global integration and service innovation
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Service Science,
Management, and E i iEngineering
Global Integration and Service Innovation
Paul P. MaglioIBM Almaden Research Center
Global Mobility Roundtable, Auckland, New ZealandNovember 24, 2008
© 2005 IBM Corporation© 2008 IBM Corporation1
Culture of Innovation
External RecognitionS i T li Mi SiliC ChiScanning Tunneling Microscope
DRAMSiGe
Silicon-on-Insulator
Copper Chip Technology
Electron Tunneling
Effect
High Temperature Superconductivity
Nuclear Magnetic Resonance Techniques
Basis for MRI today
High Performance
Computing
First woman recipient in the history of this prestigious ACM award
5 National Medals of Science5 Nobel Laureates 8 National Medals of Technology 6 Turing Awards
AAAS ECS• AAAS
• ACM
• ACS
• APS
• ECS
• IEEE
• IOP
• OSA
59 Members in National21 Members in National More than 300 Professional 10 Inductees in National
• APS
• AVS
• OSA
© 2005 IBM Corporation© 2008 IBM Corporation4
59 Members in National Academy of Engineering
21 Members in NationalAcademy of Sciences
More than 300 Professional Society Fellows
10 Inductees in NationalInventors Hall of Fame
Diversity of Disciplines at IBM Research
Behavioral Sciences Chemistry Computer Science Electrical EngineeringBehavioral Sciences Chemistry Computer Science Electrical Engineering
Materials Sciences Mathematical Sciences Physics Service Science, Management & Engineering
© 2005 IBM Corporation© 2008 IBM Corporation5
Forces of Change
A new computing model for business
New client needs generated by these new possibilitiesNew client needs generated by these new possibilities
The rising tide of globalization
© 2005 IBM Corporation© 2008 IBM Corporation6
IBM Strategy
Focus on open technologies and high-value solutions
D li i t ti d i ti t li tDeliver integration and innovation to clients
Become the premier Globally Integrated Enterprise
© 2005 IBM Corporation© 2008 IBM Corporation7
The Globally Integrated Enterprise
Palmisano, S. J. (2006). The globally integrated enterprise Foreign Affairs 85 127 – 136 http://www businessweek com/magazine/content/08 04/b4068036075566 htm
© 2005 IBM Corporation© 2008 IBM Corporation8
enterprise. Foreign Affairs, 85, 127 – 136. http://www.businessweek.com/magazine/content/08_04/b4068036075566.htm
Globalization has arrived
Free trade agreements put intoFree trade agreements put into place over the past two decades
The shift towards services and technology-driven economies
The emergence of highly skilled workforces in the world’s largest nations
And, of course, the reality of a global networked infrastructureglobal networked infrastructure.
© 2005 IBM Corporation© 2008 IBM Corporation9 9
For the first time in history, everything is connected to the World Wide Webto the World Wide Web
There are 1.2 billion people millions ofpeople, millions of businesses and perhaps a trillion devicesa trillion devices connected to the World Wide Web todayWide Web today.
© 2005 IBM Corporation© 2008 IBM Corporation1010
By 2011, the internet will reach 2 billion people –nearly one third of the world’s populationnearly one third of the world s population.
© 2005 IBM Corporation© 2008 IBM Corporation11
The networked world has led to the emergence of a new business model era….emergence of a new business model era….
…. any company –large or small – based anywhere in the world, now has access tonow has access to high value, competitive skills.
© 2005 IBM Corporation© 2008 IBM Corporation12
The way companies operate and compete today is vastly different from how they did in the 20th
Century…..y
© 2005 IBM Corporation© 2008 IBM Corporation13
Early 20th Century: The era of the International Company…..y y p y
20th20thCentury
Products were shipped and exported from one central location to the rest of the world
© 2005 IBM Corporation© 2008 IBM Corporation14
Products were shipped and exported from one central location to the rest of the world.
Mid-20th Century: The era of the Multinational Company….y y
Companies replicated themselves within the borders of each country of operation
20thCentury
© 2005 IBM Corporation© 2008 IBM Corporation15
Companies replicated themselves within the borders of each country of operation.
In 21st Century: The Globally Integrated Enterprise (GIE)y y g p ( )
21
Where a company thinks, acts, organizes and optimizes globally.
20thCentury
21stCentury
© 2005 IBM Corporation© 2008 IBM Corporation16
Where a company thinks, acts, organizes and optimizes globally.
A globally integrated enterprise…..
…locates operations and functions anywhere in the world based on thethe world based on the right cost, the right skills, and the right business environmentenvironment…
and it integrates those...and it integrates those operations horizontally and globally.
© 2005 IBM Corporation© 2008 IBM Corporation17
Global Integration is the new playing field – and innovation is the way companies and organisations can compete. y p g p
Global Integration is about much more than lower costs…
…It’s about driving greater differentiationdifferentiation
It’ b t INNOVATION…It’s about INNOVATION.
© 2005 IBM Corporation© 2008 IBM Corporation18
A Globally Integrated Enterprise y g p
Makes informed choices within a global
competitive market
Makes informed choices within a global
competitive market
Secures unique valuevia specialization in a
network of open partners
Secures unique valuevia specialization in a
network of open partners
The GloballyLeverages the power
of global assetsLeverages the power
of global assetsTaps into a universe of
modular servicesTaps into a universe of
modular services
The Globally Integrated Enterprise
Operates seamlessly Operates seamlessly Embraces open Embraces open p yacross boundaries via
global values, skills and processes
p yacross boundaries via
global values, skills and processes
collaboration and shared IP policies and
practices
collaboration and shared IP policies and
practices
© 2005 IBM Corporation© 2008 IBM Corporation19
IBM Strategy
Focus on open technologies and high-value solutions
D li i t ti d i ti t li tDeliver integration and innovation to clients
Become the premier Globally Integrated Enterprise
© 2005 IBM Corporation© 2008 IBM Corporation20
IBM’s business
2007 Pretax Income Mix Revenue Growth by Segment
SYSTEMSAND FINANCING 100
y g
37%23%
AND FINANCING
60
80
100
e ($
B) Services
Software37%
40%
SERVICES
20
40
60
Rev
enue Systems
Financing
SOFTWARE01982 1988 1994 1998 2004 2006 2007
YearYear
© 2005 IBM Corporation© 2008 IBM Corporation21
Service sector employment
I 2006 th i t ’In 2006 the service sector’s share of global employment overtook agriculture for the first time increasing fromfirst time, increasing from 39.5% to 40%. Agriculture decreased from 39.7% to 38 7% The industry sector38.7%. The industry sector accounted for 21.3% of total employment.
- International Labour Organization
http://www.ilo.org/public/english/region/asro/bangkok/public/releases/yr2007/pr07_02sa.htm
Fitzsimmons & Fitzsimmons (2008)
© 2005 IBM Corporation© 2008 IBM Corporation23
( )
Service Globalization is Still Small
Service jobs worldwide1.46 billion Jobs
(1000s)Global employment
Remote possible
Current outsourcing
Healthcare 65 560 8% 21Proportion that could beremotely performed
11% (or 161 million)
Healthcare 65,560 8% 21Insurance 11,723 19% 38IT services 6,888 44% 700% (o 6 o )
Jobs expected to locate
se ces 6,888 % 00Retail Banking
12,659 25% 302
S ft 690 49% 105Jobs e pected to ocateoffshore in 2008
4.1 million
Software, packaged
690 49% 105
Retail 155,961 3% 42
Source: McKinsey Global Institute, The Emerging Global Labor Market
© 2005 IBM Corporation© 2008 IBM Corporation26
Service Education, Research, and Innovation
Services account for more than 80 percent of the U.S. gross domestic product, employ a large and
“Our economy is increasingly dependent on services, yet our U.S. gross domestic product, employ a large and
growing share of the science and engineering workforce, and are the primary users of information technology. … [The] academic research enterprise
innovation processes remain oriented to products.”
