Relooking at services science and services innovation

1. Relookingatservices science and services innovation Georgiana LoredanaIONITA - SEM 2012 -

2. Content • Introduction • Service and the three-layer services science framework 2.1 Service needs 2.2 Service competencies • Structured view of service competencies • Engineering view of service competencies 2.3 Service resources • The Amazon case study • Conclusions

3. 1. Introduction In lots of countries, service economy has becomethe dominanteconomy. Modern services industries requiretalents skillful at multidiscipline subjects including IT services, business models, management skills, psychology, etc. There is the rise of services science, service-oriented computing,and services computing. The multidiscipline featuresbring newchallenges for services science. In this presentation, we gobeyond the traditional view of services and propose a three-layerframework for services science and services innovation. The framework covers service needs, service competencies, and service resources.

4. 2. Service and the three-layer services science framework (1) Every service has its own lifecycle which covers servicerequirements from serviceconsumers, capabilities ofservice providers, interactions among the service roles in aservice project, service delivery process, and service operation. This business driven view could facilitate the systemthinking of modern services industries. The frameworkbelow is based on experiences and studies of modernservices industry over the past 10 years.

5. 2. Service and the three-layer services science framework (2) The three layers from top to bottom areservice needslayer,servicecompetencies layer, and service resourceslayer. Besides the key factors in each layer, there are directedcausal links pointing from service resource to servicecompetency layer and from service competency layer toservice needs layer.We call this map service map to emphasizethat it is a map representing concerns in the servicefield, and it shows the relationship among different types of service concerns.

6. 2. Service and the three-layer services science framework (3) In our service map, service competencies in the middleusually make up the bottleneck. It is because services requirementcan be very rich and the demands are always growing. Each unique service competencyrequires special knowledge and service delivery platform. Itis impossible for a single service enterprise to own all theservice competencies because holding each service competencyrequires certain cost. This is the reason service providersoften seek collaborations to win a market. The coverage of service resources is very wide. It is alldepending on services providers’ competencies to leveragethose service resources and develop their service capabilitiesto acquire, serve, and retain the service consumers. Thebottleneck is usually in the middle where it is also often thesource for services innovation.

7. 2. Service and the three-layer services science framework (4) To be successful in the market, every service enterprise hasto think of efficient and unique ways to attract service customers,e.g., through unique service marketing, delivering,and operation capabilities. The benefit of using service map as a way to depict serviceneeds, service competencies, andservice resources fora service provider is that it could give a clear picture for allinternal stakeholders how indices in each layer are relatedand support by other indices. It makes service indices measurableand such giving an opportunity to improve the overallquality of the service and identifying new service resourcesto be used to offer innovative services to service customers.

8. 2.1 Service needs (1) Abraham Maslow developed the theory now known asMaslow’s hierarchy of needs. He divided those needsinto five layers, from most urgent and basic (bottom layer)to most advanced (top layer). They are physiological need,safety need, belonging/love need, esteem need, and selfactualizationneed respectively. Service technologies innovationshave great opportunities in the space of satisfyingdifferent layers of needs. Maslow’s Hierarchy of needs represents people’s needsin the society. In the field of services, there are also differentlevels of needs from different customers. It is already acommon sense to understand needs of customers in differentsegmentations and then provide them with different portfolio of service products. Maslow’s model represents the needs of one person, whilein modern services industries service needs may originatefrom a community of service customers.

9. 2.1 Service needs (2) Comparing with traditional needs in Maslow’s hierarchy,in the service fields, the service needs may include basicneeds that currently have been considered such as availabilityof service system, service delivery and billing, and servicecustomization. There are also service needs only possiblewith Web technologies such as digitized service encounter,e.g., using ATM machines to replace service staffs as banktellers in the case of simple banking transactions.

10. 2.2 Service competencies Service competencies are capabilities of a service providerto provide highquality services to its service consumers. Here, we will analyze the service competencies from differentangles including cybernetic, system engineering, and servicecomponentization. 2.2.1 Structured view of service competencies (1) One view of a service system is based on cybernetic andsystem engineering as shown bellow :

11. 2.2.1 Structured view of service competencies (2) A service system has its building blocks but should serveas a complete system to the outside world. A service systemshould be measurable. In the real cases, a successful servicecompany like Amazon should alwaysdefine a set of measurable business KPIs (key performanceindicators). One of the critical KPIs is customersatisfaction index.

12. 2.2.1 Structured view of service competencies (3) The building blocks of a service system include serviceprocesses, service staffs, service partners, etc. In the center,there is the service information hub. The overall objective ofa service system is to achieve predefined service level agreementwith acceptable cost and maximized revenue. Besidesthat, the service system should has its loop of feedback so thatit could monitor the service performance and make adjustmentsaccordingly during execution in respond to the changeof service environment and let service customers aware of theimproved service quality. Both a service and a service systemhave their lifecycles.

13. 2.2.2 Engineering view of service competencies (1) Another view of a service system is componentization-basedengineering view. Since most service systems are complexsystems while cognition and capability of people are alwayslimited, there must be a way of decomposing the systeminto controllable pieces, so that within a service organizationdifferent roles have clear view of their working scopeand they could collaborate efficiently as one body. A typicalcomponentized view within a service organization is eTOM(enhanced telecommunication operation map) frameworkfrom the telecommunication forum. Telecommunication industry is an open industry that leveragea lot of IT services innovations. The realm of telecommunication industry includesthree parts namely enterprise management which is notunique, strategy, infrastructure and product which is uniquein service product management, and service operation whichis quite unique all across the whole service lifecycle.

