Lecture in the iMinds-SMIT VUB Service Science Lecture Series

UGentMIS research group (http://www.mis.ugent.be)
Department of Business Informatics and Operations Management May 13, 2014
Understanding Service Science
through Conceptual Modeling
Geert Poels
Professor of Management Information Systems
Academic member of the Center for Service Intelligence

Department of Business Informatics and Operations Management 2
Contents
 The context
 Purpose and principles of
 The problem
 How to conceptualize service to facilitate inter-disciplinary
research?
 How to achieve a shared of service
concepts?
 The solution approach
of service concepts based on
descriptive theories of service system

Context: Service Science
Why is it needed?
What is it (and what is it not)?
How is it different from other service research
disciplines?
Let’s start with creating a common
understanding of the topic of interest..

Growing importance of service sector
 Agriculture -> Manufacturing -> Services
 Shift in % of GDP
 Shift in % of employment
 Both developed and developing countries (though
generally slower for the latter)
 + many services in disguise in industry/construction
(= ‘servitization’)
 E.g., from producing/selling jet engines to
operating/maintaining the engines and charging airlines
for propulsion usage (= ‘propulsion as a service’ )

Need for service (system) innovation
 Increasing scale, complexity, and connectedness of
service systems
 Globalisation and technology drivers
 Urbanisation and aging population
 Environmental awareness and sustainability
 Increasing demand for service quality/productivity
 Rising demand for service innovation
 How to invest in service systems to sustainably improve
key performance indicators?
 How to develop new service offerings, together with
creative value propositions and improved service systems?

Knowledge to inform service innovation
 Better understanding of service systems is required
 What are the architectures of service systems?
 How can service systems be understood in terms of a small number
of building blocks that get combined to reflect the observed
variety?
 How might architectures and building blocks help us understand
the origins, lifecycles and sustainability of service systems?
 How can service systems be optimised to interact and co-create
value?
 Why do interactions within and between service systems lead to
particular outcomes?

Need for service research
 Service research (& development) is lagging behind
 Until early 80ties research dominated by product-centric
concepts and theories
 Despite service sector accounts for > 2/3 GDP and jobs,
investment in services < 1/3 R&D spending
 Service research is strongly fragmented
 Service marketing
 Service operations
 Service management
 Service HRM
 Service sourcing
 Service pricing
 Service economics
 Service engineering
 Service design
 Service computing
 Service innovation
 Service business models
 Healthcare services
 Nursing services
 Hospitality services
 Human services
 Transformative services
 …

Product over service
Illustration: Business Eng. studies @UGent
 Product(ion)-related courses
• Production Technology, Operations Management,
Materials Science, Advanced Production Management,
Supply Chain Management, Total Quality Management,
…
 Service-related courses
• Managing Service Organizations

Need for a systemic view
Without a clear understanding of the domain and
how it relates to existing theories, knowledge will
continue to be fragmented
 Specialisation remains important, but one shortcoming is
that each discipline tends to focus on particular
configurations of resources
 The key to understanding service systems is not just to
examine one aspect of service but rather to consider
service as a system of interacting parts
 The hard work of creating an integrated theory that spans
many disciplines has not been done.

Distinctive object of study
Structure
•Service System
Behaviour
•Value Co-Creation
“The service system is the basic abstraction of
Service Science.”
“Service Science is the study of value co-creation
phenomena.”

Landmarks in history of Service Science
 2004 IBM calls for systematic approach to service
research and education
 Driven by its own transformation from a hardware
manufacturer to a service business (offering ‘solutions’
instead of technology)
 Driven by expected future shortage of adaptive innovators,
i.e., professionals with knowledge and skills required for
service innovation (= ‘T-shaped professional’)
 2007 launch of SSME at Cambridge symposium
 2012

Need for knowledge integration
 Service Science, Management, and Engineering
(SSME) is an integrative service research discipline
 Distinct field looking for a deeper level of knowledge
integration
 We have pieces of knowledge today, but they are not
integrated into a unified whole. Service Science provides
motivation, methods and skills for integration.
 Holism instead of reductionism in the approach to study
service
=> Service Science as a specialisation of Systems Science

Looking for a foundational theory
 Creating a truly integrated theory of service systems
 Developing a normative view on how service systems can
be described and their behaviour explained
 Discovering underlying principles of complex service
systems and the value propositions that interconnect them
 Address grand research challenges that span multiple
disciplines
 Providing structure and rigour for building a widely
accepted and coherent body of knowledge to support
innovation in service systems

Fundamental and applied research
 Nature of Service Science theory?
 Descriptive
 Explanatory (and predictive)
 Prescriptive (and applicable)

