Fundamentals of Services

Services are activities that cause a transformation of the state of an entity (people, product, business, and region or nation) by mutually agreed terms between the service provider and the customer. Individual services are relatively simple, although they may require customization and significant back-stage support (e.g., database, knowledge management, analysis, forecasting, etc.) to assure quality and timely delivery. Product services are also relatively straightforward, as product specifications, performance standards, quality control, installation guidelines, and maintenance procedures require good communication and understanding between providers and users. Business services can be rather complex; some may involve intensive negotiations, work process alignment, quality assurance, team collaboration and service coproduction. “Regional and National services are even more complex, as they may affect policy, custom regulations, export permits, local business practices, logistics, distribution, and other such issues”. (Chang 2010)

The service and/or set of services developed and accessible to the customer (individual consumer or enterprise) are enabled by a service system . Service System stakeholders may or may not interact to create a particular service value chain to be delivered with a particular objective. (Spohrer and Maglio 2010) Service System entities dynamically configure four types of resources (people, technology/environment infrastructure, organizations/institutions and shared information/symbolic knowledge). Service Systems can be either formal or informal in nature. In the case of formal service systems the interactions are contracted through Service Level Agreements (SLA). Informal service systems can promise to reconfigure resources without a written contractual agreement; in the case of the Emergency Transports Operations example discussed in the Service Systems Background article there is no formal contractual agreement (i.e., SLA) between the user requesting the service and the agency providing the service other than a “promise” for quick and efficient response. SLAs are written contracts between and among Service System entities as well as the legal system for enforcing the contracts. The study of informal service systems contains the study of relationships (communications, interactions and promises) between service systems and social systems, cultural norms and beliefs, as well as political systems that can maintain those relationships. (Spohrer and Kwan 2008) The resources are either physical or non-physical and have rights or no rights. See Figure below:

Figure 1. Service System Resources

Service Value Chain

SLAs and policies specify the conditions under which Services System entities reconfigure access rights to resources by mutually agreed value propositions. Current management frameworks typically focus on single Service System entity interfaces. They neither use SLAs for managing the implementation and delivery of services, nor do they recognize/support the fact that many services may be composed of lower-level services, involve third-party providers, and rely on a possibly complex relationships and processes among participating business, Information Communications and Technologies (CoreGRID 2007). While SLAs are mapped to the respective customer requirements; policies are provider-specific means to express constraints and rules for their internal operations. These rules may be independent of any particular customer [Theilmann 2009].

In Service Systems practice we describe the service value chain in terms of links among the entities; value could then be created and delivered in terms of e-services : Business-to-Business (B2B), Business to Consumer (B2C), Business to Government (B2G), Government-to-Business (G2B), Government-to-Government (G2G), Government-to-Consumer (G2C), etc. The emerging service in this case interacts or “co-produces” with their customer via the World Wide Web (www) as compared to the physical environment in which the traditional or bricks-and-mortar service enterprises interact with their customers.

As discussed by Chesbrough (2011), Tien and Berg (2003), and Hipel, et al. (2007), the services sector requires information as input, involves the customer at the production/delivery stage, and employs mostly qualitative measures to assess its performance, i.e., technology-intensive services are “information-driven, customer centric, e-oriented, and productivity-focused”. (Chang 2010) defines these features as:

Information Driven. The creation, management, and sharing of information is crucial to the design, production and delivery of services.
Customer Centric. Customers are generally co-producer of the services, as in the case of self-service. Customers require a certain degree of self-adaptation or customization, and customers must be satisfied with the rendered services.
E (electronics) Oriented. Services are becoming more e-oriented. Thus, e-access, e-commerce, and e-customer management are crucial to e-services .
Productivity-Focused. Both efficiency and effectiveness are important in the design, delivery, and support of services.
Value-Adding. Services need to add value to the target clients. For profit-seeking service companies, the value so produced assures their profitability. For non-profit service entities, it reinforces the goodness of its policy.

