Service Systems Engineering

The growth of Services in the ever evolving Global economy has brought much needed attention to service science and service systems engineering . The primary areas of research include the development of formal methodologies for understanding end-user (customer) interactions with enterprises from a socio-economic and technological perspective for value co-creation and productivity improvements. Service Systems require trans-disciplinary collaborations between society, science, enterprises and engineering. Service transactions are customized and personalized to meet a particular customer need, which requires a disciplined and systemic approach among different stakeholders and resources to take an end-user (service oriented customer-centric) approach in the design and delivery of the service. (Hipel et al. 2007; Tien and Berg 2003; Vargo and Akaka 2009; Maglio and Spohrer 2008; Maglio et al. 2010)

Topics

The topics included in this Knowledge Area include:

Topic: Service Systems Background
Topic: Fundamentals of Services
Topic: Properties of Services
Topic: Scope of Service Systems Engineering
Topic: Value of Service Systems Engineering
Topic: Service Systems Engineering Stages

Introduction

Service Systems Engineering (SSE) has usually been a Proprietary Process closely guarded by Product Businesses and Service Businesses for their competitive advantage. Traditional Systems Engineering (TSE) practices have been primarily applied in Aerospace and Defense sectors while Service Systems Engineering practices have been applied by information and communications technologies (ict) service providers. (AT&T SRP 2008; Eppinger 2001; Whitten and Bentley 2007; Freeman 2004) One example of a "Service Realization Process" from AT&T is shown in the figure below.

Figure 1. AT&T Service Realization Process (Source: AT&T SRP 2008)

These early efforts were, and in some instances continue to be, very important for product and Service Businesses. However, with the explosive growth and ubiquity of the World Wide Web and advances in computer science, in ICT, and in Business Processes Management through “social networking”, create the on-set of closely inter-related Service Systems. Product Business (glossary) (manufacturing, agriculture, etc.) and Service Business (glossary) distinctions are going away (Spohrer 2011).

These services – or service innovations – must take into account social aspects, governance processes, business processes, operational processes, as well as design and development processes where the customer, service provider, product provider, and intermediaries need to collaborate toward the optimization of customer experiences and customer provided value (through co-creation). The inter-relations among different stakeholders and resources require that Methodologies, Processes and Tools be dynamically tailored and delivered for either foreseen or newly discovered services to rapidly adapt to changing enterprise and end-user environments.

Even in the case of static, pre-determined interaction rules, the major problems faced in the definition, design and implementation of services has been in developing the integration needs among different entities, stakeholders, and in developing the information flows required for the governance, operations, administration, management and provisioning (OAM&P) of the service. (Maier 1998; Jamishidi 2009; Pineda 2010; Luzeaux and Ruault 2010)

The unique characteristics and evolving methods of Service Systems Engineering are shown in the table below (Tien and Berg 2003).

Figure 2. Service Systems Engineering: Unique Characteristics and Evolving Methods (Source: Tien and Berg 2003)

Service SE Knowledge Area Topics

This Knowledge Area (KA) describes best practices in Service Systems Engineering during the Service Design Process and outlines current research on Methods, Processes, and Tools (MPTs) leading toward the Services of the 21st Century. It does not attempt to describe the initial efforts and research leading toward the introduction of Service Science which was initially proposed and introduced by IBM (Maglio and Spohrer 2008) as Service Science, Management and Engineering (SSME) but it does recognize their leadership in getting support from academia and government to define a 21st century curricula at the undergraduate and graduate level to respond to the markets need for engineers of the 21st Century (NAE 2011).

The rest of the Knowledge Area is organized in the following way:

The Service Systems Background article presents some background on the transition from a manufacturing oriented economy toward the service economy brought by the World Wide Web through co-creation of end-user value. It describes how this transformation is impacting industries such as healthcare, agriculture, manufacturing, transportation, supply chain, environmental, etc. The article also describes the scope of Service Systems Engineering discipline's contributions to meeting the needs of the service sector companies in strategic differentiation and operational excellence (Chang 2010) by pointing out some differences between product-oriented Traditional Systems Engineering (TSE) and Service Systems Engineering (SSE) (glossary).

The Fundamentals of Service and Properties of Services articles takes the reader through a general discussion of services and current attempts to classify different types of services; particular attention is paid to the properties of Service Systems for the service sector such us transportation, consulting services, healthcare, etc.

