03/10/11	  Service	  Modularity	  and	  Business	  Model	  Design	  of	  ICT-­‐intensive	  Services	  Virpi	  Kris=ina	  T...
03/10/11	  Aims	  of	  the	  study	  •  Examine	  the	  key	  variables	  of	  modular	  service	  design,	     parHcularl...
03/10/11	  (Ini=al)	  model	  constructs:	          •  independent	  variables:	  	               –  service	  innova=on	 ...
03/10/11	  Customer	  rela=onship	  as	  the	  context	  for	  offering	                                                TYP...
03/10/11	  Preliminary	  insights	    •  Premises	  of	  modularity	  are	  conHngent	  on	  the	  type	  of	       servic...
03/10/11	  Thank	  you!	  Professor Virpi Kristiina Tuunainen, Directorvirpi.tuunainen@aalto.fi, +358 50 589 7541Dr. Risto...
Upcoming SlideShare
Loading in …5

Service Modularity


Published on

Nice piece of work for modularity!

Published in: Education, Business, Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Service Modularity

  1. 1. 03/10/11  Service  Modularity  and  Business  Model  Design  of  ICT-­‐intensive  Services  Virpi  Kris=ina  Tuunainena  ,  Risto  Rajalaa  and  Harold  Cassabb  aAalto  University  School  of  Economics,  Finland  bThe  University  of  Auckland  Business  School,  New  ZealandCambridge  Service  Week,  Cambridge,  UK,  22-­‐23  September,  2011   Service  modularity  and  organiza=onal  performance:   Gaps  in  theory  and  prac=ce   Theoretical gap: feasibility and appropriateness of modularity in service business model design Managerial gap: impact of service design on the performance of the organization Research needed on: the link between strategies, modular business model designs, and performance of service organizations 1  
  2. 2. 03/10/11  Aims  of  the  study  •  Examine  the  key  variables  of  modular  service  design,   parHcularly  in  the  case  of  ICT-­‐intensive  services   –  Literature  on  modularity  in  markeHng,  organizaHon  science,  service  research,   innovaHon  research,  informaHon  systems  science,  soNware  engineering,  …  •  Study  the  relaHonship  or  link  between  service  business  model   modularity  and  innovaHon  strategy  approaches  •  Contribute  to  the  understanding  of  how  service  modularity  is   linked  with  service  providers  producHvity  Research  process  •  based  on  a  review  of  the  relevant  literature,  idenHfy  the   relevant  constructs  and  the  business  model  design  elements   for  ICT-­‐intensive  services    •  iniHal  conceptual  framework  and  research  model  for   invesHgaHng  service  modularity  of  ICT-­‐intensive  services  •  empirical,  qualitaHve  inquiry  among  several  ICT  service   providers  •  research  model  refinement  and  hypotheses  generaHon  •  model  and  hypotheses  tesHng  with  quanHtaHve  survey  data     2  
  3. 3. 03/10/11  (Ini=al)  model  constructs:   •  independent  variables:     –  service  innova=on  strategy  types  (2  constructs:  exploraHve  and   exploitaHve  approaches  to  service  innovaHon)   –  rela=onships:  the  customer,  intra-­‐organizaHonal  and  inter-­‐ organizaHonal  collaboraHon  (2  constructs:  type  of  customer  relaHonship;   level  of  networking)   •  intermediary  variables:     –  business  model  design  elements  (3  constructs:  offering,  resources,  and   revenue  model);     •  dependent  variables:   –  organiza=onal  performance  measures  (2  constructs:  cost-­‐oriented     and  revenue-­‐oriented  performance)   Business  model  design   •  the  offering:  service  components,  value  proposiHon,  soluHon   concept  user  experience   ‒  e.g.  cloud  services,  travel   •  resources:  capabiliHes  and  assets  in  the  service  operaHon  system,   processes,  knowledge,  socio-­‐technical  network,  organizaHon   ‒  internal  resources  (technological,  financial,  knowledge,  organizaHonal,…)   ‒  external  resources  (customers,  partners,  …)   •  revenue  model:  pricing,  revenue  management,  service  bundling   ‒  modularity  vs.  bundle   ‒  one  or  two  (or  many)  sided  markets   ‒  network  effects  (same-­‐and  cross  side)   ‒  subsidizaHon     3  
  4. 4. 03/10/11  Customer  rela=onship  as  the  context  for  offering   TYPE OF SERVICE Contingent Customized Standard Mass Relationship Delivery Contract Transaction Internal Production Hierarchy costs Service Technological Agent or innovation Alliance TYPE OF CHANNEL Self Service Field Personnel Social Open Innovation Automation Network Transaction and quality costs (adapted from Vepsäläinen & Apte, 1987) Different  strategic  approaches   exploitation exploration innovation strategy closed innovation open innovation focus profit focus cost reduction revenue expansion quality focus internal external quality measures defect rate customer satisfaction/retention operational focus standardization customization service goal service uniformity customer proximity organizational focus existing organization; new internal processes; operations, accounting marketing, human resources, research and development typical improvement maximize efficiency to reduce service innovation to increase initiative costs customer convenience example application a customer information system improved platform to enable that resulted in shorter hospital customer access to on- stays and reduced operating demand video streams costs (Lehig Valley Hospital) (Netflix) (adapted from Rust et al. 2002; Broring&Herzog, 2008; Rajala, 2009) 4  
  5. 5. 03/10/11  Preliminary  insights   •  Premises  of  modularity  are  conHngent  on  the  type  of   service  innovaHon  strategy  (i.e.,  exploraHve  or  exploitaHve  orientaHon)   •  Benefits  of  modularity  seem  to  be  linked  with  different   business  model  elements,  depending  of  strategic   orientaHon   •  InnovaHon  strategy  in  ICT-­‐intensive  services:  choice  of   approach  or  ambidexterity?   –  balance  between  exploraHve  and  exploitaHve  orieantaHons   –  balance  of  open  and  closed  innovaHon  approaches  Insights for the London Borough ofSuttonThe framework usable in the considerations of:•  developing and agreeing on the definitions of the core-, non-core and group-based ICT service•  identifying the essential elements of the ICT service (in regard to the desired service level)•  considering alternative models of ICT service delivery such as shared service provision and outsourcing•  assessing the interactions, relationships, identities and structures of the ICT service to increase the understanding on how do they impact on what needs to be achieved 5  
  6. 6. 03/10/11  Thank  you!  Professor Virpi Kristiina Tuunainen, Directorvirpi.tuunainen@aalto.fi, +358 50 589 7541Dr. Risto Rajala, Research Directorristo.rajala@aalto.fi, +358 40 353 8140Aalto Service Factoryservicefactory.aalto.fi 6