Services Hierarchy And Service Systems Research - Department of ...

SSMED Emerging
Service Science,
Management,
Engineering, and
Design Emerging
Service Research Concepts:
1. resources, 2. service system entities, 3. access rights, 4. value-propositionbased
interactions, 5. governance mechanisms, 6. service system networks, 7.
service system ecology, 8. stakeholders, 9. measures, 10. outcomes
Jim Spohrer, Director, Service Research, IBM Almaden Research Center
August 8th, 2008
1
Service Research and Innovation | Almaden Research Center
© 2007 IBM Corporation

Thanks to Global IBM SSMED Team
Research
Vivian Ding (CRL)
Kazuyoshi Hidaka (TRL)
Paul Maglio (ARC)
Doug Riecken (WRC)
Liba Svobodova (ZRL)
Segev Wasserkrug (HRL) and many others…
University Relations
Dianne Fodell
Cross IBM
Wendy Murphy
Kevin Wright and many, many others…
Paul Kontogiorgis (SWG)
Steve Street (GTS)
Moises Cases(Systems)
Yuriko Sawatani (TRL)
Jakita Thomas (ARC)
Gerhard Satzger (Germany)
Claudio Pinhanez (Brazil) and many others…
Executive Support
Nicholas Donofrio
Ginni Rometty
John Kelly III
Jai Menon
Robert Morris
Thomas Li
Guru Banavar
Jim Spohrer
David Cohn
Mahmoud Nagyshineh
Greg Golden
Jon Iwata and others…
Hundreds of others worldwide… thanks to all!
2
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

A Practical Place to Get Started…
Reaching the Goal: How
Managers Improve a
Services Business Using
Goldratt’s Theory of
Constraints
John Arthur Ricketts, IBM
“Theory of Constraints (TOC) gets its name
from the fact that all enterprises are
constrained by something. If they weren’t
they could grow as large and as fast as
they wanted… So the first step in applying
TOC is to figure out precisely where the
constraints are… The second step in apply
TOC is to utilize the constraint to its fullest
extent… The third step in applying TOC is
to make sure that non-constraints keep the
constraint busy – but otherwise stay out of
its way… The fourth step in applying TOC
is to improve the productivity of the
constraint… The final step in applying TOC
is to repeat the previous steps.”
3
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

IT in the Service Economy:
Challenges and Possibilities for the 21 st Century
1. Diversity of service worlds
Barrett.,Davidson
4. Compliance-as-a-service
Butler, Emerson, McGovern
5. Service system innovation
Alter
8. Service behind the service
Ramiller, Chiasson
9. Ambulant health service delivery
Andersen, Aanestad
12. Open source service network
Feller et al
14. Computerization of service
Sawyer, Yi
16. Municipalities as service providers
Tapia, Ortiz
25. Services to/from products
Ramiller et al
27. Servitization of peer production
Feller et al
30. Servitization of IBM
Carter, Takeda, Truex
IFIP (The Intern. Fed. for Information Processing)
“IT for the benefit of all people”
4
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Outline
I. Grand Vision
Achievable?
II. Some Basics
III. Short History
IV. Why Now?
V. Ongoing Debates
Competitor Provider Customer Authority
S
(substitute)
OO
LC
SA
PA
P
service = value-cocreation
B2B
B2C
B2G
provider resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
G2C
G2B
G2G
C2C
C2B
C2G
***
C
value-proposition
change-experience
dynamic-configurations
time
OO
LC
SA
PA
A
customer resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
5
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

I. Grand Vision (Part 1)
New science
Classify all service systems
Vision: New science
Service scientist study service systems
Service systems are diverse & complex
Biological systems are diverse & complex
Linnaeus systematically classified biological
systems
IBM systematically classifying service systems
Component business model (CBM)
Industry process models
6
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

I. Grand Vision (Part 2)
New Moore’s law
Information insights to
investment discipline to
continuous improvement of
service system KPIs as
service systems/networks
scale via design and
guided evolution, thereby
generate more information
and repeat…
Vision: New Moore’s law
Service system/networks unlock the value of new
knowledge as they scale
IBV CBM Report: From insight to investment
BIW: From information analytics to insight
IDG: A service system analysis
Call centers as knowledge-intensive service
systems
Service system design lab network
Projects = covers all contracts between entities
Global service system ecology simulator
7
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

