Service Science Progress & Directions

1
Service Science Progress Directions

• Working Together to Build a Smarter Planet

Dr. James (Jim) C. Spohrer spohrer_at_us.ibm.com Di
rector, IBM University Programs World Wide ICSOC
(Service-Oriented Computing) 2010 San Francisco,
December 8, 2010
2
ICSOC 2010
3
Outline

• Stimulus Service Growth
• The World
• IBM
• Response Service Science Priorities
• Cambridge University Report
• Arizona State University Report
• World View Networks of Entities Interacting
• Service Dominant Logic (Vargo Lusch)
• Service Science (Spohrer Maglio)
• Service Network Theory (Gummesson)
• Evolution Service Science for a Smarter Planet
• What is Smarter Planet?
• What improves Quality-of-Life?
• What is a Service System? Service Science?
• How to visualize Service Science?
• Whats the Skills Goal?
• Where are the Opportunities?
• Where is the Real Science in Service Science?

4
Service Growth The World
Worlds Large Labor Forces A Agriculture, G
Goods, S Service
US shift to service jobs
2010
2010
(A) Agriculture Value from harvesting nature
40yr Service Growth
S
G
A
Labor WW
Nation
142
29
22
49
25.7
China
35
23
17
60
14.4
India
(G) Goods Value from making products
23
76
23
1
5.1
U.S.
34
39
16
45
3.5
Indonesia
(S) Service Value from IT augmented workers in
smarter systems that create benefits for
customers and sustainably improve quality of
life.
61
66
14
20
3.0
Brazil
64
69
21
10
2.4
Russia
45
67
28
5
2.2
Japan
19
20
10
70
1.6
Nigeria
37
26
11
63
2.1
Bangladesh
42
64
33
3
1.4
Germany
CIA Handbook, International Labor
Organization Note Pakistan, Vietnam, and Mexico
now larger LF than Germany
5
Service Growth IBM
Revenue Growth by Segment
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/reengineer
ing, systems integration, organizational change,
etc.
6
Priorities Succeeding through Service Innovation
- A Framework for Progress (http//www.ifm.eng.ca
m.ac.uk/ssme/) Source Workshop and Global Survey
of Service Research Leaders (IfM IBM 2008)
1. Emerging demand
2. Define the domain
3. Vision and gaps
4. Bridge the gaps
5. Call for actions
Stakeholder Priorities Education Research B
usiness Government
Service Systems 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
Service Innovation Growth in service GDP and
jobs Service quality productivity Environment
al friendly sustainable Urbanisation aging
population Globalisation technology
drivers Opportunities for businesses,
governments and individuals
The white paper offers a starting point to -
Service Science To discover the underlying
principles of complex service systems Systematica
lly create, scale and improve systems Foundations
laid by existing disciplines Progress in
academic studies and practical tools Gaps in
knowledge and skills
Develop programmes qualifications
Skills Mindset
Encourage an interdisciplinary approach
Knowledge Tools
Develop and improve service innovation roadmaps,
leading to a doubling of investment in service
education and research by 2015
Employment Collaboration
Policies Investment
Glossary of definitions, history and outlook of
service research, global trends, and ongoing
debate
7
Priorities Research Framework for the Science
of Service
Source Global Survey of Service Research Leaders
(Ostrom et al 2010)
8
Service-Dominant Logic (Vargo Lusch)

• Service is the application of competences for the
  benefit of another entity
• 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

9
Service Science (Spohrer Maglio)

• Service system entities dynamically configure
  (transform) four types of resources
• Service system entities calculate value from
  multiple stakeholder perspectives
• Service system entities reconfigure access rights
  to resources by mutually agreed to value
  propositions

