Service Science, Management, and Engineering

IS3220: Introducon to SSME

Department of Informaon Systems Naonal University of Singapore
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Assoc. Prof. Benjamin Lian

Role of Services in an Economy

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 Specializaon in IS
This specializaon will enable students who want to pursue careers that have a service-orientaon to develop an in-depth understanding in service innovaons and service systems creaon, operaon and delivery.
Mandatory
Service Science Service Systems
Enterprise Resource Planning Systems Strategic IS Planning ICT Outsourcing and Oshoring Management Enterprise Service-Oriented Architecture IT and Customer Relaonship Management IT and Supply Chain Management

Choose 4 elecves

SSME specializaon in IS
For you if who want to pursue a career that has a service-orientaon Mandatory
Develop an understanding of service innovaons and service systems creaon, operaons and delivery Service Science Service Systems Enterprise Resource Planning Systems Strategic IS Planning ICT Outsourcing & Oshoring Management Enterprise Service-oriented Architecture IT & Customer Relaonship Management IT & Supply Chain Management
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Elecves (choose 4)

What will you learn in this module?

Introducon to service science New, interdisciplinary eld that combines
Social science Business Cognive science Engineering knowledge

Needed by organizaons to successfully shi to the service and knowledge-based economy

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Topics
Introducon to SSME Service and Service Systems Service Value Creaon and Innovaons Service Value Chain Service Compung, Architecture Paerns and Trends Service Quality
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What will you be reading?

Reference texts for this module:
James Teboul, Service is Front Stage: Posioning Services for Value Advantage, Insead Business Press Wirtz, Chew, Lovelock. Essenals of Services Markeng. Pearson Fitzsimmons, J. A., & Fitzsimmons, M. J. (2005). Service management: Operaons, strategy, and informaon technology, 4th ed. New York: Irwin/McGraw-Hill

Real-world case studies Papers & arcles and you will be working on your presentaon skills

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Graded on mid-term test & group project

Mid-term test (25%) Group project
Evaluaon of individual tutorial presentaon (10%) Final project write-up (25%) Evaluaon of contribuon by peers in the same team (10%) Final project presentaon
Evaluaon by project team presentaon (20%) Evaluaon by individual presentaon (10%)

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The Project
Choose a service industry segment Describe how it works, how services are presently being delivered Idenfy a service delivery aspect that can be improved by the introducon of a service innovaon Sketch the outline of a possible implementaon using a suitable framework (e.g., from IBM)
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Common Quesons
Can I choose my project team members? What is the size of a project team? What are the benets of project-based assessment in this course? What will make an A+ in this course? Does content of presentaon maer more than presentaon skills? How does peer evaluaon work? Is it possible that team members will receive dierent grades within the same team? What are the impact if I miss tutorials and classes? Can I aend other tutorial sessions if I cannot make it to my own tutorial sessions?
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Who Am I?
NUS Department of Informaon Systems & Computer Science, 1990-1995 Silicon Graphics (SGI), 1995-2000 Entrepreneur, 2000-2002 Irdeto, 2002-2012 NUS School of Compung, 2012-present

IS5127 Managing & Using New Media

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My Coordinates
Room COM2 #04-09 Telephone 6601-1050 E-mail blian@comp.nus.edu.sg Meengs By appointment please
Prex the subject with IS3220:

IS5127 Managing & Using New Media

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Teaching assistant Wang Deliang

Room COM2 #02-20 Telephone 6516-4590 E-mail wangdl@nus.edu.sg Meengs By appointment please

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WHY ARE SERVICES SO IMPORTANT?

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Why are services so important?