“Succeeding through Service Innovation” Whitepaper: A Framework for Progress
(http://www.ifm.eng.cam.ac.uk/ssme/)
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions
Service
Innovation
Service
Systems
Service
Science
Stakeholder
Priorities
The white paper offers
a starting point to -
Growth in service
GDP and jobs
Service quality
& productivity
Environmental
friendly &
sustainable
Urbanisation &
aging population
Globalisation &
technology drivers
Opportunities for
businesses,
governments and
individuals
Customer-provider
interactions that
enable value
cocreation
Dynamic
configurations of
resources: people,
technologies,
organisations and
information
Increasing scale,
complexity and
connectedness of
service systems
B2B, B2C, C2C,
B2G, G2C, G2G
service networks
To discover the
underlying
principles of
complex service
systems
Systematically
create, scale and
improve systems
Foundations laid by
existing
disciplines
Progress in
academic studies
and practical tools
Gaps in knowledge
and skills
Education
Skills
& Mindset
Research
Knowledge
& Tools
Business
Employment
& Collaboration
Government
Policies
& Investment
Develop programmes
& qualifications
Encourage an
interdisciplinary
approach
Develop and improve
service innovation
roadmaps, leading to a
doubling of investment
in service education
and research by 2015
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
Call to Create National Service Innovation Roadmaps (SIR) Reports
8

Service scientists understand service systems/networks/ecology
(to discover and to innovate = create + scale + improve + …)
Service Systems Worldview
Service Scientists
Population Entities:
Service Systems
– People
– Organizations
– Open Source Communities
– …
Entrepreneur+
Designer/Architect+
Engineer
Manager/Leader+
Consultant+
Practitioner
Interactions:
Value Propositions
– Promise
– Contract
– …
Outcomes:
Value-Cocreation
or
Disputes
– Markets & Competition
– Governance Mechanisms
– …
CREATE SCALE IMPROVE
MERGE, DIVEST,
OUT/IN-SOURCE
TRANSFORM,ETC.
SERVICE SYSTEM ENTITIES
SERVICE SYSTEM NETWORKS
SERVICE SYSTEM ECOLOGY
9
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Service system entities are diverse and complex
“The goal of science is to make the wonderful and complex understandable and
simple – but not less wonderful.” – Herb Simon, The Sciences of the Artificial
A. Informal Service Systems
B. Formal Service Systems
1. Social Systems
Human Systems/Sociotechnical Systems
Human Cultures
2. Political Systems
Governed Systems
Value Systems
3. Economics Systems
Markets and Organizations
Firms or Hierarchies
Economic Institutions
Gray Markets
4. Legal Systems
Legislative, Judicial, Executive Separation
5. Organizational Systems
Managed Systems
Open Source Communities
6. Information Systems
Linguistic Systems
Mathematical Systems
Physical Symbol Systems
7. Engineered Systems
Technological Systems
Designed Systems
8. Ecological Systems
Evolved Systems
Nature’s Services
7.
A.
8.
6.
1.
B.
5.
2.
4.
3.
10
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Biological System Entities:
Also diverse and complex
“…from so simple a beginning endless forms most beautiful and
most
wonderful have been, and are being, evolved.” – Charles Darwin
11
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Stages of scientific maturity
Early Stage:
Collect and
Classify
(Biology
Begins)
Carl Linnaeus,
the father of modern
taxonomy and ecology
a pioneer of the science
of biology
Mature Stage:
Unify and
Mathematize
(Physics Matures;
Electro-Magnetism)
12
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

IBM has begun to systematically classify diverse service systems
industry by industry, component by component, measure by measure…
CBM: Component Business Model
WBM and RUP: Work Practices & Processes
SOA: Technical Service-Oriented Architecture
IEEE Computer, Jan 2007
Key Performance Indicators (KPIs)
IBM IBV: Component Business Models
13
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Component Business Model to Help Decompose Your Business
Experience and Know-how from Thousands of Client Engagements
Component Business Modeling tool 2.0
70+ maps supporting 17 industries
23 enhanced with key performance
indicators (KPI)
Over 2,000 trained CBM specialists
armed with the CBM tool
30 CBM patents filed
CBM tool license available to clients
Integrates with WebSphere Business Modeler
Presentation to Gartner in October 2007, by R. Leblanc
14

