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A service system (or customer service system, CSS) is a configuration of technology and organizational networks designed to deliver services that satisfy the needs, wants, or aspirations of customers. "Service system" is a term used in the service management, service operations, services marketing, service engineering, and service design literature. While the term frequently appears, it is rarely defined.
One 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.
Another definition for service system[1] states that a service system consists of elements (e.g., people, facilities, tools, and computer programs) that have a structure (i.e., an organization), a behavior (possibly described as a business process), and a purpose (or goal). A service system worldview is a system of systems that interact via value propositions.
A much simpler and more limited definition is that a service system is a work system that produces services. A work system is a system in which human participants and/or machines perform work (processes and activities) using information, technology, and other resources to produce products/services for internal or external customers. Co-production occurs in work systems in which customers are also participants, e.g., many work systems that provide medical care, education, and consulting. (Alter, 2013)
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 by John Riordan.[2][3]
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.
Topics
Design
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 delays. Ideally, empowerment of both service provider employees and customers (often via self service) results from well designed service systems.
Types of service design
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 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).
Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information.
In commerce, supply chain management (SCM) deals with a system of procurement, operations management, logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers. A more narrow definition of supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally". This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
In telecommunication, provisioning involves the process of preparing and equipping a network to allow it to provide new services to its users. In National Security/Emergency Preparedness telecommunications services, "provisioning" equates to "initiation" and includes altering the state of an existing priority service or capability.
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emphasize in advertising; operation of advertising campaigns; attendance at trade shows and public events; design of products and packaging attractive to buyers; defining the terms of sale, such as price, discounts, warranty, and return policy; product placement in media or with people believed to influence the buying habits of others; agreements with retailers, wholesale distributors, or resellers; and attempts to create awareness of, loyalty to, and positive feelings about a brand. Marketing is typically done by the seller, typically a retailer or manufacturer. Sometimes tasks are contracted to a dedicated marketing firm or advertising agency. More rarely, a trade association or government agency advertises on behalf of an entire industry or locality, often a specific type of food, food from a specific area, or a city or region as a tourism destination.
A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.
Logistics is a part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers. Logistics management is a component that holds the supply chain together. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.
Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred to as a "sale".
Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.
Services marketing is a specialized branch of marketing which emerged as a separate field of study in the early 1980s, following the recognition that the unique characteristics of services required different strategies compared with the marketing of physical goods.
A service-level agreement (SLA) is an agreement between a service provider and a customer. Particular aspects of the service – quality, availability, responsibilities – are agreed between the service provider and the service user. The most common component of an SLA is that the services should be provided to the customer as agreed upon in the contract. As an example, Internet service providers and telcos will commonly include service level agreements within the terms of their contracts with customers to define the level(s) of service being sold in plain language terms. In this case, the SLA will typically have a technical definition of mean time between failures (MTBF), mean time to repair or mean time to recovery (MTTR); identifying which party is responsible for reporting faults or paying fees; responsibility for various data rates; throughput; jitter; or similar measurable details.
Information technology service management (ITSM) is the activities that are performed by an organization to design, build, deliver, operate and control information technology (IT) services offered to customers.
Service design is the activity of planning and arranging people, infrastructure, communication and material components of a service in order to improve its quality, and the interaction between the service provider and its users. Service design may function as a way to inform changes to an existing service or create a new service entirely.
Mobile business development is a category of business development which focuses on attracting new customers in the Mobile Web markets. There are large efforts being made to make innovative mobile ICT services work. Examples of these services include mobile tourist guides and shopping guides for potential consumers. As an emerging trend, technology and service providers combine their expertise and resources to design these services. This incorporates designing several models: the Value network, a Value proposition, a Revenue model and a Technological architecture.
Service-dominant (S-D) logic, in behavioral economics, is an alternative theoretical framework for explaining value creation, through exchange, among configurations of actors. It is a dominant logic. The underlying idea of S-D logic is that humans apply their competences to benefit others and reciprocally benefit from others' applied competences through service-for-service exchange.
Service innovation is used to refer to many things. These include but not limited to:
Innovation in services, in service products – new or improved service products. Often this is contrasted with “technological innovation”, though service products can have technological elements. This sense of service innovation is closely related to service design and "new service development".
Innovation in service processes – new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation. Innovation of this sort may be technological, technological - or expertise -based, or a matter of work organization.
Innovation in service firms, organizations, and industries – organizational innovations, as well as service product and process innovations, and the management of innovation processes, within service organizations.
In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers who will buy their products and/or services. It is part of a company's overall marketing strategy which differentiates its brand and fully positions it in the market. A value proposition can apply to an entire organization, parts thereof, customer accounts, or products and services.
Operations support systems (OSS), operational support systems in British usage, or Operation System (OpS) in NTT, are computer systems used by telecommunications service providers to manage their networks. They support management functions such as network inventory, service provisioning, network configuration and fault management.
The service blueprint is a technique originally used for service design, but has also found applications in diagnosing problems with operational efficiency. The technique was first described by G. Lynn Shostack, a bank executive, in the Harvard Business Review in 1984. The service blueprint is an applied process chart which shows the service delivery process from the customer's perspective. The service blueprint has become one of the most widely used tools to manage service operations, service design and service.
The Business Model Canvas is a strategic management template used for developing new business models and documenting existing ones. It offers a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances, assisting businesses to align their activities by illustrating potential trade-offs.
Operations management for services has the functional responsibility for producing the services of an organization and providing them directly to its customers. It specifically deals with decisions required by operations managers for simultaneous production and consumption of an intangible product. These decisions concern the process, people, information and the system that produces and delivers the service. It differs from operations management in general, since the processes of service organizations differ from those of manufacturing organizations.
References
↑ Cardoso, Jorge; Fromm, Hansjörg; Nickel, Stefan; Satzger, Gerhard; Studer, Rudi; Weinhardt, Christof (2015). Fundamentals of Service Systems. Service Science: Research and Innovations in the Service Economy (1sted.). Springer. ISBN9783319231945.
↑ Riordan, John (1962). Stochastic Service Systems. New York: Wiley. pp.x + 139 pp. Illus. Anyone seeking an introduction to queueing theory...
↑ Morse, P. M. (7 September 1962). "Book review: Stochastic Service Systems by John Riordan". Science. 137 (3532): 742. doi:10.1126/science.137.3532.742-a.
Alter, S. (2013) “Work System Theory: Overview of Core Concepts, Extensions, and Challenges for the Future,” Journal of the Association for Information Systems, 14(2), pp.72–121.
Cardoso, J.; Pedrinaci, C.; Leidig, T.; Rupino, P. and Leenheer, P. D Open semantic service networks. In The International Symposium on Services Science (ISSS 2012), pages 1–15, Leipzig, Germany, 2012.
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).
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