Lecture 1 Introduction to Service Science_ Management and Engineering

IS3220: Introduc�on to SSME

Assoc. Prof. Benjamin Lian Department of Informa�on Systems Na�onal University of Singapore

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Service Science,

Management, and Engineering

Role of Services in an Economy

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Source: After Bruce Guile and James B Quinn, eds. Technology in Services: Policies for Growth, Trade and Employment. Washington D.C.: National Academy Press, 1988, p 214.

SSME Specializa�on in IS This specializa�on will enable students who want to pursue careers that have a

service-‐orienta�on to develop an in-‐depth understanding in service innova�ons and service systems crea�on, opera�on and delivery.

–  Mandatory   Service Science   Service Systems

–  Choose 4 elec�ves   Enterprise Resource Planning Systems   Strategic IS Planning   ICT Outsourcing and Offshoring Management   Enterprise Service-‐Oriented Architecture   IT and Customer Rela�onship Management   IT and Supply Chain Management

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SSME specializa�on in IS   For you if who want to pursue a career that has a service-‐orienta�on

–  Develop an understanding of service innova�ons and service systems crea�on, opera�ons and delivery

  Mandatory –  Service Science –  Service Systems

  Elec�ves (choose 4) –  Enterprise Resource Planning Systems –  Strategic IS Planning –  ICT Outsourcing & Offshoring Management –  Enterprise Service-‐oriented Architecture –  IT & Customer Rela�onship Management –  IT & Supply Chain Management

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What will you learn in this module?

  Introduc�on to “service science”   New, interdisciplinary field that combines

– Social science – Business – Cogni�ve science – Engineering knowledge

  Needed by organiza�ons to successfully shi� to the service and knowledge-‐based economy

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Topics

  Introduc�on to SSME   Service and Service Systems   Service Value Crea�on and Innova�ons   Service Value Chain   Service Compu�ng, Architecture Pa�erns and Trends   Service Quality

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What will you be reading?   Reference texts for this module:

–  James Teboul, “Service is Front Stage: Posi�oning Services for Value Advantage”, Insead Business Press

–  Wirtz, Chew, Lovelock. “Essen�als of Services Marke�ng.” Pearson –  Fitzsimmons, J. A., & Fitzsimmons, M. J. (2005). Service management:

Opera�ons, strategy, and informa�on technology, 4th ed. New York: Irwin/McGraw-‐Hill

  Real-‐world case studies   Papers & ar�cles   …and you will be working on your presenta�on skills

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Graded on mid-‐term test & group project

  Mid-‐term test (25%)   Group project

–  Evalua�on of individual tutorial presenta�on (10%) –  Final project write-‐up (25%) –  Evalua�on of contribu�on by peers in the same team (10%)

–  Final project presenta�on   Evalua�on by project team presenta�on (20%)   Evalua�on by individual presenta�on (10%)

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The Project

  Choose a service industry segment   Describe how it works, how services are presently being delivered   Iden�fy a service delivery aspect that can be improved by the introduc�on of a service innova�on   Sketch the outline of a possible implementa�on using a suitable framework (e.g., from IBM)

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Common Ques�ons   Can I choose my project team members?   What is the size of a project team?   What are the benefits of project-‐based assessment in this course?

  What will make an A+ in this course?   Does content of presenta�on ma�er more than presenta�on skills?

  How does peer evalua�on work?   Is it possible that team members will receive different grades within the same team?

  What are the impact if I miss tutorials and classes? Can I a�end other tutorial sessions if I cannot make it to my own tutorial sessions?

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Who Am I?

  NUS Department of Informa�on Systems & Computer Science, 1990-‐1995   Silicon Graphics (SGI), 1995-‐2000   Entrepreneur, 2000-‐2002   Irdeto, 2002-‐2012   NUS School of Compu�ng, 2012-‐present

IS5127 Managing & Using New Media 15

My Coordinates

  Room – COM2 #04-‐09   Telephone – 6601-‐1050   E-‐mail – [email protected]

– Prefix the subject with “IS3220:”   Mee�ngs – By appointment please


Teaching assistant – Wang Deliang

  Room – COM2 #02-‐20   Telephone – 6516-‐4590   E-‐mail – [email protected]   Mee�ngs – By appointment please

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WHY ARE SERVICES SO IMPORTANT?