Integrating Component Business Models with Industry
Process Models
+ =
Component Business
Models (CBM) and Tool
Industry Process Models in
WBM, built by BPM CoE,
leveraging APQC’s Process
Classification Framework
Result: business transformation
engagements delivered more quickly,
through more industry-specific
insights and more powerful CBM Tool
IBM is bringing together its Business Process Management Center of
Excellence (BPM CoE), IBM Research, and the Global Business Solution
Center (GBSC) to map Component Business Models (CBM) to Industry
Process Models
Presentation to Forrester in November 2007, by T. Rosamilia
15

What would a service systems breakthrough look like?
How about a CAD tool for service system/network design?
And a new Moore’s Law for service system improvement?
Computational System
More transistors, more powerful
Requires investment roadmap
Service System/Network
1. People
2. Technology
3. Shared Information
4. Organizations
connected by value propositions
More win-win interactions, more value
Requires investment roadmap
16
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Towards a Moore’s Law
Computational power doubles at a predictable rate.
Are there analogous capability-doubling laws that apply in
services?
Suppose that traces of human activity in particular service
systems double at some rate, and that these human activity
data lead to specific opportunities for improved or increased
service productivity or quality.
Consider Amazon.com: The quality of recommendations
depends on accurate statistics – the more purchases made,
the better the statistics for recommendations.
Three improvement “laws” that might be applicable in
services:
The more an activity is performed (time period doubling,
demand doubling), the more opportunities to improve.
The better an activity can be measured (sensor deployment
doubling, sensor precision doubling, relevant measurement
variables doubling) and modeled, the more opportunities to
improve.
The more activities that depend on a common sub-step or
process (doubling potential demand points), the more likely
investment can be raised to improve the sub-step.
17
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

More of the value from new knowledge is unlocked
by service systems/networks, as they scale
Supply:
Knowledge
creation rate
Demand:
Customer
adoption rate
Service
system/
network
growth
How
to
invest?
Television
Electricity
Telephone
Radio
Automobile
VCR
Adoption
PC
Cellular
Years
18
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

IBM Institute for Business Value (IBV): How to invest
Component Business Model: Making specialization real
19
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

From Information Analytics to Business Insight:
BIW COBRA (Corporate Brand); SIMPLE (Intellectual Property)
Better use of information, better decisions, continuous CBM KPI improvements
Courtesy of
Jean Paul Jacob, IBM
Valium
(Trade Name)
Diazepam
(Generic Name)
CAS # 439-14-5
(Chemical ID #)
Valium>149 “names”
Also New Book: Mining the Talk, Spangler & Kreulen
20
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Intelligent Document Gateway (IDG):
Service System Analysis
Process
Digitization
Business Logic
21
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Call Centers as knowledge-intensive service systems
Components
Analytics
Processes
Dashboard
Performance
CACM July 2006
22
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Service System Design Lab Network
(ServSys DLN)
Real World
Sensor augments
“We expect a production increase of 5–10 percent
with Intelligent Oilfield," Jonathan Krome, IBM.
Semantic augments
Virtual World
Design servicescape
Rehearsals
Simulated World
Design exploration
CAD Tool
Jacob Hall
Courtesy of
Jean Paul Jacob, IBM
“IBM's Traffic Prediction Tool predicted traffic flows …
…results were well above the target accuracy
of 85 percent,” Teresa Lim IBM
23
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Design lab projects = Potential to cover all contracts that exist
between service system entities
Examples:
IBM contracts to
improve oil field
productivity; or
traffic flows, etc.
Systematically
exploring the
space of all
service systems:
nation by nation
industry by industry
component by component
measure by measure
Courtesy of
Steve Kwan, SJSU
Government, Healthcare, Education
Retail, Utility, Travel, Financial, Professional
Entertainment, Transportation, Communication
24
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Global service system ecology simulator: By 2013?
Fundamental to CAD tool development
Every decade both HPC and PC platforms increase
complex simulation capabilities by 1000x.
- HPC: (2000 10 6 ), (2010 10 9 ), (2020 10 12 ), (2030 10 15 ) …
- PC: (2000 10 3 ), (2010 10 6 ), (2020 10 9 ), (2030 10 12 ) …
15
CBM-based Industry Simulations - 2013?
12
Heart Simulation
Log
Entities
9
Universe Simulation
Brain Simulation
6
Earth Simulator
existing projects
and projection
2000 2010 2020 2030
25
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

