© 2008 ibm corporation the challenge of services in the 21st century: opportunities for education...

© 2008 IBM Corporation

The Challenge of Services in the 21st Century: Opportunities for Education and Business

Service Science Management & Engineering - London 1st July 2008

The Challenge of Services in the 21st Century- Opportunities for Education and Business

Kevin Bishop, Vice President, Marketing, IBM NE Europe

© 2008 IBM Corporation2

The Challenge of Services in the 21st Century: Opportunities for Education & Business


Outline

Why Focus on Service?

Business challenges in service

Service Science whitepaper




Why focus on service?

Major proportion of GDP and employment in western world

– Service sector accounts for over 70% of EU’s economic activity

– Nearly 70% of EU’s workforce are employed in service sectors

China and India are also assessing their role in the service economy Source: OECD




Why Services Science?Services dominate Developed economies globally, but lag in R&D, training and professionalisation. Their importance as a motor for growth and competitive advantage drives the need to close these gaps.

Source: OECD Science, Technology and Industry Outlook 2004 - Jerry Sheehan

Norway

Iceland

SwedenFinlandPortugal

AustriaNetherlands

Italy

France

Spain

Greece

Germany

Denmark

Belgium

20

30

40

50

60

70

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

Average BERD intensity, 1995-2000as a % of GDP (OECD data)

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% t

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at C

IS3

su

rvey

)

Norway

Iceland

Sweden

Finland

Portugal

Austria

Netherlands

Italy

France

Spain

Greece

Germany

Denmark

Belgium

20

30

40

50

60

70

0.0 0.2 0.4 0.6 0.8

Average BERD intensity, 1995-2000 as a % of GDP (OECD data)

Inn

ov

ati

on

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sit

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99

8-2

00

0a

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% t

ota

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ms

(Eur

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Manufacturing Services

© 2008, IBM




Outline







Business Challenges in Service

Understanding the nature of service systems

Developing new and better services and speeding up new service introduction process

Managing the transition to a service culture

Getting/keeping people with service mindset and skills




Service Systems: a type of complex system

“People-Oriented, Services-Intensive, Market-Facing Complex Systems – complex systems and services – are very similar areas

around which we are framing the very complicated problems of business and societal systems that we are trying to understand.”

– Irving Wladawsky-Berger, IBM VP Innovation (Oct. 9, 2006)

Unravelling and understanding complex systems is a foundation stone for SSME, from whichbetter services concepts, implementation and management models and tools can be developed.

© 2008, IBM




What Problem Are We Trying To Solve?

Corporations, academia and government are now acknowledging the need to invest in service innovation in order to support the evolving globally distributed service-dominated economies.

Customer satisfaction with services is low and in many cases declining, industry dependency on service revenue is increasing and the economics for effective delivery are poor – especially in professional services.

The gap between customer demands and fulfilled expectations is growing due increased complexity. This leaves corporations, governments and national economies exposed to the potential of competitive and economic threats.

As technology becomes more complex, B2B and B2C companies must assume prime responsibility for customer consumption and retention.

What is required?

Fundamental and actionable changes in our approach to service delivery through research and innovation

What are the Goals?More value and higher satisfaction levels for customers

Dramatically improved margins for industryIndustry relevant projects for Academia




Developing people with the service mindset and skills

Depth Breadth Practical Experience Communications Teaming Management People Management Strategic Planning Problem solving via informatics Problem solving via social

networks Flexible, adaptive and

entrepreneurial Produced on demand

Service Scientists: Adaptive Innovators

Source: IBM Research survey March 2007

What industry wants from professional researchers

The skills needed for services innovation are in short supply; science and engineering tertiary education does not seek to develop skills required for innovation and entrepreneurship.

