Information & Communication Technology Master
Service science Gianluigi Viscusi and Carlo Batini viscusi@disco.unimib.it batini@disco.unimib.it
Information & Communication Technology Master
Contents
Service sector in global economies Evolution in the concept of service Service value networks
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Information & Communication Technology Master
Contents
Service sector in global economies Evolution in the concept of service Service value networks
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Information & Communication Technology Master
Service sector in global economies
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The service industries covered by the Information Supply Management report represent about 80 % of the nation's economic activity. (ISM, JPMorgan – 2007) 4
Information & Communication Technology Master
The Context: Web Services (N=2431)
(N=1705)
(N=2325)
(N=1755)
(N=2173)
(N=2345)
(N=2615)
*Rielaboration from McKinsey Global Survey, How Business are using Web 2.0, 2007
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Information & Communication Technology Master
Contents
Service sector in global economies Evolution in the concept of service Service value networks
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Information & Communication Technology Master
SERVICES?
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Information & Communication Technology Master
What is a Service? Some definitions… • • • • • • • • •
Deed, act, or performance (Berry, 1980) Deeds, processes, performances (Zeithaml& Bitner, 1996) An activity or series of activities…provided as solution to customer problems (Gronroos, 1990) A provider/customer interaction that creates and captures value (IBM Research, 2006). All economic activity whose output is not physical product or construction (Brian et al, 1987) Intangible and perishable…created and used simultaneously (Sasser et al, 1978) A time‐perishable, intangible experience performed for a customer acting in the role of co‐producer (Fitzsimmons, 2001) A change in condition or state of an economic entity (or thing) caused by another (Hill, 1977) Characterized by its nature (type of action and recipient), relationship with customer (type of delivery and relationship), decisions (customization and judgment), economics (demand and capacity), mode of delivery (customer location and nature of physical or virtual space) (Lovelock, 1983) 8
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…a definition • A service consists in an activity or series of activity, of more or less intangible nature, having place in an exchange between a supplier and a customer, where the object of the transaction is an intangible good. •
Adapted from Grönroos, C. (1990). Service Management and Marketing. Managing the Moments of Truth in Service Competition: Lexington Books)
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Evolution of definitions of service Archaic: – – –
economic residual of utility not result in a physical product transfer or output non‐productive labour.
Modern: – – – – –
the application of competences value‐cocreation interactions time‐based performances an exchange to obtain value from the access to goods, labour, professional skills, facilities, networks and systems; not normally implying ownership of any of the physical elements involved in services interactions.
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Academic silos:the gap between disciplines Economy Economy
Marketing
Operations Management
Computer Science
Service Science The Gap Human Resources
Others
Engineering
Strategy
*Adapted from IBM (2007)”Succeeding through service innovation A service perspective for education, research, business and government”, White Paper
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Information & Communication Technology Master
Activity Sectors • Fisher (1935) introduces a three sectors model: – the primary sector involves agriculture and extraction activities, – the secondary sector involves industrial transformation, – the tertiary sector, spanning from transport to commerce, involving arts, instruction, and philosophy.
• Besides the focus on final consumption, Clark (1940) classification is relevant for a new classification of the activity sectors, that are: – primary activities (agriculture, fishing, forest), where natural constraints implies a decreasing scale of rent; – industrial activities, that are large scale operations of transformation of raw materials in transportable products – service activities, gathering handicrafts, building, public utilities, transport, commerce. 12
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Toward a self‐service economy • Relevant role of science, technology, and knowledge • Growing importance of non‐manual workers • Emerging self‐service economy
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Defining the service sector, II 1997 NAICS‐based service sector, US Census Accommodation and Food Services (Sector 72) Administrative and Support, Waste Management, Remediation Services (Sector 56) Arts, Entertainment and Recreation (Sector 71) Educational Services (Sector 61) Finance and Insurance (Sector 52) Health Care and Social Assistance (Sector 62) Information (Sector 51) Management of Companies and Enterprises (Sector 55) Other Services (Except Public Administration) (Sector 81) Professional, Scientific and Technical Services (Sector 54) Real Estate and Rental and Leasing (Sector 53) Retail Trade (Sector 44‐45) Transportation and Warehousing (Sector 48‐49) Utilities (Sector 22) 14
Information & Communication Technology Master
Academic silos:the gap between disciplines Economy
Marketing
Operations Management
Computer Science
Service Science Human Resources
Others
Engineering
Strategy
*Adapted from IBM (2007)”Succeeding through service innovation A service perspective for education, research, business and government”, White Paper
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A survey •
In a review of 46 publications by 33 authors during the period 1963‐83, Zeithaml et al. (1985) determined that the most frequently cited characteristics were: – intangibility (cited by all), – heterogeneity or non‐standardization (cited by about 70%), – inseparability of production and consumption or simultaneity (cited by the great majority), – perishability or inability to inventory (cited by about 50%).