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Why are services so important?

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Nation % WW Labor

% A

% G

% S

25 yr % delta S

China 21.0 50 15 35 191

India 17.0 60 17 23 28

U.S. 4.8 3 27 70 21

Indonesia 3.9 45 16 39 35

Brazil 3.0 23 24 53 20

Russia 2.5 12 23 65 38

Japan 2.4 5 25 70 40

Nigeria 2.2 70 10 20 30

Bangladesh 2.2 63 11 26 30

Germany 1.4 3 33 64 44

Top Ten Nations by Labor Force Size (about 50% of world labor in just 10 nations)

A = Agriculture, G = Goods, S = Services

>50% (S) services, >33% (S) services

2011 2011 United States

The largest labor force migration in human history is underway, driven by global

communications, business and technology growth, urbanization and low cost labor

(A) Agriculture: Value from

harvesting nature

(G) Goods: Value from

making products

(S) Services: Value from enhancing the

capabilities of things (customizing, distributing, etc.) and interactions between things

Service innovation driving GDP growth

High Level Categoriza�on by North America Industry Classifica�on System

G Wholesale and retail trade; repair of motor vehicles, motorcycles, and personal and househeld goods (“trade services” for short)

H Hotels and restaurants (often identified as HORECA – hotels, restaurants, catering)

I Transport, storage and communication

J Financial intermediation

K Real estate, renting and business activities

L Public administration and defense; compulsory social security

M Education

N Health and social work

O Other community, social and personal service activities

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Why we need a “science of services”

  To be�er understand the design, evolu�on, and emergent proper�es of service systems   Especially, to understand how innova�on leads to produc�vity gains in the service sector

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Projected U.S. Service Employment Growth, 2004 -‐ 2014

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US Bureau of Labor Statistics

“Service-providing industries are projected to account for most job growth, generating almost 19 million new jobs between 2004 and 2014. This is due, in part, to increased demand for services and the difficulty of automating service tasks.”

Projected change in US employment, 2004 -‐ 2014

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US Bureau of Labor Statistics.

“... accounted for more than 20 million jobs.” “Employment in professional and business services is projected to increase by nearly 4.6 million jobs. Growth in this sector is led by providers of administrative support services and consulting services.”

Closer to home …   The services sector, together with the manufacturing sector, are the twin engines of growth for the Singapore economy

  In 2006, the service sector’s contribu�ons to nominal GDP and total employment were 65.3% and 68.4% respec�vely

–  Singapore Department of Sta�s�cs, Economic Survey Series 2005 – The Services Sector ISSN 0218-‐3978

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So, wherever you decide to find a career - in Singapore, Asia Pacific countries or globally- more than 70% of available jobs are in the service sector. This is also the fastest growing sector.

Closer to home … con�nued healthy growth of service industries

  The overall business receipts for services industries rose by 19.1% in 1Q2008 over the same quarter in 2007.

  The healthy growth in overall business receipts was a�ributed to good performance across all major service industries, with financial and insurance services recording the highest growth.

–  Singapore Department of Sta�s�cs, Business Receipt Index for Services Industries, 1Q2008

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Singapore GDP by Industry

GROSS DOMESTIC PRODUCT BY INDUSTRY2009 2009

2005 2006 2007 2008 II III IV I II III IV I II

GDP AT CURRENT MARKET PRICES 8.9 9.9 13.8 2.3 13.2 15.7 15.1 11.7 4.2 0.4 -5.6 -9.1 -3.3Goods Producing Industries 5.8 9.9 5.7 -6.2 2.7 6.6 7.7 6.9 -7.8 -10.6 -12.1 -15.0 6.8