II. Some Basics
We are all customers
We are all providers
We are all students of
service, more or less
More and more of us
digitally connect to service
networks
Modern service is
quantitatively and
qualitatively different
Knowledge-Intensive Service Economy
Service science is different, it integrates
What should a service scientist know?
Resources are the building blocks of service
system entities
Value propositions are the building blocks of
service system networks
Access rights are the building blocks of
service system ecology
Relationships are a type of resource too
Service and non-service interactions (ISPAR)
26
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Knowledge-Intensive Service Economy
Service is as old as the
division of labor across
life cycles
Knowledge-Intensive Service Economies (KISE)
create jobs that require expert thinking (specialization)
and complex communication skills (integration)
Modern service becomes
possible when billions
can connect digitally to
service networks
The value of new
knowledge is enhanced
as the pace and
frequency of knowledge
access and use is
accelerated by larger scale
service networks
Percentile change in skill descriptions 1969-1999
Based on U.S. Department of Labor’s
Dictionary of Occupational Titles (DOT)
From Levy and Marnane (2004),
Autor, Levy Marnane (2003)
27
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Service science is different, because it integrates…
Many say that “service science is just _______”
Most like general systems theory (abstract) and systems engineering (applied)
Most disciplines specialize…
Service science integrates
Service system entities
are dynamic configurations of
resources…
people, technology, organizations,
shared information (e.g., language,
laws, measures, models, processes,
policies, relationships, rights, etc.)
connected to other service system
entities by value propositions for
the purpose of value-cocreation
relationships, with governance
mechanisms for dispute resolution.
Marketing
Operations Mngmnt …
Cognitive Science/Psych
Social Science/ Poli-Sci
Information Science
CS/Artificial Intelligences
Anthropology
General Systems Theory
Systems Engineering
Queuing Theory
A Service
System is
Complex
Management Science
Mngmnt of Info Sys (MIS)
Economics & Law
Organization Theory
Information Management
Game Theory
Industrial Engineering
Multi-agent Systems
Operations Research …
28
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

