This paper describes an IT-driven service innovation with an in-depth case study. The case study shows the different stages of RFID implementation in the jewellery supply chain of a retailer including all stakeholders. Based on a review of the literature on service engineering, information systems and management, we propose a framework to enhance IT-driven service innovation. Service science lacks procedures, methods and tools for developing new services. The main contributions of this paper lie in proposing a framework that supports service innovation in an IT-driven case. We illustrate our framework with an in-depth case study and infer lessons that can be useful to managers who wish to duplicate IT-driven service innovation for RFID technology. This framework includes both strategic and operational dimensions to help managers anticipate key challenges and pitfalls in service innovation projects.