“Need l-shaped, T-Shaped people …” Stuart Feldman (Oct 6, 2006)

Business and M

anagement

Science and E

ngineering

Econom

ics and Social S

ciences

Math and O

perations Research

Com

puter Science &

Info. System

s

Industrial and System

s Engineering

Business A

nthropology

Organizationa

l Change &

Learning

Business and M

anagement

Science and E

ngineering

Econom

ics and Social S

ciences

Math and O

perations Research

Com

puter Science &

Info. System

s


s Engineering

Business A

nthropology

Organizationa

l Change &

Learning

Business and M

anagement

Science and E

ngineering

Econom

ics and Social S

ciences

Math and O

perations Research

Com

puter Science &

Info. System

s


s Engineering

Business A

nthropology

Organizationa

l Change &

Learning

Business and M

anagement

Science and E

ngineering

Econom

ics and Social S

ciences

Math and O

perations Research

Com

puter Science &

Info. System

s


s Engineering

Business A

nthropology

Organizationa

l Change &

Learning

© 2008, IBM




SSME: what is it?

SSME is an urgent call to action to get more systematic about service innovation

SSME is also a proposed academic discipline and the basis for a proposed new profession – the service scientist

SSME is also a proposed research area, the study of service systems

SSME is highly multidisciplinary and spans areas of science, engineering, and management

To oversimplify:

– Science is a way to transform data about service systems into knowledge

– Engineering transforms the knowledge into new value

– Management continuously improves the end-to-end value creation process and directs investment

SSME is a call to action to improve service innovation, an emerging academic discipline and a new, integrative area of research.

© 2008, IBM




D. Service Management1. Service Marketing 2. Service Operations 3. Service Management 4. Service Innovation Management5. Service Leadership6. Service Quality7. Service Lifecycle 8. Human Resources Management 9. Customer Relationship Management 10. Service Accounting11. Service Sourcing12. Services Law13. Globalization of Services14. Service Management Education

D. Human Behavior in Service Systems1. Service Systems Evolution2. Behavioral Models of Services3. Decision Making in Services4. People in Service Systems5. Organizational Change in Services6. Measurement and Incentive in Services7. Customer Psychology

E. Service Design1. Service Design Theory 2. Service Design Methodology 3. Service Representation 4. Aesthetics of Services 5. Service Design Education

G. Service Arts 1. Service Arts Theory 2. Services-Inspired Art3. Traditional Service Arts4. Contemporary Service Arts5. History of Service Arts

H. Service Industries1. The Service Industry2. Information Services3. Business Services4. Professional Services5. Business Consulting6. Customer Relations7. Maintenance and Repair8. Public Services9. Social Services10. Health11. Hospitality12. Transportation13. Retail and Wholesale14. Financial15. Entertainment and Media16. Religious and Spiritual Services17. Other Service Industries

A. General1. SSME Education2. Research in SSME3. SSME Policy4. History of Services5. Services Market6. Miscellaneous

B. Service Science1. Service Theory2. Economics of Services3. Mathematical Models of Services4. Services as Value Co-Creation Systems5. Services as Dynamic Systems6. Services as Multi-agent Systems 7. Services as Customer-Intensive Systems8. Service Complexity Theory 9. Service Innovation Theory10. Service Science Education

C. Service Engineering1. Service Operations 2. Service Optimization 3. Service Systems Engineering 4. Service Supply Chains5. Service Engineering Management6. Service Systems Performance 7. Service Information Systems8. Service Standards9. Assetization of Services10. Service Engineering Education

Services Science: what’s in the box?SSME - Service Science, Management, and Engineering Discipline Classification System v 0.2 May