10
Service Network Theory (Gummesson)
11
Evolution Service Science for a Smarter
PlanetWhat is Smarter Planet? Harmonized smarter
systems.
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.
IT
12
Our planet is a complex, dynamic, highly
interconnected 54 Trillion system-of-systems
(OECD-based analysis)
? Our planet is a complex system-of-systems
Transportation 6.95 Tn
Communication 3.96 Tn
This chart shows systems (not industries)
Education 1.36 Tn
Water 0.13 Tn
Leisure / Recreation / Clothing 7.80 Tn
Electricity 2.94 Tn
Global system-of-systems 54 Trillion (100 of WW
2008 GDP)
Healthcare 4.27 Tn
Infrastructure 12.54 Tn
Legend for system inputs
Same IndustryBusiness SupportIT SystemsEnergy
ResourcesMachineryMaterials
Trade
Note 1. Size of bubbles represents systems
economic values 2. Arrows represent the strength
of systems interaction
1 Tn
Govt. Safety 5.21 Tn
Finance 4.58 Tn
Food 4.89 Tn
Source IBV analysis based on OECD
13
Economists estimate, that all systems carry
inefficiencies of up to 15 Tn, of which 4 Tn
could be eliminated
? We now have the capabilities to manage a
system-of-systems planet

Global economic value of Global economic value of
System-of-systems 54 Trillion100 of WW 2008 GDP
Inefficiencies 15 Trillion28 of WW 2008 GDP
Improvement potential 4 Trillion7 of WW 2008 GDP
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 be eliminated ( 34 x 42).
Source IBM economists survey 2009 n 480
14
What improves Quality-of-Life? Service System
Innovations
20/10/10

• A. Systems that focus on flow of things that
  humans need (15)
• 1. Transportation supply chain
• 2. Water waste recycling/Climate Environment
• 3. Food products manufacturing
• 4. Energy electricity grid/Clean Tech
• 5. Information and Communication Technologies
  (ICT access)
• B. Systems that focus on human activity and
  development (70)
• 6. Buildings construction (smart spaces) (5)
• 7. Retail hospitality/Media
  entertainment/Tourism sports (23)
• 8. Banking finance/Business consulting
  (wealthy) (21)
• 9. Healthcare family life (healthy) (10)
• 10. Education work life/Professions
  entrepreneurship (wise) (9)
• C. Systems that focus on human governance -
  security and opportunity (15)
• 11. Cities security for families and
  professionals (property tax)
• 12. States/regions commercial development
  opportunities/investments (sales tax)
• 13. Nations/NGOs citizens rights/rules/incentive
  s/policies/laws (income tax)

US Labor in 2009.
2/7/4
2/1/1
7/6/1
1/1/0
5/17/27
1/0/2
24/24/1
2/20/24
7/10/3
5/2/2
3/3/1
0/0/0
1/2/2
0/19/0
Quality of Life Quality of Service Quality of
Jobs Quality of Investment-Opportunities
61 Service Design 2010 (Japan) / 75 Service
Marketing 2010 (Portugal)/78 Service-Oriented
Computing 2010 (US)
15
NAEs Engineering Grand Challenges

• A. Systems that focus on flow of things humans
  need
• 1. Transportation Supply Chain
• Restore and enhance urban infrastructure
• 2. Water Waste/Climate Green tech
• Provide access to clear water
• 3. Food Products
• Manager nitrogen cycle
• 4. Energy Electricity
• Make solar energy economical
• Provide energy from fusion
• Develop carbon sequestration methods
• 5. Information Communication Technology
• Enhance virtual reality
• Secure cyberspace
• Reverse engineer the brain
• B. Systems that focus on human activity
  development
• 6. Buildings Construction (smart spaces)
• Restore and enhance urban infrastructure

