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Services Sciences, Management and Engineering
A service is a provider/client interaction that creates and captures value.
For instance, most everyone is familiar with a typical doctor/patient interaction, in which both sides benefit from the transaction - referred to as "capturing value" in services parlance. The doctor receives a fee; the patient gets a health assessment and (it is hoped) recovers from the illness. This basic principle also underlies the work between a services provider and a corporation.
The provider and client coordinate their work (co-production) and in the process, both create and capture value (transformation). Services typically require assessment, during which provider and client come to understand one another's capabilities and goals. In the case of the doctor/patient interaction, the patient checks to see if the doctor is licensed and/or accredited and if he or she has the right specialty for the given illness. The doctor also conducts an assessment to determine the patient's medical history, gather information on the current ailment, and verify insurance or payment details. All of these steps factor into both sides capturing value from the services engagement. Obviously, for IT and business services, these assessments can be far more complex, but the processes and measurements are similar.
In business services, if the client does not install the new IT systems and train the necessary people in the reengineered process, the client firm will not receive the benefit of the service. Thus, the provider in many cases must monitor and assess the way the client is performing its responsibilities. And, of course, the client needs to determine that the provider is likewise applying satisfactory effort and quality controls in the performance of its tasks. These issues become of paramount importance in outsourcing deals, where a client may outsource a component of its business to a provider that is in a different country with different government regulations and national cultures.
Because services depend critically on the co-production relationship, it is very important that the service contract spell out mutual responsibilities and expectations. A significant percentage of service engagements (estimates range from 10-50 percent) do not meet the client's or provider's expectations, resulting in poor performance and low satisfaction, and, therefore, in less value created and captured than anticipated. This gap is an opportunity for services innovation that will improve returns, performance and satisfaction.
Here are some additional ways of thinking about services:
- A change in condition or state of an economic entity (or thing) caused by another (Hill, 1977)
- Intangible and perishable… created and used simultaneously (Sasser et al, 1978)
- Deed, act, or performance (Berry, 1980)
- Characterized by its nature (type of action and recipient), relationship with customer (type of delivery and relationship), decisions (customization and judgment), economics (demand and capacity), mode of delivery (customer location and nature of physical or virtual space) (Lovelock, 1983)
- All economic activity whose output is not physical product or construction (Brian et al, 1987)
- Deeds, processes, performances (Zeithaml & Bitner, 1996)
- An activity or series of activities… provided as solution to customer problems (Gronroos, 2000)
- A time-perishable, intangible experience performed for a customer acting in the role of co-producer (Fitzsimmons, 2001)
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