Stefan Thomke from Harvard Business Review, April 2003
has not focused on or been organized to meet the needs of service businesses. Major challenges to services industries that could be taken up by universities include: (1) the adaptation and
“Services dominate economic activity in developed economies, and yet understanding of
universities include: (1) the adaptation and application of systems and industrial engineering concepts, methodologies, and quality-control processes to service functions and businesses; (2)
innovation in this sector remains very limited…… At this early stage, academic research about innovation in services is not well processes to service functions and businesses; (2)
the integration of technological research and social science, management, and policy research; and the (3) the education and training of engineering and
innovation in services is not well defined.”
Henry Chesbrough from Financial Times, October 2004
science graduates prepared to deal with management, policy, and social issues.”
National Academy of Engineering (2003). "The Impact of Academic Research on Industrial Performance"
“Services is an understudied field”Matthew Realff, Director, NSF SSE Programfrom NY Times article April 18, 2006Academia Dissects the Service Sector, but Is It a Science? - Steve Lohr
© 2005 IBM Corporation© 2008 IBM Corporation27
Academic Research on Industrial Performancea Science? Steve Lohr
Opportunities for Innovation
Existing stateTools used for creating tracking and
Organizational Design
Tools used for creating, tracking and managing outsourcing deals are incompatible, slow and awkward
Critical business data is not collected, shared standardized or analyzed toshared, standardized, or analyzed to provide business intelligence
Systemic approach to rethink and transform the business with
Work Practices
transform the business with improvements to
Win more good deals: ensure that proposals are deliverable and profitable
Reduce cost of engagement: work Technical ArchitectureReduce cost of engagement: work efficiency and effectiveness
Value proposition of systemic approachImprove win rate reduce engagement cost
Technical Architecture
Improve win rate, reduce engagement cost
Improve customer satisfaction
Improve solution design quality Transformation for integration, optimization and sustainability
© 2005 IBM Corporation© 2008 IBM Corporation28
optimization, and sustainability
What is Service Science or SSME(D)?
Service Science, Management, and Engineering (SSME) is a term introduced by IBM to describe Service Science, an interdisciplinary approach to the t d d i dstudy, design, and
implementation of services systems – complex systems in which specific arrangements ofwhich specific arrangements of people and technologies take actions that provide value for others More precisely SSMEothers. More precisely, SSME has been defined as the application of science, management and engineeringmanagement, and engineering disciplines to tasks that one organization beneficially performs for and with another.
© 2005 IBM Corporation© 2008 IBM Corporation29
performs for and with another.
Service Science is about building common language
An analogy can be made with Computer Science. The success of CS is not in the definition of a basic science (as in physics or chemistry for example) but more in its ability to bring together diverse disciplines, such as mathematics, electronics
d h l t l bland psychology to solve problems that require they all be there and talk a language that demonstrates common purpose.
Service Science may be the same thing, only bigger: an interdisciplinary umbrella that enables economists, social scientists mathematicianssocial scientists, mathematicians, computer scientists and legislators (to name a small subset of the necessary disciplines) to cooperate to achieve a larger goal - analysisto achieve a larger goal - analysis, construction, management and evolution of the most complex systems we have ever attempted to construct.
© 2005 IBM Corporation© 2008 IBM Corporation30
construct.
Service-dominant logic
Service is the application of competences for the benefit of another entity
Service is exchanged for serviceg
Value is always co-created Resource Integrator
Resource Integrator
Goods are appliances for service delivery
/Beneficiary
(“Firm”)
/Beneficiary(“Customer”)
All economies are service economies
All businesses are service businesses
© 2005 IBM Corporation© 2008 IBM Corporation31
Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
Service is the application of competence for the benefit of another entity.
Service involves at least two A. Service Provider B. Service ClientForms of
Service Relationship(A & B t l )
entities, one applying competence and another integrating the applied
• Individual• Organization• Public or Private
• Individual• Organization• Public or Private
(A & B co-create value)
competences with other resources and determining benefit (value co-creation).
Forms ofForms of
Forms ofService Interventions
(A on C, B on C)
We call these interacting titi i t C. Service Target: The reality to be
Forms ofOwnership Relationship
(B on C)Responsibility Relationship
(A on C)
entities service systems. C. Service Target: The reality to be transformed or operated on by A, for the sake of B
• People, dimensions of• Business, dimensions of
P d t d d t i l t• Products, goods and material systems• Information, codified knowledge
Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio economic Approaches Cheltenham UK: Edward Elgar pp 26 53
© 2005 IBM Corporation© 2008 IBM Corporation32
Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.
New view of value-creation
PRODUCTIONSYSTEM CONSUMPTION
PreparationsProcess
Outcome Value
SYSTEM SYSTEMExchange
BehavioralresponseWith service processes, the
t id i ifi tInfrastructure
Output
Goods-dominant logic view
customer provides significant inputs into the production process.
-Sampson & Froehle (2006)
PRODUCTIONSYSTEM
CONSUMPTIONSYSTEM
Th t i lPreparations
Process Co-productionOutcome
Interactions
The customer is always a co-producer.
-Vargo & Lush (2004)
Contract
Service-dominant logic view
© 2005 IBM Corporation© 2008 IBM Corporation33
Paul Lillrank, “An event-based approach to services,” Presented at Frontiers in Service Conference, October 2008
Service-dominant logic means a new view of process
Production process
The appointmentprocess
The anamnesisprocess
The diagnosticprocess
The treatmentprocess
Preparations Preparations Preparations Preparations
Output: Outcome:
Service event:
What was done
to a patient
What happened to a patient
Healthevents
Service event:Customerinput and
involvement
Patient episode
© 2005 IBM Corporation© 2008 IBM Corporation34
Paul Lillrank, “An event-based approach to services,” Presented at Frontiers in Service Conference, October 2008
Service system encounters: Agreements
DataInterviewed more than 25 Delivery Project Executives Project
SLA performance measures are but one indication of account health.
Project Executives, Project Executives, Account Managers, Technology Solution Managers and Technology Solution Architects in service delivery
“The SLAs are green month after month, but my employees are complaining about IT service.” Quoted by Delivery Project Executive
“It’s frustrating to me that when the SLAs are green month after month, no one pays any attention to them. You can’t see how
Field visits to customer sites, met delivery team management and clients.
p y yhard we work to keep the SLAs green month after month. I wish there was a way to make this more visible.” Delivery Project Executive
“I don’t care whose fault it is, when the cash registers aren’t ki b i ff ”Collected and analyzed service
delivery, contractual, and other documents
S i L l A (SLA)
working my business suffers.” Customer
SLA performance recedes into the background when these measures remain relatively constant over time – but this doesn’t mean the delivery teams are not dealing with account problems.
Service-Level Agreement (SLA)A contract between provider and client specifying what will be done.
Penalties often apply for missed
Full self-service isn’t what many clients want. They want their service provider to be proactive in providing client-specific info and analysis.
“The SLA measures are great, but I don’t feel like I’m gettingPenalties often apply for missed Service Level targets
Performance measurements must be reported at specified intervals
The SLA measures are great, but I don t feel like I m getting what I signed up for with my service provider. I want you guys to bring your IT expertise to be proactive and help me with my business problems.”
Quoted by Delivery Project Executive
© 2005 IBM Corporation© 2008 IBM Corporation35
Blomberg , J. (2008). Negotiating meaning of shared information in service system encounters. European Management Journal, 26, 213-222.