2007https://w3.webahead.ibm.com/w3ki/display/SSME/SSME+Disciplines

© 2008, IBM




Services Science: the roadmap for skills

© 2008, IBM

SSME Launched

2004

EstablishAwareness 2004-2006

Adoption 2007 -2009

Embed 2008 -2010

Business Value2009 and Beyond

Plan Mobilize Execute Reinforce

Increase Focus and Impact for SSME/S421C

Key

Act

ivit

ies/

Met

rics

Results

White papers

Initial discussions with universitypartners

Workshops

Press hits onSSME/S421C

Web hits

Awareness in academia, industry, gov’t

Early adopters

SSME Summit

SSME tools andprograms growing

S421C defined

Service systems ascomplex systems

Government andfoundation funding

SSME graduates

Internal training

Internal hiring plans

Better trained workforce

+Service innovation

+Sales impact

+Client satisfaction

+Productivity

+Efficiency

+Learning speed onengagements

Broadened awareness

SSME curriculumdevelopment

focus and buy in

Joint researchprojects/awards

Case studiesdeveloped

Cross IBM SSME

White papers


White papers


Workshops


Web hits


Early adopters

SSME Summit


S421C defined



SSME graduates

Internal training



+Service innovation

+Sales impact


+Productivity

+Efficiency


Broadened awareness




Workshops


Web hits


Early adopters

SSME Summit

Workshops


Web hits


Early adopters

SSME Summit


S421C defined



SSME graduates

Internal training



S421C defined



SSME graduates

Internal training



+Service innovation

+Sales impact


+Productivity

+Efficiency



+Service innovation

+Sales impact


+Productivity

+Efficiency


Broadened awareness




Broadened awareness







Outline







Key Objectives

To build consensus on the need for service innovation

To identify knowledge and skills required for service innovation

To offer recommendations for business, government and academia




Paper Development Process

LaunchProcess /

Form Industrial

& AcademicCommittee

Industry / Academic

SymposiumIn

Cambridge

Green Paper

Development

Broad Industrial, Government& AcademicConsultation

Process

Paper Revision

and Whitepaper Release

Mar 07 July 07 July - Sept 07 Oct - Dec 07 Feb - Mar 08




Improve understanding& create needed dialogue

Alignstakeholder commitments& actions

Service Science

Systematic approach to service innovation

Shared language and frameworks Deep customer-provider knowledge and modelling

Broad inclusive interdisciplinary & cultural approach

Awareness and prioritisation

Education: Adaptive innovators (“service mindset”)& SSME certificates(“T-shaped”)

Research: Service systems & Value propositions as foundational and integrative concepts

Business & Government: Service innovation roadmaps &Raised awareness

Strategies to guide on-going change

Transformingperformancemeasurement

Increasing Value from Service Innovation

Improve service quality, productivity & compliance

Sustainable innovation with reduced environmental hazards & risks

Improvements in employment

Economic growth & prosperity

OverallObjectives

Concepts & Deliverables

Key Challenges

StakeholderPriorities

Enabling Solution

“Succeeding through Service Innovation”White Paper

Education:People & Expertise

Research:Bridging & Integrating

Practitioners & Policy Makers:Data & Investment

Rationale and logic flow




Recommendations for business

1. Review existing approaches to building repeatable service systems and expand project-based collaboration with multidisciplinary teams from academia;

2. Build large and inclusive interdisciplinary service science communities involving graduates with SSME qualifications;

3. Provide specific challenges and funding for service system research;

4. Develop appropriate organisational arrangements and practices in the area of business partnerships to enhance industry-academic collaboration;

5. Work with stakeholders to include sustainability measures and create actionable service innovation roadmaps.




Recommendations for policy

1. Promote the importance of service systems and fund the development of an integrated theory of service systems;

2. Require leading-edge practices in government agencies to develop infrastructures, methods and data sets for service innovation;

3. Develop reliable economic data on knowledge-intensive service activities across sectors to underpin leading practice for service innovation;

4. Make public service systems more comprehensive and citizen-responsive;

5. Encourage the development of service innovation roadmaps through industry-academia-government collaboration.




Recommendations for research

1. Develop an interdisciplinary approach to service research;

2. Foster disciplinary bridging and integration efforts with grand research challenges;

3. Establish service system and value proposition as foundational concepts;

4. Work with practitioners to create data sets to better understand the design and evolution of service systems;

5. Create modelling and simulation tools for service systems.




Recommendations for education

1. Enable graduates from various disciplines to become “T-shaped professionals”, adaptive innovators with a “service mindset”;

2. Promote SSME programmes and qualifications;

3. Develop a modular template-based SSME curriculum;

4. Explore alternative and innovative provisioning routes for SSME related education.




Social Science (People)

Management(Business)

Engineering (Technology)

Core Field of Study

Interactional Expertise Across Other Fields

Tower of Babel“Biggest problem in businessis people don’t know how to talk to other people in the

language they understand.”Charles Holliday, CEO Dupont

Based on slides by Jean Paul Jacob, IBM

Across industriesAcross culturesAcross functions

Across disciplines=

More experiencedMore adaptive

More collaborative

Designed together

How will the education system meet the growing demand for T-shaped people across both global

and local service enterprises?