What should a service scientist know?
T-shaped professionals are aware
and in high demand because they
have both depth and breadth
They combine expert thinking
(depth in one or more areas)
and complex communications
(breadth across many areas)
complex communication
I. Theoretical & Practical Foundations
1. Concepts & Questions
2. Tools & Methods
II. Disciplines & Expert Thinking
3. History & Evolution: Economics & Law
4. Customer: Marketing & Quality Measure
5. Provider: Operations & Productivity Measure
6. Authority: Governance & Compliance Measure
7. Competitor: Design & Sustainable Innovation Measure
8. Privileged Access: Anthropology & People Resources
9. Owned Outright: Engineering & Technology Resources
expert thinking
Courtesy of Jean Paul Jacob
10. Shared Access: Computing & Information Resources
11. Leased/Contract: Sourcing & Organization Resources
12. Future & Investment: Management & Strategy
III. Professions & Complex Communication
13. Mindset & Entrepreneurship
14. Science & Leadership
For a service science outline and 200+ annotated references, refer to:
http://www.cob.sjsu.edu/ssme/refmenu.asp
29
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Resources are the building blocks of
service systems entities
First foundational premise
of service science:
Service system entities
dynamically configure
four types of resources
The named resource is
Physical
or
Not-Physical
(physicists resolve disputes)
The named resource has
Rights
or
No-Rights
(judges resolve disputes
within their jurisdictions)
Physical
Not-Physical
Rights
1. People
3. Organizations
operant
No-Rights
2. Technology
4.. Shared
Information
operand
Formal service systems can contract
Informal service systems can promise/commit
Trends & Countertrends (Evolve and Balance):
Informal Formal
Social Economic
Political Legal
Routine Cognitive Labor Computation
Routine Physical Labor Technology
Transportation (Atoms) Communication (Bits)
Qualitative (Tacit) Quantitative (Explicit)
30
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Value propositions are the building blocks of
service system networks
Second foundational premise
of service science:
Value propositions coordinate & motivate resource access
Service system entities
calculate value from multiple
stakeholder perspectives
A value propositions can
be viewed as a request from
one service system to another
to run an algorithm
(the value proposition)
from the perspectives of
multiple stakeholders according
to culturally determined
value principles.
The four primary stakeholder
perspectives are: customer,
provider, authority, and competitor
Stakeholder
Perspective
(the players)
1.Customer
2.Provider
3.Authority
4.Competitor
(Substitute)
Measure
Impacted
Quality
(Revenue)
Productivity
(Profit)
Compliance
(Taxes and
Fines)
Sustainable
Innovation
(Market
share)
Pricing
Decision
Value
Based
Cost
Plus
Regulated
Strategic
Basic
Questions
Should we?
(offer it)
Can we?
(deliver it)
May we?
(offer and
deliver it)
Will we?
(invest to
make it so)
Value
Proposition
Reasoning
Model of customer: Do
customers want it? Is there
a market? How large?
Growth rate?
Model of self: Does it play
to our strengths? Can we
deliver it profitably to
customers? Can we
continue to improve?
Model of authority: Is it
legal? Does it compromise
our integrity in any way?
Does it create a moral
hazard?
Model of competitor: Does
it put us ahead? Can we
stay ahead? Does it
differentiate us from the
competition?
31
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Access rights are the building blocks of
service system ecology
Third foundational premise
of service science:
The access rights associated with
customer and provider resources
are reconfigured by mutually
agreed to value propositions
relationships
Access rights
Access to resources that are owned
outright (i.e., property)
Access to resource that are leased/
contracted for (i.e., rental car, home
ownership via mortgage, insurance
policies, etc.)
Shared access (i.e., roads, web
information, air, etc.)
Privileged access (i.e., personal
thoughts, inalienable kinship
relationships, etc.)
Competitor Provider Customer Authority
S
(substitute)
OO
LC
SA
PA
P
service = value-cocreation
B2B
B2C
B2G
provider resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
G2C
G2B
G2G
C2C
C2B
C2G
***
C
value-proposition
change-experience
dynamic-configurations
time
OO
LC
SA
PA
A
customer resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
32
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Relationships are a type of resource too…
“… the important distinction is
that the relationship has become
a resource in itself…
thus the returns have now more
to do with extending the scope,
content and process of the
relationship.”
Bryson, Daniels and Warf
“Service Worlds”
A. Service Provider
• Individual
• Organization
• Public or Private
Forms of
Responsibility Relationship
(A on C)
Forms of
Service Relationship
(A & B co-create value)
Forms of
Service Interventions
(A on C, B on C)
B. Service Client
• Individual
• Organization
• Public or Private
Forms of
Ownership Relationship
(B on C)
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
- Based on Gadrey (2002)
33
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Service and non-service interactions (ISPAR)
Four possible outcomes
from a two player game
ISPAR descriptive model
1
Win Lose
Provider
lose-win
(coercion)
lose-lose
(co-destruction)
win-win
(value-cocreation)
win-lose
(loss-lead)
5 6
3
9
4
10
7
2
8
Lose Win
Customer
ISPAR generalizes to ten
possible outcomes
win-win: 1,2,3
lose-lose: 5,6, 7, maybe 4,8,10
lose-win: 9, maybe 8, 10
win-lose: maybe 4
34
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Culturally-based Value Principles
Efficiency (Conserve
Resources)
Reducing costs of communication and
transportation has a huge impact on
value creation potential
Cost of storage, processing, and
communication of information
Cost of storage, processing, and
transportation of physical
Transaction costs in social system
reduction (by firm or market) has a
huge impact on value-cocreation
potential (the amount of trust and
compliance in the system, to reduce
governance costs)
35
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

