Well, let's take a quick look at some definitions from the ITIL 2011 edition glossary, and some comments from the 2011 edition books, add in some interpretation (yes, my subjective opinions), and see what conclusion we come to.
"business service management: The management of business services delivered to business customers. Business service management is performed by business units."
"business service: A service that is delivered to business customers by business units. For example, delivery of financial services to customers of a bank, or goods to the customers of a retail store. Successful delivery of business services often depends on one or more IT services. A business service may consist almost entirely of an IT service – for example, an online banking service or an external website where product orders can be placed by business customers. See also customer-facing service."
"customer-facing service: (ITIL Service Design) An IT service that is visible to the customer. These are normally services that support the customer’s business processes and facilitate one or more outcomes desired by the customer. All live customer-facing services, including those available for deployment, are recorded in the service catalogue along with customer-visible information about deliverables, prices, contact points, ordering and request processes. Other information such as relationships to supporting services and other CIs will also be recorded for internal use by the IT service provider."
"IT service: A service provided by an IT service provider. An IT service is made up of a combination of information technology, people and processes. A customer-facing IT service directly supports the business processes of one or more customers and its service level targets should be defined in a service level agreement. Other IT services, called supporting services, are not directly used by the business but are required by the service provider to deliver customer-facing services. See also core service; enabling service; enhancing service; service; service package."
So, an IT service could be a customer-facing service, which could almost be a complete business service. There is a slight quibble that I have here as IT services support business processes (according to the definition) but the definition for customer-facing services is slightly more open in saying that it normally supports business processes and facilitates outcomes. In my experience, some IT services directly support the external services and/or products of the whole business - it might not be about supporting a process. However, we'll leave that point there as I guess ITIL might define these as business services.
"Service: A means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks. The term ‘service’ is sometimes used as a synonym for core service, IT service or service package. See also utility; warranty."
"IT service management (ITSM): The implementation and management of quality IT services that meet the needs of the business. IT service management is performed by IT service providers through an appropriate mix of people, process and information technology. See also service management."
"service management A set of specialized organizational capabilities for providing value to customers in the form of services."
They way I read this is that Service Management is a generic item, IT Service Management is a sub-set or application of Service Management performed by IT Service Providers. Business Service Management must be a type of Service Management which is performed by Business Units - but potentially it's different from IT Service Management.
Does this reinforce the potential divide between IT and 'the business'?
Some IT departments want to be considered a peer with the other parts of the business, and I think that you could read this as being the whole business including IT - see the definition for 'business'.
"business: (ITIL Service Strategy) An overall corporate entity or organization formed of a number of business units. In the context of ITSM, the term includes public sector and not-for-profit organizations, as well as companies. An IT service provider provides IT services to a customer within a business. The IT service provider may be part of the same business as its customer (internal service provider), or part of another business (external service provider)."
So, is IT a Business Unit?
Well, according to the Service Strategy book, it could be.
Note from the Service Strategy book, on external customer-facing services: "Internal IT organizations are not the only providers of external services to customers. Outsourcers, internet service providers and cloud service providers are all examples of organizations that are in the business of providing external services - and the technology departments providing these services are business units, supported by internal IT service providers."
Another couple of definitions
"business unit (ITIL Service Strategy): A segment of the business that has its own plans, metrics, income and costs. Each business unit owns assets and uses these to create value for customers in the form of goods and services."
"IT service provider (ITIL Service Strategy): A service provider that provides IT services to internal or external customers."
My conclusion on the guidance from ITIL 2011 is that an IT or technology department could be both a business unit delivering business services and an IT Service Provider delivering IT services. According to my reading of ITIL, this means that they would need to be practicing IT Service Management and Business Service Management. You could also have 2 different organizational units - an IT department which purely delivers IT Services, and a separate technology business unit which uses these IT Services to support the delivery of Business Services.
So, maybe we need a book on what Business Service Management is, and how to do it well. After all, ITIL is "a set of best-practice publications for IT service management" according to the glossary. Therefore it doesn't tell you how to do Business Service Management.