Service system
Encyclopedia
A service system is a configuration of technology and organizational networks designed to deliver services that satisfy the needs, wants, or aspirations of customers.
, service operations, services marketing
, service engineering, and service design
literature. While the term frequently appears, it is rarely defined.
One recent definition of a service system is a value coproduction configuration of people, technology, internal and external service systems connected via value propositions, and shared information (language, laws, measures, etc.). The smallest service system is a single person
and the largest service system is the world economy
. The external service system of the global economy is considered to be ecosystem services
. Service systems can be characterized by the value
that results from interaction
between service systems, whether the interactions are between people, businesses, or nations. Most service system interactions aspire to be win-win, non-coercive, and non-intrusive. However, some service systems may perform coercive service activities. For example, agents of the state may use coercion in accordance with laws of the land.
A service system worldview is a system of systems
that interact via value propositions.
The earliest known usage of the phrase service system in a book title is:
Stochastic Service Systems. John Riordan. Wiley, New York, 1962. x + 139 pp. Illus.
"Anyone seeking an introduction to queueing theory..."
Also a Science article was published by John Riordan
http://www.sciencemag.org/cgi/content/citation/137/3532/742-a
Science 7 September 1962: Vol. 137. no. 3532, p. 742
Usages from Quinn and Paquette (1990) Technology in Services: Creating Organizational Revolutions. MIT Sloan Management Review. 31(2).
"Properly designed service technology systems allow relatively inexperienced people to perform very sophisticated tasks quickly — vaulting them over normal learning curve delays."
Examples: "Domino's Pizza … industrial engineering and food science research automated the making of a pizza to as near a science as possible, eliminating much of the drudgery in such tasks, yet ensuring higher quality and uniformity. Then, finding that its store managers were still spending fifteen to twenty hours per week on paperwork, Domino's introduced NCR "mini-tower" systems at its stores to handle all of the ordering, payroll, marketing, cash flow, inventory, and work control functions … Federal Express … Its DADS (computer aided delivery) and COSMOS II(automated tracking) systems give FedEx maximum responsiveness."
Inferred definition: Service systems, also known as service technology systems, are designed to allow inexperienced people to perform very sophisticated service provisioning tasks quickly.
Usages from Cook, Goh, and Chung (1999) Service Typologies: A State of the Art Survey. Production and Operations Management, 8(3).
"Customer contact is one of the primary criteria used to classify service operations and refers to the physical presence of the customers in the service system during the provision of the service... Service systems can be placed on a continuum that ranges from high customer contact to low customer contact during the creation of the service."
"Capital intensity of the service system also serves as the basis of classification... The capital intensity of the service system ranges from low to high."
"The level of customer involvement in the creation of a service is also a dimension used to classify services... Customer involvement means the level of interaction the customer has with the service system and the level to which the customer can actually affect the service delivery process."
"Customer satisfaction is the most basic concept underlying TQM. It is, therefore, of critical importance that the service system and the services it is designed to deliver satisfy the needs and wants of the organization's customers."
"Not only does one have to consider the implications on product design and how this affects marketing, but is also may have significant implications for the design of the service system. This illustrates the need to address interactions between the marketing and operations functions and to integrate these functions for the betterment of the firm."
"The environment in which a service organization operates will be instrumental in determining how the service system, as well as the services themselves, should be designed... Global service organizations must also appreciate and understand local customers, laws, and culture to successfully operate internationally."
Examples: "Pure services (e.g., health centers and personal services) represent the highest level of customer contact. Progressing down the continuum toward lower custom contact are mixed services (e.g., branch offices of post offices), quasimanufacturing (e.g., home office of banks), and manufacturing (e.g., automobile assembly plants)... ...When a client contracts with an architect to design a home, a relationship involving high customer involvement is created. On the other hand, a customer who has purchased an airline ticket has little opportunity for involvement in the service delivery or to impact how the service is going to be provided."
Inferred definition: Service systems are organizations designed to delivery services that satisfy the needs and wants of the organization's customers. Marketing, operations, and global environment considerations have significant implications for the design of a service system. Three criteria used to classify service systems include: customer contact, capital intensity, and level of customer involvement.
Usages from Lusch, Vargo, and Malter (2006) Marketing as Service-Exchange: Taking a Leadership Role in Global Marketing Management. Organizational Dynamics, 35(3).
