportunities are not found in reducing cost, but in eliminating the small, often invisible leakages that prevent value from reaching the business at the speed and scale intended.

Once those leakages become visible, they can be addressed. Once they are addressed, technology organisations stop being viewed merely as service providers. They begin to be recognised as contributors to growth, resilience, innovation, and competitive advantage.

Perhaps that is the most important lesson I take from the direction ITIL (Version 5) is heading. The future of service management is not simply about running services more efficiently. It is about understanding how value is created, how value moves, and where value is lost.

Organisations that learn to measure and manage that journey effectively will find themselves having very different conversations with their stakeholders. Conversations that are no longer centred on cost.

But on outcomes. Impact. And value.

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