1. Relooking at services science and services innovation Georgiana Loredana IONITA - SEM 2012 -

2. Content 1. Introduction 2. Service and the three-layer services science framework 2.1Service needs 2.2Service competencies O Structured view of service competencies O Engineering view of service competencies 2.3Service resources 3. The Amazon case study 4. Conclusions 2

3. 1. Introduction In lots of countries, service economy has become the dominant economy. Modern services industries require talents 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 features bring new challenges for services science. In this presentation, we go beyond the traditional view of services and propose a three-layer framework for services science and services innovation. The framework covers service needs, service competencies, and service resources. 3

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

5. 2. Service and the three-layer services science framework (2) The three layers from top to bottom are service needs layer, service competencies layer, and service resources layer. Besides the key factors in each layer, there are directed causal links pointing from service resource to service competency layer and from service competency layer to service needs layer. We call this map service map to emphasize that it is a map representing concerns in the service field, and it shows the relationship among different types of service concerns. 5

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

7. 2. Service and the three-layer services science framework (4) To be successful in the market, every service enterprise has to 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 service needs, service competencies, and service resources for a service provider is that it could give a clear picture for all internal stakeholders how indices in each layer are related and support by other indices. It makes service indices measurable and such giving an opportunity to improve the overall quality of the service and identifying new service resources to be used to offer innovative services to service customers.

8. 2.1 Service needs (1) Abraham Maslow developed the theory now known as Maslow’s hierarchy of needs. He divided those needs into 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 self actualization need respectively. Service technologies innovations have great opportunities in the space of satisfying different layers of needs. Maslow’s Hierarchy of needs represents people’s needs in the society. In the field of services, there are also different levels of needs from different customers. It is already a common sense to understand needs of customers in different segmentations and then provide them with different portfolio of service products. Maslow’s model represents the needs of one person, while in modern services industries service needs may originate from a community of service customers. 8

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

10. 2.2 Service competencies Service competencies are capabilities of a service provider to provide high quality services to its service consumers. Here, we will analyze the service competencies from different angles including cybernetic, system engineering, and service componentization. 2.2.1 Structured view of service competencies (1) One view of a service system is based on cybernetic and system engineering as shown bellow : 10

11. 2.2.1 Structured view of service competencies (2) A service system has its building blocks but should serve as a complete system to the outside world. A service system should be measurable. In the real cases, a successful service company like Amazon should always define a set of measurable business KPIs (key performance indicators). One of the critical KPIs is customer satisfaction index. 11

12. 2.2.1 Structured view of service competencies (3) The building blocks of a service system include service processes, service staffs, service partners, etc. In the center, there is the service information hub. The overall objective of a service system is to achieve predefined service level agreement with acceptable cost and maximized revenue. Besides that, the service system should has its loop of feedback so that it could monitor the service performance and make adjustments accordingly during execution in respond to the change of service environment and let service customers aware of the improved service quality. Both a service and a service system have their lifecycles. 12

13. 2.2.2 Engineering view of service competencies (1) Another view of a service system is componentization-based engineering view. Since most service systems are complex systems while cognition and capability of people are always limited, there must be a way of decomposing the system into controllable pieces, so that within a service organization different roles have clear view of their working scope and they could collaborate efficiently as one body. A typical componentized view within a service organization is eTOM (enhanced telecommunication operation map) framework from the telecommunication forum. Telecommunication industry is an open industry that leverage a lot of IT services innovations. The realm of telecommunication industry includes three parts namely enterprise management which is not unique, strategy, infrastructure and product which is unique in service product management, and service operation which is quite unique all across the whole service lifecycle. 13

14. 2.2.2 Engineering view of service competencies (2) The eTOM view looks at services in an enterprise from two dimensions as shown bellow : One dimension is from service customer point of view such as operation support and readiness, service fulfillment, service assurance, and service billing. The other dimension is from management point of view such as customer relationship management, service management and operation, resource management and operation, and supplier/partner relationship management. 14

