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Service Management in IT-Enabled Service Supply

Chains
Case

Author: Yan Wang & Henk Akkermans


Online Pub Date: January 04, 2017 | Original Pub. Date: 2017
Subject: Information Management, Service Operations, Supply Chain Management
Level: Intermediate | Type: Experience case | Length: 2496 words
Copyright: © Yan Wang and Henk Akkermans 2017
Organization: fictional/disguised | Organization size: Large
Region: Western Europe | State:
Industry: Information and communication| Telecommunications
Originally Published in:
Publisher: SAGE Publications: SAGE Business Cases Originals
DOI: http://dx.doi.org/10.4135/9781473989788 | Online ISBN: 9781473989788
SAGE SAGE Business Cases
© Yan Wang and Henk Akkermans 2017

© Yan Wang and Henk Akkermans 2017

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion
or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein
shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use
only within your university, and cannot be forwarded outside the university or used for other commercial
purposes. 2020 SAGE Publications Ltd. All Rights Reserved.

This content may only be distributed for use within JAWAHARLAL NEHRU UNIVERSITY.
http://dx.doi.org/10.4135/9781473989788

Service Management in IT-Enabled Service Supply Chains


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Abstract
Services and information technology (IT) are dominating the current global economy. Due to the
increasing involvement of IT in service operations, a new type of service supply chain (SSC)
has emerged, namely the IT-enabled SSC. The present case is intended to reveal the insights
of service management in such a new supply chain. Through the example of TeleSP, a northern
European telecommunications and IT service provider with a complex supply chain, readers are
invited to discover the unique characteristics of the IT-enabled SSC, and to view the challenges
in running it.

Case

Learning Outcomes
The purpose of this case is to provide students with an opportunity to:

1. Obtain a clear overview of operations and management in IT-enabled service supply


chains;
2. Clarify the delivery model of IT-enabled services and the responsibility of all involved par-
ties;
3. Distinguish the unique features of IT-enabled service supply chains from general service
supply chains;
4. Identify the factors that make the chain’s performance dynamic and complex;
5. Understand the pros and cons of different innovation development methods, and be able
to choose the proper method for a given project according to project conditions.

Introduction
Almost no one would disagree on the digitalization of services brought by the development of IT. Our daily
life has been significantly influenced and transformed into a digital world since the introduction of not only the
new digital products such as smart phones, tablets, and other mobile devices, but the new digital way of com-
munication. New products (e.g., smartwatch, driverless car, drones, etc.), ICT services (e.g., e-commerce,
online banking, webcare, etc.), and even new business wars of ecosystems (e.g., Google vs. Microsoft, etc.)
are surrounding us, and we are enjoying the efficiency and convenience from using ICT services on fancy
products.

Critical infrastructure is the backbone of a nation’s economy, security, and health. The more dependent we
are on ICT services, the more critical the IT infrastructure (e.g., hardware, software, networks, facilities, etc.)
where those services run is. Without well-functioning IT infrastructure, there is no ICT service available at
all. Unfortunately, most attention is paid to the flourishing business market and innovation emerged from the
advancement of IT. We often only realize the vital role of IT infrastructure when incidents occur, such as the
Heathrow disruption after system failure in December 2014, or the severe traffic disruption due to a massive
power blackout in the Amsterdam area in March 2015. This drives us to investigate into the case at TeleSP,
whose services are fully dependent on IT infrastructure.

TeleSP, a large telecommunications and ICT service provider in Northern Europe, offers fixed-line and wire-
less telephony, internet, and TV to individual customers, and end-to-end telecommunications and ICT ser-
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vices to business customers. Standing out from general service supply chains, TeleSP’s supply chain, as part
of the telecommunication industry, is intensively IT-enabled. This implies that the supply chain is fully based
on IT, and the telecom services are developed, delivered, and operated in terms of/through/in IT applications.
The business processes are highly automated where services do not function without IT (Akkermans & Voss,
2013). In order to deliver high-quality telecom services, TeleSP runs an extremely complex supply chain which
consists of constant IT development and innovations, a great deal of IT-enabled service operations, and the
management of the IT-enabled service supply chain (SSC).

This business case aims to show insights of service management in this particular type of SSC. The following
sections provide (1) an overview of TeleSP’s SSC, including a process model of the entire supply chain, and
the steps in TeleSP’s service delivery process; (2) a discussion of the challenges in managing TeleSP’s supply
chain; and (3) an analysis of TeleSP’s supply chain. The case concludes with questions for further discussion.

TeleSP’s SSC: An Overview


Telecom services received by customers are delivered through a telecommunication network, which consists
of telecom infrastructure (e.g., antennas, routers, transmission cables, and servers) and is operated through
various IT applications. Every provisioning of a new service starts from an original business wish, which de-
scribes the expected functionalities of the service and consists of the input of the SSC.