Not just a fancy name for..
 Given its foundational principles, Service Science is
not
 Service-Oriented Computing (SOC), Service-Oriented
Architecture (SOA), Service-Oriented Software Engineering
(SOSE)
 Service-Oriented Business Architecture (SOBA), Service-
Oriented Enterprise Engineering (SOEE)
• i.e., the application of SOC, SOA and SOSE to business and
organisational design (similar to the design of IT infrastructures
and software applications)
 Multidisciplinary research in service management

“As a distinct interdisciplinary field, Service Science
needs an idiosyncratic and unifying paradigm to
provide identity and discriminate it from its many
contributing but separate service research disciplines”
“Chief among the challenges that lay ahead is the
challenge of developing a shared vocabulary that can
be used across disciplines to describe the great variety
of service systems”
The problem: common understanding

Underlying worldview
Service-
Dominant
Logic
Systems
thinking
Study of value
co-creation
phenomena in
service
systems

Common understanding?
Service
System
Worldview
Service
Dominant
Logic
Service
Quality
Gap
Model
Unified
Services
Theory
Service
System
Framework
Work
System
Theory
General
Service
Model
DEFINITION
OF
CONCEPTS?
RELEVANCE
OF
CONCEPTS?
COMPLETENESS
OF CONCEPTS?

But what is service?
“An act or performance that one party can offer to another that
is essentially intangible and does not result in the ownership of
anything.”
“A provider-client interaction that creates and captures value.”
“Value-creating support to another party’s practices.”
“The application of specialized competences (knowledge and
skills) through deeds, processes and performances for the
benefit of another entity or the entity itself.”
“Acts performed for the benefit of others.”

“A change in the condition of a person, or a good belonging to
some economic entity, brought about as a result of some other
entity, with the approval of the first person or economic entity.”
“A time-perishable, intangible experience performed for a
customer acting in the role of a co-producer.”
“A simultaneous or near-simultaneous exchange of production
and consumption transformation in the experience and value
that customers receive from engagement with providers, and
intangibility in that goods are not exchanged.”

“A service is an economic resource as it is viewed as valuable by
some agent and can be transferred between agents”
“Service is a complex temporal entity consisting of a service
commitment and a service process”
“A service is generally implemented as a course-grained,
discoverable software entity that exists as a single instance and
interacts with applications and other services through a loosely
coupled (often asynchronous), message-based communication
model.”

Other confusion
 Service system
 Services are exchanged between service systems
 Services are exchanged within service systems
 Value co-creation
 Co-production based on individual customer inputs
 Overlap in time/space of provider and customer activities
 Provider facilitates value creation by customer
 Service exchange
 Benefits for one party, reciprocity in the exchange
 Benefits for both parties within same service

A solution approach: conceptual modeling
 Conceptual model
 Model of the concepts and their relations pertaining to
some domain of interest
 As a representation of the domain a conceptual model
serves the purposes of abstraction and visualisation
 It helps in understanding and analysing the domain (and
can act as a design for socially constructed domains)
 Our thesis: conceptual modelling helps clarifying
definitions of Service Science concepts and show
how they are interrelated

Towards a conceptual framework
 Clarify concepts using descriptive theories that offer
a comprehensive view of service
 Build a conceptual model (for the moment just as a
concept map) that includes and combines concepts
from the different theories, and identifies cross-
theoretical relations between concepts, but without
integrating the theories themselves
“Instead of assuming that particular definitions are right or
wrong, it is more useful to assume each definition makes
sense from a particular viewpoint or in a particular context”

Nature of theory (Gregor, MISQ 2006)
(I) Theory for
analyzing
(IV) Theory for
explaining and predic ng
(EP theory)
(V) Theory for design
and ac on
(III) Theory for
predic ng
(II) Theory for
explaining

Theories of service
 Service-Dominant Logic
 Marketing / philosophical basis of Service Science
 Focus on customer benefits creation
 Unified Services Theory
 Operations Management
 Analyzing efficiency and quality of service production
process

 Work system metamodel (Work System Theory)
 Information Systems (but transdisciplinary)
 Systemic view of service within organisational context
 Operational model for analyzing form, function and
environment (from systems engineering perspective)
 Resource-Service-System model (based on REA
ontology)
 Accounting (Information Systems)
 Focus on economic exchange of service
 Analyzing various business aspects of service systems

Service-Dominant Logic
 IHIP characterization of services, providing basis for
separate service research disciplines, is deficient
 Service-Dominant Logic = counter-movement
 All economic exchange is exchange of service for service
 Service is application of competences for benefit of
someone else
 Both goods and services (in traditional sense) can be used
in this act
 Benefits are determined by the service beneficiary in
terms of value-in-use and value-in-context

 Foundational premises of Service-Dominant Logic
FP1: Service is the fundamental basis of exchange.
FP2: Indirect exchange masks the fundamental basis of exchange.
FP3: Goods are a distribution mechanism for service provision.
FP4: Operant resources are the fundamental source of competitive advantage.
FP5: All economies are service economies.
FP6: The customer is always a co-creator of value.
FP7: The enterprise cannot deliver value, but only offer value propositions.
FP8: A service-centered view is inherently customer oriented and relational.
FP9: All social and economic actors are resource integrators.
FP10: Value is always uniquely and phenomenologically determined by the
beneficiary.

