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©2006 IBM Corporation

Services Science

andService Innovation

OTS2008

Maribor, June12, 2008

Paul Van Droogenbroeck

IBM Belgium

GovernmentalPrograms

Version 20080610 16:00

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Recommendations

SSME and

-Industry

-Academia

-Government

Agenda

OTS 2008

June 12 2008

“Service Science and

Service Innovation”

Innovation

and research

Services

Service Science

SSME

Services Systems

21stcentury

Challenges

and opportunities

IBM

Services

Service Science

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IBM, a technological company…

1983

1986

1987

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…operating in a global economy

Everything = commodity

Fierce competition

New technologies

New business m

odels

‘a flat world’

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Some facts and figures

2007 IBM Corporate Revenue

by segment

25%

20%

55%

Systems and

Financing

Software

Global Services

2007 year-end from continuing operations

�Revenue: $98.8 billion

�Cash balance: $16 billion

�Number of IBM employees (31/12/07):

•Worldwide: 355,766

Computing

Tabulating

Recording

Company 1911-

1924

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IBM’s End-to-end solutions with products and services

BUSINESS

TECHNOLOGY

HELP M

E DO IT

MANAGE IT

FOR M

ETELL M

E

WHAT TO DO

Strategic

Outsourcing

Services

Global Business Services

Global TechnologyServices

Middleware Software –

Lotus, Tivoli, DB2, Rational, W

ebsphere

Servers and Storage

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Netw

ork Ubiquity

�More than a billion Internet users

today

�Trillions of connected devices

Open Standards

�Widely-adopted technical a

nd

transaction specifications

New Business Designs in a global

economy

�Horizontally-integrated operations

The economy has reached a new era –

an innovation era

21st -Century Drivers of Change

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Nature of innovation itself is changing

�It’s occurring m

ore rapidly

�It’s m

ore open, global and requires

wider collaboration across m

ultiple

disciplines, specialties and borders

often involving diversity in culture

and language

�Concepts of intellectual property

ownership are giving w

ay to a

more enlightened emphasis on

intellectual capital, sharing and

collaboration.

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0%

20%

40%

60%

80%

100%

Services as share of Gross Domestic product

Business and related services pro

vide a

growing part of overall services

Breakdown of services for U.S. 2004

Economies have become services

dominated

Historical Development of GDP contribution of

industrial sectors in some example countries

United States

Agriculture

Manufacturing

Service

1810

1835

1860

1885

1910

1935

1960

1985

2010

Wholesale and retail trade,

restaurants and hotels

(15.4%)

Transport, storage and

communication (6.1%)

Finance and insurance

(7.9%)

Real estate, renting and

business services(24.5%)

Incl. maintenance Services

related to product business

(Automotive

, ICT,

Electronics, ..)

Public administration and

defense (7.5%)

Education, health, social

work and other services

(15.8%)

Source: OECD in Figures2006-2007

Japan

Germ

any

India

China

Russia

United States

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Projected US service employment growth,

2004 -2014

US Bureau of Labor Statistics.

http://www.bls.gov/opub/ooq/2005/winter/art03.pdf

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Conclusions

�Growth is in services business

�Global competition in product business; hard to

escape the commodity/price battle

�Need to evolve from delivering the best technology

to providing the best solution

�Know your customer’s business environment

= Industry specifics + Customer specifics +

Technology + Client needs + G

overnmental rules &

regulations + …

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The 21stCentury Paradox

�21stcentury G

DP is service driven w

ith on average

more than 70% share of nations’GDP

�Only 10 to 20% of nations’R&D is service

innovation oriented; major focus remains on

technology research and production process

innovation

� ��what about service innovation and global

competitive differentiation ??

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Real innovation is the result of research

�Jim

Spohrer, Service researcher at Alm

adenResearch C

enter

identified the need for a science w

hich studies the service

phenomena of this 21stcentury from a societal, economic, ICT

and engineering and m

anagement aspect (2004)

�He called it Service Science, Management and Engineering,

short SSME

�The study of services requires a m

ulti-disciplinary insight of

above domains. As from the beginning, we have promoted a

move to m

ulti-disciplinary and cross-faculty research and

curricula at universities.

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Services Science,

Management & Engineering (SSME)

The m

arketplace requires innovation that combines

people, technology, value and clie

nts

Business Models &

Processes

Science

&

Technology

People

&

Culture

SSME

IBM Overview

Definition of SSME

�SSME is the application of scientific, management, and

engineering disciplin

es to tasks that one organization

beneficially perform

s for and with another (‘service

systems’)

The key to service value is in actions, perform

ed now or promised

for the future. Services often create m

utual interdependencies.

IBM Overview

A service system is a type of complex system

“People-O

riented, Services-Intensive, Market-Facing Complex Systems–

complex systemsand services–are very sim

ilar areas

around which we are framing the very

complicated problems of

business and societal systems that we are trying to understand.”