16
What is a Service System? What is Service
Science? customers just name ltyour favorite
providergt researchers just name ltyour
favorite disciplinegt
Design/ Cognitive Science
Systems Engineering
service science is the interdisciplinary study
of service systems value-cocreation
a service system is a human-made system to
improve customer-provider interactions, or
value-cocreation between stakeholders
Marketing
Computer Science/ Artificial Intelligence
Operations
Economics Law
17
How to visualize service science? The
Systems-Disciplines Matrix
systems
disciplines
18
What is the skills goal? T-Shaped professionals,
ready for T-eamwork!
SSMED Service Science, Management, Engineering
Design
19
Where are the opportunities? Everywhere!
20
Time
14B Big Bang (Natural World)
10K Cities (Human-Made World)
Where is the Real Science in Service
Science? In the sciences of the natural and
human-made worlds Evolving hierarchical-complexit
y of populations of things
writing (symbols and scribes)
ECOLOGY
written laws
money (coins)
Sun
Earth
bacteria (uni-cell life)
sponges (multi-cell life)
universities
clams (neurons)
printing press (books)
tribolites (brains)
steam engine
21
Service System Ecology Conceptual Framework

• Resources People, Technology, Information,
  Organizations
• Stakeholders Customers, Providers, Authorities,
  Competitors
• Measures Quality, Productivity, Compliance,
  Sustainable Innovation
• Access Rights Own, Lease, Shared, Privileged

22
Holistic Service Systems

• Examples Nations, States, Cities, Universities,
  Luxury Hotels, Cruise Ships, Households
• Subsystems Transportation, Water, Food, Energy,
  Communications, Buildings, Retail, Finance,
  Health, Education, Governance, etc.
• Definition A service system that can support its
  primary populations, independent of all external
  service systems, for some period of time, longer
  than a month if necessary, and in some cases,
  indefinitely
• Balance independence with interdependence,
  without becoming overly dependent

23
Cities as Holistic Service Systems All the
systems

• A. Flow of things
• 1. Transportation Traffic congestion accidents
  and injury
• 2. Water Access to clean water waste disposal
  costs
• 3. Food Safety of food supply toxins in toys,
  products, etc.
• 4. Energy Energy shortage, pollution
• 5. Information Equitable access to info and comm
  resources
• B. Human activity development
• 6. Buildings Inefficient buildings,
  environmental stress (noise, etc.)
• 7. Retail Access to recreational resources
• 8. Banking Boom and bust business cycles,
  investment bubbles
• 9. Healthcare Pandemic threats cost of
  healthcare
• 10. Education High school drop out rate cost of
  education
• C. Governing
• 11. Cities Security and tax burden
• 12. States Infrastructure maintenance and tax
  burden
• 13. Nations Justice system overburdened and tax
  burden

Example Singapore
24
Universities as Holistic Service Systems All the
systems

• A. Flow of things
• 1. Transportation Traffic congestion parking
  shortages.
• 2. Water Access costs reduce waste
• 3. Food Safety reduce waste.
• 4. Energy Access costs reduce waste
• 5. Information Cost of keeping up best
  practices.
• B. Human activity development
• 6. Buildings Housing shortages Inefficient
  buildings
• 7. Retail Access and boundaries. Marketing.
• 8. Banking Endowment growth Cost controls
• 9. Healthcare Pandemic threat. Operations.
• 10. Education Cost of keeping up best
  practices..
• C. Governing
• 11. Cities Town gown relationship.
• 12. States Development partnerships..
• 13. Nations Compliance and alignment.

25
Luxury Hotels as Holistic Service Systems All
the systems
http//www.youtube.com/watch?vHm7MeZlS5fo
26
Why Universities Matter GDP and Top 500
Strong Correlation (2009 Data) National GDP and
University Rankings
http//www.upload-it.fr/files/1513639149/graph.htm
l
27
Accelerating Innovation Create Ideal or
Reference Models
CITIES/METRO REGIONS Universities Key to
Long-Term Economic Development
UNIVERSITIES Research Centers Real-World
Systems
28
Edu-Impact.Com
When we combined the impact of Harvards direct
spending on payroll, purchasing and construction
the indirect impact of University spending
and the direct and indirect impact of off-campus
spending by Harvard students we can estimate
that Harvard directly and indirectly accounted
for nearly 4.8 billion in economic activity in
the Boston area in fiscal year 2008, and more
than 44,000 jobs.
29
Urban-Age.Net
Currently, the worlds top 30 cities generate 80
of the worlds wealth. The Urban
Age For the first time in history
more than 50 the earths population live in
cities - by 2050 it will be 75 The Endless City
30
Population growth per hour in major cities
31

• World Population Service System Scaling

32

• Thank-You! Questions?

