Live from Brainstorm - Making the transition to services engineering

I am attending the Brainstorm BPM/SOA/Rules event in Washington DC this week and blogging as I go.

Third session was Brett Champlin on Making the Transition to Services Engineering. Brett was contrasting services engineering to industrial engineering as the economy transitions from manufacturing to services-based (note this means services compared with products rather than SOA-type services). A little bit of history first - when manufacturing was key there was rapid growth in research and techniques for improving manufacturing. This led to a reduction from 60% in manufacturing to just 22%. This has been matched by a massive growth in services so the question is how to apply some of the established industrial engineering techniques for productivity to services.

He had great stats on the opportunity for improvement in services - 50% of service work adds no value, 90% of elapsed time is waiting for work to happen, estimates of 30-80% waste. In addition he noted that being world class in services means only being 5x as bad as the theoretical maximum while world class manufacturing is only 2x theoretical maximum! There is lots of opportunity, therefore, to improve service effectiveness just as we improved manufacturing.

Problems with services and improving their efficiency are many and include the fact that they have intangible, time-perishable outputs and that both decision-making processes and customer experience are key to the efficiency of a service. For instance, customers might regard "good service" differently, process are less defined and may differ from customer to customer. Several processes might be required to deliver a service. Services can be hard to measure thanks to intangibility (all services have some degree of this), heterogeneity (as different people do services differently), simultaneity (outputs consumed when produced) and perishability (can't be stored). Do we have to include customer processes when considering services? Probably, and this means a focus on the "moments of truth".

Brett found that traditional classification schemes do not work well but that there is one that seemed better:

Professional Services (highly customized, lots of discretion, lost of customer contact, process-focused)
Service Shops
Mass Services (standard, no discretion, less customer interaction, product-focused)

I think that services and the issues around "automating" them force a focus on the automation, or at least automated support, of decisions within those services. In addition hand-offs and wait times, big issues in services efficiency, can be managed using decisioning technology. Of course, personalization and customization are also going to be big issues. Interestingly I am presenting on a similar topic - Challenges and opportunities in customer-led services- at UC Berkeley in the fall and will post more on this when I have some materials ready. If you are interested, check out the Services: Science, Management & Engineering (SSME) program at UC Berkeley.

Technorati Tags: decision technology, services