III. Short History
The last five years
US News
America COMPETES Act
SSMED summary
36
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Global Change and SSMED
In 2006 the service sector’s share of
global employment overtook agric.
for the first time, increasing from
39.5% to 40%. Agric.decreased from
39.7% to 38.7%. The industry sector
accounted for 21.3% of total
employment.
- International Labour Organization
What is SSMED really?
- Focus on service innovation
- Proto-discipline & professions
- Research area
Germany $87M
Innovation with
Services
EU $100M
NESSI pending
China 5 Yr Plan
Modern Services
Japan $30M
Service
Productivity
US $4M+
NSF SEE
HR 2272/1106
. . . And More!
Related activities to date
- ACM, IEEE, INFORMS, SRII SIGs
- 130 Programs, 44 Countries
- Over 100 conference and journal papers
- >100 Press, >10,000 Web site mentions
- IBM – 400 Service Researchers WW
37
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

US News – Smart Choices Graduate Engineering
ENVIRONMENTAL ENGINEERING
It's a growing field, and engineers are
needed to clean up existing pollution
problems and prevent future ones.
SERVICE SCIENCE, MANAGEMENT,
AND ENGINEERING (SSME)
This emerging discipline is getting a big
push from industry, including IBM and
Hewlett-Packard. SSME combines
engineering, computer science,
economics, and management to improve
the service sector.
http://www.usnews.com/usnews/edu/grad/articles/brief/gbeng_brief_2.php
http://www3.brookings.edu/metro/pubs/20070904_gleiecosystem.pdf
38
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

The U.S. National Innovation Investment Act
(America COMPETES)
US House and Senate voted to approve on August 2 nd,, 2007; President has signed.
SEC. 1005. STUDY OF SERVICE SCIENCE.
(a) Sense of Congress- It is the sense of Congress that, in order to strengthen the
competitiveness of United States enterprises and institutions and to prepare the people of
the United States for high-wage, high-skill employment, the Federal Government should
better understand and respond strategically to the emerging management and learning
discipline known as service science.
(b) Study- Not later than 270 days after the date of enactment of this Act, the Director of the
Office of Science and Technology Policy, through the National Academy of Sciences, shall
conduct a study and report to Congress regarding how the Federal Government should
support, through research, education, and training, the emerging management and learning
discipline known as service science.
(c) Outside Resources- In conducting the study under subsection (b), the National Academy
of Sciences shall consult with leaders from 2- and 4-year institutions of higher education, as
defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), leaders
from corporations, and other relevant parties.
(d) Service Science Defined- In this section, the term `service science' means curricula,
training, and research programs that are designed to teach individuals to apply scientific,
engineering, and management disciplines that integrate elements of computer science,
operations research, industrial engineering, business strategy, management sciences, and
social and legal sciences, in order to encourage innovation in how organizations create
value for customers and shareholders that could not be achieved through such disciplines
working in isolation.
http://thomas.loc.gov/cgi-bin/query/F?c110:5:./temp/~c110nPy6Rp:e19768:
39
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

IV. Why Now?
Modern service networks -
digitally connected services
for billions of people
Billions of people digitally connected
Millions of organizations too
Trillions of devices
Quadrillions of concept-concept pairs
40
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