•
These latter, often indicated as IHIP “constitutes today’s received wisdom in the broader academic marketing community[…]”(Lovelock et al., 2004)
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Tangibles vs.intangibles attributes/assets • Tangible attributes include – – – – – –
Price Quality Design functions Choices Customization Variety
• Intangible attributes include – – – – – –
Convenience Style Trust Security, Efficiency Ease of use.
• Intangible assets include – Relationships – employee know‐how and competency, – the effectiveness of the organisation’s work groups and structure, – the efficiency of the organisation’s production and service processes – the level of trust between the people or organisations forming the relationships.
• Tangible assets are – financial resources – other capital‐based resources that are controlled by the firm. 17
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Between goods and services: the service package •
•
•
The interdependence between services and products leads to the concept of service package (Grönroos, 2004, 2006) or offering (R. Normann et al., 1994) as a bundle of services and physical goods. Shostack (1977) defines service as a combinations of discrete elements, either tangible or intangible, which are linked together in molecule‐like wholes; thus, products may be arrayed on a tangibility spectrum according to whether their constituent elements are tangible or intangible‐ dominant. The notion of service package, is related to the concept of augmented product (Grönroos, 2000), applied both to services and goods, and involving three types of services:
– the core services, e.g. lodging for an Hotel; – the facilitating services (or goods), that facilitate the consumption of the core service (e.g. both help‐desk and the bank card facilitate the access to an automatic teller machine); – supporting services, that do not facilitate the consumption or use of the core services, but are used to increase the value and/or differentiate from service competitors (Grönroos, 2000). 18
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Difficult Conceptual Transitions Goods‐Dominant Concepts
Transitional Concepts Service‐Dominant Concepts
Goods
Services
Service
Products
Offerings
Experiences
Feature/attribute
Benefit
Solution
Value‐added
Co‐production
Co‐creation of value
Profit maximization
Financial Engineering
Financial feedback/learning
Price
Value delivery
Value proposition
Equilibrium systems
Dynamic systems
Complex adaptive systems
Supply Chain
Value‐Chain
Value‐creation network/constellation
Promotion
Integrated Marketing Communications
Dialog
To Market
Market to
Market with
Product orientation
Market Orientation
Service‐Dominant Logic (Consumer and relational)
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Information & Communication Technology Master
Academic silos:the gap between disciplines Economy
Marketing
Operations Management
Computer Science
Service Science Human Resources
Others
Engineering
Strategy
*Adapted from IBM (2007)”Succeeding through service innovation A service perspective for education, research, business and government”, White Paper
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SERVICES?