Manufacturing 6.5 10.6 3.6 -14.2 0.9 4.9 4.2 3.9 -16.8 -20.0 -21.8 -25.7 2.5Construction 5.3 5.1 21.7 43.4 16.7 21.0 33.5 31.2 51.6 51.8 39.7 41.0 27.5Utilities -3.1 9.3 6.2 -5.0 5.4 3.1 6.5 -3.5 2.5 -12.8 -6.0 -23.5 -4.3Other Goods Industries1 -0.9 11.3 -2.2 -1.4 0.4 0.4 -6.3 2.7 -0.2 0.2 -8.2 -3.3 -6.0

Services Producing Industries 11.3 10.3 14.7 7.8 15.7 15.5 15.2 14.3 10.2 7.2 0.6 -4.0 -5.5Wholesale & Retail Trade 23.4 16.5 9.9 2.1 9.4 8.1 13.6 4.1 5.3 4.4 -4.6 -13.1 -13.3Transport & Storage 6.6 1.2 13.2 2.1 16.3 15.4 11.4 6.7 2.6 -1.0 0.3 -13.6 -13.1Hotels & Restaurants 12.0 13.9 13.5 10.9 12.7 14.6 15.0 16.9 13.8 9.5 4.3 -9.8 -13.5Information & Communications 6.8 7.7 7.6 5.4 8.0 8.2 8.0 9.0 4.4 2.9 5.5 4.6 1.4Financial Services 10.6 12.7 25.5 8.6 27.6 31.2 19.4 21.9 15.2 5.7 -5.8 1.1 -1.2Business Services 9.7 11.1 21.6 18.6 20.3 22.2 25.5 25.1 21.7 18.3 10.7 0.1 -2.4Other Services Industries 3.1 5.7 7.3 9.2 11.7 7.1 7.4 17.6 6.6 9.4 3.5 4.0 4.8

Ownership of Dwellings 3.0 24.3 28.3 20.8 21.6 30.2 32.5 29.2 27.5 16.7 12.7 4.3 -1.5Less: FISIM2 9.6 19.1 20.9 28.0 20.4 21.1 15.4 25.1 23.6 22.6 40.3 23.3 11.8

Gross Value Added At Basic Prices 9.2 10.3 12.0 3.0 11.4 12.9 13.6 12.1 4.7 1.3 -4.7 -8.5 -3.1Add: Taxes on Products -1.2 2.7 46.8 -7.6 45.6 71.0 44.9 5.4 -2.1 -10.9 -20.0 -18.2 -6.5

1 Comprise Agriculture, Fishing and Quarrhying. Source: Singapore Department of Statistics2 Refers to Financial Intermediation Services Indirectly Measured.Note: The Industries are classified according to SSIC 2005

Percentage Change Over Corresponding Period of Previous Year

20082007

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Service Growth: IBM

0102030405060708090

100

1982

1988

1994

1998

2004

2006

2007

2008

2009

Year

Rev

enue

($B

)ServicesSoftwareSystemsFinancing

31 B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc.

What do IBM Service Professionals Do? Run things on behalf of customers, help Transform customers to adopt best practices, and Innovate with customers.

Revenue Growth by Segment

LEVERAGING INFO TECH TO IMPROVE OUR USE OF RESOURCES

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A few things happened

  Inven�on of digital computers and communica�ons in late-‐1940’s   Inven�on of TCP/IP in late-‐1960’s   Morphing of ARPANET into the Internet in the early-‐1970’s   Inven�on of the personal computer in the late-‐1970’s


Then more things happened

  Inven�on of HTTP in late-‐1980’s   Internet opened to public in 1992   Inven�on of the Mosaic web browser in 1992   Inven�on of different ways of conver�ng analog content into digital form for storage and transmission   Inven�on of different ways of compressing digital content to reduce storage and transmission overheads


And it is deeply embedded in our lives

Government Na�onal security Finance & banking Health care

Educa�on Transporta�on Logis�cs Entertainment

Telecommunica�ons Social interac�on Energy Manufacturing


Role of Services in an Economy

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Source: After Bruce Guile and James B Quinn, eds. Technology in Services: Policies for Growth, Trade and Employment. Washington D.C.: National Academy Press, 1988, p 214.