Summary

The changing business landscape makes service innovation an

imperative.

Service innovation requires a better understanding of service systems,

but the knowledge and skills required are not readily available.

Business, government and academia need to work together towards an

interdisciplinary approach to research and education.

The whitepaper, in conjunction with initiatives like SSMENetUK, serves

as a basis for formulating action plans.




The need, the response & the part you can play..

10.00 am Welcome and Introduction

10.15 am Keynote: Growth in the Services Economy: The need for new knowledge and skills

11.00 am Panel: Services, business & needs for a skilled workforce

12.15 pm Lunch

1.00 pm Panel: Responding to the need for transformation in Higher Education

2.15 pm Breakout: Your Response

3:30 pm Next: The September workshop and follow-up




Thank you

Thank You

MerciGrazie

Gracias

Obrigado

Danke

Japanese

English

French

Russian

German

Italian

Spanish

Brazilian PortugueseArabic

Traditional Chinese

Simplified Chinese

Hindi

Tamil

Thai

Korean

Diolch

Welsh

© 2008 IBM Corporation

The Challenge of Services in the 21st Century: Opportunities for Education and Business


IBM Appendix:Services Science progress

© 2008, IBM

April 2-4, 2008 – Paris, France © 2008, AFSMI, SSPA, TPSA

Executive summary

• Services innovation is the 21st century differentiator in the globalised economy

• IBM is a global leader in stimulating the development of a ‘science of services’

• Services Science is the study and application of Scientific, Management, and Engineering disciplines to Services (‘SSME’)

• Hence services research, drawing on a wide range of disciplines, is a central motor for SSME

• Embracing and leading in SSME will be essential to grow and differentiate IBM services businesses; many potential business benefits have been advanced which need to be tested

• This will require collaboration spanning IBM Research and all market-facing business units, working with clients and academia in a collaborative framework on a local and WW basis

© 2008, IBM


The SRII - Who’s Involved


What’s been achieved so far: U.S. perspective

• Global Community driven out of Almaden – Monthly SSME Forum Calls

• Internal awareness and connection-building– Monthly SSME Global Leadership Calls

• Lab focal point for internal and external SSME activities

• Thought Leadership and Press– Over 100 US press articles (e.g., NY Times, Wall Street Journal)– Over 12,000 web hits and growing by over 500 a month– SRI announcement – Service Research and Innovation Initiative – includes

other industry players, such as Oracle, Accenture, Cisco

• Science and Publications– 15 academic articles (e.g., CACM special issue, POMS, IEEE Computer);– IBM Systems Journal in progress– 16 conferences, workshops, panels (e.g., INFORMS, Frontiers)– Special Interest Groups formed in INFORMS, AIS, HFES; IEEE and ACM

SSME has gathered major global momentum in the last 24 months in media, research, industry and government

© 2008, IBM



• Workshops and Funding– SSME summit at Palisades with more than 250 participants from 22 countries – 10+ National Workshops (China, Japan, India, Norway, Germany, Israel, Ireland,

Nordic, Portugal)– Germany – $87M Innovation with Service– Japan – $30M Service Productivity– China – Five Year Plan in Modern Services– Pending – EU NESSI; US legislation; NSF Complex Systems– NESSI Service Engineering, Service Science working groups – Taiwan, Korea, Portugal, India – includes government sponsorship (MOU’s)– WIRED – Maine, New Hampshire, Vermonet SSME Curriculum development (US Dept

of Labor)– 9 recent SUR’s: NYU, Friedrich Schiller University, Wageningen University, University

of Stuttgart, University of Karlsruhe, University of Lecce, Universidad Carlos III de Madrid, Universität Frankfurt Main, University of Hawaii Maui Community College


© 2008, IBM


• Skill Needs and Course Development

– 2006 – 38 courses, programs, degrees in 11 countries (e.g., Berkeley, NCSU)