Concept map

Unified Services Theory
 Focus on service production process
 Distinguishes service and non-service production
processes (>< Service-Dominant Logic)
 Service process is a production process in which each
individual consumer provides significant inputs
 Operational implications address challenges unique
to service processes (due to presence of consumer
inputs)
 Value extraction is performed by consumers in
consumption process

Concept map

Integrated concept map

Work system metamodel
 Work system
 A system in which human participants and/or machines
perform work (processes and activities) using information,
technology, and other resources to produce specific
products/services for specific internal and/or external
customers
 Service
 An act performed to produce outcomes for the benefit of
others
 Most work systems are service systems

Concept map

Resource-Service-System model
 Service-Dominant Logic interpretation of the
Resource-Event-Agent (REA) model of economic
exchange
 Economic exchange results from the economic reciprocal
actions (called economic events) of independent entities
(called economic agents) that provide each other the
resources that they control (called economic resources)
 Economic resources = operant/operand resources
 Economic event = service
 Economic agent = service system entity
 Reciprocity relation = service exchange

Concept map

Conceptual clarification?
 Service
 Service as process (SDL, WSM, RSS)
• Application of competences for benefit of others (SDL, RSS)
• Operant resources acting upon operand resources
(SDL, RSS)
• Acts to produce outcomes for benefit of others (WSM)
 Service production process
• Individual consumer inputs required (UST)

 Value co-creation
 Overlap in time/space of provider and consumer
activities (WSM) – optional for service
 Integration of provided resources (SDL, RSS)
• Required for service
• But, does not imply overlapping activities
 Co-production in service process / service system
activities
 Customer participant - optional (WSM)
 Consumer input to process required, but must not be
consumer himself (UST)

 Service system
 Everything needed to perform service (WSM)
 Contains service process (UST) consisting of activities
(WSM, RSS)
 Employed by service system entity, which can be a
resource controlled by a service supra-system (RSS)
 Service Exchange
 In scope (SDL, RSS) versus out scope (WSM, UST)
 Intention of mutually beneficial value co-creation (RSS)

Department of Business Informatics and Operations Management May 13, 2014
Back-up slides

T-shaped professional

Principle of interdisciplinary research
 SSME accepts disciplinary barriers between academic
fields and service research disciplines, but aims at
building bridges between them

 Not by multidisciplinary research aimed at embracing all
relevant service research disciplines

 Not by multidisciplinary research focused on a selected set
of core elements of existing service research disciplines

 But by interdisciplinary research attempting to create new
knowledge to bridge existing service research disciplines,
based on transdisciplinary and crossdisciplinary
collaboration.

concept definition
multidisciplinary Creation of new knowledge that adds to multiple existing
disciplines, where the knowledge of individual disciplines is seen
as separate and additive to each other
interdisciplinary Creation of new knowledge that bridges, connects, or integrates
individual disciplines
transdisciplinary Transcending or extending beyond the knowledge of existing
disciplines
crossdisciplinary Knowledge of one discipline is used as a lens through which
another discipline is studied

The Service System worldview
• Service System Entity
• Resource
• Focal resource
• Access Right
• Service System Ecology
• Interaction
• Value proposition based
• Governance mechanism based
• Outcome
• Measure
• Stakeholder

believe that the graphical model already helps in better understanding the service
system worldview as it shows how different concepts (should) relate to each other.
Therefore, we will explain the service system conceptualization on which the
ontology is based via the graphical conceptual model that we developed.
Fig. 2. Service system conceptual model
The diagram is overlaid with four coloured areas that further categorize the service
system concepts, mainly in function of their relationship with the service process, as
modelled in our ISPAR-based service process model [reference hidden for reviewers
- will be added in case of paper acceptance]. Core concepts are those that play a role

Useful for framing research challenges
How to represent work in service systems and measure
quality, productivity, compliance and innovation?

How does an ecology of service system entities evolve
to remain efficient, effective and viable?
What are the dynamics and laws that govern
networks of service system entities?

Which interaction episodes result in the favourable
outcome of mutual value co-creation?
How to design service processes in order to minimize
the chance of unfavourable outcomes?

How to design profitable and sustainable service business models?
How to strategically source the right resources for such business models?
How to develop the right service culture and mindset for successful service business?

Lecture in the iMinds-SMIT VUB Service Science Lecture Series

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