"Stated alternatively, service-dominant logic offers opportunity for the organization to focus on selling a flow of service. This would encourage it to determine the optimal configuration of goods, if any, for a level of service, the optimal organization or network configuration to maintain the service, and the optimal payment mechanism in exchange for providing the service. That is, the organization is encouraged to think about the service system."
Examples: "For example, if a heating and air conditioning equipment manufacturer views itself in the temperature control business, then it could decide to sell climate control for a building rather than just mechanical devices. It could charge per cubic foot of climate maintained on a monthly or annual basis and/or through a payment plan involving gain sharing, in which costs are reduced as system performance rises, thus benefiting financially both the firm and the customer. A seller entering into such an arrangement has an incentive to look at everything about the building that will influence heating and cooling costs."
Inferred definition: Service systems are optimal configurations of goods, organizational networks, and payment mechanisms for providing a level of service.
Properly designed service systems employ technology or organizational networks that can allow relatively inexperienced people to perform very sophisticated tasks quickly — vaulting them over normal learning curve
delays. Ideally, empowerment
of both service provider employees and customers (often via self service) results from well designed service systems.
The language, norms, attitudes, and beliefs of the people that make up a service system may evolve over time, as people adjust to new circumstances. In this sense, service systems are a type of complex system
that is partially designed and partially evolving. Service systems are designed to deliver or provision services, but they often consume services as well.
Every service system is both a service provider
and a customer of multiple types of services. Because service systems are designed both in how they provision and consume services, services systems are often linked into a complex service value chain
or value network
where each link is a value proposition
. Service systems may be nested inside of service systems (e.g., staff and operating room unit inside a hospital that is part of a nationwide healthcare provider network).
Service system designers or architects often seek to exploit an economic complementarity
or network effect
to rapidly grow and scale up the service. For example, credit cards usage is part of a service system in which the more people and businesses that use and accept the credit cards, the more value the credit cards have to the provider and all stakeholders in the service system. Service system innovation often requires integrating technology innovation, business model (or value proposition) innovation, social-organizational innovation, and demand (new customer wants, needs, aspirations) innovation.
For example, a national service system may be designed with policies that enable more citizens (the customers of the nation) to become an entrepreneur
, and thereby create more innovation and wealth for the nation. Service systems may include payment
mechanisms for selecting a level of service to be provided (upfront or one time payment) or payment based on downstream value sharing or taxation derived from customers who received the benefit of the service (downstream or ongoing payment). Payments may also be in the form of credit (creative arts)
or other types of intangible value (see anthropological theories of value
and theory of value
).
Scope of the term
"Service system" is a term very frequently used in the service managementService management
Service management is integrated into supply chain management as the joint between the actual sales and the customer. The aim of high performance service management is to optimize the service-intensive supply chains, which are usually more complex than the typical finished-goods supply chain...
, service operations, services marketing
Services marketing
Services marketing is a sub field of marketing, which can be split into the two main areas of goods marketing and services marketing...
, service engineering, and service design
Service design
Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers....
literature. While the term frequently appears, it is rarely defined.
One recent definition of a service system is a value coproduction configuration of people, technology, internal and external service systems connected via value propositions, and shared information (language, laws, measures, etc.). The smallest service system is a single person
Person
A person is a human being, or an entity that has certain capacities or attributes strongly associated with being human , for example in a particular moral or legal context...
and the largest service system is the world economy
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....
. The external service system of the global economy is considered to be ecosystem services
Ecosystem services
Humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes...
. Service systems can be characterized by the value
Value (economics)
An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...
that results from interaction
Interaction
Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of interaction, as opposed to a one-way causal effect...
between service systems, whether the interactions are between people, businesses, or nations. Most service system interactions aspire to be win-win, non-coercive, and non-intrusive. However, some service systems may perform coercive service activities. For example, agents of the state may use coercion in accordance with laws of the land.
A service system worldview is a system of systems
System of systems
System of systems is a collection of task-oriented or dedicated systems that pool their resources and capabilities together to create a new, more complex system which offers more functionality and performance than simply the sum of the constituent systems...
that interact via value propositions.
History
Usages of the term service system (bold added) are provided below:The earliest known usage of the phrase service system in a book title is:
Stochastic Service Systems. John Riordan. Wiley, New York, 1962. x + 139 pp. Illus.
"Anyone seeking an introduction to queueing theory..."
