Abstract: IT Service Management (ITSM) has historically been a digitally bounded discipline, limited to data artefacts such as logs, tickets, and network telemetry. This paper introduces Physical-Digital ITSM Integration (PDII) as a new paradigm wherein AI-powered video analytics, deployed on edge computing infrastructure, becomes the primary intelligence layer connecting the physical operational environment to ITSM workflows. Drawing on empirical research, industry case studies, and emerging AI capabilities including Vision Large Language Models (VLLMs), Small Language Models (SLMs) on edge hardware, and agentic orchestration architectures, this paper demonstrates that PDII represents a category-defining evolution of ITSM. The paper contextualises this evolution within India's industrial and regulatory landscape, including DPDP Rules 2025 and Industry 4.0 manufacturing imperatives, and concludes with a practical implementation framework and directions for future research.

Keywords: AI Video Analytics, ITSM, Edge AI, Physical-Digital Integration, Predictive Service Management, EdgeBox, Indoai, SLM, AIOps, DPDP 2025

Downloads: | DOI: 10.17148/IARJSET.2026.13436