Services as customer intensive systems

What are Services? “In economics and marketing, a service is the non-material equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.” [Wikipedia, see http://en.wikipedia.org/wiki/Services] 2 © 2007 IBM Corporation

IBM (SSME) Definitions “A service is a provider/client interaction that creates and captures value.” “A service is a provider-to-client interaction that creates and captures value while sharing risks.” “Services are value that can be rented.” “Services are the application of specialized competences (skills and knowledge).” “Services are autonomous, platform independent, business functions.” [IBM SSME website, www.almaden.ibm.com/asr/SSME/coursematerials/services.ppt] 3 © 2007 IBM Corporation

Better definitions of services A. Service Provider B. Service Client Forms of Service Relationship Individual Individual The Unified Services Theory Organization Organization (A & B coproduce value) Technology that Portion of reality Services are production processes wherein individual A is responsible for owned by B customers supply one or more elements (‘customer Forms of inputs’) for their individual service production. Service Interventions Forms of (A on C, 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 All managerial issues unique to services are founded in the People, dimensions of customer-input distinction.” Business, dimensions of Products, technology artifacts & env. Information, codified knowledge [Sampson 01] [Gadrey 02] A service system is nevertheless distinguished from other types of systems by the fact that the customer may be actively involved in all nine classes: is nevertheless distinguished from other types of systems by the fact that the customer may be actively involved in A service system all customer - as initiator and receiver of the service (e.g., the customer is characterized as looking for novelty, reliability - or both); nine classes: 1. 2. 1. customer - as initiator and receiver of the the design and operation ofis characterized as looking for novelty, reliability shopper to configure the product variant he wishes to purchase); goals - as setting the primary objectives for service (e.g., the customer the service (e.g., the service should an Internet - or both); 3. 2. goals - asclient upon whom the service is to the performed (e.g., a patient coming for treatment); input - as a setting the primary objectives for be design and operation of the service (e.g., the service should an Internet shopper to configure the product variant he wishes to purchase); 4. 3. input- -as aaclient upon whom athe service isbeen performed (e.g., the patient after treatment); output as client upon whom service has to be performed (e.g., a patient coming for treatment); 5. 4. output--as a participant in the process (e.g., an Internet sales transaction incorporates a dialogue facility between a customer and a sales agent); process as a client upon whom a service has been performed (e.g., the patient after treatment); 6. 5. process - as a participant in the the process (e.g., Internet sales transaction incorporatesthedialogue facility between a customer and a sales agent); human enabler - as a resource in process (e.g., an an Internet sales transaction involves a customer as an independent agent); 7. 6. humanenabler - -as providing a resource to the (e.g., an Internet sales transaction involves the customer as an independent agent); physical enabler as a resource in the process process (e.g., an Internet shopper uses his own computer to access the vendor site); 8. 7. physicalenabler --as applying his resource to the process (e.g., an Internet shopper uses his own computer to access the vendor site); informatic enabler as providing a own knowledge to the process (e.g., an Internet shopper uses his own know-how regarding the product to configure the model he wishes to buy); 9. 8. informatic enabler - as constraints or standards for acceptable service levelsInternet shopper uses his own know-how regarding the product to configure the model he wishes to buy); environment - as setting applying his own knowledge to the process (e.g., an (e.g., an Internet shopper demands 24-hour availability of a dialogue facility). 9. environment - as setting constraints or standards for acceptable service levels (e.g., an Internet shopper demands 24-hour availability of a dialogue facility). [Kani and Karner 07] 5 © 2007 IBM Corporation

Customer-Intensive Processes producer capital labor knowledge facilities inputs outputs customer critical audience A production process is a customer-intensive process when: 1. The customer does not control most means of production. 2. The customer (self, belongings, information) is a significant part of the input to the production process. (adapted from [Sampson 01]) 8 © 2007 IBM Corporation

A Customer-Intensive Process provider capital labor knowledge facilities material inputs outputs customer’s body/mind customer customer’s belongings critical audience customer’s information 9 © 2007 IBM Corporation

The Customer is in the “Conveyor Belt” provider LABOR capital knowledge facilities material inputs outputs customer’s body/mind customer customer’s belongings critical audience customer’s information 10 © 2007 IBM Corporation

The Customer Often Co-produces Services customer provider capital LABOR LABOR knowledge capital knowledge facilities material inputs facilities outputs customer’s body/mind customer customer’s belongings critical audience customer’s information 11 © 2007 IBM Corporation

Representing Customer-Intensive Processes provider capital LABOR LABOR knowledge capital knowledge facilities facilities material outputs customer inputs inputs critical audience 12 © 2007 IBM Corporation