The economic change we all know…
The small “other” category emerges as a dominant
Ten Nations
Total 50% of World Wide Labor
A = Agriculture, G = Goods, S = Services 1980-2005
PC Age
Nation
Labor
%
A
%
G
%
S
%
Service
Growth
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%
International Labor Organization
US Employment History & Trends
United States
(A) Agriculture:
Value from
harvesting nature
(G) Goods:
Value from
making products
2005
(S) Services:
Value from enhancing the
capabilities of things (customizing,
distributing, etc.) and interactions between things
The largest labor force migration in human
history is underway, driven by global
communications, business and technology
growth, urbanization and low cost labor
41
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Fact: 2006 was first year that service jobs overtake
agriculture jobs world wide
In 2006 the service sector’s share of
global employment overtook agric. for
the first time in human history,
increasing from 39.5% to 40%.
agric.decreased from 39.7% to 38.7%.
The industry sector accounted for
21.3% of total employment.
Correlates with growth of
More people, more large cities
More technology, more global networks
More organizations, more wealth
More information, more knowledge
Increase in connectedness
Billions of people
Billions of devices (computers, phones,
TVs, security cameras, routers, etc.)
Millions of organizations
Quadrillions of symbol-concepts
Increase in interactions
Productive (value +)
Unproductive (value -)
- International Labour Organization
42
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Investment is lagging
Cannot invest wisely until more systematic understanding
Businesses in the
US service sector
account for:
More than 2/3
of GDP and jobs
…And yet less
than 1/3 of R&D
investment
However, measuring R&D
investment in service sector is
still being refined
Includes and is more than
technology innovation
investment
Currently, does not lead to as
many patents
Frequently depends on new
business formation
http://www.nist.gov/director/prog-ofc/report05-1.pdf
43
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Recap (1 of 6): Why now?
Visualizing a thousand people
People connectedness:
Hunter-gatherer clans living
off the land, family roles
and human life cycle
division of labor
Technology connectedness:
Simple tools carried with
hunting bands/clans
Organization
connectedness: Largely
isolated bands, conflict
typical of encounters
Information connectedness:
No written language
From Saul Griffith, “Visualizing a thousand people”
44
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Recap (2 of 6): Why now?
Evolution of trust
The Company of Strangers :
A Natural History of
Economic Life
by Paul Seabright
“Evolution of Trust: Human beings are the only
species in nature to have developed an elaborate
division of labor between strangers. Even something
as simple as buying a shirt depends on an
astonishing web of interaction and organization that
spans the world. But unlike that other uniquely
human attribute, language, our ability to cooperate
with strangers did not evolve gradually through our
prehistory. Only 10,000 years ago--a blink of an eye
in evolutionary time--humans hunted in bands, were
intensely suspicious of strangers, and fought those
whom they could not flee. Yet since the dawn of
agriculture we have refined the division of labor to
the point where, today, we live and work amid
strangers and depend upon millions more. Every
time we travel by rail or air we entrust our lives to
individuals we do not know. What institutions have
made this possible?”
45
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Recap (3 of 6): Why now?
Visualizing a million people
People connectedness:
Cities concentrate human
interactions, and division of
labor increases
Technology connectedness:
Transportation and utility
service infrastructures grow
Organization
connectedness: States and
businesses interconnect
Information connectedness:
Written language
From Saul Griffith, “Visualizing a million people”
46
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Recap (4 of 6): Why now?
Evolution of business organizations
The Visible Hand: The
Managerial Revolution in
American Business
by Alfred Dupont Chandler
47
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

“Recap (5 of 6): Why now?
Visualizing a billion people
People connectedness:
Community and
information-centric web
sites, many large cities
Technology connectedness:
Telecommunication, world
wide web, global travel
Organization
connectedness: Millions of
businesses, elaborate state
structure, NGOs, etc.
Information connectedness:
Digital media, search, entity
co-tables (s-webs)
From Saul Griffith, “Visualizing a billion people”
48
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Recap (6 of 6): Why now?
Evolving knowledge-intensive service economy
The Origin
of Wealth
by Eric D.
Beinhocker
Estimated world (pre-1800) and then
U.S. Labor Percentages by Sector
2M years as hunting clans/bands
10K years as farm families
200 years as factory workers
60 years (so far) as knowledge
workers in organizations
and now digital networks
The Pursuit of
Organizational
Intelligence,
By James G.
March
Estimations based on Porat, M. (1977) Info
Economy: Definitions and Measurement
49
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

What is service science?
Service science is the study of service systems,
entities (like people, businesses, government
agencies, communities, on-line and off-line, etc.) that
dynamically configure resources and interact to
cocreate value, via mutually agreed to value
propositions, with governance mechanisms to
resolve disputes and learn from past experience.
Service networks are revealed patterns of service
systems, given an analysis framework.
IEEE Computer, Jan 2007
Service ecology is the study of the evolution of
populations of types of service systems, that change
over time, giving rise to new types of service
systems, value propositions, governance
mechanisms, resources, and types of value.
50
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

