07.09.09
Service; a new religion?
Those that are reading this blog are likely amongst the already converted that clearly understands the importance of service in the world economy. Service now accounts for the majority of the GDP and jobs. Service today is being somewhat redefined in eyes of businesses that used to think of themselves as a just producer of goods rather than a creator of customer value. More than ever companies now realize that service is becoming a larger part of their overall business success. Today, most of the top public technology companies now see more than 50% of their revenues and profits come from services and not just product sales
We, at the Services Transformation and Innovation Group LLC, have been talking about how businesses need to innovate to become more of what we call a “Service Oriented Enterprise”™. People and businesses buy things for the value that they create not just to own an asset. However, most businesses of today learned to operate under business models designed by the manufacturing sector and espoused by Adam Smith in the 1700’s. These outdated business models built highly specialized and independently operating silos within most companies. These silos tend to not have the customer in mind and do not collaborate well to create value for the customers. We think that these models need to change in this new services based economy in which we live today. Examples of what we think of as Service Oriented Enterprise models exist today where major manufacturers of hard goods like tractors and jet engines are selling these goods not as products WITH services but are selling products AS services. For example, an airline can buy “power by hour” and not have own the jet engines used on their airliners. They pay for a service that provides them needed propulsion as they consume it and only as it creates value for their business.
While we have written in a lot more detail about the Services Oriented Enterprise™, (for examples see www.servtrans.com ) the key success factor in making these business transformations work has been an integrated enterprise that effectively leverages technology, process and people to co-create value for, and with, their customers. We were partially inspired by ideas in a book by James Teboul of INSEAD who wrote “Service is Front Stage, Positioning services for value advantage”. In that book, Professor Teboul talks about how front end systems like CRM and back end systems like ERP need to become more interconnected and how much of the service experience comes from the whole enterprise and not just the front line people and systems.
The other day, I was invited to attend a “Enterprise Service Transformation Summit” ( http://www.opnevents.com/programs/transformation/ ) hosted by Oracle, IBM and Motorola in Chicago on July 15th. I was delighted to see the agenda and subject matter that fit so well into what I think represents the future of business. IBM has certainly been at the forefront of the service transformation movements and leading the world in creating thought leadership and research for Service Science. While Oracle and IBM have collaborated before on Service Science initiatives as founders of the Services Research and Innovation Initiatives (www.thesrii.org ), this summit is an entirely new and welcomed commercial collaboration. More importantly, I am seeing the message that service transformation from an Oracle perspective is not just about effective use of CRM systems but in fact the effective use of the entire enterprise technology and business process elements to deliver customer value. This holistic approach is something that we preach to our clients all the time. Oracle has been quietly ( and NOT so quietly ) filling in their portfolio to position themselves as perhaps the unique technology vendor that can best integrate the end to end enterprise that will facilitate the new approaches to the service economy. The subject matter of this summit and the case studies that will be presented were not possible even just a few years ago. I would recommend to any of my clients who want to see what is possible in transforming to a more service oriented business model that they should try to attend this event and encourage the organizers to do more. Yes, it will certainly be a commercial for sponsoring companies but it is also a good learning opportunity.
I have been in the services industry for over 30 years and service is just now getting some of the recognition from businesses, Wall Street and governments that it deserves. In the spirit of full disclosure here, I do have to tell you that I have worked for both IBM and Oracle in the past. I still participate with IBM research in promoting SSME (Service Science Management and Engineering) efforts in order to drive research and education in the service profession. Neither I nor my company is directly affiliated with this event. I am writing about it because I am delighted to see and hear about more companies that are getting the new services religion. Business today is not about producing better, faster and cheaper widgets. It is about producing value for both the shareholders and the customers for whom they serve. For me service is not the new religion. The new religion is being fanatical about driving and participating in customer success. The term “service” is just a good proxy for now.
That’s what I think, what is your opinion?