Instrumented, Interconnected, Intelligent
Lets build a Smarter Planet. IBM If we are
going to build a smarter planet, lets start by
building smarter cities CityForward.org Univer
sities are major employers in cities and key to
urban sustainability. Coalition of USU Cities
learning from cities learning from cities.
Fundacion Metropoli The future is already here
It is just not evenly distributed. Gibson The
best way to predict the future is to create
it/invent it. Moliere/Kay Real-world problems
may not/refuse to respect discipline boundaries.
Popper/Spohrer Todays problems may come from
yesterdays solutions. Senge History is a
race between education and catastrophe. H.G.
Wells The future is born in universities.
Kurilov Think global, act local. Geddes
Dr. James (Jim) C. Spohrer Director, IBM
University Programs (IBM UP) WW spohrer_at_us.ibm.com

33
Vision for the Educational Continuum
The Educational Continuum
http//www-935.ibm.com/services/us/gbs/bus/html/ed
ucation-for-a-smarter-planet.html
33
34
Fun Learn CityInvesting with CityOne Game
Serious Game to teach problem solving for real
issues in key industries, helping companies to
learn how to work smarter. Energy, Water,
Banking, Retail
http//www.ibm.com/cityone
35
Priority 1 Urban Sustainability Service
Innovation Centers

• A. Research Holistic Modeling Analytics of
  Service Systems
• Modeling and simulating cities will push
  state-of-the-art capabilities for planning
  interventions in complex system of service
  systems
• Includes maturity models of cities, their
  analytics capabilities, and city-university
  interactions
• Provides an interdisciplinary integration point
  for many other university research centers that
  study one specialized type of system
• Real-world data and advanced analytic tools are
  increasingly available
• B. Education STEM (Science Tech Engineering
  Math) Pipeline LLL
• City simulation and intervention planning tools
  can engage high school students and build STEM
  skills of the human-made world (service systems)
• Role-playing games can prepare students for
  real-world projects
• LLL Life Long Learning
• C. Entrepreneurship Job Creation
• City modeling and intervention planning tools can
  engage university
• students and build entrepreneurial skills
• Grand challenge competitions can lead to new
  enterprises

36
Teaching SSMED

• Service ManagementOperations, Strategy,and
  Information Technology
• By Fitzsimmons and Fitzsimmons, UTexas

• Fitzsimmons Fitzsimmons
• Graduate Students
• Schools of Engineering Businesses
• Teboul
• Undergraduates
• Schools of Business Social Sciences
• Busy execs (4 hour read)
• Ricketts
• Practitioners
• Manufacturers In Transition
• And 200 other books
• Zeithaml, Bitner, Gremler Gronross, Chase,
  Jacobs, Aquilano Davis, Heineke Heskett,
  Sasser, Schlesingher Sampson Lovelock, Wirtz,
  Chew Alter Baldwin, Clark Beinhocker Berry
  Bryson, Daniels, Warf Checkland, Holwell
  Cooper,Edgett Hopp, Spearman Womack, Jones
  Johnston Heizer, Render Milgrom, Roberts
  Norman Pine, Gilmore Sterman Weinberg Woods,
  Degramo Wooldridge Wright etc.
• URL http//www.cob.sjsu.edu/ssme/refmenu.asp

• Service Is Front StagePositioning services
  forvalue advantage
• By James Teboul, INSEAD

• Reaching the Goal How Managers Improve a
  Services Business Using Goldratts Theory of
  Constraints
• By John Ricketts, IBM

37
Service-dominant logic

• Service is the application of competences for the
  benefit of another entity
• 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

Vargo, S. L. Lusch, R. F. (2004). Evolving to
a new dominant logic for marketing. Journal of
Marketing, 68, 1 17.
38
What is value?