The scope of TeleSP’s SSC (see Figure 1) includes three main processes: the development of IT/innovation,
IT-enabled service operations, and chain management. With original business wishes, TeleSP’s SSC starts
with the process of development of IT/innovation. TeleSP’s telecom services, as the output of the develop-
ment of IT/innovation, are deployed and monitored by IT applications in the course of IT-enabled service op-
erations. The IT applications used in operating these services are crucial to the success of service delivery
to the end customer, and are regularly innovated, in order to meet TeleSP’s expanding business planning.
The need for such continuous innovation and enhancement also provides input back into the beginning of
the development of IT/innovation process. The task of SSC management is to make sure everything works
smoothly throughout the entire delivery process, and the delivered TeleSP’s services perform according to
customer expectations.

Figure 1. Process model of TeleSP’s IT-enabled service supply chain.

As shown in Figure 2, the service delivery process at TeleSP (begins with development IT/innovations and
crosses over into IT-enabled service operations. After the business wish comes in, it is analyzed for feasibility
then planned within the larger scope of TeleSP’s project roadmap. Once the project is approved, the design-
build-test phase starts. The resulting IT application is then deployed in the actual telecom network, and the
new service “goes live” to customers. Services are further monitored 24/7 and maintained regularly by service
operations.

Figure 2. TeleSP’s service delivery process.


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When it comes to IT services, outsourcing is commonly and naturally an important managerial issue in the
SSC. This continuing trend is well recognized in TeleSP, yet with some unique aspects, given the fact that all
service development and operations are IT-enabled. Development, integration, and maintenance of TeleSP’s
core IT applications are outsourced to a major supplier. The supplier is involved throughout the process of
development IT/innovation and IT-enabled service operations. TeleSP and this supplier have been collabo-
rating for more than 5 years, and set up good level of knowledge and trust on each other. Under their cur-
rent outsourcing contract, the supplier’s role is mainly regarding their technological expertise and consultancy
competence. The managerial decisions on the SSC are made by the TeleSP’s management.

TeleSP’s Supply Chain Challenges


Running such an IT-enabled SSC requires TeleSP to keep both service reliability and innovativeness at a very
high level. In order to achieve this, the following challenges must be met.

Fast-Paced Innovations
For service organizations, innovation is considered as one of the core competences (Kandampully, 2002).
The driving force for high innovativeness is even stronger due to the fast pace of technology change in IT-
enabled SSCs. The competition in telecom service market is tough. There are numerous internet/mobile/TV
service providers who all try to maintain and expand their market position by constantly innovating their ser-
vices, such as faster and broader internet connections, 4G mobile networks, on-demand video services, and
over the top (OTT) services. High innovation rate in telecom services puts TeleSP in an extreme dynamic en-
vironment, and forces TeleSP to always be ready to offer new services with state-of-art technology.

TeleSP is constantly engaged in two types of innovations from both outside and inside their SSC, namely
the technology based leading innovation which focuses on providing new telecom services, and the TeleSP’s
internally supporting innovation which is about re-engineering the SSC processes from an organizational per-
spective. There is a lot of pressure on TeleSP’s management team in managing project schedules and re-
sources, since the fast-paced innovation demand requires TeleSP’s innovation projects to be planned at least
one and a half year in advance, and to implement changes in service platform on a weekly basis. In addition,
TeleSP is also implementing a long-term reorganization plan, to make management more effective and cost-
efficient. Some supporting innovation projects are also taking place in the SSC, in parallel with the regular
leading innovation projects and within the same teams.

Service Quality Cascade


Service innovations always bring changes into existing service operations, all of which demand excellent op-
erational resources to guarantee the quality of innovation implementations and the resulting service perfor-
mance. For TeleSP, this is rather challenging, given the unique type of SSC they are running.

Because everything is run in IT applications, and all the applications are deployed in the same infrastructure

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network, quality assurance is crucial and challenging for service management. Telecom services are 24/7 live
services. Any change made to the services, for instance, launching a 4G mobile network, upgrading the ver-
sion of TV set-top box or a new functionality in an online TV service application, has to be done in an ‘open-
heart surgery’ manner. It is impossible to shut down all the running applications, implement the changes, and
then make the updated applications back in live mode. This requires high-level service quality assurance in
order to make all the changes right the first time.

The same applies to incident management of TeleSP services. Once there is a service incident, such as a
malfunction of an IT application that leads some service functionality to become unavailable to customers, the
effect is immediately perceived by customers if they were using the service at the time the incident occurred.
The highest priority in incident management is to restore services as soon as possible, since the longer it
takes to do so, the greater the customer impact. This puts lots of pressure on the operational resource—the
technicians—until service is fully restored.