– 2007 – new schools are planning or implementing courses – now in 28 countries

• University of Sydney – using ASR course modules

• Berkeley Masters Program in Information and Service Design (ischool)

• University of Washington, Systems Engineering certificate

• University of Buffalo proposing a plan for new courses

• Catholic University Argentina also working with ASR

• “Considerations for the use of Methods” course module added to ASR materials

– Representation for internal call to action at the TLE in Anaheim


© 2008, IBM



9 January 2008.

The following note is being sent on behalf of Kevin Faughnan, Director, IBM Academic Initiative:

Dear University Ambassadors

We continue to expand the global footprint of our Service Science Management and Engineering (SSME) initiative.

Yesterday, one of the premier technical universities in Germany, the University of Karlsruhe, signed an agreement to establish Europe's first joint institute for service research. The new "Karlsruhe Service Research Institute" will advance research and discovery in the service sector, as well prepare university graduates for the growing number of multi-disciplinary jobs in the new economy.

The Institute will open its doors in the summer of 2008 and roll out a series of service-oriented classes and seminars for business and engineering students. In support of this collaboration, IBM researchers will undertake projects with Karlsruhe researchers at the university site. The university and IBM are also financing new professorships in SSME to promote integrated business and technology lessons in the classroom.

Please take a moment to read the attached press release on the announcement, and share this "first of a kind" initiative with your university counterparts. It's an important proof point in our drive to implement SSME in collaboration with our university partners.


© 2008, IBM

What’s been achieved so far: in Europe


• Key SSME Conferences / Publications

– Cambridge Service Science, Management and Engineering Symposium with IBM co-sponsorship – July 2007

– Associated Green Paper: ‘Succeeding through Service Innovation: Developing a service perspective on economic growth and prosperity

– Associated White Paper

• Related SSME Developments

– *Service Science Forum run by Exeter University in Oct 07 & Mar 08 http://www.centres.ex.ac.uk/cserv/business_linked_activities/service_science_forum.php

• IBM Keynotes @

– Images of Manufacturing Conference (EPSRC Manufacturing Futures Network) Oct 18 - pitch on 'Succeeding through Service Innovation, the Emerging discipline of Service Science'

– IBM Key Note Speech at 21st Service Workshop @ Westminster - IBM & the SSME Initiative


© 2008, IBM

What’s been achieved so far: in the UK


• Core Research

– EPSRC/BAE Systems £2 million research grant for Service & Support Engineering Solutions to research consortium led by Professor Duncan McFarlane of the University of Cambridge.

– AIM - Advanced Institute of Management Research - 'AIM - the UK's Research Initiative on Management' - Call for Mid Career Fellowships on Services

– 6 AIM Research Fellowships in Services announced

– 'The Economic and Social Research Council (ESRC) is inviting applications from eligible institutions for Mid-Career Fellowships focused on services research' http://www.aimresearch.org/overviewnews.html

• Related Research– Imperial College, London - IBM participation in 'Platforms for Innovation Research Project being

launched by Imperial College

– Said Business School, Oxford - IBM participation in the 'Designing for Services' Research project lead by Lucy Kimbell of the Said BS

– EPSRC 'Block Grant' for Research in 'Servitisation' to Cranfield University .. the transition from manufacturing to services


© 2008, IBM



• SSME-related Curriculum Development

– MSc in Service Science at Westminster University announced 16th November at the 21st Service Workshop @ Westminster University

– MSc in Service Science & Management at Exeter University - actually announced in July (see http://www.centres.ex.ac.uk/cserv/education/msc_service_science.php )

– Glasgow - potential SSME module in their MBA, joint research programme to be lead by Adam Smith Foundation, Glasgow Business School, European wide business journal issue dedicated to SSME & forthcoming European Conference (2008)

– Judge Business School, Cambridge University - MBA elective from Jan 09

– Sheffield University - initial contact with Stephen Wood who has 'been tasked .. to look into how we might take the concept of service sciences forward in terms of research and teaching


© 2008, IBM



Source: Monitor, 2004



Source: IfM, 2004

New order intake / Installed base



04/19/23 39

“Why Should My Company Re-Think Its R&D Spend?”

