1. Commitment-Based
Modeling of Service Systems
in the Light of Service Dominant Logic
Robert Ferrario and Nicola Guarino
National Research Council of Italy
Institute of Cognitive Sciences and Technology
Laboratory for Applied Ontology, Trento
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2. Four problems with SDL
1. Service as application of competences
2. Tension between microscopic and mesoscopic level
3. Service as value co-creation
4. Notion of service system (where are the boundaries?)
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3. Services are events. What kinds of events?
• Services are economic activities offered by one party to
another, most commonly employing time-based performances to
bring about desired results... Lovelock & Wirtz, "Services Marketing:
People, Technology, Strategy" (Prentice Hall 2007).
• A service is a time-perishable, intangible experience performed
for a customer acting in the role of a co-producer. Fitzsimmons &
Fitzsimmons “Service management.” (McGraw-Hill 2003).
• Service [is] the application of specialized competences
(knowledge and skills), through deeds, processes, and
performances for the benefit of another entity or the entity itself.
Lusch & Vargo “The Service-Dominant Logic of Marketing.” (Armonk, NY:
ME Sharpe. 2006).
• Services are value co-creation phenomena that arise among
interacting service system entities. Spohrer, J.C., Maglio, P.P.:
Toward a science of service systems: Value and symbols. In Handbook of
Service Science (Springer 2010)
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4. 1. Service as “application of a specific
competence”
• Doesn’t account for a basic intuition behind “service”: being at
your disposal (see the ancient meaning of servus)
• In our approach, it is not so much the specific application of
competence which counts as a service, but rather the
commitment to perform some kinds of actions:
• Example: a telephone company. We say it provides one service,
even if we make multiple phone calls.
• We need a mesoscopic level definition of service
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5. 2. The tension between microscopic and
mesoscopic level
• Service defined at microscopic level in SDL (single value co-
creation interaction)
• Service systems defined as possibly complex configurations of
resources, with “a beginning, a history, and an end”, and a
“unique identity”
• But what is the glue that keeps the whole service system together,
in time?
• Answer: providing the same service (generalising multiple
microscopic interactions
• Our approach: service as a business activity, modeled at the
mesoscopic level
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6. Microscopic vs. mesoscopic perspective
• Action-based: passing the salt is a service (application of
competences - microscopic perspective)
• Commitment-based: a previous commitment is needed
(economic activity - mesoscopic perspective)
• Claim: the mesoscopic perspective is the one that accounts for
the ordinary, business-level notion of service
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7. Services are based on commitments
• How can you tell that a service is present, here and now?
• ...if somebody is committed to do something here and now
• (a service can be present without being active...)
service commitment
• a provider guarantees the execution of some type of actions
• executed by a producer
• on the occurrence of a certain triggering event,
• in the interest of a customer
• upon prior agreement with the customer
• according to a certain specification (service description)
• which constraints the way service actions will be performed (service process)
• a commitment state starts with a commitment act
service as value co-creation vs. service as commitment to value cocreation
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8. Generic commitment
• Towards potential customers
• Directed to a service description, that is intended to facilitate
service discovery
• It is a state resulting from an act that is in a sense uni-directional,
as it does not imply an explicit agreement
• It is not strictly speaking binding for the provider. Until there is at
least one specific, actual customer, the provider cannot be directly
sanctioned for not having respected his or her commitment
• So not honoring a generic commitment can obviously result in a
loss of credibility or reputation, but not in a direct sanction
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9. Specific commitment
• Specific commitment is a state that follows a mutual agreement
between provider and customer, most of the times consisting in
the signature of a contract.
• The contract describes how the service will be implemented for the
individual customer, so normally it specifies the service description
in more detail.
• Two relevant differences with the generic commitment:
• the contract commits both parties, not only the provider
• It has a greater binding power, whose violation usually entails a
sanction, that may be described in the contract itself.
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10. 3. Service as value cocreation
• S-D logic: “We exchange services, not goods”.
• This overall service exchange results in value co-creation, but such
global value co-creation is not a service in itself!
• If we define service just as value co-creation, we have no way to
understand what is exchanged on each side, and so, for example, we
cannot describe how a certain service can be negotiated.
• So, clearly, a service implies a value co-creation process (or
phenomenon), but definitely we can't collapse the two notions.
• The notion of service is necessarily asymmetric, while value co-creation is
symmetric
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11. Service value co-creation
• It is a complex process involving two symmetric value
experiences: the customer’s experience accounts for the service’s
benefits and the corresponding costs on the customer’s side, while
the provider’s experience accounts of provider’s benefits and the
corresponding costs in implementing the service process
• Service value co-creation is also ontologically dependent on the
commitment (the more the actual service execution complies with
the service description and the specific contract signed, the more
the value of a service increases)
• Value is in part produced by the interaction between service and
the surrounding environment, and the service execution is not by
itself sufficient to determine its value
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12. Modelling value experiences in time
Commitment act core action
Customer’s cost
Customer’s benefit
Provider’s cost
Provider’s benefit
Provider’s commitment
time
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13. 4. Service system boundaries
• According to SDL, service systems are complementary
components of economic exchange
• Question: is the customer part of the service system?
• ...if the customer is involved in value co-creation, the obvious
answer should be YES!
• otherwise, if a service system is just one party of the service
interaction, how does a service system differ from a system?
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14. Service, Service System, Service System
lifecycle
• Services are (complex) events
• Service systems are (complex) objects, whose behaviour
is called service system life-cycle
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15. Service and service system lifecycle
Service commitment
Service process
Service system life-cycle
Service context monitoring
Service
Customized delivery planning & coordination
Customized service content delivery
Supporting action(s)
Core service action(s)
Enhancing action(s)
Service value exchange
Provider's activities
Service Negotiation with Payment
Bundling, presentation & pricing Follow-up
awareness customer exploitation
Customer's activities
Need Negotiation with Follow-up
Discovery Readiness to pay Payment
awareness provider
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16. Understanding service systems: the socio-
technical perspective
Socio-Technical Systems are ultimately
Service Systems
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17. Steven Alter’s Systemic Approach
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18. The classic approach (STS theory)
[Bostrom & Heinen 1977]
• More a perspective on factors affecting work than a theory of the
system itself
• Set of principles for taking the social system into account
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19. A change of shift: from principles to models
• Nature and structure of main components:
• People
• Technical artifacts (agentive and non-agentive)
• Organizations
• Natural context
• Nature of their interactions
• Person-artifact
• Person-Person
• Person-Organization
• Organization-Organization
• Artifact-Natural context
• ...
• We need a comprehensive ontological theory:
• social reality
• functionality and technical artifacts
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• norms and institutions 19

20. What is a sociotechnical system
(adapted from [Kroes, Franssen, van de Poel, Ottens 2006])
• Simple Instrumental system: <user, instrument, goalu, context>
• Simple Technical system: <user, artefact, goala, context>
• Simple Sociotechnical system:
<user, socio-technical artefact, goala, context>
• Sociotechnical artefact: an artefact where at least a person plays a
functional role.
• Complex sociotechnical system: involves multiple users and multiple
artefacts, possibly with an emerging (non-designed) behaviour.
• Note: the parts of such systems are people, machines, resources.
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