Transition of Innovation Development Approaches


TeleSP, being a large telecom and ICT service organization, looks into its industrial and consumer market for
at least 5–10 years in advance, in order to maintain its leading position in the business. Besides the current
and near-future telecom service trends, TeleSP also pays special attention on the development methodology
of its service innovation. Since mid-2014, the process of development IT / innovations has been in a transition
period from a traditional waterfall development approach to an agile approach. Until this moment, there have
been mixed innovation approaches found at TeleSP in the same process or among different innovation pro-
jects respectively, and it has been difficult to achieve smooth integration and transformation of these ways of
working. The main challenges for TeleSP are to coordinate projects working under different approaches and
check dependencies among different types of projects.

Figure 3 depicts the process overview of TeleSP’s projects that follow waterfall and agile methods respective-
ly. TeleSP customizes both development approaches slightly in their projects. The waterfall projects contain
a leaner process with steps of request, plan, design, build and test, and deliver the end service in one com-
plete software package. The agile projects have continuous request and plan processes, which need to be
coordinated with the progress of waterfall projects, and several iterative processes (aka sprints)—with steps
of design, build, and test. At the end of each sprint, a smaller piece of software is delivered, so that the full
software package is delivered incrementally in agile projects.

Figure 3. Process overview of waterfall and agile projects at TeleSP.

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The agile method (Highsmith, 2002) is continuously gaining in popularity, especially in the current era of ap-
plication (app) development in which mobility dominates telecommunication industry. With respect to the IT-
enablement role in TeleSP’s services, the agile approach is considered as a proper way of working for many
new innovation projects, such as apps for mobile TV services. This is because the core artifacts under devel-
opment are IT applications, which are usually developed in stages and delivered incrementally. The features
planned for these apps are developed step-by-step in the agile manner, and it is very flexible to either release
all developed features to the market in once, or release them in a series as app updates. Thus this approach
is also in favored by the management team, who wants to see the developed products/services sooner.

However, agile method is not applicable to all innovation projects, in particular to the innovation on TeleSP’s
telecom infrastructure network. TeleSP’s telecom infrastructure network holds all servers and service applica-
tions, and planning for its innovation needs a holistic roadmap and well-defined scope. Thus waterfall method
should be retained here. Therefore; the project management at TeleSP needs to manage both types of pro-
jects. The situation is very similar to the one described in Figure 3.

As noted earlier, any change made in the infrastructure network has a potential impact on services which are
already in operation or other services which share the same infrastructure. The deployment of different appli-
cations requires availability of corresponding components of TeleSP’s infrastructure network. These compo-
nents are maintained and innovated by different projects, which could be done in agile or waterfall manner.
Therefore, there are lots of dependencies between agile projects and waterfall projects. In the traditional wa-
terfall method, dependency checking can be done as the all project scopes are fixed. But there is no such
fixed scope in projects where agile methods are applied. Dependency checking across different types of pro-
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jects becomes problematic.

Analysis and Discussion

Topic 1
A service industry is always customer-centric, and customers interact with service providers during the service
consumption either directly or indirectly (Sampson, 2012). In the TeleSP case, the service provisioning and
operations are highly automated. Except for very limited field work, the telecom network together with ap-
plied IT applications act as the surrogate between service provider and customers. The most direct customer
feedback is received when there is an incident causing customer impact. Besides that, the service delivery
process seems simply a software development project. How do we perceive the major activities carried out in
TeleSP’s service delivery process? Is managing TeleSP’s SSC simply a matter of running IT projects—why or
why not?

Topic 2
TeleSP’s supply chain is a typical IT-enabled SSC. IT is without doubt the driving force in TeleSP’s SSC,
as both the service enabler and core operational competence. Service operations carried out in such types
of supply chain are highly dependent and influenced by IT performance. How does IT make TeleSP’s SSC
unique from a general SSC? How do we perceive the human factor in IT-enabled SSC?

Topic 3
Regardless of the discussion on IT projects in Topic 2, both waterfall and agile methods are still two main-
stream development approaches. The decision of choosing the proper development method depends on nu-
merous conditions, such as the project size, working environment, and target products. Looking into the cur-
rent situation in TeleSP’s SSC, what are the pros and cons of waterfall and agile method in this specific case
condition?

References
Akkermans, H. , & Voss, C. (2013). The service bullwhip effect. International Journal of Operations & Produc-
tion Management, 33(6), 765–788.
Highsmith, J. (2002). Agile software development ecosystems. Boston, MA: Addison-Wesley Longman Pub-
lishing Co.
Kandampully, J. (2002). Innovation as the core competency of a service organisation: The role of technology,
knowledge and networks. European Journal of Innovation Management, 5(1), 18–26.
Sampson, S. E. (2012). Visualizing service operations. Journal of Service Research, 15(2), 182–198.
http://dx.doi.org/10.4135/9781473989788

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