Service Life Cycle Manager
Products go through a ‘life cycle’ of the services that customers need from initial purchase to final disposal. In this model, the end-to-end lifecycle for a given product line is brought together into a single service model, covering activities such as customer management, product or service creation, implementation, operation and support. The functions along the value chain are integrated to create this new service, or alternatively the new service is bought in directly. This places this model close to the vertical axis of our grid. By way of illustration, Rolls Royce Aero Engines has significantly improved performance by moving its focus from product sales to after-market service, measured as a series of transactions. Customers now buy a lifetime package Beyond Boundaries rather than a piece of hardware. The move to a Service-based model helped Rolls Royce increase service sales by 25% to £1.8 billion.
Click here to download a pdf with further information
Industry Service Network
Where companies within an industry are highly interdependent, sector-wide value chains can be as critical to success as the value chains within each organisation. Industry Service Networks facilitate sector-wide interaction by allowing companies to present themselves to others as a collection of available services. This model then represents an extension of the Service Network model, connecting to Service Lifecycle Management offered by companies connected to the network. The most common example of this model is e-procurement services, with eProcurement Scotland demonstrating how the buying power of local government can be increased through collaboration. Another example is RosettaNet, a standards organisation promoting collaborative commerce among hi-tech companies, allowing the global industry to align its business processes and exchange information electronically.
Click here to download a pdf with further information
Customer Service Network
This model breaks down the boundary between organisation and customer to create a collaborative relationship, with the service continually evolving in response to customer interaction. Delivery channels are integrated at the customer interface. The model allows efficient operation of multi-channel delivery by representing each channel as a service, with clear interactions between the services. If a customer interaction cannot be dealt with by the channel service of first contact, then the overflow is handled by the interaction with other related channel services, e.g. overflowing from an on-line transaction to a call centre. British Airways, for example, has transformed its front office to compete with low-cost airlines, reducing costs while improving customer service. Analysts estimate that it has already saved over $770 million in sales and distribution costs thanks to the transition from in-person to on-line check-in.
Click here to download a pdf with further information
Service Aggregator
In this model, the business becomes the aggregator of a set of services, in-house or outsourced. The model thus provides both cross value chain integration at the customer interface as well as along value chain integration by connecting to the organisation's portfolio of life-cycle services, as such it sits at the top right hand corner of our grid. The utility Welsh Water has transformed itself into an aggregator, providing its stakeholders with market-leading business performance with a workforce that is less than 5% of its original strength of 5000. Virtually all services are now procured from partners. As a result, operating costs have reduced by 18% since 2001, while operating profits have increased by 16% since 2002.
Service Network
In this model a business area, or an entire business, becomes a network of services interacting and potentially competing with each other, in a similar way to a complete business sector. Combinations of business functions are then redefined as stand-alone business services, or separate businesses. The result is then to create some cross value chain and some along value chain integration, but with a focus on adaptability of the network of services. As a result this model sits squarely in the centre of the grid. GSK, for example, has broken up its monolithic R&D departments, the result of a number of mergers, into a network of competing businesses. GSK aimed to put in place an R&D structure to be radically different from those of its peers by organising around six Centres for Excellence in Drug Recovery (CEDDS) to function like semi-independent biotechnology companies. This created a more innovative environment and blurred the boundary between internal and external research. The change had a major positive impact on the pipeline (by 2005 there were 54 products in late stages of development compared with 31 four years before) and on share price performance 2005 saw an increase of 30%).
Click here to download the Planning as a Shared Service pdf
Click here to download the Service as Orientated Manufacturing pdf
Function Shared Service
In this model, individual functions are redefined as a Shared Service, redefining the relationship with the rest of the organisation. A single Function Shared Service is not integrated with other functions, only connected via the relevant service agreement, so that the model sits in the bottom left hand corner of our grid. By creating a strong focus on consolidation and optimisation of the Shared Service, a move to function Shared Service can dramatically increase efficiency. Many organisations contemplating a move towards a Service-based operating model begin their journey with Function Shared Service, typically applying the approach to their Finance, human resources or IT functions. Examples of this approach are becoming increasingly common across both the private and public sectors. For example Ericsson implemented a number of Business Service Centres for Finance and Procurement to reduce costs and ensure process compliance.
Service Consolidator
Here, individual functions are consolidated to create defined ‘black box services’, which can be expanded to accommodate other functions, which exist at that point in the value chain. The primary example of this is the consolidation of back office functions into multi-function Shared Service centres. This model then represents a move across the bottom of our grid, but could be applied in the back, middle or front office of an organisation or between organisations. An example of back office Service Consolidation is provided by energy company TXU, which has undertaken a complete transformation of its back office, with extensive outsourcing of business processes to Capgemini, involving the transfer of around 2,700 employees. Capgemini is now operating services such as finance, human resources, maintenance and operation of IT applications and infrastructure, customer care and revenue management as Shared Service centres on behalf of TXU. In fewer than two years since embarking on this initiative, TXU has increased its market capitalisation by over $17 billion, helped by the dramatic cost reductions delivered through the Shared Services transformation.
Click here to download the Back office PoV pdf
Download as PDF