Also a Science article was published by John Riordan
http://www.sciencemag.org/cgi/content/citation/137/3532/742-a
Science 7 September 1962: Vol. 137. no. 3532, p. 742
Usages from Quinn and Paquette (1990) Technology in Services: Creating Organizational Revolutions. MIT Sloan Management Review. 31(2).
"Properly designed service technology systems allow relatively inexperienced people to perform very sophisticated tasks quickly — vaulting them over normal learning curve delays."
Examples: "Domino's Pizza … industrial engineering and food science research automated the making of a pizza to as near a science as possible, eliminating much of the drudgery in such tasks, yet ensuring higher quality and uniformity. Then, finding that its store managers were still spending fifteen to twenty hours per week on paperwork, Domino's introduced NCR "mini-tower" systems at its stores to handle all of the ordering, payroll, marketing, cash flow, inventory, and work control functions … Federal Express … Its DADS (computer aided delivery) and COSMOS II(automated tracking) systems give FedEx maximum responsiveness."
Inferred definition: Service systems, also known as service technology systems, are designed to allow inexperienced people to perform very sophisticated service provisioning tasks quickly.
Usages from Cook, Goh, and Chung (1999) Service Typologies: A State of the Art Survey. Production and Operations Management, 8(3).
"Customer contact is one of the primary criteria used to classify service operations and refers to the physical presence of the customers in the service system during the provision of the service... Service systems can be placed on a continuum that ranges from high customer contact to low customer contact during the creation of the service."
"Capital intensity of the service system also serves as the basis of classification... The capital intensity of the service system ranges from low to high."
"The level of customer involvement in the creation of a service is also a dimension used to classify services... Customer involvement means the level of interaction the customer has with the service system and the level to which the customer can actually affect the service delivery process."
"Customer satisfaction is the most basic concept underlying TQM. It is, therefore, of critical importance that the service system and the services it is designed to deliver satisfy the needs and wants of the organization's customers."
"Not only does one have to consider the implications on product design and how this affects marketing, but is also may have significant implications for the design of the service system. This illustrates the need to address interactions between the marketing and operations functions and to integrate these functions for the betterment of the firm."
"The environment in which a service organization operates will be instrumental in determining how the service system, as well as the services themselves, should be designed... Global service organizations must also appreciate and understand local customers, laws, and culture to successfully operate internationally."
Examples: "Pure services (e.g., health centers and personal services) represent the highest level of customer contact. Progressing down the continuum toward lower custom contact are mixed services (e.g., branch offices of post offices), quasimanufacturing (e.g., home office of banks), and manufacturing (e.g., automobile assembly plants)... ...When a client contracts with an architect to design a home, a relationship involving high customer involvement is created. On the other hand, a customer who has purchased an airline ticket has little opportunity for involvement in the service delivery or to impact how the service is going to be provided."
Inferred definition: Service systems are organizations designed to delivery services that satisfy the needs and wants of the organization's customers. Marketing, operations, and global environment considerations have significant implications for the design of a service system. Three criteria used to classify service systems include: customer contact, capital intensity, and level of customer involvement.
Usages from Lusch, Vargo, and Malter (2006) Marketing as Service-Exchange: Taking a Leadership Role in Global Marketing Management. Organizational Dynamics, 35(3).
"Stated alternatively, service-dominant logic offers opportunity for the organization to focus on selling a flow of service. This would encourage it to determine the optimal configuration of goods, if any, for a level of service, the optimal organization or network configuration to maintain the service, and the optimal payment mechanism in exchange for providing the service. That is, the organization is encouraged to think about the service system."
Examples: "For example, if a heating and air conditioning equipment manufacturer views itself in the temperature control business, then it could decide to sell climate control for a building rather than just mechanical devices. It could charge per cubic foot of climate maintained on a monthly or annual basis and/or through a payment plan involving gain sharing, in which costs are reduced as system performance rises, thus benefiting financially both the firm and the customer. A seller entering into such an arrangement has an incentive to look at everything about the building that will influence heating and cooling costs."
Inferred definition: Service systems are optimal configurations of goods, organizational networks, and payment mechanisms for providing a level of service.
Design of service systems
Marketing, operations, and global environment considerations have significant implications for the design of a service system. Three criteria used to classify service systems include:- customer contact,
- capital intensity, and
- level of customer involvement.
