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Service Science, Innovation and BPOService Science, Innovation and BPO Part 1 of 12Part 1 of 12

Alejandro Melchor IIIGovernmental Programs ExecutiveIBM Philippines, Inc.

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CICT-BPAP-IBM MOU on SSME Collaboration Program

On August 7, 2008, CICT, BPAP, and IBM Philippines signed an MOU to develop an SSME Collaboration Program which will advocate for and facilitate the adoption of the Service Science, Management, and Engineering (SSME) curriculum in colleges and universities nationwide, in order to develop the critical mass of skilled manpower needed to sustain Philippine leadership in the Global Offshoring & Outsourcing Industry.

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What is Service Science, Management, and Engineering?

Science is a way to create knowledgeEngineering is a way to apply knowledge and create new valueBusiness Model is a way to apply knowledge and capture valueManagement improves the process of creating and capturing value

Computer Science

Operations Research

Industrial engineering

Business strategy

Management sciences

Social and cognitive sciences

Legal sciences

SSME

“SSME is an academic discipline and research area that hopes to bring together ongoing work in computer science, operations research, industrial engineering, business strategy, management sciences, social and cognitive sciences, and legal sciences to develop the skills required in a services-led economy.”

ACADEMIC DISCIPLINE

RESEARCH AREA

CALL TO ACTION

SSME draws from a number of established academic & research disSSME draws from a number of established academic & research disciplinesciplines

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0

20

40

60

80

100

120

1970 1975 1980 1985 1990 1995 2000 2005

Year

Mill

ions

of J

obs

Services

Manufacturing, Construction & Mining

Farming & Ranching

U.S. private sector job growth came from its Services Sector from 1970-2005

Source: Bureau of Economic Analysis

1970 - 2005

46M

121M

26M25M

4M 3M

75 million net new jobs in services

Economists have long observed that as economies mature, job growth and wealth growth come primarily from their Services Sectors.

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Services Sector is largest sector of Philippine Economy (55%)

Philippine Services Sector is fastest growing sector (8.7% growth in 2007).Source: National Statistics Office, as of 1Q 2008

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Service Science teaches you how to innovate in services

“Our prosperity is no accident. It is the product of risk-takers, innovators, and visionaries. We owe our global leadership in large measure to our willingness to build an economy and culture that welcomes and encourages innovation and flexible, open markets.”

“By making our economy more flexible, more innovative, and more competitive, we will keep America the economic leader of the world.”George W. Bush, President of the United States

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Findings of IBM’s Global CEO Study – 2006

Innovation represents the best opportunity to achieve growth

External collaboration separates winners from losers

Sustainable innovation depends on culture and orchestration fromthe top

Global Business Leaders agree on the importance of innovation to competitiveness, profitability and growth

For the IBM Global CEO Study 2008:http://www.ibm.com/ibm/ideasfromibm/us/ceo/20080505/index.shtml

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When we say “Innovation” we immediately think of products

Sony PS3

Toyota PriusNokia N98

Apple iPod Sony PS3Sony PS3

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Is General Motors a product company or a service company?

Source: PEER Insight: Developing New Services (2005)

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GM’s profitability and growth are driven by services

Source: Developing New Services (2005), PEER Insight LLC

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In reality, most enterprises are neither pure product companies or pure service companies…

We are all in services…more or less!

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Service Scientists are able to understand complex service systems, spot opportunities for innovation, and assess which will produce the most value.

Innovation Landscape for the Airline Industry—a complex service systemSource: The Power of Innovation, VHA, Inc.

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Service scientists understand that virtually all innovations can be classified into ten unique types of innovation.

Doblin Inc’s research found that, over the 10-year period of 1997-2006, most innovation efforts focused on product innovation—which produced the least value. 2% of the projects produced 90% of the value. Source: Doblin, Inc.

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Service Science gives you frameworks to be systematic about innovation. Here’s the “Ten Types of Innovation” Framework

“The Ten Types of Innovation” by Larry Keeley, Doblin Inc.

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Case Study: Enterprise Rent-a-Car applied the strategy of “Going After the White Spaces” to become #1

Source: Peer Insight LLC

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Enterprise Went After the White Space and Became #1

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Companies are increasingly focusing their innovation efforts on the customer experience

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Service Science gives you the tools to map, design and improve the entire customer experience

Board the Filipino Service Science Express Train…It’s the fastest, most cost- effective way to get to where we want to go—global leadership in the fast- growing Offshoring & Outsourcing Industry. Take step and learn about Service Science.