Top Ten Nations by Labor Force Size
A = Agriculture, G = Goods, S = Services
(about 50% of world labor in just 10 nations)

Service innovation driving GDP growth

2011

Nation
China India U.S. Indonesia Brazil Russia Japan Nigeria Bangladesh Germany

% WW

Labor 21.0 17.0 4.8 3.9 3.0 2.5 2.4 2.2 2.2 1.4

% A 50 60 3 45 23 12 5 70 63 3

% G 15 17 27 16 24 23 25 10 11 33

% S 35 23 70 39 53 65 70 20 26 64

25 yr % delta S

United States
(A) Agriculture:
Value from harvesting nature

2011

191 28 21 35 20 38 40 30 30 44

Value from making products

(G) Goods:

Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things

(S) Services:

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

The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and low cost labor
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High Level Categorizaon by North America Industry Classicaon System

G H I J K L M N O Wholesale and retail trade; repair of motor vehicles, motorcycles, and personal and househeld goods (trade services for short) Hotels and restaurants (often identified as HORECA hotels, restaurants, catering) Transport, storage and communication Financial intermediation Real estate, renting and business activities Public administration and defense; compulsory social security Education Health and social work Other community, social and personal service activities
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Why we need a science of services

To beer understand the design, evoluon, and emergent properes of service systems Especially, to understand how innovaon leads to producvity gains in the service sector

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

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.
US Bureau of Labor Statistics

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Projected change in US employment, 2004 - 2014

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.

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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 sectors contribuons to nominal GDP and total employment were 65.3% and 68.4% respecvely
Singapore Department of Stascs, Economic Survey Series 2005 The Services Sector ISSN 0218-3978

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.

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Closer to home connued 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 aributed to good performance across all major service industries, with nancial and insurance services recording the highest growth.
Singapore Department of Stascs, Business Receipt Index for Services Industries, 1Q2008

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Singapore GDP by Industry

GROSS DOMESTIC PRODUCT BY INDUSTRY 2005 GDP AT CURRENT MARKET PRICES Goods Producing Industries Manufacturing Construction Utilities 1 Other Goods Industries Services Producing Industries Wholesale & Retail Trade Transport & Storage Hotels & Restaurants Information & Communications Financial Services Business Services Other Services Industries Ownership of Dwellings Less: FISIM
2

2006 9.9 9.9 10.6 5.1 9.3 11.3 10.3 16.5 1.2 13.9 7.7 12.7 11.1 5.7 24.3 19.1 10.3 2.7

2007 13.8 5.7 3.6 21.7 6.2 -2.2 14.7 9.9 13.2 13.5 7.6 25.5 21.6 7.3 28.3 20.9 12.0 46.8

8.9 5.8 6.5 5.3 -3.1 -0.9 11.3 23.4 6.6 12.0 6.8 10.6 9.7 3.1 3.0 9.6 9.2 -1.2

2007 2008 2008 II III IV I II III Percentage Change Over Corresponding Period of Previous Year 2.3 13.2 15.7 15.1 11.7 4.2 0.4 -6.2 2.7 6.6 7.7 6.9 -7.8 -10.6 -14.2 0.9 4.9 4.2 3.9 -16.8 -20.0 43.4 16.7 21.0 33.5 31.2 51.6 51.8 -5.0 5.4 3.1 6.5 -3.5 2.5 -12.8 -1.4 0.4 0.4 -6.3 2.7 -0.2 0.2 7.8 15.7 15.5 15.2 14.3 10.2 7.2 2.1 9.4 8.1 13.6 4.1 5.3 4.4 2.1 16.3 15.4 11.4 6.7 2.6 -1.0 10.9 12.7 14.6 15.0 16.9 13.8 9.5 5.4 8.0 8.2 8.0 9.0 4.4 2.9 8.6 27.6 31.2 19.4 21.9 15.2 5.7 18.6 20.3 22.2 25.5 25.1 21.7 18.3 9.2 11.7 7.1 7.4 17.6 6.6 9.4 20.8 21.6 30.2 32.5 29.2 27.5 16.7 28.0 3.0 -7.6 20.4 11.4 45.6 21.1 12.9 71.0 15.4 13.6 44.9 25.1 12.1 5.4 23.6 4.7 -2.1 22.6 1.3 -10.9