14. 2.2.2 Engineering view of service competencies (2) TheeTOM view looks at services in an enterprise from twodimensions as shown bellow : One dimension is from servicecustomer point of viewsuch as operation support and readiness, servicefulfillment, service assurance, and service billing. The otherdimension is from management point of viewsuch as customer relationshipmanagement, service management and operation, resource management and operation, and supplier/partnerrelationshipmanagement.

15. 2.3 Service resources Service resources coverwhatever items service providers useduring service processes. Service resources include informationresources, people resources, process resources, andphysical resource, etc. From a service provider point of view,service resources could be categorized into internal resourcesand external resources that correspond to different policiesfor resource management. Internal resources Example: a service-orientedpub-sub system could integrate customer information withshipment information and provide instant messaging servicesto thecustomer notifying them of the change of shipment status. It could greatly improve the customers’ satisfaction andincrease the possibility of more business opportunities withthe customer. External resources Anexample of good external resources enabled by IT innovationcould be integrated cross region supply chains coveringmultiple sub-service providers so that the main service providerscould always choose the best sub-service provider withlowest cost.

16. 3. The Amazon case study (1) Amazon.com, previously a recognized online bookseller, has evolved its business model from an online retailerto a online service provider for the retail industry—enabledby SOAandWeb services technologies. Its marketplace partnermodel is highly successful, with tens of thousands ofsubscribers to itsWeb services-enabled back-end interfaces. Now Amazon.com is providing end-to-end services to otherretailers, running their entire online operations (includingWeb sites, orders, and fulfillments). • The needs for online business that influence Amazon When customers come to Web, they are certain seekingmore options and more convenient ways of purchasing moregoods, in an approach that is more cheap than buying instores. Amazon is good at understanding customers’ needsand offer the services in efficient approach. The needs almostcover all aspect of service needs. For availability of service system and service delivery andbilling, after Amazon realized that depending on third partyfulfillment vendors cannot guarantee high quality and on timebook delivery, they established they own fulfillment center.

17. 3. The Amazon case study (2) For service customization, users that have registered onAmazonWeb site could enjoy customizedWeb pages showingtheir interested good and providing recommendations forthem, using the famous collaborative filtering recommendationsystem like “Users buy product X also buy productY ”. The “review” feature on Amazon’s Web site providesend user contribution for ranking the popular books and othergoods. 2. Core competencies of Amazon influence the successof new service business models Because Amazon’s service system has both broad customerset and very efficient and scalable service platform, it canserve the needs of different types of customers. 3. Amazon’s service resources form the foundationof Amazon competencies If we look into more detail of Amazon’s core competencies,we would find that most of them are related to Amazon’sunique service resources, including platform resources, operationresources, standard interface resources, etc.

18. 3. The Amazon case study (4) 4. The Amazon service ecosystem With core and unique service competencies, Amazon notonly satisfies customers’ needs but also accumulated valuableservice resources. Amazon’s core platform is built foradapting to changes based on its business models. There arethree major partnership business models: associate partner,marketplace partner, and Web Service (platform) partner. Amazon’s ecosystem includes these Amazon Partners (APs)supported by the Amazon platform. The following four typesof role players are the active users of Amazon’s platform: Buyers. There are over 39 million active customeraccounts, this is Amazon’s base for partnership; Sellers. They are merchants who sell on the Amazon’splatform. There are over 600,000 active seller accounts, thenumber of buyers and sellers constitutes positive feedback; Associates (Web Site owners). They are people who owntheir Web sites and link to Amazon with referral fees. Thereare hundreds of thousands of associates; Developers. They are people who use Amazon Web Services(AWS) to create applications and tools. There are over100,000 registered developers.

19. 3. The Amazon case study (5) TheimplicationofAmazon’s success is that tobea industrylead, you have to grasp unique and core competencies that notonly satisfies customer’s current needs but also can influencecustomers’ usage and purchasing behavior.On the other hand,core competencies highly depend on IT services innovationsand available service resources. Good content resources mayattract more customers, good people and process resourcesmay improve service operation, and good channel resourceswith customers and partners and greatly broaden your serviceecosystem to generate more transactions. A good service system like Amazon not only covers thewhole service lifecycle but also highly improves the experienceof front stage and back stage of a service operationsystem. This flexible enablement platform for introducing newbusiness models has demonstrated the value of SOA andWeb services technology in building an adaptive service ecosystemfor Amazon.com. It is a typical embodiment of thethree-layer service model to realize service needs for differentservice consumers and partners.

20. 4. Conclusions The proposed three-layer service map not only covers serviceneeds and service competencies but also covers serviceresources. Theservice needs layer extends Maslow’s Hierarchyof needs to the field of services. The service competencieslayer leverages the concept of cybernetic and systemthinking to study a service system. The service resourceslayer leverages the observations from service economy andservice management; they have opportunities for using moremodern service resources triggered by technology innovations. The Amazon case is an example to seehow the three-layer service map may well illustrate the modernservice enterprises

21. Thank you!