- Services are becoming more important in today's economy and often rely on large, complex systems as critical infrastructure - Engineering service systems requires a holistic, customer-focused approach across the entire lifecycle - New approaches to acquisition and contracting are needed to focus on capabilities and services rather than just technologies/products - Making this transition requires a conceptual shift from products to ensuring the delivery of capabilities through services

1. From Systems to Services:
Challenges for Service Systems Engineering
Dr. ing. Marco Lisi
European Space Agency
18/02/2015 1

2. Summary
• Services are becoming more and more important in
today’s world economy;
• Service-oriented, large and complex systems are often
critical infrastructures of our society;
• The engineering of service systems and enterprises
requires systemic approach, holistic view, customer
focus and life cycle perspective;
• New acquisition and contracting schemes are also
required;
• A service provision perspective requires a conceptual
paradigm shift: moving from technologies/products to
capabilities and services.
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3. Towards a Knowledge-Based…
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4. … and Service-Oriented Economy
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5. What is really happening?
• On one side our final products get more and
more added value from the knowledge
embedded in them (providing knowledge
being a primary form of service);
• On the other side, customers need
comprehensive solutions to their problems
(not a car to move around, but a solution to
my mobility problems; not tools but
capabilities).
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6. What do we mean by "service"?
• By the term “service” we mean the guaranteed and
committed delivery of a capability to a community of
potential customers/users;
• Focus on “commitment” (continued over time) and
on “customer satisfaction”;
• “Technical performance” is an essential prerequisite,
but not an objective;
• NOTA BENE: services are not alternative to (or in
competition with) technology and goods production.
On the contrary, advanced, high value-added services
need state-of-the-art technological products and
systems to be provided. Examples:
–Internet
–Wireless communication networks
–Electric power distribution infrastructure
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7. What is a Service System?
• Service (or service-oriented) systems are systems meant
to provide value-added services through the use of
technology (mainly information and communications
and technologies, ICT);
• A “service system” has been defined as a dynamic
configuration of people, technology, organizational
networks and shared information (such as languages,
processes, metrics, prices, policies, and laws) designed
to deliver services that satisfy the needs, wants, or
aspirations of customers.
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8. Characteristics of Service Systems
• Large and complex systems
• Software intensive (several million lines of code)
• Capability-based rather than product-based
• Organization and governance (human factor)
• Technical performance is a prerequisite for production and
delivery of services, not a final objective
• In the definition of the Quality of Service (QoS), requirements
related to operations and logistics, in addition to technical ones,
assume a very high relevance:
Reliability, Availability, Continuity Safety
Flexibility Security
Expandability Resilience
Maintainability Interoperability
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9. Service-Oriented Systems/Infrastructures
Examples of complex systems supporting services for civil
applications include:
 global satellite navigation systems
 air traffic control systems
 railway control systems
 space systems such as the International Space Station or space
transportation and exploration vehicles
 Satcom systems for fixed and mobile communications, and TV
broadcasting
 surveillance, Earth observation and Homeland security systems
 electric power distribution systems
 telecommunication systems
 complex computer networks, including Internet.
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10. Specifying a Service System
• Functional and technical performance:
 System Requirements Document (SRD)
• Operational requirements and scenarios:
 Concept of Operations (CONOPS) document
• Expected service behavior and non-functional
performance:
 Service Level Agreement (SLA)
• A typical SLA defines Key Performance Indicators (KPI’s)
and Key Quality Indicators (KQI’s), with target values and
target ranges to be achieved over a certain time period.
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11. New Procurement Approach
• Current systems engineering, project management and
acquisition practices still rely on their historical hardware
engineering and acquisition legacy;
• Product-oriented, fixed-price, build-to-specification
contracts give the illusion of a delivery within the
allocated budget, but usually result in cost and schedule
overruns;
• Many projects have difficulties integrating hardware,
software and human factor aspects;
• Many projects fail to capture (and optimize) in their
acquisition processes the multifaceted aspects of the
systems they try to realize.
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12. Life Cycle Multiple Perspectives
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13. Through-Life Capability Management
• Through-Life Capability Management (TLCM) is an approach
to the acquisition and in-service management of a capability
over its entire life-cycle, from cradle to grave
• TLCM means evaluating a capability not just in the terms of a
single piece of equipment, but as a complete system or
“system of systems”
• TLCM recognizes the value of concurrent engineering, being
aware that the initial purchase cost (and risk) of a system is
only a small fraction of the total cost of procurement
• The adoption of a TLCM approach implies the evaluation of all
the costs involved in the utilization of a capability over its
entire life-cycle, a.k.a. Total Cost of Ownership.
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14. Total Cost of Ownership
• Operators, including government establishments and
commercial entities, are emphasizing reduced total cost
of ownership of large and complex space systems;
• The Total Cost of Ownership (TCO) approach asks for cost
trade-off’s throughout the total life cycle;
• An optimum balance must be found between non-
recurring (CAPEX) development and integration costs and
operating (OPEX) costs;
• Scalable architectures, design for reliability/
maintainability/supportability, interface standardization
(physical and protocol levels) and SOA (Service-Oriented
Architecture) technologies are promising “best practices”
to achieve the total cost of ownership reduction goal.
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15. The Total Cost of Ownership Iceberg
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16. Evolution of Contracting in Aerospace
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TRADITIONAL
(one contract for
system followed by
one contract for
spares & repairs)
SPARES
INCLUSIVE
CONTRACTING
FOR
AVAILABILITY
CONTRACTING
FOR
CAPABILITY
This a true
“Service Contract”