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Bundles of services/goods • Service as augmented product or offering involve both tangible and intangible characteristics, enabled by information and communication technologies • A new set of highly intangible services limited to images on a screen and sounds (Lovelock et al., 2004) • A new kind of physical tangibility existing in such other services (e.g. an mp3 song can be downloaded and stocked in a mp3 repository for further listening, together with its art‐cover) • Focus more and more on bundles of services
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E‐Service vs Web service •
E‐service is defined as the provision of service over electronic networks. E‐service also encompasses the service product, service environment, service delivery , and the business model, whether it belongs to a goods manufacturer or a pure service provider.*
The concept of e‐service is much broader than the concepts of IT services, Web services, or infrastructure services. •
A Web service is defined as a self‐describing, open software components that support rapid, low‐cost composition of distributed applications. Services are offered by service providers‐organizations that procure the service implementations, supply their service descriptions, and provide related technical and business support.**
* See: Rust, R.T. and Kannan, P.K. E‐Service: New Directions in Theory and Practice. ME Sharpe, Armonk, New York, NY, 2002. **See: Papazoglou, M.P., Georgakopoulos, D.: Service‐oriented computing. Commun. ACM 46(10), 25–28 (2003)
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Information & Communication Technology Master
Types of services • Many typologies of service exist: – external customer (market‐based) and internal customer service; – direct and indirect customer and provider interactions; – automated, IT‐reliant and non‐automated service; – customised, semicustomised and non‐customised service; – personal and impersonal service; – repetitive and non‐repetitive service; – long‐term and short‐term service; – service with varying degrees of self‐service responsibilities. 24
Information & Communication Technology Master
Typology of services (IBM) experiential extending
enabling
creative
entrusted
core service experience
information
regulation
quality of life
problem solving
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Information & Communication Technology Master
Characteristics of emerging services Service Systems Engineering Characteristics Information‐ Driven
Customer‐ Centric
E‐Oriented
Productivity‐ Focused
Wholesale & Retail: Mass Customization
X
X
X
X
Business & Professional: “Early Warning” System
X
Education: Internet‐Based Distance Learning
X
Government: Crime “Hot Spots”
X
Health Care: Medical Triaging
X
X
X
X
Finance, Insurance & Real Estate: Internet‐Based Auctions
X
X
X
X
Transportation: Airline Passenger Screening
X
X
X
Communications: Real‐Time Routing
X
X
X
Example Emerging Services
X X
X
X X
26 (Tien and Berg, 2003, p 34).
Information & Communication Technology Master
SLAÂ contents
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Information & Communication Technology Master
Contents 1. 2. 3.
Service sector in global economies Evolution in the concept of service Service value network
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Information & Communication Technology Master
Value network?
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Three important points • Value is produced by the end consumer and delivered through a complex web of direct and indirect relationships between value network actors • The complexity of service value networks depends on the number of actors and on the involvement of these actors in delivering the service. • ICT provides a greater level of value‐network integration, information visibility, and means to manage and anticipate change. 30
Information & Communication Technology Master
Value chain vs Value Co‐creation
Value Production and Consumption
Service Exchange through Resource Integration and Value Co-creation
Supplier
Supply/Value Chain
Resource Integrator/ Beneficiary (“Firm”)
Producer
Consumer
Resource Integrator/ Beneficiary (“Customer”)
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Differences between value‐chain and value constellation • Industrial perspective – Value chain ‐> production and consumption are separated ‐> focus on costs and efficiency of the production process ‐> roles of the stakeholders are fixed ‐> linkages between stakeholders are fixed
• Service perspective – Value costellation ‐> production an consumption are simoultaneous and not separated ‐> focus on effectiveness and differentiation ‐> roles of the stakeholders are dynamics ‐> linkages between stakeholders are dynamics 32
Information & Communication Technology Master
The challenge: information growth • A major advance in services, has been the explosion of social networking with sites such as Facebook, YouTube, MySpace, Flickr, Wikipedia and Twitter. • Users add tags by making comments, adding or embedding links
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Information & Communication Technology Master
Foundational Premises for a Service Science A service‐dominant logic is inherently customer oriented and relational •Operant resources being used for the benefit of the customer places the customer in the center of value creation and implies relationship
Knowledge is the fundamental source of competitive advantage •Operant resources, especially “know‐how,” are the essential component of differentiation
Goods are distribution mechanisms for service provision. •“Activities render service; things render service” (Gummesson 1995) : goods are appliances
The enterprise can only make value propositions. •Since value is always determined by the customer (value‐in‐use)—it can not be embedded through manufacturing (value‐in‐exchange)
The application of specialized skill(s) and knowledge is the fundamental unit of exchange. •Service (application of skills and knowledge) is exchanged for service
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Thanks
‌.questions?