The Nature of AgreementsNegotiation and re-interpretation of information is at the core of meaning-making
No single window on service delivery performance
The meaning of information is negotiated in working and organizational relationshipsorganizational relationships
Negotiating the meaning of IT performance is the ongoing work ofperformance is the ongoing work of client – provider collaboration
Tools and processes should supportTools and processes should support the often unacknowledged work of providing “transparent” views –producing good data, deciding what to expose, negotiating meaning
© 2005 IBM Corporation© 2008 IBM Corporation36
p , g g g
Blomberg , J. (2008). Negotiating meaning of shared information in service system encounters. European Management Journal, 26, 213-222.
Back-office Enablers of Outsourcing
Tools used to create, track and manage IT outsourcing business (from engagement tobusiness (from engagement to delivery) are old, incompatible, slow and awkward
MM: Market ManagementMM: Market Management
Build the platform (SOA) upon which a new suite of tools can be built
OM: Opportunity Management
SD: Solution DesignSolution Delivery Fulfillment
t a
Growth
SF: Solution Delivery, Fulfillment & GrowthBM: Bid
Portfolio Management
and Enablement
OM: Opportunity Management
SD: Solution DesignSolution Delivery Fulfillment
t a
Growth
SF: Solution Delivery, Fulfillment & GrowthBM: Bid
Portfolio Management
and Enablement
Demonstrate value of innovation in back office through re design
Develop High-Level
Solution
DevelopProposal
ObtainClient
Approval
Close theSolution
6-9 Month Life Cycle
Sta
rtup
Impl
emen
t
Man
age
Clo
se
Man
age
Ord
erG
ener
ate
Bill
ing
Dat
aP
repa
re
Invo
ice
DevelopContractN
otic
e
Iden
tify
Val
idat
e
Qua
lify
RFSDevelop
High-Level Solution
DevelopProposal
ObtainClient
Approval
Close theSolution
6-9 Month Life Cycle
Sta
rtup
Impl
emen
t
Man
age
Clo
se
Man
age
Ord
erG
ener
ate
Bill
ing
Dat
aP
repa
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Invo
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DevelopContractN
otic
e
Iden
tify
Val
idat
e
Qua
lify
RFS
in back-office through re-design engagement phase tooling
Identify areas for performance improvements, new intra-organizational alignments and business strategies
© 2005 IBM Corporation© 2008 IBM Corporation37
g
Bailey, J, Kieliszewski, C. & Blomberg, J. (2008). Work in Organizational Context and Implications for Technology Interventions. In L. Sznelwar, F. Mascia and U. Montedo (Eds). Human Factors in Organizational Design and Management – IX.
Iterative and Collaborative Engagement Practices
Examine the business, organizational, and work practices of engagement teams
Identify key integration points, information and value flows, and t f ti b t thtransformations between the people, technology and organization
Res lted in changed the ie ofResulted in changed the view of engagement practices
From linear to iterative and interdependent
Linear process flow
From process focused to client deliverables focusedForm work and information
t t li ti tcompartmentalization to collaborative work and situated information Iterative process interactions
© 2005 IBM Corporation© 2008 IBM Corporation38
Bailey, J, Kieliszewski, C. & Blomberg, J. (2008). Work in Organizational Context and Implications for Technology Interventions. In L. Sznelwar, F. Mascia and U. Montedo (Eds). Human Factors in Organizational Design and Management – IX.
Engagement Documents are Reviewed Iteratively
“Vendor shall remove data network nodes and cabling, LAN-connected equipment and cabling, and data network equipment at end user
ExampleRFP/SOW
UpdateInput
locations deemed no longer needed by client, and decommission related equipment from the data network in accordance with a schedule
Does "remove“ mean merely to disconnect or also to dispose? Does
disposal include financial Clarification
Update
AssumptionsCollaborativeReview
Update
approved by client to meet client’soperational requirements while minimizing disruption in the services; Review with and obtain client’s
disposal include financial and physical responsibility?
Client C&N, Lead TSM, DPE
Di
Review
approval as to the vocation of such decommissioned equipment, be that removal of all vendor maintenance, trade-in or redeployment.” Is this a typo,
Ambiguities,Conflicts
DiscoverSubmit
Is this a typo, did they mean
location?
© 2005 IBM Corporation© 2008 IBM Corporation39
Bailey, J, Kieliszewski, C. & Blomberg, J. (2008). Work in Organizational Context and Implications for Technology Interventions. In L. Sznelwar, F. Mascia and U. Montedo (Eds). Human Factors in Organizational Design and Management – IX.
Closing the Loop Between Engagement and Delivery
RFPRFP
Update Input
Update
Proposal
Clarification
Client C&N, Lead TSM, DPE
AssumptionsCollaborativeReview
Ambiguities /Conflicts
DiscoverSubmit Win the deal
Interpret the solution and transition to IBM
Deliver the solution within the budget
Client Transition teamClient Delivery team
© 2005 IBM Corporation© 2008 IBM Corporation40
Bailey, J, Kieliszewski, C. & Blomberg, J. (2008). Work in Organizational Context and Implications for Technology Interventions. In L. Sznelwar, F. Mascia and U. Montedo (Eds). Human Factors in Organizational Design and Management – IX.
Cross-cultural Communication Issues
IBM has > 356,000 l i 74employees in 74
countries.
~22% of the IBM~22% of the IBM workforce is in developing countries, such as India Chinasuch as India, China, Brazil, and Eastern Europe.
> 52% of IBM's global workforce works in non-traditional environments • Observational Study
W kl ll b t US d I di tad o a e o e s(home office, client site, or remotely).
• Weekly calls between US and India team• 9.5 hour time difference• end of day in Bangalore, start of day in New jersey
© 2005 IBM Corporation© 2008 IBM Corporation41
Ark, W. Shaw, B, Lelescu, A., & Stucky, S. (2008). Data-mining the cross-cultural communication gap. Manuscript under review.
Cross-cultural Communication Issues
US IndiaUS India
Technical 166 2
Manager 417 197g
Team lead 753 105
Total 1888 304
• Observational StudyW kl ll b t US d I di t
Turn Taking Behavior• Weekly calls between US and India team• 9.5 hour time difference• end of day in Bangalore, start of day in New jersey
© 2005 IBM Corporation© 2008 IBM Corporation42
Ark, W. Shaw, B, Lelescu, A., & Stucky, S. (2008). Data-mining the cross-cultural communication gap. Manuscript under review.
Interactions are Key
As more 21st century companies come to specialize in core activities and outsource the rest, they have greater need for workers who can interact with other companies, their customers, and their suppliers.
The traditional organization, where a few top managers coordinate the pyramid below them, is being upended.upended.
Raising the productivity of employees whose jobs can’t be automated is the next great
f h ll d thperformance challenge – and the stakes are high.
Companies that get that right will build complex talent-basedbuild complex talent based competitive advantages that competitors won’t be able to duplicate easily – if at all.
© 2005 IBM Corporation© 2008 IBM Corporation43
Johnson, B., Manyika, J., & Yee, L. (2005). The next revolution in interactions. McKinsey Quarterly, 4, 20-33.
Parts and People
Employees are the most important asset of any technology-based companycompany.
They each have individual skills, interests, expectations, and limitations.
They may live in a particular area, have family-related constraints, prefer working solo...
They may be more or less susceptible to pressure, easy or difficult to retrain…
Human professionals cannot possiblyHuman professionals cannot possibly be described as a mere set of attributes
e.g., resumes contain lengthy textual descriptions not a list of attributes anddescriptions not a list of attributes and values.