Irving W

ladawsky-Berger, IBM VP Innovation (O

ct. 9, 2006)

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Impact of Service Innovation

�Academics need to make service innovation a priority

•University competitiveness for prospective students and

attractiveness to business for shared research

�Governments need to make service innovation a priority

•GDP gro

wth and employment increasingly depends on

it, hence citizens’wellness and satisfaction

�Businesses need to make service innovation a priority

•Revenue and profit growth increasingly depend on it

•Competitive value of pro

duct driven companies

increasingly depends on services

IBM Overview

Service Innovation at IBM

IBM Overview

IBM’s strategic jo

urney

2004

1992

1984

2005

We have set a deliberate new agenda

for our clients, our industry and ourselves

IBM Overview

Shape of revenue dramatically changed over past 10 years

0

20

40

60

80

100

120

1998

2000

2002

2004

2005

2006

2007

Services

Hardware

Software

Global Financing & other

4%

16%

42%

38%

3%

20%

22%

55%

IBM Overview

IBM and SSME –

what needs doing yet

�IBM Research

�IBM University Programs

�IBM G

overnment Programs

�IBM Recruiting

�IBM Learning Services

IBM Overview

IBM’s 2008 SSME Priorities

Metrics –Awareness/Adoption/Results

•Thought leadership and press

•Industry and G

overnment participation and adoption

•University and IBM adoptio

n

•Joint research, science and exploratory projects

Measures of Success

•Create a global movement and build m

omentum

•Encourage funding and policy initiatives for SSME

•Expand IBM lecture series and case studies globally

•Support Research agenda to take SSME to the next level

External Outreach

•Engage our services organizations in SSME

•Create an internal “buzz”around SSME and skills

•Catalyze SSME education/skills initiative for IBMers

•Connect the dots and create internal governance m

odel

Internal Outreach

Create integrated strategy and execution plans to speed the adoption of SSME and

build the pipeline of skills w

e need for the 21stcentury

Bus

Bus +

I&T

Bus+I&T

+ Client’s

Ecosystem

Ecosystem

Business

The promise

of SSME

ICT

Application of SSME principles to business solutions

Starting Point

Eco Inform

ation & Technology

First Bus

+ Client’s

Ecosystem, then

leveraged w

ith

ICT

IBM Overview

IBM Overview

SSME and EDUCATIO

N

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We need a new breed of innovator –the service scientist

Social Science

(People)

Management

(Business)

Engineering

(Technology)

Tower of Babel

�“Biggest problem in business

is people don’t know how to

talk to other people in the

language they understand.”

�Charles Holliday, CEO Dupont

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Service Education is Interdisciplinary

Need m

ore T-shaped people –

both deep and broad

Business and Management

Science and Engineering

Economics and Social Sciences

Math and Operations Research

Computer Science & Info. Systems

Industrial and Systems Engineering

Business Anthropology

Organizational Change & Learning

IBM Overview

www.ibm.com/university/ssme

IBM Overview

SSME Roadmap for University Faculty

1.Learn about Services as a Science

Go to the IBM SSME website www.ibm.com/university/ssme:

�Recommended reading list

�SSME-related conferences

�Course-related linkages

2.Assess w

hat your school is doing now in SSME-related studiesand share

with IBM and other universities. Identify gaps in curriculum and build

SSME curriculum.

3.Collaborate w

ith other Universitieswho are leaders in SSME research

–Berkley, CMU, Stanford, MIT, Oxford, TsingHua, NCSU, GA Tech, SJSU

4.Participate in the SSME evolution:

�Champion efforts to promote SSME

�Conduct research in various challenge areas

�Apply for research and new curricula grants from G

ove

rnment and Foundations

�Build new course curriculum for degree programs

�Build case studies using IBM customer exa

mples, industry studiesand business issues studies

�Post SSME curricula and courseware on IBM Academic Initiative

website for collaboration

�Engage in SSME conferences and eve

nts

IBM Overview

Example Curriculum: SSME at North Carolina State

University

MBA C

oncentration in SSME

MS Concentration in SSME

NCSU is w

orking on a M

asters in Services

Engineering

Required

Services M

anagement

Consulting

Business R

elationship M

anagement

Required

Services M

anagement

Management of Technology

Managing People in the High-Tech

Environment

Process Analysis and Design

Requirements and Electives

in Electrical Engineering or

Computer Science M

asters Programs

Elective options

Market Analytics

Marketing Strategy

Supplier Relations

Choose one of the following

Market Analytics

Marketing R

esearch

Marketing Strategy

Project Management

Supplier Relations

IBM Overview

What would service scientists actually do?

�Own the body of knowledge around service system problem solving

�Identify a service system that needs improvement

Identify the stakeholders

their concerns and perceived opportunities

�Envision additional new service systems

or reconfigurations of old service systems components that best address all

problems and opportunities

Identify year-over-year im

provement trajectories

Identify incentives to change (ROI, leadership, laws)

IBM Overview

Over 150 SSME curricula worldwide, examples ..