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One of these tools is Customer Experience Gap Analysis

CASE STUDY: NetFlix vs Blockbuster

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NetFlix found some customer experience gaps, and filled them

Service Science tools will enable your business or organization to be competitive with Industry Leaders!

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Product vision vs. customer experience vision

What a product vision would sound like

What a customer experience vision would sound like

Value meter Value meter

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Service Science gives your business the tools to overcome the forces of commoditization

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Emotional value propositions can change the equation

The key is to discover those few areas that strike an emotional chord within your target customers.

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Services Marketing: Integrating Customer Focus Across the Firm Zeithaml, Valeria A.

Services Marketing: People, Technology, Strategy Lovelock, Christopher, Wirtz, Jochen

Services Marketing—one of the powerful sub-disciplines within Service Science—teaches you how to consistently produce that “WOW!” Effect.

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Service Science will give Filipinos the framework and tools to rService Science will give Filipinos the framework and tools to replicate our eplicate our phenomenal success in call centers in higher value slivers of Glphenomenal success in call centers in higher value slivers of Global O&Oobal O&O

Source: McKinsey Global Institute; Gartner 2005 database; IDC; interviews

IT applications services (ITO) Business process services (BPO) Engineering services (ESO)

Application development and maintenance• Application development• AD integration and testing• Application MaintenanceSystem Integration• Analysis• Design• Development• Integration and testing• Package implementationIT Infrastructure Services• Help desk• Desktop support• Data centre services• Mainframe• Network operations• IT consultingSoftware product development• New product development• System testing• Localization/Support• Gaming

Horizontal processes• Contact centers• Human resources• Finance and accounting• Supply chain (procurement, logistics

management)Industry/vertical processes• Banking and insurance • Telecom • Public sector • Utilities • Health care • High-tech • Oil & Gas • Consumer productsKPO• Business research, financial research• Animation• Data analytics• Legal process and patent research• Other high-end processes

Manufacturing Engineering• Upstream product engineering

– Concept design– Simulation– Design engineering

• Downstream product engineering– CAD/CAM/CAE– Embedded software – Localization

• Plant and process engineeringArchitecture design• Design process• Building Management models

Outsourcing and Offshoring (IT - BPO): Three main sectors

1 2 3

ATTY. JAMEA GARCIA: The Philippine Talent Proposition

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ANNEX

© 2007 IBM Corporation

http://www-304.ibm.com/jct09002c/university/scholars/skills/ssme/index.html

© 2007 IBM Corporation

Service Science, Management and Engineering: Education for the 21st Century Bill Hefley & Wendy Murphy, editors (384 p., 2008)

Increasingly, academic and industrial leaders are recognizing that college graduates need new skills to address business and technical issues in a service business environment. Because services depend critically on people working together and with technology to provide value for others, these new skills include the ability to integrate across traditional disciplinary areas to obtain globally effective solutions. Service Science, Management and Engineering (SSME) is one such approach to properly focusing education and research on services, and to preparing tomorrow’s graduates to work in an expanding services economy.

Wendy Murphy is Program Manager for Almaden Services Research initiatives, IBM Research. She leads revenue growth and cost reduction initiatives in outsourcing groups.

© 2007 IBM Corporation

Services Science: Fundamentals, Challenges and Future Developments Stauss, B.; Engelmann, K.; Kremer, A.; Luhn, A. (Eds.), 172p, 2008

The service sector has dominated advanced economies for years. In many countries, it accounts for more than 70% of gross domestic product, and approximately the same percentage of all employees work in this sector. To reflect the economic relevance of the service sector, services science must be established as an academic discipline. But the path in pursuit of this goal is riddled with challenges, especially in the fields of services research, service- oriented education and service-related collaborations. This book includes detailed articles and short statements on each field, written by academics and experts. They explain which challenges need to be met by research and academic training in the services community of the 21st century. The contributions contained in this book reflect the content of presentations and statements given at the first German Services Science Conference.

© 2007 IBM Corporation

View the presentations from the Aug. 5-8, 2008 Conference on Service Science, Management, and Engineering: Towards Philippine Global Competitiveness in Offshoring and Outsourcing at our joint CICT-BPAP-IBM Conference Website. Stay posted for the rest of this planned 12-Part Series on Service Science, Innovation and BPO.

Alejandro P. Melchor III <melchoa@ph.ibm.com>

Aug. 5-8 SSME Conference Website: www.ibm.com/ph/ssmeconference

URL: http://www-07.ibm.com/ph/ssmeconference/