‘‘People are not parts’’
© 2005 IBM Corporation© 2008 IBM Corporation44
Naveh, Y., Richter, Y., Altshuler, Y., Gresh, D. L. & Connors, D. P. (2007). Workforce optimization: Identification and assignment of professional workers using constraint programming. IBM Journal of Research and Development, 51, 263-280.
Real Business Problem
Where to locate the people providing the services?
Key differences from “product” location problem include
Cost structure
Perishable capacityPerishable capacity
Simultaneous needs for a set of people of different types
Given the demand of customers in a geographic region
types
© 2005 IBM Corporation© 2008 IBM Corporation45
Ying Tat Leung, Jesse Bockstedt & Wolfgane Koenig, “Optimal Staffing at Multiple Locations for a Multi-Skill Service Provider,”
Presented at Frontiers in Service Conference, October 2008
Center of Competency vs Replication Approaches to Organization Designpp g g
Profit is determined by travel cost
C t f t hCenter of competency approach has economy of scale advantages, e.g.,
EquipmentKnowledge management
Center of Competency vs Replication - Equal Arrival Rates
Travel Cost ProfitKnowledge managementAdministration
These can be modeled using the l b t
5000
10000
15000
w
labor rate per person
w = difference in travel costs between the cases 10-0-0-10 & 5-5-5 5 10000
-5000
0
$5-5
w/5 = min. average labor rate decrease per person for center of
t h t b t
-20000
-15000
-10000
10-0-0-10 9-1-1-9 8-2-2-8 7-3-3-7 6-4-4-6 5-5-5-5 4-6-6-4 3-7-7-3 2-8-8-2 1-9-9-1 0-10-10-0
competency approach to be cost effective
Number of People per Location-Competency
© 2005 IBM Corporation© 2008 IBM Corporation46
Ying Tat Leung, Jesse Bockstedt & Wolfgane Koenig, “Optimal Staffing at Multiple Locations for a Multi-Skill Service Provider,”
Presented at Frontiers in Service Conference, October 2008
Business Modeling
• Component Business Modeling is a framework for analyzing and modeling a business for organizing and grouping business activities into components
• In a component business map: activities are grouped along two coordinates:business competencies (columns) and accountability levels (rows)
© 2005 IBM Corporation© 2008 IBM Corporation47
Cherbakov, L. Galambos, G, Harishankar, R., Kalyana, S. & Rackham, G. (2005). Impact of service orientation at the business level. IBM Systems Journal, 44, 653 – 658.
Business Modeling
• Component Business Modeling is a framework for analyzing and modeling a business for organizing and grouping business activities into components
• In a component business map: activities are grouped along two coordinates:business competencies (columns) and accountability levels (rows)
© 2005 IBM Corporation© 2008 IBM Corporation48
Cherbakov, L. Galambos, G, Harishankar, R., Kalyana, S. & Rackham, G. (2005). Impact of service orientation at the business level. IBM Systems Journal, 44, 653 – 658.
Details
MainframePC/NT apps Unix apps3rd Party Interface
I13 A t
I17 Customer PerceivedIn-Stock
Mesa Data
NEW SoundscanNPD Group
AIG Warranty Guard RoadshowSterling VAN
Mailbox (Value)UAR - Universal Account
Reconciliation
DepositoryBanks
BudgetAnalysis Tool Printer
Maintenance
VendorMaintenance
Vendor Setup
S20-SalesP lli
Process Servers(Imaging)
MainframePC/NT apps Unix apps3rd Party Interface
I13 A t
I17 Customer PerceivedIn-Stock
Mesa Data
NEW SoundscanNPD Group
AIG Warranty Guard RoadshowSterling VAN
Mailbox (Value)UAR - Universal Account
Reconciliation
DepositoryBanks
BudgetAnalysis Tool Printer
Maintenance
VendorMaintenance
Vendor Setup
S20-SalesP lli
Process Servers(Imaging)
MainframePC/NT apps Unix apps3rd Party Interface
I13 A t
I17 Customer PerceivedIn-Stock
Mesa Data
NEW SoundscanNPD Group
AIG Warranty Guard
I13 A t
I17 Customer PerceivedIn-Stock
Mesa Data
NEW SoundscanNPD Group
AIG Warranty Guard RoadshowSterling VAN
Mailbox (Value)RoadshowSterling VAN
Mailbox (Value)UAR - Universal Account
Reconciliation
DepositoryBanks
UAR - Universal AccountReconciliation
DepositoryBanks
BudgetAnalysis Tool Printer
Maintenance
VendorMaintenance
Vendor Setup
S20-SalesP lli
Process Servers(Imaging)
S01 - SalesCorrections
I03 Return toVendor
I06 WarehouseManagement
S06 - Credit App
P15 EES EmployeeChange NoticeL02-Resource
M02 - Millennium
M03 - Millennium 3.0
D01 Post LoadBilling
I12 EntertainmentSoftware
E13E3 Interface
S04 - Sales Posting
I13- AutoReplenishment
Stock Options
P16 - Tally Sheet
I15 Hand ScanApps
A04 C t
Equifax
S09 - DigitalSatelliteSystem
I06 - CustomerOrder
S07 - CellPhones
Fringe PO
AIS Calendar
Stores & Mrkts
Due Dates
Smart Plus
InsertionsOrders
Print CostingInvoice App
AIS Reports
BroadcastFilter
Smart PlusLauncher
GeneralMaintenance
Printer PO
Maintenance Polling
S01 - SalesCorrections
I03 Return toVendor
I06 WarehouseManagement
S06 - Credit App
P15 EES EmployeeChange NoticeL02-Resource
M02 - Millennium
M03 - Millennium 3.0
D01 Post LoadBilling
I12 EntertainmentSoftware
E13E3 Interface
S04 - Sales Posting
I13- AutoReplenishment
Stock Options
P16 - Tally Sheet
I15 Hand ScanApps
A04 C t
Equifax
S09 - DigitalSatelliteSystem
I06 - CustomerOrder
S07 - CellPhones
Fringe PO
AIS Calendar
Stores & Mrkts
Due Dates
Smart Plus
InsertionsOrders
Print CostingInvoice App
AIS Reports
BroadcastFilter
Smart PlusLauncher
GeneralMaintenance
Printer PO
Maintenance Polling
S01 - SalesCorrections
I03 Return toVendor
I06 WarehouseManagement
S06 - Credit App
P15 EES EmployeeChange NoticeL02-Resource
M02 - Millennium
M03 - Millennium 3.0
D01 Post LoadBilling
I12 EntertainmentSoftware
E13E3 Interface
S04 - Sales Posting
I13- AutoReplenishment
Stock Options
P16 - Tally Sheet D01 Post LoadBilling
I12 EntertainmentSoftware
E13E3 Interface
S04 - Sales Posting
I13- AutoReplenishment
Stock Options
P16 - Tally Sheet
I15 Hand ScanApps
A04 C t
Equifax
S09 - DigitalSatelliteSystem
I15 Hand ScanApps
A04 C t
Equifax
S09 - DigitalSatelliteSystem
I06 - CustomerOrder
S07 - CellPhones
Fringe PO
I06 - CustomerOrder
S07 - CellPhones