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Our planet is a complex, dynamic, highly interconnected $54 Trillion system-‐of-‐systems (OECD-‐based analysis)

Communication $ 3.96 Tn

Transportation $ 6.95 Tn

Leisure / Recreation / Clothing

$ 7.80 Tn

Healthcare $ 4.27 Tn

Food $ 4.89 Tn

Infrastructure $ 12.54 Tn

Govt. & Safety $ 5.21 Tn

Finance $ 4.58 Tn

Electricity $ 2.94 Tn

Education $ 1.36 Tn

Water $ 0.13 Tn

Global system-of-systems $54 Trillion

(100% of WW 2008 GDP)

Same Industry Business Support IT Systems Energy Resources Machinery Materials Trade

Legend for system inputs Note: 1. Size of bubbles represents

systems’ economic values 2. Arrows represent the strength of

systems’ interaction

Source: IBV analysis based on OECD

This chart shows ‘systems‘ (not ‘industries‘)

1 Tn

Economists es�mate, that all systems carry inefficiencies of up to $15 Tn, of which $4 Tn could be eliminated

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Global economic value of

System-of-systems

$54 Trillion 100% of WW 2008 GDP

Inefficiencies


Improvement potential


How to read the chart: For example, the Healthcare system‘s value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can be eliminated (= 34% x 42%).

Source: IBM economists survey 2009; n= 480

System inefficiency as % of total economic value

Impr

ovem

ent p

oten

tial a

s %

of s

yste

m in

effic

ienc

y

Education 1,360

Building & Transport Infrastructure

12,540

Healthcare 4,270

Government & Safety 5,210

Electricity 2,940

Financial 4,580

Food & Water 4,890

Transportation (Goods & Passenger)

6,950

Leisure / Recreation /

Clothing 7,800

Communication 3,960

Analysis of inefficiencies in the planet‘s system-of-systems

Note: Size of the bubble indicate absolute value of the system in USD Billions

42%

34%

This chart shows ‘systems‘ (not ‘industries‘)

15%

20%

25%

30%

35%

40%

15% 20% 25% 30% 35% 40% 45%

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INSTRUMENTED We now have the ability to measure, sense and see the exact condition of practically everything.

INTERCONNECTED People, systems and

objects can communicate and interact with each other in entirely new

ways.

INTELLIGENT We can respond to changes

quickly and accurately, and get better results

by predicting and optimizing for future events.

WORKFORCE

PRODUCTS

SUPPLY CHAIN

COMMUNICATIONS

TRANSPORTATION BUILDINGS

IT NETWORKS

Smarter Planet, Smarter Ci�es

Luxury Hotels as Holis�c Service Systems: All the systems

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An intelligent hotel

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A Smarter Grid for Stormwater Management -‐ Op�mizing System Capacity

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All assets of the same type in this area highlighted in blue

Search for all assets of the Type ‘natural channel’ with condition = 3 in this area. Results are highlighted in blue

Wireless network links monitoring devices to central command center

Sewer system data can also be linked with asset & workflow tools

to manage any specific maintenance requests

Innovative technologies such as Smart Manhole Covers are used to detect sewer flow levels

Data can also drawn from more traditional SCADA/sensors systems.

High resolution weather and flooding models are used to generate accurate flood maps with specifics on impact areas

Advanced analytics and optimization engines generate recommended actions for flood avoidance

Stormwater Management Command Center

Valves, pumps or inflatable dams are controlled dynamically to balance inline sewer storage and avoid potential overflows.