1. True, Product Has Been the Engine That Pulls Through The Services.2. But, In Some Markets, Services Is Beginning To Pull Products.3. And, Due To Its Sheer Size, Service Innovation May Be The Greatest

Unrealized Economic Opportunity In The Company

CEO Question:

Why Focus on Services in Technology?Business Challenges in Services


04/19/23 40

Leading Business and Financial Issues

• Financial markets continue to undervalue services revenues and profits relative to products making it difficult for companies to justify service investments to financial analysts and shareholders.

• In consumer technology markets, consumers display an unwillingness to pay for low value service, but willing pay significant premiums for services they value.

• Customers are beginning to pressure maintenance prices due to low value but tech companies are reluctant to modify such a successful business model.

Businesses can benefit from SSME by applying it in services engagements, in internal service design and by building SSME into services marketing


Service Systems: value co-creation

• Provider and customer interact to co-produce value

• Value is achieving desired change or the prevention or undoing of unwanted change

• Changes can be physical, mental, or social (= collective mental states – common or distributed knowledge)

• Value is in the eye of the beholder, and may include complex subjective intangibles, bartered – knowledge intensive

• Boundary of service experience in space and time may be complex

Service is Value Co-production, or finding Win-Win interactions between a provider and a customer. A service system is an entity, individual, corporate or national. which consumes and produces services.

Win-Lose

(Loss-lead)

Lose-Lose

(War: Value

Co-destruction)

Win-Win

(Service: Value

co-production)

Lose-Win

(Coercion)

Win-Lose

(Loss-lead)

Lose-Lose

(War: Value

Co-destruction)

Win-Win

(Service: Value

co-production)

Lose-Win

(Coercion)

Customer / Client

Value Creation

Pro

vid

er

Val

ue C

reat

ion

© 2008, IBM


Benefits: applying SSME inservices engagements

• Increasing the breadth of the dialogue with the client

• Ability to resolve complex human, cultural conflicts

• Move IBM towards leadership position in service innovation

• Improved quality of delivery

© 2008, IBM

Source: AoT Study: Benefits of SSME Q3 2007 - https://w3.webahead.ibm.com/w3ki/display/SSME/AoT+Study+-+Benefits+of+SSME


Benefits: applying SSME ininternal service design

• Reduce deal risk by broadening the scope of inspection

• Better end to end continuity - improved hand-offs, reduced cost of coordination

• More effective measurement of service delivery cost factors to allow more aggressive pricing

• Broader scope of continuous improvement to meet more aggressive standards

© 2008, IBM



Benefits: applying SSME in services marketing

• Better articulation of the value proposition

• Better connection of the proposition to the customer values

• More objective or scientific costing of services:

• Expressing values and aspirations in services businesses


© 2008, IBM


04/19/23 45

Revenue Mix vs. Estimated R&D Spend Mix

Estimated R&D Spending AllocationFor Technology Companies

Product R&D95%

Service R&D5%


Benefits: refocusing academic research programmes

• Increase the contribution of research to the future of service based business

– The research community finds it difficult to relate to the services world and develop relevant and valuable work; the services community lacks a framework into which such work could be fitted

– Applying SSME in the services businesses would create such framework and a feedback loop that would enable more relevant research

• Discovery of white spaces in research agenda

– Current SSME research programmes take a broad view of services. Stronger coupling with real business issues will stimulate the identification of specific topics: service value; design; foundations; human aspects and simulation. These should be driven by business needs which will stimulate research involvement in service tools, methods, quality, architecture and representation

• Open Innovation for IT Services

– Areas of the IT industry have benefited from Open Source communities that develop standards and sharable assets although IT Services remains fragmented with incompatible tools and methods and high level of wasted effort. Research should become an active participant in services open standards

• Delineation of proprietary areas of research

– Having understood where business wishes to engage in open innovation, firms will be better able to see where we wish to develop differentiating technologies.

© 2008, IBM


© 2008 ibm corporation the challenge of services in the 21st century: opportunities for education...

Documents

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challenge of services

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