Fringe PO
AIS Calendar
Stores & Mrkts
Due Dates
Smart Plus
InsertionsOrders
Print CostingInvoice App
AIS Reports
BroadcastFilter
Smart PlusLauncher
GeneralMaintenance
Printer PO
Maintenance Polling
E01-EDI
gL02 ResourceScheduling(Campbell)
P09 - P17Cyborg
Banks - ACH and Pos toPay
Cobra
B01 - StockStatus
P14 On-line NewHire Entry
CTS
Plan Administrators(401K, PCS, Life,
Unicare, SolomonSmith Barney)
I04 HomeDeliveries
I02 -Transfers
I10 Cycle PhysicalInventory
U18 - CTO
I09 Cycle Counts
ACH
Resumix
L01-PromoAnalysis
V02-PriceMarketingSupport
I11 PriceTesting
POS
S08 V
A04 - CustRefund Chks
System
X92-X96Host to AS400
Communication
Washington,RGIS,
Ntl Bus Systems
V04-SignSystem
P01-EmployeeMasterfile
FrickCo
S11 - ISPTracking
AAS
Supplier
1
CTO2.Bestbuy.com
Spec SourceSKU Tracking
Prodigy
E01-EDI
gL02 ResourceScheduling(Campbell)
P09 - P17Cyborg
Banks - ACH and Pos toPay
Cobra
B01 - StockStatus
P14 On-line NewHire Entry
CTS
Plan Administrators(401K, PCS, Life,
Unicare, SolomonSmith Barney)
I04 HomeDeliveries
I02 -Transfers
I10 Cycle PhysicalInventory
U18 - CTO
I09 Cycle Counts
ACH
Resumix
L01-PromoAnalysis
V02-PriceMarketingSupport
I11 PriceTesting
POS
S08 V
A04 - CustRefund Chks
System
X92-X96Host to AS400
Communication
Washington,RGIS,
Ntl Bus Systems
V04-SignSystem
P01-EmployeeMasterfile
FrickCo
S11 - ISPTracking
AAS
Supplier
1
CTO2.Bestbuy.com
Spec SourceSKU Tracking
Prodigy
E01-EDI
gL02 ResourceScheduling(Campbell)
P09 - P17Cyborg
Banks - ACH and Pos toPay
Cobra
B01 - StockStatus
P14 On-line NewHire Entry
CTS
Plan Administrators(401K, PCS, Life,
Unicare, SolomonSmith Barney)
I04 HomeDeliveries
I02 -Transfers
I10 Cycle PhysicalInventory
U18 - CTO
I09 Cycle Counts
ACH
Resumix
I04 HomeDeliveries
I02 -Transfers
I10 Cycle PhysicalInventory
U18 - CTO
I09 Cycle Counts
ACH
Resumix
L01-PromoAnalysis
V02-PriceMarketingSupport
I11 PriceTesting
POS
S08 V
A04 - CustRefund Chks
System L01-PromoAnalysis
V02-PriceMarketingSupport
I11 PriceTesting
POS
S08 V
A04 - CustRefund Chks
System
X92-X96Host to AS400
Communication
Washington,RGIS,
Ntl Bus Systems
V04-SignSystem
P01-EmployeeMasterfile
FrickCo
S11 - ISPTracking
AAS
X92-X96Host to AS400
Communication
Washington,RGIS,
Ntl Bus Systems
V04-SignSystem
P01-EmployeeMasterfile
FrickCo
S11 - ISPTracking
AAS
Supplier
1
Supplier
1
CTO2.Bestbuy.com
CTO2.Bestbuy.com
Spec SourceSKU Tracking
Prodigy
G02 - General
I01 POReceivingScorecard - HR
S03-Polling
y)
Arthur Planning
I07 PurchaseOrder
I05Inventory Info
V01-Price ManagementSystem
I55 SKUInformation
K02Customer Repair
Tracking I35 Early WarningSystem
Intercept
y
E02-EmployeePurchase
Ad Expense
Testing
P09Bonus/HR
S08 - VertexSalesTax
NPD,SoundScan
I18SKU Rep
S02 -Layaways
L60 MDFCoop SKU Selection
Tool
SKUPerformance
SupplierCompliance
I35 - CEIASIS
V03- MktReactions
SpecSource
RebateTransfer
ELTPowerSuite
StoreMonitor
G02 - General
I01 POReceivingScorecard - HR
S03-Polling
y)
Arthur Planning
I07 PurchaseOrder
I05Inventory Info
V01-Price ManagementSystem
I55 SKUInformation
K02Customer Repair
Tracking I35 Early WarningSystem
Intercept
y
E02-EmployeePurchase
Ad Expense
Testing
P09Bonus/HR
S08 - VertexSalesTax
NPD,SoundScan
I18SKU Rep
S02 -Layaways
L60 MDFCoop SKU Selection
Tool
SKUPerformance
SupplierCompliance
I35 - CEIASIS
V03- MktReactions
SpecSource
RebateTransfer
ELTPowerSuite
StoreMonitor
G02 - General
I01 POReceivingScorecard - HR
S03-Polling
y)
Arthur Planning
I07 PurchaseOrder
I05Inventory Info
V01-Price ManagementSystem
I55 SKUInformation
K02Customer Repair
Tracking I35 Early WarningSystem
Intercept
y
E02-EmployeePurchase
Arthur Planning
I07 PurchaseOrder
I05Inventory Info
V01-Price ManagementSystem
I55 SKUInformation
K02Customer Repair
Tracking I35 Early WarningSystem
Intercept
y
E02-EmployeePurchase
Ad Expense
Testing
P09Bonus/HR
S08 - VertexSalesTax
NPD,SoundScan
Ad Expense
Testing
P09Bonus/HR
S08 - VertexSalesTax
NPD,SoundScan
I18SKU Rep
S02 -Layaways
I18SKU Rep
S02 -Layaways
L60 MDFCoop SKU Selection
Tool
SKUPerformance
SupplierCompliance
I35 - CEIASIS
L60 MDFCoop SKU Selection
Tool
SKUPerformance
SupplierCompliance
I35 - CEIASIS
V03- MktReactions
SpecSource
RebateTransfer
ELTPowerSuite
StoreMonitor
V03- MktReactions
SpecSource
RebateTransfer
ELTPowerSuite
StoreMonitor
G02 - GeneralLedger
A05 - AP
OTHER APPS - PCAP - Collections/CreditTM Credit Card DB
ACCTS REC APPS - PC990CORBad Debt
Beneficial FeesBeneficial Reconcile
INVENTORY CONTROL APPS - PCCode Alarm
Debit ReceivingsDevo Sales
Display Inventory
INVENTORY CONTROL APPS - PCDPI/CPI
IC BatchingInventory Adj/Count Correct
Inventory Control Reports
Journal Entry Tool Kit
B02 MerchandiseAnalysis
Texlon 3.5
U16-Texlon
EDICoordinator
Store BudgetReporting
S05 - HouseCh
BMP - Busperformance Mngt
StoreScorecard
Valley Media
CellularRollover
I14 Count CorrectionsNARM
AIMSMerch Mngr Approval
Batch ForcastingAd Measurement
AIMS Admin
AIMSReportingAd
L h
SignSystem
CopyWriter'sWorkspace
PowerSuite G02 - GeneralLedger
A05 - AP
OTHER APPS - PCAP - Collections/CreditTM Credit Card DB
ACCTS REC APPS - PC990CORBad Debt
Beneficial FeesBeneficial Reconcile
INVENTORY CONTROL APPS - PCCode Alarm
Debit ReceivingsDevo Sales
Display Inventory
INVENTORY CONTROL APPS - PCDPI/CPI
IC BatchingInventory Adj/Count Correct
Inventory Control Reports
Journal Entry Tool Kit
B02 MerchandiseAnalysis
Texlon 3.5
U16-Texlon
EDICoordinator
Store BudgetReporting
S05 - HouseCh
BMP - Busperformance Mngt
StoreScorecard
Valley Media
CellularRollover
I14 Count CorrectionsNARM
AIMSMerch Mngr Approval
Batch ForcastingAd Measurement
AIMS Admin
AIMSReportingAd
L h
SignSystem
CopyWriter'sWorkspace
PowerSuite G02 - GeneralLedger
A05 - AP
OTHER APPS - PCAP - Collections/CreditTM Credit Card DB
ACCTS REC APPS - PC990CORBad Debt
Beneficial FeesBeneficial Reconcile
INVENTORY CONTROL APPS - PCCode Alarm
Debit ReceivingsDevo Sales
Display Inventory
INVENTORY CONTROL APPS - PCDPI/CPI
IC BatchingInventory Adj/Count Correct
Inventory Control Reports