Collabora�on Pla�orm: Smart Bay (Galway Bay, Ireland)

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§  Sensor network monitors 30+ dimensions of water quality in Galway Bay –  Data is streamed and processed in real time

§  Integration with other data feeds (weather, shipping etc)

§  Innovative user interface and advanced visualization supporting multidisciplinary users

§  Benefits: –  Collaboration platform for multiple stakeholders

(coastguard, shipping, fish-farming, tourism, agriculture, etc)

–  Enables rapid response to water quality events etc

–  Enables system-wide response to climate change, economic development etc

–  Helping to identify sustainable business models

Smartbay

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WHAT KIND OF PROFESSIONALS ARE NEEDED?

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Changing Nature of Jobs: Deep & Broad

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-10

-5

0

5

10

15

1969 1974 1979 1984 1989 1994 1999

Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton University Press.

Based on U.S. Department of Labor’’ Dictionary of Occupational Titles (DOT)

Expert Thinking (deep)

Complex Communication (broad)

Routine Manual

Non-routine Manual

Routine Cognitive

Increasing usage of job descriptive terms

T-‐Shaped Professionals: Ready for T-‐eamwork!

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Many disciplines (understanding & communications)

Many systems

(understanding & communications)

Deep in one discipline

(analytic thinking & problem

solving)

Deep in one system

(analytic thinking &

problem solving)

Many team-oriented service projects completed (resume: outcomes, accomplishments & awards)

SSMED = Service Science, Management, Engineering & Design

The Science in Service Innova�on h�p://royalsociety.org/Hidden-‐wealth-‐The-‐contribu�on-‐of-‐science-‐to-‐service-‐sector-‐

innova�on/

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Importance of T-‐Shaped Skills

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WHAT IS SERVICE SCIENCE? What are service systems?

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What is a Service System? What is Service Science?

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Economics & Law

Design/ Cognitive Science Systems

Engineering

Operations Computer Science/

Artificial Intelligence

Marketing

““a service system is a human-made system to improve customer-provider interactions,

or value-cocreation””

“service science is the interdisciplinary study of service systems & value co-creation”

What is a service system?

Service involves at least two en��es applying competences and making use of individual and shared resources for mutual benefit.

Such interac�ng en��es are called service systems.

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A. Service Provider   Individual   Organization   Public or Private

C. Service Target: The reality to be transformed or operated on by A, for the sake of B   People, dimensions of   Business, dimensions of   Products, goods and material systems   Information, codified knowledge

B. Service Client   Individual   Organization   Public or Private

Forms of Ownership Relationship

(B on C)

Forms of Service Relationship

(A & B co-create value)

Forms of Responsibility Relationship

(A on C)

Forms of Service Interventions

(A on C, B on C)

Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.

Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.

A different point of view: Service-‐dominant logic

  Service is the applica�on of competences for the benefit of another en�ty

  Service is exchanged for service

  Value is always co-‐created   Goods are appliances for delivery

  All economies are service economies

  All businesses are service businesses

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Resource Integrator/Beneficiary (“Firm”

)

Resource Integrator/Beneficiary (“Customer”)

What is value?

  Self-‐service, or value crea�on – When an en�ty achieves an outcome, some change in the world that is desired   And that they worked to create

– Then the en�ty has created value for itself

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What is value?

  Service, or value co-‐crea�on – When an en�ty achieves an outcome, some change in the world that is desired   And they worked to create, but could not have done without the help or the resources of another en�ty, that willingly provided the help or resource in exchange for benefits

– Then value co-‐crea�on has occurred

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Value co-‐crea�on = win/win

  Value co-‐crea�on is not a zero-‐sum game – Where for one en�ty to gain another en�ty must lose (e.g., not the case that for me to get +3, you have to get -‐3, so in the end it is a total of zero (0) together)

  Value co-‐crea�on is a posi�ve-‐sum game – Where both en��es can and do gain (e.g., the case that I can get +3 and you can get +4, so in the end it is a total of +7 together)

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END Next session: What is a service?

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Lecture 1 Introduction to Service Science_ Management and Engineering

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Transcript of Lecture 1 Introduction to Service Science_ Management and Engineering