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Service Science, Management, and E i i Engineering Global Integration and Service Innovation Paul P. Maglio IBM Almaden Research Center Global Mobility Roundtable, Auckland, New Zealand November 24, 2008 © 2008 IBM Corporation 1

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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

IBM Research Worldwide

© 2005 IBM Corporation© 2008 IBM Corporation2

© 2005 IBM Corporation© 2008 IBM Corporation3

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

It’s not just IBM…

© 2005 IBM Corporation© 2008 IBM Corporation22

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

( )

Worldwide Service GDP

© 2005 IBM Corporation© 2008 IBM Corporation24

Worldwide Service Employment

© 2005 IBM Corporation© 2008 IBM Corporation25

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

re

Invo

ice

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.

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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

http://www.ibm.com/university/ssme

© 2005 IBM Corporation© 2008 IBM Corporation68

© 2005 IBM Corporation© 2008 IBM Corporation69