Journal Entry Tool Kit
B02 MerchandiseAnalysis
Texlon 3.5
U16-Texlon
EDICoordinator
Store BudgetReporting
S05 - HouseCh
B02 MerchandiseAnalysis
Texlon 3.5
U16-Texlon
EDICoordinator
Store BudgetReporting
S05 - HouseCh
BMP - Busperformance Mngt
StoreScorecard
Valley Media
CellularRollover
BMP - Busperformance Mngt
StoreScorecard
Valley Media
CellularRollover
I14 Count CorrectionsNARM I14 Count CorrectionsNARM
AIMSMerch Mngr Approval
Batch ForcastingAd Measurement
AIMS Admin
AIMSReportingAd
L h
SignSystem
CopyWriter'sWorkspace
PowerSuite
AIMSMerch Mngr Approval
Batch ForcastingAd Measurement
AIMS Admin
AIMSReportingAd
L h
SignSystem
CopyWriter'sWorkspace
PowerSuite
Actual Application Architecture for Consumer Electronics Company
Data Warehouse(Interfaces to and from theData Warehouse are not
displayed on this diagram)
TM - Credit Card DB Beneficial ReconcileJEAXFJEBFAJEBKAJEDVAJESOAJEVSAJEVSF
NSFTeleCredit Fees
Display InventoryIn Home
JunkoutsMerchandise Withdrawal
Promo CreditsRTV Accrual
ShrinkAP Research - Inv CntrlAP Research-Addl Rpts
Book to Perpetual InventoryClose Out Reporting
Computer Intelligence DataCount Corrections
Cross Ref for VCB DnldsDamage Write OffDebit Receivings
DFI Vendor DatabaseDisplay Inventory ReconcileDisplay Inventory Reporting
Inventory Control ReportsInventory Levels
Inventory RollMerchandise Withdrawal
Open ReceivingsPI Count Results
PI Time Results from InvPrice Protection
Sales Flash ReportingShrink Reporting
SKU Gross MarginSKU Shrink Level Detail
USMVCB Downloads
SiteSeer
C02 - CapitalProjects
F06 - FixedAssets
US Bank ReconFile
Star Repair
Optika
Cash Receipts/Credit
Charges
ICMS Credit
Cash Over/Short
Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)
PCBS(Profit Center Budget System)Merchandising Budget
Launcher
Connect 3
Connect 3Reports
Connect 3PDF Transfe
PSP
In-HomeRepair
WarrantyBillingSystem
Prepared by Michelle Mills
Data Warehouse(Interfaces to and from theData Warehouse are not
displayed on this diagram)
TM - Credit Card DB Beneficial ReconcileJEAXFJEBFAJEBKAJEDVAJESOAJEVSAJEVSF
NSFTeleCredit Fees
Display InventoryIn Home
JunkoutsMerchandise Withdrawal
Promo CreditsRTV Accrual
ShrinkAP Research - Inv CntrlAP Research-Addl Rpts
Book to Perpetual InventoryClose Out Reporting
Computer Intelligence DataCount Corrections
Cross Ref for VCB DnldsDamage Write OffDebit Receivings
DFI Vendor DatabaseDisplay Inventory ReconcileDisplay Inventory Reporting
Inventory Control ReportsInventory Levels
Inventory RollMerchandise Withdrawal
Open ReceivingsPI Count Results
PI Time Results from InvPrice Protection
Sales Flash ReportingShrink Reporting
SKU Gross MarginSKU Shrink Level Detail
USMVCB Downloads
SiteSeer
C02 - CapitalProjects
F06 - FixedAssets
US Bank ReconFile
Star Repair
Optika
Cash Receipts/Credit
Charges
ICMS Credit
Cash Over/Short
Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)
PCBS(Profit Center Budget System)Merchandising Budget
Launcher
Connect 3
Connect 3Reports
Connect 3PDF Transfe
PSP
In-HomeRepair
WarrantyBillingSystem
Prepared by Michelle Mills
Data Warehouse(Interfaces to and from theData Warehouse are not
displayed on this diagram)
TM - Credit Card DB Beneficial ReconcileJEAXFJEBFAJEBKAJEDVAJESOAJEVSAJEVSF
NSFTeleCredit Fees
Display InventoryIn Home
JunkoutsMerchandise Withdrawal
Promo CreditsRTV Accrual
ShrinkAP Research - Inv CntrlAP Research-Addl Rpts
Book to Perpetual InventoryClose Out Reporting
Computer Intelligence DataCount Corrections
Cross Ref for VCB DnldsDamage Write OffDebit Receivings
DFI Vendor DatabaseDisplay Inventory ReconcileDisplay Inventory Reporting
Inventory Control ReportsInventory Levels
Inventory RollMerchandise Withdrawal
Open ReceivingsPI Count Results
PI Time Results from InvPrice Protection
Sales Flash ReportingShrink Reporting
SKU Gross MarginSKU Shrink Level Detail
USMVCB Downloads
SiteSeer
C02 - CapitalProjects
F06 - FixedAssets
US Bank ReconFile
Star Repair
Optika
Cash Receipts/Credit
Charges
SiteSeer
C02 - CapitalProjects
F06 - FixedAssets
US Bank ReconFile
Star Repair
Optika
Cash Receipts/Credit
Charges
ICMS CreditICMS Credit
Cash Over/Short
Cash Over/Short
Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)
PCBS(Profit Center Budget System)Merchandising Budget
Launcher
Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)
PCBS(Profit Center Budget System)Merchandising Budget
Launcher
Connect 3
Connect 3Reports
Connect 3PDF Transfe
PSP
In-HomeRepair
WarrantyBillingSystem
Prepared by Michelle Mills
© 2005 IBM Corporation© 2008 IBM Corporation49
Actual Application Architecture for Consumer Electronics Company
System Administrator Studies
Barrett, R., Haber, E., Kandogan, E., Maglio, P. P., Prabaker, M., & Takayama, L. A. (2004). Field studies of computer system administrators: Analysis of system management tools and practices. In Proceedings of the Conference on Computer-Supported Collaborative Work (CSCW 2004)
Maglio, P. P., Kandogan, E., & Haber, E. (2008). Distributed cognition and joint activity in computer-system administration. In M. S. Ackerman, C. Halverson, T. Erickson, & W. A. Kellogg (Eds.), Resources, co-evolution, and artifacts: Theory in CSCW. New York: Springer
© 2005 IBM Corporation© 2008 IBM Corporation50
Supported Collaborative Work (CSCW 2004).Springer.
Field Studies
Web Hosting, Data Management, Web Hosting
Web Hosting Southbury
1 Week
g, g ,Operating System, Security, and Storage
16 Visits 6 sitesData Management
Poughkeepsie3 Days
gSouthbury
1 Week
16 Visits, 6 sites
Surveys (~ 100 people)Observations (~ 50 days)
Web Hosting Boulder
3 Days + 1 Eve
Data ManagementCharlotte3 Days
Observations (~ 50 days)Video (~ 350 hours)Interviews (~ 50 people)Di ( 10 th )
y
Web Hosting Boulder1 Week
Operating system Boulder Diary (~ 10 months)
Qualitative and quantitative analysis
Boulder3 Days
Security Urbana3 Days
Storage Boulder3 Days
Security Urbana1 Week
© 2005 IBM Corporation© 2008 IBM Corporation51
1 Week
What do system administrators do?