�Brigham Young U

niversity

�Brussels, V.U.B

.�

Business school of IDC (Israel)

�Cornell University

�Delft University of Technology

�EPFL Federal Institute of Technology Lausanne

�FUNDP (Namur Belgium)

�Georgetown University

�Harbin Institute of Technology

�Helsinki Polytechnic Institute

�ITESM (Mexico)

�JAIST

�K.U.Leuven

�Long Island University

�Massachusetts Institute of Technology

�Michigan Technological University

�Missouri State

�Northern Illinois University

�Ohio State, Fisher Colle

ge of Business

�Pace

�Portland State U

niversity

�Rensselaer Polytechnic

�RMIT University

�Rochester Institute of Technology

�Sogang University

�State University of Management, M

oscow

�Technical University of Brno, Czech Republic

�Tampere

University of Technology

�Texa

s A & M

�Tsinghua

�U.C. Louva

in�

UNC Keenan Flagler School of Business

�UniLuxe

mbourg

�UniversiteitAntwerpen

�UniversiteitGent

�University of Bridgeport

�University of California, Santa Cruz

�University College, Dublin

�University of Dublin (Trinity College)

�University of Porto

�University of Pretoria

�University of Syd

ney

�Universidad Federal de Rio de Janeiro

�University of Manchester

�University of MD Baltim

ore County

�University of Maryland RH Smith School of Business

�University of Pavia

�University of Pennsylva

nia, Wharton

�University of Virginia

�Universidad Torcuato

Di Tella

�University of Tsukuba

�Western M

ichigan University

�Virginia Tech

�Warw

ick University

�William and M

ary

�York University Canada

SSME and Industry

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See and handle O

pportunities and Threats in ..

�Globalisation:

•im

pact on your products & services, yo

ur clients & suppliers, yo

ur R&D, yo

ur hiring

�Ageing Population / shortage of resources

�Ubiquitous netw

ork and ICT resources: value leveraging?

�Client-centric positioning / participant in solution

�Services based business architecture (cfrSOA)

�What is the value that you bring to your clients ?

IBM Overview

Industry Trend Reports for Teaching SSME

In depth reports by industry or by solution on

trends, technologies, and business insights.

IBM Overview

U.S. Service Research and Innovation Initiative (SRII)

�Announced M

arch 2007

�IBM and O

racle founding m

embers

Advisory board includes Accenture, Cisco, EMC, Computer Sciences,

Hewlett-Packard, Xerox, European C

ommission, FrauenhoferInstitute

Research m

embers from University of California, Los Angeles, Wharton

School at University of Pennsylvania, Arizona State University

�Mission

Forum for collaboration to help set public and private research priorities

Pool corporate funds to support academic programs

Advise the government on preferred targets of basic research

IBM Overview

Service Innovation at EC : some 2007 achievements

�DG ENTR and DG Education and Culture called for a new university

discipline for service science in their joint EC communication on skills

and innovation.

�Bruegel(Think Tank focusing on economic policy m

aking) has created

a new task force on growth and innovation, based on Service Science

principles

�Funding for multidisciplinary/service science research and/or curriculum

development (FP7 based): -Successful u

pstart of an FP7 research

portfolio in the area of Networked Software and Services

�Broad awareness about Service Science has been created amongst

MEP’s

IBM Overview

Joined initiative by EC and European industry: NESSI:

Networked European

Software and Services Initiative

“Promoted by 13 major European ICT corporations (*),

totaling almost a million jobs and over 300 B€of revenues,

the NESSI Technology Platform

aims to provide a unified

view for European research in Service Architectures

and Software Infrastructuresthat will define technologies,

strategies and deployment policies fostering new, open,

industrial solutions and societal applicationsthat

enhance safety, security and well-being of citizens.

(*) AtosOrigin, BT, Engineering IngegneriaInform

atica, HP, IBM, Nokia, Object Web, SAP, Siemens,

Software AG, Telecom Italia, Telefonica, Thales

IBM Overview

NESSI: strategic drivers

�European dim

ension

�ICT sim

plification

�Adopting a citizen perspective

�A truly m

ulticultural approach

�Business and administrative process flexibility

�Embracing open source as a m

odel

�Open Standards adoption and development

�SME-friendly eco-systems

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Open Innovation Policy G

roup for Services Creation

�Industry led with encouragement and support by the European

Commission

�Nokia, Intel, BT, IBM, HP, SAP, Philips, Orange, Items

International (non-industry Sitra

and N

ESTA)

�Focus on Strategy and Policy in support of Open Innovation in

Europe

�Service Economy and Services Innovation

�The empowered User

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Recommendations

IBM Overview

What to do next ?

�Academics need to make service innovation a priority

–Intensify collaboration amongst faculties and amongst universities, worldwide

–Research in Services

–Students to be better prepared to a m

ulti-disciplinary professional career

�Businesses need to make service innovation a priority

–Moving from technology based to solutions based is a tough journey

–Open innovation w

ithin industry and w

ith academia

–Government and Trade associations to support entrepreneurs

�Governments need to make service innovation a priority

–Policy definition w

hich m

akes services innovation a priority

–Encourage academia in their transition into m

ulti-disciplinary research & education

–Encourage and support industry to invest in services innovation

–Encourage young graduates to become an entrepreneur

IBM Overview

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