• Value depends on the capabilities a system has
  to survive and create beneficial change in its
  environment.
• Taking advantage of the service another system
  offers means incorporating improved capabilities.
  
• Value can be defined as system improvement in an
  environment.
• All ways that systems work together to improve
  or enhance one anothers capabilities can be seen
  as being value creating.

Vargo, S. L., Maglio, P. P., and Akaka, M. A.
(2008). On value and value co-creation A
service systems and service logic perspective.
European Management Journal, 26(3), 145-152.
39
What is a service system?

• Service involves at least two entities applying
  competences and making use of individual and
  shared resources for mutual benefit.
• We call such interacting entities service
  systems.

Spohrer, J., Maglio, P. P., Bailey, J. Gruhl,
D. (2007). Steps toward a science of service
systems. Computer, 40, 71-77.
40
Resources are the building blocks of service
systems
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)
Formal service systems can contract Informal
service systems can promise/commit Trends
Countertrends (Evolve and Balance) Informal ltgt
Formal Social ltgt Economic Political ltgt
Legal Routine Cognitive Labor ltgt
Computation Routine Physical Labor ltgt
Technology Transportation (Atoms) ltgt
Communication (Bits) Qualitative (Tacit) ltgt
Quantitative (Explicit)
Spohrer, J Maglio, P. P. (2009) Service
Science Toward a Smarter Planet. In
Introduction to Service Engineering. Editors
Karwowski Salvendy. Wiley. Hoboken, NJ..
41
Value propositions are the building blocks of
service system networks
Second foundational premise of service
science 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 perspecti
ves are customer, provider, authority, and
competitor
Value propositions coordinate motivate resource
access
Stakeholder Perspective (the players) Measure Impacted Pricing Decision Basic Questions Value Proposition Reasoning
1.Customer Quality (Revenue) Value Based Should we? (offer it) Model of customer Do customers want it? Is there a market? How large? Growth rate?
2.Provider Productivity (Profit) Cost Plus Can we? (deliver it) Model of self Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?
3.Authority Compliance (Taxes and Fines) Regulated May we? (offer and deliver it) Model of authority Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?
4.Competitor (Substitute) Sustainable Innovation (Market share) Strategic Will we? (invest to make it so) Model of competitor Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?
Spohrer, J Maglio, P. P. (2009) Service
Science Toward a Smarter Planet. In
Introduction to Service Engineering. Editors
Karwowski Salvendy. Wiley. Hoboken, NJ..
42
Access rights are the building blocks of service
system ecology
Third foundational premise of service
science Service system entities reconfigure
access rights to resources by mutually agreed
to value propositions

• 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.)

Spohrer, J Maglio, P. P. (2009) Service
Science Toward a Smarter Planet. In
Introduction to Service Engineering. Editors
Karwowski Salvendy. Wiley. Hoboken, NJ..
43
Premises of service science What service systems
do
Service system entities dynamically configure
(transform) four types of resources Service
system entities calculate value from multiple
stakeholder perspectives Service system
entities reconfigure access rights to resources
by mutually agreed to value propositions
Stakeholder Perspective Measure Impacted Pricing Questions Reasoning
1.Customer Quality Value Based Should we? Model of customer Do customers want it?
2.Provider Productivity Cost Plus Can we? Model of self Does it play to our strengths?
3.Authority Compliance Regulated May we? Model of authority Is it legal?
4.Competitor Sustainable Innovation Strategic Will we? Model of competitor Does it put us ahead?
Spohrer, J Maglio, P. P. (2009) Service
Science Toward a Smarter Planet. In
Introduction to Service Engineering. Editors
Karwowski Salvendy. Wiley. Hoboken, NJ..