According to the NAICS… Wholesale Trade Professional, Scientific, and Technical Services 421 Wholesale Trade, Durable Goods 541 Professional, Scientific, and Technical Services 422 Wholesale Trade, Nondurable Goods Management of Companies and Enterprises Retail Trade 551 Management of Companies and Enterprises 441 Motor Vehicle and Parts Dealers 442 Furniture and Home Furnishings Stores Administrative and Support and Waste Management and Remediation Services 443 Electronics and Appliance Stores 561 Administrative and Support Services 444 Building Material and Garden Equipment and Supplies Dealers 562 Waste Management and Remediation Services 445 Food and Beverage Stores 446 Health and Personal Care Stores Educational Services 447 Gasoline Stations 611 Educational Services 448 Clothing and Clothing Accessories Stores 451 Sporting Goods, Hobby, Book, and Music Stores Health Care and Social Assistance 452 General Merchandise Stores 621 Ambulatory Health Care Services 453 Miscellaneous Store Retailers 622 Hospitals 454 Nonstore Retailers 623 Nursing and Residential Care Facilities 624 Social Assistance Transportation and Warehousing 481 Air Transportation Arts, Entertainment, and Recreation 511 Publishing PerformingHistorical Sites, and Similar Institutions Industries Sports, and Related Industries 482 Rail Transportation 711 Arts, Spectator 483 Water Transportation 712 Museums, 484 Truck Transportation 713 Amusement, Gambling, and Recreation Industries 485 Transit and Ground Passenger Transportation 512 MotionAccommodation and Food Services Picture and Sound Recording Industries 486 Pipeline Transportation 487 Scenic and Sightseeing Transportation 721 Accommodation 488 Support Activities for Transportation 722 Food Services and Drinking Places 513 Broadcasting (except Public Administration) and Telecommunications 491 Postal Service 492 Couriers and Messengers Other Services 493 Warehousing and Storage 811 Repair and Maintenance 812 Personal and Laundry Services Information 813 Religious, Grantmaking, Civic, Professional, and Similar 511 Publishing Industries 814 Private Households 512 Motion Picture and Sound Recording Industries 513 Broadcasting and Telecommunications Public Administration 514 Information Services and Data Processing Services 921 Executive, Legislative, and Other General Government Supp 922 Justice, Public Order, and Safety Activities Finance and Insurance 923 Administration of Human Resource Programs 521 Monetary Authorities - Central Bank 924 Administration of Environmental Quality Programs 522 Credit Intermediation and Related Activities 925 Administration of Housing Programs, Urban Planning, and C 523 Securities, Commodity Contracts, and Other Financial Inve 926 Administration of Economic Programs 524 Insurance Carriers and Related Activities 927 Space Research and Technology 525 Funds, Trusts, and Other Financial Vehicles 928 National Security and International Affairs Real Estate and Rental and Leasing 531 Real Estate 532 Rental and Leasing Services 533 Lessors of Nonfinancial Intangible Assets (except Copyright) [North American Industry Classification System 2002] 15 © 2007 IBM Corporation

Manufacturing Process vs. Service Process manufacturer capital labor knowledge facilities inputs customer outputs critical audience user input intensity on-demand manufacturing processes service provider knowledge facilities labor capital customer inputs outputs critical audience material inputs 17 © 2007 IBM Corporation

Traditional Representation of a Service Process IMAGING A HARD-DISK customer imaging time machine is passwords disk is machine is machine queue arrives is estimated deposited are collected imaged tested is returned 19 © 2007 IBM Corporation

Customer-Centered Representation IMAGING A HARD-DISK passwords queue are collected machine is disk is deposited imaged imaging time machine is is estimated tested CUSTOMER customer machine arrives is returned 20 © 2007 IBM Corporation

….+ Customer Exchanges IMAGING A HARD-DISK passwords queue are collected passwords machine is disk is deposited imaged body time info imaging time machine is is estimated tested body CUSTOMER machine machine new passwords customer machine arrives is returned 21 © 2007 IBM Corporation

….+ Customer Exchanges and Presence IMAGING A HARD-DISK machine passwords passwords queue are collected machine machine passwords passwords machine is machine data disk is deposited passwords imaged body machine time info imaging time machine is is estimated tested body CUSTOMER machine machine machine new passwords customer machine arrives is returned 22 © 2007 IBM Corporation

The Intangibility of Services service provider Human values-loaded input knowledge facilities Processing time is always customer time labor capital Perceived quality is a function of result, process, and customer expectations Coproduction emotionally attaches customer to process inputs outputs critical audience material inputs and result 23 © 2007 IBM Corporation

Product Designers vs. Service Designers manufacturer capital labor knowledge facilities inputs customer outputs critical audience service provider knowledge facilities labor capital customer inputs outputs critical audience material inputs 26 © 2007 IBM Corporation

The Good, the Bad, and the Ugly human-centricity is customer-intensity the skills of a service designer part of traditional creates new are likely to be more similar methods of design constraints that the ones of a theater director (unlike engineering) require new than of a traditional designer methodologies and practices

What About Businesses as Customers? service provider knowledge facilities labor capital business inputs outputs critical material inputs audience business services as business-intensive systems 28 © 2007 IBM Corporation

service provider knowledge facilities labor capital customer material inputs critical audience inputs outputs

Services as customer intensive systems

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