Properly designed service systems employ technology or organizational networks that can allow relatively inexperienced people to perform very sophisticated tasks quickly — vaulting them over normal learning curve
Learning curve
A learning curve is a graphical representation of the changing rate of learning for a given activity or tool. Typically, the increase in retention of information is sharpest after the initial attempts, and then gradually evens out, meaning that less and less new information is retained after each...
delays. Ideally, empowerment
Empowerment
Empowerment refers to increasing the spiritual, political, social, racial, educational, gender or economic strength of individuals and communities...
of both service provider employees and customers (often via self service) results from well designed service systems.
Types of service systems
Service systems range from an individual person equipped with tools of the trade (e.g., architect, entrepreneur) to a portion of a government agency or business (e.g., branch office of a post office or bank) to complete multinational corporations and their information systems (e.g., Domino's Pizza, Federal Express). Hospitals, universities, cities, and national governments are designed service systems.The language, norms, attitudes, and beliefs of the people that make up a service system may evolve over time, as people adjust to new circumstances. In this sense, service systems are a type of complex system
Complex system
A complex system is a system composed of interconnected parts that as a whole exhibit one or more properties not obvious from the properties of the individual parts....
that is partially designed and partially evolving. Service systems are designed to deliver or provision services, but they often consume services as well.
Every service system is both a service provider
Service provider
A service provider is an entity that provides services to other entities. Usually, this refers to a business that provides subscription or web service to other businesses or individuals. Examples of these services include Internet access, Mobile phone operators, and web application hosting...
and a customer of multiple types of services. Because service systems are designed both in how they provision and consume services, services systems are often linked into a complex service value chain
Value chain
The value chain, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.-Firm Level:...
or value network
Value network
A value network is a business analysis perspective that describes social and technical resources within and between businesses. The nodes in a value network represent people . The nodes are connected by interactions that represent tangible and intangible deliverables. These deliverables take the...
where each link is a value proposition
Value proposition
A value proposition is a promise of value to be delivered and a belief from the customer of value that will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services....
. Service systems may be nested inside of service systems (e.g., staff and operating room unit inside a hospital that is part of a nationwide healthcare provider network).
Service system designers or architects often seek to exploit an economic complementarity
Complementarity
-Mathematics:*Complementary angles, in geometry* Complementarity theory, a concept related to optimization -Physical sciences:* Complementarity , a property of nucleic acid molecules in molecular biology...
or network effect
Network effect
In economics and business, a network effect is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.The classic example is the telephone...
to rapidly grow and scale up the service. For example, credit cards usage is part of a service system in which the more people and businesses that use and accept the credit cards, the more value the credit cards have to the provider and all stakeholders in the service system. Service system innovation often requires integrating technology innovation, business model (or value proposition) innovation, social-organizational innovation, and demand (new customer wants, needs, aspirations) innovation.
For example, a national service system may be designed with policies that enable more citizens (the customers of the nation) to become an entrepreneur
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
, and thereby create more innovation and wealth for the nation. Service systems may include payment
Payment
A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
mechanisms for selecting a level of service to be provided (upfront or one time payment) or payment based on downstream value sharing or taxation derived from customers who received the benefit of the service (downstream or ongoing payment). Payments may also be in the form of credit (creative arts)
Credit (creative arts)
In general, the term credit in the artistic or intellectual sense refers to an acknowledgement of those who contributed to a work, whether through ideas or in a more direct sense.-Credit in the arts:...
or other types of intangible value (see anthropological theories of value
Anthropological theories of value
Anthropological theories of value attempt to expand on the traditional theories of value used by economists or ethicists. They are often broader in scope than the theories of value of Adam Smith, David Ricardo, John Stuart Mill, Karl Marx, etc. usually including sociological, political,...
and theory of value
Theory of value
Theory of value is an ambiguous term, and may mean:*Theory of value , where value is meant as economic worth of goods and services.*Value theory, where value is meant in the philosophical sense....
).
See also
- Customer serviceCustomer serviceCustomer service is the provision of service to customers before, during and after a purchase.According to Turban et al. , “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer...
- Customer Service SystemCustomer Service SystemBT's Customer Service System is the core operational support system for BT, bringing in 70% of income for the company...
- Enterprise architectureEnterprise architectureAn enterprise architecture is a rigorous description of the structure of an enterprise, which comprises enterprise components , the externally visible properties of those components, and the relationships between them...