They communicate with oneThey communicate, with one another, with clients
E i t l d
other4%
gui i t t
email4%
face to face5%
Environments are complex and idiosyncratic
S i l i ti l d
gui21%
instant messenger
16%webSocial, organizational, and
business factors matterweb3%
System tool changes don’t address their real activities
phone36%
command line11%
36%
© 2005 IBM Corporation© 2008 IBM Corporation52
Barrett, R., Haber, E., Kandogan, E., Maglio, P. P., Prabaker, M., & Takayama, L. A. (2004). Field studies of computer system administrators: Analysis of system management tools and practices. In Proceedings of the Conference on Computer-Supported Collaborative Work (CSCW 2004).
Jobs and tasks are changing
15
10
15
Expert Thinking
5 Complex Communication
-5
0 Routine Manual
Non-routine Manual
-101969 1974 1979 1984 1989 1994 1999
Routine Cognitive
1969 1974 1979 1984 1989 1994 1999
Based on U.S. Department of Labor’ Dictionary of Occupational Titles (DOT)
© 2005 IBM Corporation© 2008 IBM Corporation53
Levy, F, & Murnane, R. J. (2004). The New Division of Labor:How Computers Are Creating the Next Job Market. Princeton University Press.
Distribution of Educational Degrees in IBM (2004)
Social ScienceHumanities
Social ScienceHumanities
ArtsHumanitiesArts
ScienceEngineering Business
Business ScienceEngineering
ScienceEngineering
Services Software & Systems Research
© 2005 IBM Corporation© 2008 IBM Corporation54
Service Science skills, abilities, and knowledge
Cross-disciplinary communication
Service system design, management, and modelingT-shaped professionals are inhigh demand because theyh b h d h d b d h
y g g g
Value co-creation analysis
Service lifecycle analysis (for quality assurance)
have both depth and breadth
They combine expert thinking(depth in one or more areas)
d l i ti Service supply and demand management
New service development
B i j t t
and complex communications(breadth across many areas)
complex communication Business project management
Business case development and analysis
Organizational change management
complex communication
e Organizational change management
Marketing and sales
Creative and critical thinking
expert th g
Communication skills
Leadership and collaboration skills
hinking
© 2005 IBM Corporation© 2008 IBM Corporation55
Wendy Murphy & Bill Hefley, “What’s new in service science, management, and engineering?”Presented at Frontiers in Service Conference, October 2008
Stages of Scientific Maturity
Early StageCollect and ClassifyCollect and Classify(Biology)
Mature StageMature StageUnify and Mathematize(Electro-Magnetism)
© 2005 IBM Corporation© 2008 IBM Corporation56
Service is the application of competence for the benefit of another entity.
A service system is a A. Service Provider B. Service ClientForms of
Service Relationship(A & B t l )
ydynamic value co-creation configuration of resources, including people,
• Individual• Organization• Public or Private
• Individual• Organization• Public or Private
(A & B co-create value)
organizations, shared information (language, laws, measures, methods), and
Forms ofForms of
Forms ofService Interventions
(A on C, B on C)
technology, connected to other service systems by value propositions.
C. Service Target: The reality to be
Forms ofOwnership Relationship
(B on C)Responsibility Relationship
(A on C)
C. Service Target: The reality to be transformed or operated on by A, for the sake of B
• People, dimensions of• Business, dimensions of
P d t d d t i l t• Products, goods and material systems• Information, codified knowledge
Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio economic Approaches Cheltenham UK: Edward Elgar pp 26 53
© 2005 IBM Corporation© 2008 IBM Corporation57
Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.
Resources are the building blocks of service systems
First foundational premise of service science:
Rights No-Rights
Service system entitiesdynamically configurefour types of resources
Physical 2. Technology1. People
four types of resources
The named resource isoperant operand
Not-Physical 4.. SharedInformation3. Organizations
Formal service systems can contractInformal service systems can promise/commit
Trends & Countertrends (Evolve and Balance):
Physicalor
Not-Physical(physicists resolve disputes)
operant operand
Trends & Countertrends (Evolve and Balance):Informal <> FormalSocial <> Economic
Political <> Legal
(physicists resolve disputes)
The named resource hasRights
Routine Cognitive Labor <> ComputationRoutine Physical Labor <> Technology
Transportation (Atoms) <> Communication (Bits)Qualitative (Tacit) <> Quantitative (Explicit)
orNo-Rights
(judges resolve disputeswithin their jurisdictions)
© 2005 IBM Corporation© 2008 IBM Corporation58
Qualitative (Tacit) <> Quantitative (Explicit)within their jurisdictions)
Value propositions are the building blocks of service system networks
Second foundational premise of service science:
Value propositions coordinate & motivate resource access
Service system entitiescalculate value from multiple
t k h ld ti
StakeholderPerspective(the players)
MeasureImpacted
PricingDecision
BasicQuestions
ValuePropositionReasoning
stakeholder perspectives
A value propositions canbe viewed as a request from
1.Customer Quality(Revenue)
ValueBased
Should we?(offer it)
Model of customer: Do customers want it? Is there a market? How large? Growth rate?
be viewed as a request fromone service system to another
to run an algorithm(the value proposition)
f th ti f
2.Provider Productivity(Profit)
CostPlus
Can we?(deliver it)
Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?
from the perspectives of multiple stakeholders according
to culturally determinedvalue principles.
3.Authority Compliance(Taxes andFines)
Regulated May we?(offer anddeliver it)
Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?value principles.
The four primary stakeholderperspectives are: customer,
provider, authority, and competitor
4.Competitor(Substitute)
Sustainable Innovation(Marketshare)
Strategic Will we?(invest tomake it so)
Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?
© 2005 IBM Corporation© 2008 IBM Corporation59
Access rights are the building blocks of service system ecology
S AP CCompetitor Provider Customer AuthorityThird foundational premise
of service science:
OOLC
OOLC
S(substitute)
The access rights associated with customer and provider resources
fi d b t ll SAPA
SAPA
value-propositionchange-experience
dynamic-configurations
are reconfigured by mutually agreed to value propositions
relationships
Access rightsAccess to resources that are owned outright (i.e., property) service = value-cocreation
B2B
dynamic configurations
time
Access to resource that are leased/contracted for (i.e., rental car, home ownership via mortgage, insurance policies, etc.)
Sh d (i d b
B2BB2CB2GG2CG2BG2G
provider resourcesO d O t i ht
customer resourcesO d O t i htShared access (i.e., roads, web
information, air, etc.)
Privileged access (i.e., personal thoughts, inalienable kinship relationships etc )
G2GC2CC2BC2G***
Owned OutrightLeased/ContractShared Access
Privileged Access
Owned OutrightLeased/ContractShared Access
Privileged Access
© 2005 IBM Corporation© 2008 IBM Corporation60
relationships, etc.) g Privileged Access
Grand Challenge: Laws of Service?
Computational power doubles at a predictable rate.
Are there analogous capability-doubling laws that apply in g p y g pp yservices?
Suppose that traces of human activity in particular service systems double at some rate, and that these human activity data lead to specific opportunities for improved or increased service productivity or qualityservice productivity or quality.
Consider Amazon.com: The quality of recommendations depends on accurate statistics – the more purchases made, the better the statistics for recommendations.
Three improvement “laws” that might be applicable in services:
The more an activity is performed (time period doubling, demand doubling), the more opportunities to improve.
