"What the customer values is frequently different from what the IT organizaiton believes it provides. Mind the Gap."
- ITIL Service Strategy, pg 31
A good place for IT to start identifying with the business is the application, since it is closer to the business than 'infrastruture' which to most business people (and some in IT) is a confusing mess. However, even if we succeed in understanding the applications and their associated interdependencies --- which for most organizations would be a giant leap forward --- it may not link precisely with key business processes. Worse, these business processes may not align well with external customers and can negatively impact the effectiveness of managing a portfolio of services.
In order to truly understand the value of a service portolio you will need to understand the business processes they support. More importantly, these business processes should be defined and optimized from a customer point of view. If either or both of these conditions do not exist, then managing the service portfolio for business value may be fundamentally flawed.
Moving up the food chain from infrastructure (think technical service catalogs) to applications (think business service catalogs) will eventually require an understanding of key business processes. The systems orientation of limiting service definiton to applications is just that; internally focused and often excluding the outside world (where your customers are).
I continue to read an article by Fred Nickols called, The Difficult Process of Identifying Processes; why it isn't as easy as everyone makes it sound. In it, the author describes how transactions are often a more effective indicator of business processes, which flow across functional boundaries (just like ITIL processes do). The establishment of boundaries between these flows of activity is something that requires the business to define, not IT. Without it your definition of 'end-to-end' may be very different than the the business'. The CPP (Customer Expectation Management Method) is ideally suited to helping solve this dilemma and establishing a business-driven definition of 'end-to-end', and one that does not exclude your external customers.
Mind the Gap.