- Managed servicesManaged servicesManaged services is the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations inclusive of Production Support and lifecycle build/maintenance activities...
- Product service systemProduct service systemA product-service system , also known as a function-oriented business model, is a business model, developed in academia, that is aimed at providing sustainability of both consumption and production.- What is PSS? :...
- Service (economics)
- Service economyService economyService economy can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago...
- Services marketingServices marketingServices marketing is a sub field of marketing, which can be split into the two main areas of goods marketing and services marketing...
- Service designService designService design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers....
- Service providerService providerA service provider is an entity that provides services to other entities. Usually, this refers to a business that provides subscription or web service to other businesses or individuals. Examples of these services include Internet access, Mobile phone operators, and web application hosting...
- Service Science, Management and EngineeringService Science, Management and EngineeringService science, management, and engineering is a term introduced by IBM to describe service science, an interdisciplinary approach to the study, design, and implementation of services systems – complex systems in which specific arrangements of people and technologies take actions that provide...
- Support automation
- Strategic Service ManagementStrategic Service ManagementStrategic service management is a business strategy that optimizes a company's provided services through the effort of synchronizing: service parts and resources forecasting, service partners, workforce technicians, and service pricing....
- Web serviceWeb serviceA Web service is a method of communication between two electronic devices over the web.The W3C defines a "Web service" as "a software system designed to support interoperable machine-to-machine interaction over a network". It has an interface described in a machine-processable format...
Further reading
- Chase (1981) The Customer Contact Approach to Services: Theoretical Bases and Proactical Extensions. Operations Research. 21(4)
- Cook, Goh, and Chung (1999) Service Typologies: A State of the Art Survey. Production and Operations Management. 8(3).
- Karni and Kaner (2006) An engineering tool for the conceptual design of service systems. In Advances in Service Innovations, edited by Spath and Fahnrich. Springer. NY.
- Lusch, Vargo, and Malter (2006) Marketing as Service-Exchange: Taking a Leadership Role in Global Marketing Management. Organizational Dynamics. 35(3).
- Normann (2004) Reframing Business: When the Map Changes the Landscape. Wiley. New York, NY.
- Quinn and Paquette (1990) Technology in Services: Creating Organizational Revolutions. MIT Sloan Management Review. 31(2).
- Ross, J.W., Weill, P., Robertson, D. (2006) Enterprise Architecture As Strategy: Creating a Foundation for Business Execution. Harvard Business Review Press.
External links
- National Tsing-hua University (Taiwan) Service Science Institute
- Singapore Management University (Singapore) Service System & Solutions
- Technion (Israel) Service Engineering
- Stevens Institute of Technology (USA) Service Segments, Specializations, and Foundations
- UC Merced (USA) Service Science for Undergraduates
- University at Buffalo, The State University of New York (USA) Service Systems Engineering Graduate Major
- Michigan Tech (USA) Service Systems Engineering Undergraduate Major
- UC Berkeley (USA) The Information and Services Economy: Section 17: Service Systems (ISE notes)
- UC Berkeley (USA) The Information and Service Design Program (service research and instructional program)
- U Toronto (Canada) Service Science Introduction
- North Carolina State University (USA) SSME
- San Jose State University (USA) Service Science Program
- San Jose State University (USA) Service Systems Management
- Karlstads University (Sweden) Service Science
- University of Sydney (Australia) Service Science
- Peking University (China) Service Science and Engineering
- Technion (Israel) Mandelbaum's Service Engineering of Service Networks (aka Service Systems)
- Networked Europe Software and Services Initiative (NESSI)
- Adaptable and Autonomic Service Systems
- Canfora and Di Penta's Architecting, Analyzing, and Testing Service-Oriented Systems (aka Service Systems)
- Capacity Management in Stochastic Service Systems
- Tien and Berg's A Case for Service Systems Engineering
- KIT Karlsruhe Institute of Technology — Scientific Alliance eOrganisation
- Sorenson's Architecture-Based Enterprise Systems
- Service Management Software Systems
- Service Science Management and Engineering SSMEService Science, Management and EngineeringService science, management, and engineering is a term introduced by IBM to describe service science, an interdisciplinary approach to the study, design, and implementation of services systems – complex systems in which specific arrangements of people and technologies take actions that provide...