IV -5.6 -12.1 -21.8 39.7 -6.0 -8.2 0.6 -4.6 0.3 4.3 5.5 -5.8 10.7 3.5 12.7 40.3 -4.7 -20.0

2009 I -9.1 -15.0 -25.7 41.0 -23.5 -3.3 -4.0 -13.1 -13.6 -9.8 4.6 1.1 0.1 4.0 4.3 23.3 -8.5 -18.2

2009 II -3.3 6.8 2.5 27.5 -4.3 -6.0 -5.5 -13.3 -13.1 -13.5 1.4 -1.2 -2.4 4.8 -1.5 11.8 -3.1 -6.5

Gross Value Added At Basic Prices Add: Taxes on Products

1 2

Comprise Agriculture, Fishing and Quarrhying. Refers to Financial Intermediation Services Indirectly Measured. Note: The Industries are classified according to SSIC 2005

Source: Singapore Department of Statistics

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Service Growth: IBM

Revenue Growth by Segment
100 90 80 70 60 50 40 30 20 10 0

Revenue ($B)

Services Software Systems Financing

82

88

94

98

04

06

07

08

19

19

19

19

20

20

20

20

Year

What do IBM Service Professionals Do? Run things on behalf of customers, help Transform customers to adopt best practices, and Innovate with customers.
B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc.

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09

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LEVERAGING INFO TECH TO IMPROVE OUR USE OF RESOURCES

33

A few things happened

Invenon of digital computers and communicaons in late-1940s Invenon of TCP/IP in late-1960s Morphing of ARPANET into the Internet in the early-1970s Invenon of the personal computer in the late-1970s

IS5127 Managing & Using New Media

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Then more things happened

Invenon of HTTP in late-1980s Internet opened to public in 1992 Invenon of the Mosaic web browser in 1992 Invenon of dierent ways of converng analog content into digital form for storage and transmission Invenon of dierent ways of compressing digital content to reduce storage and transmission overheads
IS5127 Managing & Using New Media 35

And it is deeply embedded in our lives

Government Finance & banking Educaon Logiscs Telecommunicaons Energy Naonal security Health care Transportaon Entertainment Social interacon Manufacturing

IS5127 Managing & Using New Media

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Role of Services in an Economy

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)
This chart shows systems (not industries)

Communication
$ 3.96 Tn

Transportation
$ 6.95 Tn

Education
$ 1.36 Tn

$ 0.13 Tn

Water

Electricity
$ 2.94 Tn

Leisure / Recreation / Clothing

$ 7.80 Tn

Global system-of-systems $54 Trillion

(100% of WW 2008 GDP) Healthcare
$ 4.27 Tn

Infrastructure
Note: 1. Size of bubbles represents systems economic values 2. Arrows represent the strength of systems interaction

$ 12.54 Tn

Legend for system inputs

Same Industry Business Support IT Systems Energy Resources Machinery Materials Trade

Finance
$ 4.58 Tn

Source: IBV analysis based on OECD

$ 4.89 Tn

Food

Govt. & Safety

$ 5.21 Tn

1 Tn

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Economists esmate, that all systems carry ineciencies of up to $15 Tn, of which $4 Tn could be eliminated
This chart shows systems (not industries)

40%

Analysis of inefficiencies in the planets system-of-systems

Healthcare 4,270 Building & Transport 34% Infrastructure Education 12,540 1,360 Financial 4,580

Improvement potential as % of system inefficiency

Global economic value of System-ofsystems Inefficiencie s

35%
Electricity 2,940 Food & Water 4,890

$54 Trillion $15 Trillion

28% of WW 2008 GDP

100% of WW 2008 GDP

30%

42%

25%

20%

Communication 3,960 Transportation (Goods & Passenger) 6,950 Leisure / Recreation / Clothing 7,800

Government & Safety 5,210

Improvemen $4 Trillion 7% of WW 2008 GDP t potential

15% 15%

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

20%

25%

30%

35%

40%

45%

System inefficiency as % of total economic value

Source: IBM economists survey 2009; n= 480

How to read the chart: For example, the Healthcare systems value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can 39 be eliminated (= 34% x 42%).