A Service System is defined by its value co-creation chain in which stakeholders work in open collaboration to deliver consistently high quality service according to the business goals, service goals, and customer goals. A value proposition can be viewed as a request from one service system to another to run an algorithm (the value proposition) from the perspectives of multiple stakeholders according to culturally determined value principles. The four primary stakeholder’s perspectives are the customer, provider, authority and the competitors; Figure below depicts value calculations from multiple stakeholder perspectives:

Figure 2. Value calculation from different stakeholders’ perspectives.

From (Spohrer 2011) with permission

From an engineering design point of view the service and business goals are an entry point to analyze the Business architectures (including organization and processes) needed which in turn demand alignment between the IT Components and Technology Architecture to achieve the goals. From a Systems Engineering perspective we then need to identify Service System entities that could participate in the service delivery (people, organizations, technologies, processes).

Service System Entities

Spath and Fahnrich (2007) defined a service meta-model comprised of nine types of entities:

Customers: customer features, customer attitudes, customer preferences
Goals: business goals, service goals, customer goals, enterprise culture goals
Inputs: physical, human beings, information, knowledge, currency, constraints
Outputs: physical, human beings, information, knowledge, currency, waste
Processes: service provision, service operations, service support, customer relationships, planning and control, call center management
Human Enablers: service providers, support providers, management, owner organization (enterprise)
Physical Enablers: owner organization (physical), buildings, equipment, furnishings, location
Informatics Enablers: information, knowledge, procedures and processes, decision support, skill acquisition
Environment: political factors, economic factors, social factors, technological factors, environmental factors, legal factors (PESTEL), physical factors.

Thus, a service or service offering is created by the relationships among Service System entities (including information flows) through business processes into strategic capabilities that consistently provide superior value to the customer. If we were to represent the service as a network diagram (as in the figure below) then the entities represent the nodes and the links represent the relationships between nodes.

Figure 3. Service Systems Network Diagram

Service System Hierarchy

But systems are part of other systems that are often expressed by systems hierarchies [Skyttner 2010] to create a multilevel hierarchy and thus the Service System is composed of Service System entities that interact through processes defined by governance and management rules to create different types of outcomes in the context of stakeholders with the purpose of providing improved customer interaction and value co-creation. Examples of Service System entities are a business enterprise, a nation, or in its simplest form a person (consumes and produces services).

Using the hierarchical approach Spohrer conceptualizes an ecosystem at the highest level in which a Service System is an entity of its own. We extend this concept to create the Service System hierarchy as described in the Figure below. (Spohrer 2011 Maglio and Spohrer 2008; Maglio et al. 2010)

Figure 4. Service System Conceptual Framework

Service System Attributes

The fundamental attributes of a Service System include togetherness, structure, behavior and emergence . As mentioned earlier, today’s global economy is very competitive and a Service System may be very competitive in a given environment at a given time (the business space) and the Service System’s trajectory should be well controlled as time goes by [Qiu 2009] since services are “real time in nature and are consumed at the time they are co-produced” (Tien and Berg 2003), i.e., during service transactions.

The Service System should evolve and adapt to the conditions within the business space in a manner to ensure that the customized service behaves as expected. This adaptive behavior of Service System implies that its design must be truly trans-disciplinary:

They must include techniques from social science (i.e., sociology, psychology, and philosophy) and management (i.e., organization, economics, and entrepreneurship). As a consequence Systems, Man and Cybernetics (SMC) must expand their systems (i.e., holistic oriented), man (i.e., decision-oriented), and cybernetics methods to include and be integrated with those techniques that are beyond science and engineering. (Hipel et al. 2007)

References

Citations

Chang, C.M. 2010. "Service Systems Management and Engineering, Creating Strategic Differentiation and Operational Excellence." New York, NY, USA: John Wiley & Sons, Inc. ISBN 978-0-470-42332-5.

Chesbrough, H. 2011. "Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era." San Francisco, CA, USA: Jossey-Bass. ISBN-10: 0470905743; ISBN-13: 978-0470905746.

CoreGRID. 2007. "Using SLA for Resource Management and Scheduling - A Survey. Technical Report 0096." Jülich & Dortmund, Germany: European Research Network on Foundations, Software Infrastructures and Applications for large scale distributed, GRID and Peer-to-Peer Technologies, Institute on Resource Management and Scheduling www.coregrid.net/mambo/images/stories/TechnicalReports/tr-0096.pdf. accessed on June 4th 2011.