15. 2.3 Service resources Service resources cover whatever items service providers use during service processes. Service resources include information resources, people resources, process resources, and physical resource, etc. From a service provider point of view, service resources could be categorized into internal resources and external resources that correspond to different policies for resource management. Internal resources Example: a service-oriented pub-sub system could integrate customer information with shipment information and provide instant messaging services to the customer notifying them of the change of shipment status. It could greatly improve the customers’ satisfaction and increase the possibility of more business opportunities with the customer. External resources An example of good external resources enabled by IT innovation could be integrated cross region supply chains covering multiple sub-service providers so that the main service providers could always choose the best sub-service provider with lowest cost. 15

16. 3. The Amazon case study (1) Amazon.com, previously a recognized online book seller, has evolved its business model from an online retailer to a online service provider for the retail industry— enabled by SOA and Web services technologies. Its marketplace partner model is highly successful, with tens of thousands of subscribers to its Web services- enabled back-end interfaces. Now Amazon.com is providing end-to-end services to other retailers, running their entire online operations (including Web sites, orders, and fulfillments). 1. The needs for online business that influence Amazon When customers come to Web, they are certain seeking more options and more convenient ways of purchasing more goods, in an approach that is more cheap than buying in stores. Amazon is good at understanding customers’ needs and offer the services in efficient approach. The needs almost cover all aspect of service needs. For availability of service system and service delivery and billing, after Amazon realized that depending on third party fulfillment vendors cannot guarantee high quality and on time book delivery, they established they own fulfillment center. 16

17. 3. The Amazon case study (2) For service customization, users that have registered on Amazon Web site could enjoy customized Web pages showing their interested good and providing recommendations for them, using the famous collaborative filtering recommendation system like “Users buy product X also buy product Y ”. The “review” feature on Amazon’s Web site provides end user contribution for ranking the popular books and other goods. 2.Core competencies of Amazon influence the success of new service business models Because Amazon’s service system has both broad customer set and very efficient and scalable service platform, it can serve the needs of different types of customers. 3.Amazon’s service resources form the foundation of Amazon competencies If we look into more detail of Amazon’s core competencies, we would find that most of them are related to Amazon’s unique service resources, including platform resources, operation resources, standard interface resources, etc. 17

18. 3. The Amazon case study (4) 4.The Amazon service ecosystem With core and unique service competencies, Amazon not only satisfies customers’ needs but also accumulated valuable service resources. Amazon’s core platform is built for adapting to changes based on its business models. There are three 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 types of role players are the active users of Amazon’s platform: Buyers. There are over 39 million active customer accounts, this is Amazon’s base for partnership; Sellers. They are merchants who sell on the Amazon’s platform. There are over 600,000 active seller accounts, the number of buyers and sellers constitutes positive feedback; Associates (Web Site owners). They are people who own their Web sites and link to Amazon with referral fees. There are hundreds of thousands of associates; Developers. They are people who use Amazon Web Services (AWS) to create applications and tools. There are over 100,000 registered developers. 18

19. 3. The Amazon case study (5) The implication of Amazon’s success is that to be a industry lead, you have to grasp unique and core competencies that not only satisfies customer’s current needs but also can influence customers’ usage and purchasing behavior. On the other hand, core competencies highly depend on IT services innovations and available service resources. Good content resources may attract more customers, good people and process resources may improve service operation, and good channel resources with customers and partners and greatly broaden your service ecosystem to generate more transactions. A good service system like Amazon not only covers the whole service lifecycle but also highly improves the experience of front stage and back stage of a service operation system. This flexible enablement platform for introducing new business models has demonstrated the value of SOA and Web services technology in building an adaptive service ecosystem for Amazon.com. It is a typical embodiment of the three-layer service model to realize service needs for different service consumers and partners. 19

20. 4. Conclusions The proposed three-layer service map not only covers service needs and service competencies but also covers service resources. The service needs layer extends Maslow’s Hierarchy of needs to the field of services. The service competencies layer leverages the concept of cybernetic and system thinking to study a service system. The service resources layer leverages the observations from service economy and service management; they have opportunities for using more modern service resources triggered by technology innovations. The Amazon case is an example to see how the three-layer service map may well illustrate the modern service enterprises 20

21. Thank you! 21