infoTECH Feature

October 01, 2009

Attention IT Service Providers: Scientific Rigor Required

By TMCnet Special Guest
Eamonn Kennedy, Services Expert, Ovum IT
(Editor’s Note: The new Ovum (News - Alert) IT service draws on three expert research teams, which collaborate to provide unparalleled insight and strategic support for our clients. The articles in this series, from Ovum, Butler Group and Datamonitor Technology team members, reflect Ovum’s philosophy of analysis and advice based not on IT for its own sake but on how IT adds value to a business. In this installment, services expert Eamonn Kennedy describes how the rapid shift toward service-dominant economies has spawned a movement to establish service science as a new academic discipline devoted to managing such systems. IT services providers, he argues, must get ahead of this curve if they wish to be leaders.)
 
The technology services industry is one part of an increasingly service-oriented world.
 
In recent years, awareness has been building that the knowledge required to understand service systems is not as advanced as it needs to be; the development of knowledge that is ultimately applied in industry has not kept pace with the shift to service-dominant economies. In response, a movement has grown to establish service science as a distinct academic discipline fully supported by partners in industry and government. To their great credit, some players in the technology industry have been active in encouraging this progress. It remains an emerging field.
 
Companies in the technology services sector fondly refer to themselves as ‘leading IT service providers’. If they want to lead anything, they must pay attention to the future of their industry and support the emergence of service science.
 
Diversity Gives Rise to Complexity
 
The technology services industry – if we allow ourselves such a generalization of players, markets and offerings – is a grouping characterized by vast diversity.
 
It is an industry often described as complex, sometimes portrayed as sophisticated. Regardless, leading players exhibit diversity on many levels:
 
  • They have built their businesses from vastly different backgrounds: technology inventors, professional service firms and IT body-shoppers.
 
  • They pursue a range of different business models: pure services, services-led, services that complement core products, sub-contractors and prime contractors.
 
  • They are highly international in nature: export-led offshorers, global players, ‘onshore’ companies with large workforces in countries where senior management are rarely present.
 
  • They hold substantially different attitudes to risk, sometimes within their own companies: from day-rated projects to long-term commitments with uncertain profitability.
 
  • They compete while enjoying or enduring vastly different financial fortunes: from multi-billion-dollar global firms with consistent profits to under-scale captives dependent on their parent companies for sustenance.
 
  • What could be more fertile ground for a movement that promises to bring order to such chaos, to show strategic direction to companies mired in the complexity of their diversity? Such a movement does exist and it’s called service science.
 
Stakeholder Collaboration Is Vital
 
Among industry participants, technology-related firms played leading roles in the development of service science towards mainstream acceptance. The list includes such companies as IBM, HP, BT, Cisco, Microsoft, SAP (News - Alert) and Oracle. But interest in service science extends well beyond technology services, and includes such non-IT-related companies as law firm Clifford Chance; financial services firms HSBC, Royal Bank of Scotland and JP Morgan (News - Alert); CPG firms Tesco, Unilever and Marks & Spencer; and engineering firms Arup and Laing O’Rourke.
 
That is to say nothing of the two other stakeholder groups – academia and government – that are central to the development of service science and the realization of its potential.
 
The common factor linking the interest of all stakeholder groups is the increasingly important role of services in modern economies:
 
  • Most developed economies today are service-led economies, heavily reliant on industries such as financial services, travel, hospitality, retail and professional services. In the US, the services sector accounts for more than 80 percent of economic output (according to the US Bureau of Economic Analysis); in the United Kingdom, the figure is above 70 percent (Office for National Statistics).
 
  • Large commercial organisations, many with a manufacturing heritage, see the development of service businesses as an important element in their future success. This leads to concepts such as the ‘servitization’ of manufacturing. On the other hand, the need for scalability and efficiency leads to the productization of services.
 
  • The international portability of many types of service (for example, financial transaction processing, IT application development) presents opportunities and challenges for governments with respect to economic development and social welfare. Generally speaking, governments in developed economies need to defend against this portability by up-skilling their workforces or promoting innovation in domestic service capability, while governments in developing economies promote their advantages as locations from which to deliver such services.
 
As with other aspects of technological, economic or societal change, academia is motivated to not only understand this shift towards services but also to engage in teaching and research that develops knowledge and tools for use by affected parties.
 
Making Service Science Mainstream
 
All of the above hints at some of the key features of service science: it is an emerging discipline; some of its foundations lie in existing fields of study; building on these sources to create a distinct field of study should expand the frontiers of our understanding of services and how to create value with them.
 
Like the technology services industry, service science is a complex field due to its underlying diversity. The introduction of scientific rigor, however, to questions of strategy, leadership, design and management in services is welcome. It holds a lot of promise for the technology services industry and exerts influence over what will be deemed wise courses of action for such firms into the future.
 
There is a lot of work to do before service science can be considered mainstream, but progress to date can be seen in academic journals, articles and textbooks, and in teaching programs at more than 250 universities – all tangible outcomes from financial and intellectual investments made thus far.
 
For our part, Ovum is and will continue to be an active member of the service science community, taking part in debates, engaging with stakeholders, driving scientific rigor and highlighting relevant developments. We intend to draw from and contribute to a better understanding of our complex industry, and in so doing to provide our clients with guidance based on a firm foundation of knowledge, not guesswork.

TMCnet publishes expert commentary on various telecommunications, IT, call center, CRM and other technology-related topics. Are you an expert in one of these fields, and interested in having your perspective published on a site that gets several million unique visitors each month? Get in touch.

Edited by Michael Dinan
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