17. From Products to Systems to Services
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18. From Products…
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19. …to Systems…
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20. …to Services
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European GNSS Agency (GSA),
Prague
Galileo Service Centre, Madrid
Early Services
Task Force
Galileo System Infrastructure
Galileo
Security
Monitoring
Centre

21. Galileo System Development & Acquisition
Process
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Galileo
System
Assets
(Satellite Constellation, GCC’s,
GCS, GMS, GDDN, etc.)
Galileo System
Requirements
Galileo System
Performance &
Operations
People
(ESA Project Team, Subco’s,
EC, GSA, etc.)
Processes
(Engineering Board, VCB,
CCB, CM, Ops Procedures,
etc.)

22. Galileo Service Provision Process
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Galileo
Services
Assets
(Galileo System, GSC, GPEC, etc.)
Galileo Services
Requirements
Galileo Services
Provision
People
(EC, GSA, ESA Support,
Member States, Services
Providers, Operators, etc.)
Processes
(Services Validation, KPIs
Monitoring, Security
Monitoring, Helpdesk, etc.)

23. Current Galileo Governance
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24. Galileo Service Organization
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GSA
OS
EU Citizens
PRS
EU States
CS
Providers
SAR
Cospas-
Sarsat
ESA
External
Entities
External
Entities
Operator(s)
Galileo System
Service
Operatore
EC
Technical
Support

25. Galileo Service Value Chain
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System
Development &
Procurement
ESA/Industry
Service
Operations
& Logistics
Service
Operator
Full Service
Provision
GSA
EC,
Member States,
Cospas-Sarsat,
Downstream
Industry
U
S
E
R
S
• System design
authority
• Design changes
• System evolution
• System
Engineering
Support
• Operations
• Logistics
• Service
Engineering
• GDDN
• Configuration
Management
• Performance
Reporting
• O/A Service
Management
• Security
Management &
Operations
• Users Relationship
Management
• Legal Affairs and
IPRs
• Independent
Performance
Monitoring
• Market
Development
• European
Commission (all
services)
• Member States
(PRS)
• Cospas-Sarsat (SAR
Service)
• Commercial Service
Providers
• Applications
Providers
• Receiver
Manufacturers

26. Galileo Open Service Business Model
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27. Galileo PRS Business Model
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GSA
(Service
Operator)
Economic flow
Product/service flow
EC
EU
taxpayers
Member States
PRS
Mission
Mission
Government Bodies
Service
mgmt&
support
Galileo
infrastructureESA
Equipment
manufacturers
(satellite,
ground
segment, etc.)
Equipment
manufacturers
(receivers,
networks,
etc.)

28. "Spirit to Serve"
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29. Conclusions
• Our economy is more and more depending on large, strategic
and complex service infrastructures, based on large, strategic
and complex systems;
• The design of a complex service enterprise requires a wide
range of skills and expertise's, covering organizational,
engineering, social, legal and contractual aspects;
• The acquisition and contracting strategy in the Aerospace &
Defense sector is evolving towards service and capability
oriented schemes;
• The advent of a services economy imposes a radical
conceptual paradigm shift, still rather difficult to metabolize
in a mostly engineering-minded environment: moving from
technologies/products to capabilities and services;
• The “spirit to serve” (call it “customer focus”, if you like) is at
the basis of all services.
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30. 18/02/2015 30M. Lisi - International Legal Symposium
THANK YOU
QUESTIONS ?