The End of the Boundary Between Products and Services: What the New ITIL Reveals About Value Management in Modern Organizations
"For decades, organizations separated products and services into distinct structures. The new ITIL suggests a different approach: viewing both as part of the same value creation flow."
For years, organizations structured their operations around clearly defined boundaries. Product belonged to one area. Service belonged to another. Development built. Operations sustained. Support assisted. Business defined priorities. Technology executed. Although this division helped organize responsibilities, it also created a side effect well known to many leaders: the fragmentation of value creation. Each area began optimizing its own objectives, indicators, and processes. Clients, however, never consumed departments. They never consumed organizational charts. They never consumed internal flows. Clients have always consumed an experience.
Recently, while reviewing the ITIL (Version 5) materials as a participant in the Beta Testing Programme from PeopleCert , one specific change caught my attention. This is not simply the evolution of a framework widely recognized in the market. It is a shift in perspective. For the first time, products and services occupy the same core within an integrated value creation model. And perhaps this is one of the most relevant messages for modern organizations.
The Client Never Saw the Separation
Within organizations, it is common to discuss where one responsibility ends and another begins. What is the role of the Product Manager? Where does Discovery end and Delivery begin? What belongs to Engineering? What belongs to Operations? What belongs to Support? These discussions have value from an organizational perspective. They help define responsibilities, specializations, and governance mechanisms.
But there is an important difference between the organization's perspective and the client's perspective. For the client, there is no Product Management. There is no Service Management. There is no Upstream or Downstream. There is only one expectation: To receive value. When an organization delivers a fragmented experience, it makes little difference to the client which area failed. The impact is perceived as a single negative experience. Likewise, when the experience is positive, the client rarely distinguishes which areas contributed to that outcome. They simply perceive value.
Flow Matters More Than Boundaries
One of the most relevant lessons of Enterprise Agility was showing that local efficiency does not guarantee global results. A team can be extremely efficient. A department can achieve all its goals. An area can operate within the highest performance standards. And yet, the organization can still fail to deliver value.
The reason is simple. Value is not created within silos. Value is created through the flow that connects different capabilities. This principle transformed the way many organizations began viewing digital products, customer journeys, and value streams. Now, this same logic appears to be reaching the relationship between products and services.
The question is no longer:
Who is responsible for this stage?
And instead becomes:
How does this stage contribute to the complete value creation lifecycle?
Products and Services Do Not Compete
For some time, the market debated whether the future belonged to product-oriented organizations or service-oriented organizations. Perhaps that was the wrong question. Products and services do not compete. They complement each other.
A digital product without adequate support will struggle to sustain value over time. A service without continuous evolution tends to lose relevance. A product strategy disconnected from operations creates frustration. Operations disconnected from strategy create stagnation. The true competitive advantage does not lie in choosing one model over the other. It lies in the ability to integrate both within the same value creation system.
A Management Shift, Not Just a Change in Terminology
Perhaps the main contribution of this new perspective is not the inclusion of the word "Product" alongside "Service". The most relevant contribution lies in the implicit message. Modern organizations need to stop optimizing boundaries and start optimizing flows. They need to stop measuring only the efficiency of individual parts and begin understanding the effectiveness of the system. They need to recognize that clients do not experience departments, processes, or organizational structures. Clients experience outcomes. And those outcomes are the result of the integration of strategy, products, services, technology, operations, and people.
What Has Really Changed?
When observing the new model, a natural question emerges: Are products and services now the same thing? The answer is NO. Products and services still have distinct characteristics, funding models, metrics, and responsibilities. What has changed is the way value creation is viewed. The model recognizes that both move through the same organizational lifecycle. Both need to be discovered, designed, acquired, built, transitioned, operated, delivered, and supported. More importantly, both depend on the same organizational capabilities to generate sustainable outcomes. The innovation is not in eliminating the differences. It is in recognizing that those differences should not become barriers.
Final Reflection
For years, we have sought to improve Product Management. We have also sought to improve Service Management. Perhaps the next step in organizational maturity is recognizing that both are part of the same journey. Not because they are identical. But because value emerges precisely from the connection between them.
The organizations that understand this shift first will probably not be those with the best silos. They will be those capable of building the best value creation flows. And perhaps that is the most important message behind the evolution of ITIL. The future does not belong to organizations that choose between Products or Services. It belongs to organizations that can integrate both into a continuous system of creating, delivering, and sustaining value.
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