Smarter Planet, Smarter Cies

INSTRUMENTED

INTERCONNECTED

INTELLIGENT

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

People, systems and objects can communicate and interact with each other in entirely new ways.
IT NETWORKS SUPPLY CHAIN

We can respond to changes quickly and accurately, and get better results by predicting and optimizing for future events.
COMMUNICATIONS BUILDINGS

TRANSPORTATION

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Luxury Hotels as Holisc Service Systems: All the systems

41

An intelligent hotel

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A Smarter Grid for Stormwater Management - Opmizing System Capacity

Innovative technologies such as Smart Manhole Covers are used to detect sewer flow levels Wireless network links monitoring devices to central command center High resolution weather and flooding models are used to generate accurate flood maps with specifics on impact areas

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

Stormwater Management Command Center

Advanced analytics and optimization engines generate recommended actions for flood avoidance
Search for all assets of the Type natural channel with condition = 3 in this area. Results are highlighted in blue

Sewer system data can also be linked with asset & workflow tools to manage any specific maintenance requests

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

Valves, pumps or inflatable dams are controlled dynamically to balance inline sewer storage and avoid potential overflows. 43

Collaboraon Plaorm: Smart Bay (Galway Bay, Ireland)

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
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Smartbay

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WHAT KIND OF PROFESSIONALS ARE NEEDED?

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Changing Nature of Jobs: Deep & Broad

15 10 5 0 -5 -10

Increasing usage of job descriptive terms

Expert Thinking (deep)

Complex Communication (broad)

Routine Manual Non-routine Manual Routine Cognitive

1969 1974 1979 1984 1989 1994 1999

Based on U.S. Department of Labor Dictionary of Occupational Titles (DOT) Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton University Press. 48

T-Shaped Professionals: Ready for T-eamwork!

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

(understanding & communications)

Many disciplines

Many systems
(understanding & communications)

SSMED = Service Science, Management, Engineering & Design

(analytic thinking & problem solving)

(analytic thinking & problem solving)

Deep in one discipline

Deep in one system

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hp://royalsociety.org/Hidden-wealth-The-contribuon-of-science-to-service-sector- innovaon/

The Science in Service Innovaon

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Importance of T-Shaped Skills

51

What are service systems?

WHAT IS SERVICE SCIENCE?

53

What is a Service System? What is Service Science?

Design/ Cognitive Science

service science is the interdisciplinary study of service systems & value co-creation a service system is a human-made system Marketing

Systems Engineering

to improve customer-provider interactions, or value-cocreation

Computer Science/ Artificial Intelligence

Economics & Law

Operations
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What is a service system?

Service involves at least two enes applying competences and making use of individual and shared resources for mutual benet. Such interacng enes are called service systems.
A. Service Provider Individual Organization Public or Private
Forms of Service Relationship (A & B co-create value)

B. Service Client Individual Organization Public or Private

Forms of Service Interventions (A on C, B on C) Forms of Responsibility Relationship (A on C) 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
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.

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A dierent point of view: Service- dominant logic

Service is the applicaon of competences for the benet of another enty 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

Resource Integrato r/ Beneficia ry(Firm )

Resource Integrato r/ Beneficia (Customer ry )

58

What is value?
Self-service, or value creaon
And that they worked to create

When an enty achieves an outcome, some change in the world that is desired Then the enty has created value for itself

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What is value?
Service, or value co-creaon
When an enty 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 enty, that willingly provided the help or resource in exchange for benets

Then value co-creaon has occurred

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Value co-creaon = win/win

Value co-creaon is not a zero-sum game
Where for one enty to gain another enty 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) Where both enes 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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Value co-creaon is a posive-sum game

Next session: What is a service?

END

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