People
“All the information workers observed
experienced a high level of fragmentation in
the execution of their activities. People
averaged about three minutes on a task and
about two minutes on any electronic device or
paper document before switching tasks.”
Gloria Mark and Victor M. Gonzalez,
authors of “Research on Multi-tasking in
the Workplace”
51
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Families
"The family is the natural and fundamental group
unit of society and is entitled to protection by
society and the State".
Article 16(3) of the
Universal Declaration of Human Rights
“Developing a Family Mission Statement”
Stephen R. Covey, author of The 7 Habits of
Highly Effective Families
“In the agricultural age, work-life-and-family
blended seamlessly.”
IBM GIO 1.0
52
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Cities
“Cities are the defining artifacts of civilisation. All
the achievements and failings of humanity are
here… We shape the city, and then it shapes us.
Today, almost half the global population lives in
cities.”
John Reader, author of Cities
IBM Releases ``IBM and the Future of our Cities''
Podcast
IBM Press Release 2005
53
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Nations
“Understanding economic change including
everything from the rise of the Western world to the
demise of the Soviet Union requires that we cast a
net much broader than purely economic change
because it is a result of changes in (1) the quantity
and quality of human beings; (2) in the stock of
human knowledge particularly as applied to human
command over nature; and (3) the institutional
framework that defines the deliberate incentive
structure of a society.”
Douglass C. North, author of Understanding
the Process of Economic Change
54
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Businesses
“…of the 100 entities with the largest Gross
National Product (GNP), about half were
multi-national corporations (MNCs)… The
MNCs do not exist on traditional maps.”
Alfred Chandler and Bruce Mazlish,
authors of Leviathans
“The corporation has evolved constantly
during its long history. The MNC of the late
twentieth century … were very different from
the great trading enterprises of the 1700s. The
type of business organization that is now
emerging -- the globally integrated enterprise
-- marks just as big a leap. “
Sam Palmisano, CEO IBM in Foreign
Affairs
55
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Universities
“The contemporary American
university is in fact a knowledge
conglomerate in its extensive
activities, and this role is costly
to sustain.”
Roger L. Geiger, author of
Knowledge and Money:
Research Universities and
the Paradox of the
Marketplace
56
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Hospitals
“Modern medicine is one of those
incredible works of reason: an elaborate
system of specialized knowledge,
technical procedures, and rules of
behavior.”
Paul Starr, author of The Social
Transformation of American
Medicine
57
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Call Centers
“Call Centers For Dummies helps put
a value on customer relations efforts
undertaken in call centers and helps
managers implement new strategies
for continual improvement of customer
service.”
Réal Bergevin, author of Call
Centers For Dummies
58
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Data Centers
“All data centers are unique, but they all share the
same mission: to protect your company’s valuable
information.”
Douglas Alger, author of Build the Best
Data Center Facility for Your Business
59
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

V. Ongoing Debate
What is service
What is science
What is best way to
proceed
Two dominant views of service
Two dominant views of innovation
Two dominant views of SSMED as science
Customer versus engineering focus
Marketing versus operations focus
Education versus management focus
SSME versus SSMED
Integrating disciplines: pairs versus lists
People are not resources
What kind of systems are service
systems?
Abstract versus pragmatic
Doable versus too hard
60
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Questions?
Visit us in
San Jose, CA USA
IBM Almaden
Research Center
One of eight main
IBM Research labs
worldwide
Email: spohrer@us.ibm.com
Blog: http://forums.thesrii.org/blog?blog.id=main_blog
Service Research: http://www.almaden.ibm.com/asr/
Service Innovation: http://www.ifm.eng.cam.ac.uk/ssme/
61
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

SSMED Emerging
62
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Language Evolution
“Half of the world’s languages will disappear by 2100”
Are the number of languages
increasing or decreasing?
What about disciplinary
and professional languages?
One symbol-concept pair
about every 10 seconds
63
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

The Mechanisms of Economic Evolution
Standard operating
procedures are passed
down from one
generation to the next
Successful processes
can be copied, though
transfer is not costless
Learning curves
Patent protection
Evolution of firms … best
understood through an
examination of history
“If the adaptation of both the business firm and
biological species to their respective
environments are instances of heuristic search…
we will still have to account for the mechanisms
that bring the adaptation about. In biology the
mechanism is located in the genes and their
success reproducing themselves. What is the
gene’s counterpart in the business firm?
Nelson and Winter suggest that business firms
accomplish most of their work through
standard operating procedures – algorithms for
making daily decisions that become routinized and
are handed down from one generation of
executives and employees to the next.”
- Herb Simon, Sciences of the Artificial, pg. 48
64
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Test
65
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation

Test
66
Service Research and Innovation | Service Science Management Engineering and Design
© 2008 IBM Corporation
© 2005 IBM Corporation