The Scope of Service Systems Engineering and Value of Service Systems Engineering articles are the heart of the Knowledge Area covering the value of service systems engineering, the needs of defining (or using when available) Service Architectural Frameworks, and the stages of the Service Development Process from Concept to life cycle management .

The Service Systems Engineering Stages article summarizes the major Service Systems Engineering Process activities that need to be carried out during the Service Design Process and the needed output (work products) in each of the Service Design Process stages.

Service Innovation & Value-Co-creation

Service innovation has several dimensions. Service innovation can come about through the creation of a service concept which is sufficiently different that it is not merely an improved service, but in reality is a new service concept. To maintain the rigor and value of innovation, we must distinguish between an improved service (which may generate some additional value) and a truly new and innovative service concept, which may generate a great deal of value. Dr. Noriaki Kano, a renowned quality management guru, has suggested that every service concept has its inherent attributes and we should strive to continuously improve upon these; but this is not innovation.

To be innovative, the change in a value proposition cannot be incremental, but it must be enough to significantly impact customer and competitor behavior (e.g., new market creation). Value innovation involves a shift in perspective of customer needs that requires a rethinking of what service value proposition is delivered. (Kano 1996)

Innovation can also come through a significant change in the way or the reason the customer is engaged or connected. In a service value chain , the customer may well change from being just a receiver of service value to becoming a co-creator, or an active participant in the design and delivery, i.e., Service transaction, of service value. At the retail level, when a customer designs the time, route and price selection for a plane ticket purchased online, he is co-creating the service. Value innovation involves a shift in perspective of customer needs that requires a rethinking of how a service value proposition is delivered. (Bettencourt 2010)

Finally, service innovation can come through significant changes in the way the enterprise is organized to create a service value proposition from concept through delivery. A considerable improvement in the enterprise structure and/or governance can be seen as innovation. Value innovation involves a shift in perspective of customer needs that requires a rethinking of how an enterprise organizes to support a service value proposition.

Continuous improvement can reasonably be planned and predicted. Not so with innovation and breakthroughs. The most effective way to obtain innovation and breakthroughs is to encourage the culture, environment, and atmosphere that are conducive to innovation and breakthroughs. Innovative co-creation requires the integration of people, ideas, and technology for the purpose of creating value for themselves, their customers, companies, and society.

The lone inventor sees a problem and must work to create the solutions to all dimensions of the problem. Co-creators see the problem and realize that there may already be several creators, each already having a piece of the solution. Co-creation embraces the value of things “not invented here” because of the velocity they can bring to ideation and time to market. This service innovation process is facilitated by modern mass (and at the same time, personal) communication technology evident in social networking platforms.

Towards a Discipline of Service SE

We are very mindful of the evolution taking place in the global economy and the world markets. It would be foolish to pretend we can exhaustively cover all the major advances being made and the boundless possibilities in the services sector for the rest of the century. The services sector covers wide areas of application studied in many different fields (e.g., business science, social science, cognitive science, political science, etc.) and only until recently the new field of Service Systems (10 to 15 years ago) has been introduced for the trans-disciplinary analysis and study of services per se.

As a consequence, much of the existing literature on services and service-innovation is scattered. Thus, the main objective of this Knowledge Area is to document the Systems Engineering processes, methodologies and existing tools as applied to the Service Design Process. We also discuss the main challenges and Research areas required in Service Systems Engineering to realize the full potential of Service Systems.

Key Terms

Service

A service can be defined as an activity required by one or more users who have agreed on the terms of outcomes and quality of service without details to how it is provided. A service is also, simply put, an act of help or assistance. In a more formal sense:

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.

In the service-dominant logic (S-DL) for marketing, service is the application (through deeds, processes, and performances) of specialized operant resources (knowledge and skills) for the benefit of another entity or the entity itself.(Vargo and Akaka 2009)
In the field of Service Science, Management, and Engineering (SSME), the following is offered:

Services are processes, performances, or experiences that one person or organization does for the benefit of another – such as custom tailoring suit, cooking a dinner to order, driving a limousine, mounting a legal defense, setting a broken bone, teaching a class, or running a business’s information technology infrastructure and applications. In all cases, service involves deployment of knowledge, skills, and competences that one person or organization has for the benefit of another (Vargo and Lusch 2004), often done as a single, customized job. And in all cases, service requires substantial input from the customer or client (Sampson 2001) – how else could your steak be customized for you unless you tell your waiter how you want it prepared? (http://en.wikipedia.org/wiki/Service_Science,_Management_and_Engineering)

Furthermore:

Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility. In exchange for their money, time, and effort, service customers expect to obtain value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved. (Lovelock & Wirtz 2007)

A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. (Fitzsimmons & Fitzsimmons 2007)

The application of competences (knowledge, skills and resources) by one entity for the benefit of another entity in a non-coercive (mutually agreed and mutually beneficial) manner.
Value co-creation interactions (typically with well-defined customer-provider entities as parties who initiate, directly or indirectly, front-stage and back-stage activities in anticipation of value results)

An economic activity offered by one party to another, most commonly employing time-based performances to bring about desired transformation results in recipients themselves or in objects or other assets for which purchasers are responsible. In exchange for their money, time and effort, service customers expect to obtain value from the access to goods, labour, professional skills, facilities, networks and systems; but they do not normally take ownership of any of the physical elements involved. (IFM 2008)

Service System

A Service System is defined as “a dynamic configuration of resources (people, technology, organizations and shared information) that creates and delivers value between the provider and the customer through services” (IFM 2008). This dynamic configuration is illustrated in the System Coupling Diagram (Lawson 2010) where a situation (need for a service) is met by (interacts with) a respondent system (service system) based upon the use of system assets.
A service system can also be thought of as a collection of entities that performs the operations, administration, management and provisioning (OAM&P) of resources that together provide the opportunity to co-create value by both the service provider and the service consumer.
The Cambridge white paper defines a service system in this manner (IFM 2008).

Service systems are dynamic configurations of resources (people, technology, organisations and shared information) that can create and deliver service while balancing risk-taking and value co-creation. The dynamics are in part due to the ongoing adjustments and negotiations that occur in all systems involving people. People are the ultimate arbiters of value and risk in service systems (in part because people are legal entities with rights and responsibilities). Service systems are complex adaptive systems.

Service Systems Engineering

Service Systems Engineering (SSE) is the application of SE principles and concepts in the development, delivery, operation, and life cycle management of service systems. The key focus of SvSE is on the transactions between a service provider and service consumers. The consumer can be an individual, an organization, or even an entire enterprise.

References

Citations

AT&T SRP. 2008. Technical Approach to Service Delivery. General Services Administration, AT&T Bridge Contract No. GS00Q09NSD0003, http://www.corp.att.com/gov/contracts/fts_bridge/technical/07_vol_I_section_1.pdf. accessed on June 1st 2011.

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

Eppinger, S. 2001. Innovation at the Speed of Information. Harvard Business School Publishing Corporation.

Fitzsimmons & Fitzsimmons. 2007. Service Management: Operations, Strategy, Information Technology. McGraw-Hill. ISBN: 978-0077228491.

Freeman, R.L. 2004. Telecommunication Systems Engineering. Wiley-Interscience. 4 edition. ISBN-10: 0471451339; ISBN-13: 978-0471451334.

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.

Jamshidi, M. 2009. System of Systems Engineering: Innovations for the 21st Century. John Wiley & Sons. ISBN # 978-0-470-19590-1.

Kano, N. 1996 “Guide to TQM in Service Industry”, Asian Productivity Organization, 92833311302, ISBN: 97892833114300.

Lovelock & Wirtz. 2007. Services Marketing: People, Technology, Strategy. 7th Edition. Prentice Hall. ISBN: 978-0-13-610721-7.

Maier, M.W. 1998. Architecting Principles for System of Systems. Systems Engineering 1 (4): 267-284.

Maglio, P., Kieliszewski C., and Spohrer, J. 2010. Handbook of Service Science. Springer. 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.

Pineda, R. 2010. Understanding Complex System of Systems Engineering. Invited paper. International Engineering Network Plenary. Metz, France.

Sampson, S.E. 2001. Understanding service businesses. John Wiley: New York, NY.

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.

Vargo, S. L. and Lusch, R. F. 2004. The Four Service Marketing Myths – Remnants of a Goods-Based Manufacturing Model. Journal of Service Research 6: 324-335.

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

Whitten, J. and Bentley, L. 2007. Systems Analysis and Design Methods. McGraw-Hill. ISBN 13:978-0-07-305233-5.

Primary References

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

Freeman, R.L. 2004. Telecommunication Systems Engineering. Wiley-Interscience. 4 edition. ISBN-10: 0471451339; ISBN-13: 978-0471451334.

Maglio, P., Kieliszewski C., and Spohrer, J. 2010. Handbook of Service Science. Springer. 1st Edition. ISBN-10: 9781441916273; ISBN-13: 978-1441916273.

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