Hipel, K.W., Jamshidi, M.M., Tien, J.M., and White, C.C. 2007. "The Future of Systems, Man, and Cybernetics: Application Domains and research Methods." IEEE Transactions on Systems, Man, and Cybernetics-Part C: Applications and Reviews 37 (5): 726-743.

IFM. 2008. "Succeeding through service innovation: A service perspective for education, research, business and government." University of Cambridge Institute for Manufacturing (IfM) and International Business Machines Corporation (IBM) report. Cambridge Service Science, Management and Engineering Symposium. July 2007. ISBN: 978-1-902546-65-0.

Maglio, P., Kieliszewski C., and Spohrer, J. 2010. "Handbook of Service Science." New York, NY, USA: Springer Science + Business Media. 1st Edition. ISBN-10: 9781441916273; ISBN-13: 978-1441916273.

Maglio P. and Spohrer, J. 2008. "Fundamentals of Service Science." Journal of the Academy of Marketing Science 36 (1): 18-20. DOI: 10.1007/s11747-007-0058-9.

Qiu, R. 2009. "Computational Thinking of Service Systems: Dynamics and Adaptiveness Modeling." Service Science 1 (1): 42-55.

Skyttner, L. 2006. "General Systems Theory: Perspectives, Problems, Practice." 2nd Edition. Singapore: World Scientific Publishing Company. ISBN-10: 981256389; ISBN-13: 978-9812563897.

Spath, D. and Fähnrich, K.P. 2007. (eds.) "Advances in Services Innovations." Berlin & Heidelberg, Germany:Springer-Verlag. ISBN–10: 3-540-29858-4. ISBN-13: 978-3-540-29858-8

Spohrer, J.C. 2011. "Service Science: Progress & Directions." Presented at International Joint Conference on Service Science. Taipei, Taiwan.

Spohrer, J. and Kwan, S.K. 2009. Service Science, Management, Engineering, and Design (SSMED): An Emerging Discipline-Outline & References. International Journal of Information Systems in the Service Sector 1(3).

Spohrer, J. and Maglio, P. P. 2010. Service Science: Toward a Smarter Planet, in Introduction to Service Engineering (eds G. Salvendy and W. Karwowski), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9780470569627.ch1.

Theilmann, W. and Baresi, L. 2009, Multi-level SLAs for Harmonized Management in the Future Internet. Towards the Future Internet - A European Research Perspective. Tselentis et al. (Eds.). IOS Press. Doi:10.3233/978-1-60750-007-0-183.

Tien, J,M. and Berg, D. 2003. A Case for Service Systems Engineering. Journal of Systems Science and Systems Engineering 12 (1): 13-38. Spath, D. and Fahnrich, K.P. 2007. Advances in Services Innovations. Springer-Verlag. ISBN – 10 # 3-540-29858-4.

Vargo, S.L. and Akaka, M.A. 2009. Service-Dominant Logic as a Foundation for Service Science: Clarifications. Service Science 1 (1): 32-41.

Primary References

Hipel, K.W., Jamshidi, M.M., Tien, J.M., and White, C.C. 2007. The Future of Systems, Man, and Cybernetics: Application Domains and research Methods. IEEE Transactions on Systems, Man, and Cybernetics-Part C: Applications and Reviews 37 (5): 726-743.

IFM 2008. University of Cambridge Institute for Manufacturing (IfM) and International Business Machines (IBM) “Succeeding Through Service Innovation: A service perspective for education, research, business and government”, April 2008, ISBN:978-1-902546-65-0

Spath, D. and Fahnrich, K.P. 2007. Advances in Services Innovations. Springer-Verlag. ISBN – 10 # 3-540-29858-4.

Spohrer, J.C. 2011. Service Science: Progress & Directions. International Joint Conference on Service Science. Taipei, Taiwan.

Tien, J,M. and Berg, D. 2003. "A Case for Service Systems Engineering". Journal of Systems Science and Systems Engineering 12 (1): 13-38.