The better an activity can be measured (sensor deployment doubling, sensor precision doubling, relevant measurement variables doubling) and modeled, the more opportunities to improve.
The more activities that depend on a common sub-step or process (doubling potential demand points), the more likely investment can be raised to improve the sub-step.
© 2005 IBM Corporation© 2008 IBM Corporation61
Progress Toward Service Science…
Education198 courses, programs, or degrees
bli h d i 42 iestablished in 42 countries 12 centers, seminars, or groups established
Government11+ programs for service research and education in 11 countries$1B+ committed worldwide$1B+ committed worldwide
IndustrySRII established to promote service presearch and innovation agenda, with $1M in funding from IBM, Oracle, Xerox, Microsoft and others
AssociationsAIS – Service Science SIGINFORMS – Service Science Section
© 2005 IBM Corporation© 2008 IBM Corporation62
Some Upcoming Events
International Conference on Service Science (ICSS 2009); Beijing, China May14th - 15th, 2009. http://www.icss2009.org/
Quality in Services 11 (QUIS 11); Wolfburg, Germany, June 11-14, 2009. http://quis11.kampagne24.de/
Art & Science of Service V; Boston, Massachusetts, USA, June 17-19, 2009, http://atc3.bentley.edu//conferences/service09
Frontiers in Service; Honolulu, Hawaii, USA, October 29 - November 1, 2009, http://www.rhsmith.umd.edu/ces/frontiersconference.aspx
INFORMS International Conference on Service Science; 6-7 August 2009, Hong Kong, http://informs09.ielm.ust.hk/
4th International Conference on Services4th International Conference on Services Management; 8-9 May, 2009, Oxford, UK, http://www.kc-jones.co.uk/events/Managing-Services-Across-Continents/
© 2005 IBM Corporation© 2008 IBM Corporation63
Service ScienceDiscipline Classification System
A. General1. Service Science Education2. Research in Service Science3. Service Science Policy
D. Service Management1. Service Marketing2. Service Operations 3. Service Management
G.Service Arts 1. Service Arts Theory 2. Traditional Service Arts3. Performance Artsy
4. History of Services5. Case Studies6. Miscellaneous
B. Service Foundations1 Service Theory
g4. Service Lifecycle 5. Service Innovation Management6. Service Quality7. Human Resources Management 8. Customer Relationship Management 9. Services Sourcing
4. History of Service Arts5. Service Arts Education
H.Service Industries*1. The Service Industry2 Utiliti1. Service Theory
2. Service Philosophy3. Economics of Services4. Theoretical Models of Services5. Mathematical Models of Services6. Service Complexity Theory 7 Service Innovation Theory
9. Services Sourcing10. Services Law11. Globalization of Services12. Service Business Education
E. Human Aspects of ServicesS i S t E l ti
2. Utilities3. Wholesale Trade4. Retail Trade5. Transportation and Warehousing6. Information Services7. Finance and Insurance
7. Service Innovation Theory8. Service Foundations Education
C. Service Engineering1. Service Engineering Theory2. Service Operations
1. Service Systems Evolution2. Behavioral Models of Services3. Decision Making in Services4. People in Service Systems5. Organizational Change in Services6. Social Aspects of Services
8. Real Estate and Rental9. Professional and Technical Services10. Management Services11. Administrative and Support Services12. Educational Services13. Health Care and Social Assistancep
3. Service Standards4. Service Optimization 5. Service Systems Engineering 6. Service Supply Chains7. Service Engineering Management8. Service Systems Performance
7. Cognitive Aspects of Services8. Customer Psychology9. Education in Human Aspects of Services
F. Service Design1. Service Design Theory
14. Arts, Entertainment, and Recreation15. Accommodation and Food Services16. Public Administration Services17. Other Service Industries
8. Service Systems Performance9. Service Quality Engineering 10. New Services Engineering11. Computer Services12. Information Technology Services13. Service Engineering Education
g y2. Service Design Methodology 3. Service Representation 4. Aesthetics of Services5. Service Design Education
© 2005 IBM Corporation© 2008 IBM Corporation64
Claudio Pinhanez & Paul Kontogiorgis, “A proposal for a service science discipline classification systems,”Presented at Frontiers in Service Conference, October 2008
“Succeeding through Service Innovation”
Service Science is emerging as a distinct field. Its vision is to discover the underlying logic of complex service systems and to establish a common language and shared frameworks for service innovation To this end an interdisciplinary approach should beinnovation. To this end, an interdisciplinary approach should be adopted for research and education on service systems.
For education: Enable graduates from various disciplines to become T-shaped professionals or adaptive innovators; promote SSME education programmes and qualifications; develop a modular template-based SSME curriculum in higher educationqualifications; develop a modular template-based SSME curriculum in higher education and extend to other levels of education; explore new teaching methods for SSME education.
For research: Develop an interdisciplinary and intercultural approach to service research; build bridges between disciplines through grand research challenges; establish
i t d l iti f d ti l t k ith titiservice system and value proposition as foundational concepts; work with practitioners to create data sets to understand the nature and behaviour of service systems create modelling and simulation tools for service systems.
For business: Establish employment policies and career paths for T-shaped professionals; review existing approaches to service innovation and provide grand p ; g pp p gchallenges for service systems research; provide funding for service systems research; develop appropriate organisational arrangements to enhance industry-academic collaboration; work with stakeholders to include sustainability measures.
For government: Promote service innovation and provide funding for SSME education and research; demonstrate the value of Service Science to government agencies;
http://www.ifm.eng.cam.ac.uk/ssme/
and research; demonstrate the value of Service Science to government agencies; develop relevant measurements and reliable data on knowledge- intensive service activities; make public service systems more comprehensive and citizen-responsive; encourage public hearings, workshops and briefings with other stakeholders to develop service innovation roadmaps.
© 2005 IBM Corporation© 2008 IBM Corporation65
Call to Create National Service Innovation Roadmaps (SIR) Reports
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions
StakeholderPriorities
Education
Service Systems
Customer-provider interactions that
Service Science
To discover the underlying principles of
Service Innovation
Growth in service GDP and jobs
The white paper offers a starting point to -
Research
interactions that enable value cocreation
Dynamic configurations of
l
underlying principles of complex service systems
Systematically create, scale and improve
t
Develop programmes & qualifications
j
Service quality & productivity
Environmental friendly & sustainable
Skills& Mindset
E
Business
resources: people, technologies, organisations and information
Increasing scale,
systems
Foundations laid by existingdisciplines
sustainable
Urbanisation &aging population
Globalisation &
Knowledge& Tools
Employment
Encourage an interdisciplinary approach
Government
g ,complexity and connectedness of service systems
B2B, B2C, C2C, B2G, G2C G2G service
Progress in academic studies and practical tools
Gaps in knowledge and skills
technology drivers
Opportunities for businesses, governments and individuals
Employment& Collaboration
Policies & Investment
Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015G2C, G2G service
networksskillsd dua s & Investment research by 2015
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
© 2005 IBM Corporation© 2008 IBM Corporation66
“Succeeding through Service Innovation” Whitepaper: A Framework for Progress(http://www.ifm.eng.cam.ac.uk/ssme/)
Understanding service systems
ServiceService is the application of competences for the benefit of another entity
Service SystemVal e co creation config rations ofValue co-creation configurations of integrated resources: people, organizations, shared information and technology
Service ScienceService science is the systematic study of service and service systems
SSMESSME is a discipline that brings together scientific understandingtogether scientific understanding, engineering principles, and management practices to design, create, and deliver service systems
© 2005 IBM Corporation© 2008 IBM Corporation67
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