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1Openwater Personalized Customer Service
Personalized Customer Service
Service Networks for Customer Service
Service innovation is an idea whose time has come. The service sector now accounts for 75 to 80 percent of the U.S. gross domestic product (GDP). Countries like India and China are also fast catching up in this measureof "development": according to the World Bank, services now contribute about 50 percent to India's GDP andabout 40 percent to China's, with both growing rapidly. Yet, while a tremendous amount of research has goneinto innovation in traditional sectors of agriculture and industry, the service sector has remained relativelyneglected.Many across the high tech industry have begun to marshall resources to this challenge. Renowned names inindustry and academia, including Cisco, IBM, Oracle, HP, Xerox, Microsoft, Peking University, Oxford University,Carnegie Mellon, UC Berkeley, Wharton and many more are devoting resources towards defining what IBMhas been calling Service Science – the next step after Computer Science. In this paper we’ll highlight some of their work and how it is setting a common vision of both the future of service, and how this might be achieved.We’ll go further and discuss how this vision is turning into a reality at Openwater Networks. First, bydescribing the basics of a Service Network for Customer Service, and finally by showing you a real-worldexample. With the innovations pioneered in the Consumer Internet by Google, Facebook, Wikipedia andAmazon we think you’ll find Service Networks both an innovative and a familiar idea.
Personalized Customer Service
Irving Wladawsky-Berger is Chairman Emeritus, IBM Academy of Technology and Visiting Professor of Engineering Systems at MIT. He blogs and recently had a great post
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on the importance of customer service. Init, he describes the business model of Bharti Enterprises, a leading Indian Telecom conglomerate. Bharti hasbeen growing its cellular, broadband, long distance and other communications services at a rapid pace. Tokeep up with this huge growth and keep lowering its already low costs, their Chairman, Sunil Mattal, made abold move. He decided to focus all the energies of the company on attracting, supporting and retainingcustomers and outsource just about everything else, including all the IT equipment and the network itself.Mittal said in his talk at an IBM conference held in April 2006 that originally there was a lot of resistance to thisstrategy. People were calling him from around the world saying that IT and the network were the heart of atelecom business and that he could not possibly outsource them and be successful. To which he replied thatthe customer, not the technology, was the heart of his business and then proceeded to implement hiscustomer-centric strategy. Bharti Enterprises is now one of the top five companies in India, and Mittal's targetis for Bharti to become India's most admired brand by 2010.Irving closes his post, which includes some other customer service stories, by saying "Products and servicesmight be commodities, but you never, ever want your customers to feel like they, too, are just commodities. Asuccessful business will make each of its clients feel special by understanding and addressing their unique
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http://irvingwb.typepad.com/blog/2006/07/the_critical_im.html
Copyright © 2007 Openwater Software, Inc. All rights reserved.
 
2Openwater Personalized Customer Servicerequirements, and quickly solving problems when they come up. This is really hard, which is why it may verywell be the most important way for a business to stand out from its competitors."The focus on the customer, on delivering a personalized customer experience is also at the heart of CEOCastro-Wright’s strategy to transform Wal-Mart. A recent article
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on Wal-Mart highlights the fundamental shiftCastro-Wright is making. “The Company's cult-like focus on supply-chain logistics grinds away at costs butdoesn't allow it to know the neighbors. The new strategy tries to make that connection – editing for the area,offering a point of distinction. "It's going to tell the customer that we understand what they need,” says CEOCastro-Wright. "We not only understand what you need, we respect your point of view. We want to be yourstore of choice because we understand you better than anyone else in the marketplace." Said another way –they’ve done a great job at their transaction systems – their challenge is how to use information to drive anexperience that is personal to you.
Technical Vision
So how are Mittal and Castro-Wright going to achieve their business vision? In 2002 IBM launched an initiativethey call Service Science. Service Science came from an observation that IBM could double the size of theirservice business (which is over 50% of IBM’s revenue), but without an investment in technology their marginswould erode. Starting with a team of 20 researchers Jim Spohrer has grown the group to over 400. IBM chosethe name Service Science because they believe this work is as important as Computer Science was in the 20thCentury.Service Science is a hybrid field that seeks to use technology, management, mathematics, and engineeringexpertise to improve the performance of service businesses like transportation, retailing, and health care — aswell as service functions like: marketing, design, and customer service that are also crucial in manufacturingindustries. Today universities around the world including the University of California at Berkeley, Arizona State,Stanford, North Carolina State University, Karlstad University, Peking University, Universidad Federal de Rio deJaneiro and University of Sydney are experimenting with courses, degree programs or research programs inthe field. Jim has challenged the community by saying: ''Computer science has benefited from Moore’s Law(where the capabilities of computer chips double about every 18 months). Could a Moore’s Law of servicescience be possible?''In January 2007 he and a group of colleagues published a paper entitled: Steps Towards a Science of ServiceSystems
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. In the paper they outline their basic approach to developing and cultivating an interdisciplinaryeffort called Service Science—“the application of scientific, management, and engineering disciplines to tasksthat one organization (service provider) beneficially performs for and with another (service client). ServiceScience aims to understand how an organization can invest effectively to create service innovations.”They go further to define the basic idea of a service system as a “value co-production configuration of people,technology, other internal and external service systems, and shared information (such as language, processes,metrics, prices, policies, and laws). Service systems comprise service providers and service clients workingtogether to co-produce value in complex value chains or networks.” The science of service systems relies
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Restoring Wal-Mart, Time Magazine, November 12, 2007
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Steps Toward a Science of Service Systems, Jim Spohrer, Paul P. Maglio, John Bailey and Daniel Gruhl, IEEE Computer,January 2007.
Copyright © 2007 Openwater Software, Inc. All rights reserved.
 
3Openwater Personalized Customer Serviceheavily on integrating people, technology and shared information. New work in economics, sociology, socialnetworking and information technology are all being brought to bear to develop this new field.Jim is not alone in his vision. Greg Oxton, Executive Director of the Consortium for Service Innovation, puts outa challenge to every service organization. ”In order for our service organizations to deliver higher value totheir customers, we must focus on the source of the value: knowledge. We must transition from a call-centric,transaction-oriented model to a knowledge-centric, relationship-based model. We must recalibrate ourmeasurement systems to measure the creation of value, not just activity. We must rethink the role of people,information, management, and customers to take full advantage of the knowledge that emerges from theexperience and interactions of the service organization.”
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He calls these new service systems, dynamicnetworks.
Dynamic Service Networks
The Consortium’s view – “The source of value for business has shifted, while our structures and practices havenot. The manufacturing approach of a production line, with compartmentalized responsibilities, linearprocesses, activity-based metrics, and discreet outcomes targeted at large collections of customers, is notoptimal for a services business. A new set of business practices is required, moving organizations from thetraditional command and control, hierarchical, linear processes to a nurturing, unbounded network of peopleand knowledge.”But let’s bring this all closer to home because the answer is not far from sight. Consider the following story.Ten years ago if you were interested in a book, you went down to your local bookstore, found a parking spaceand then waited patiently to talk to Jack, the bookstore owner. You might have asked him “Do you have thebook Blink?” or “Do you have the new book by the author of The Tipping Point?” or “What book would be bestto read and understand viral marketing?” Between his store inventory system running on his PC, Books in
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An Integrated Approach to Service Innovation, Greg OxtonConsortium for Service Innovation, San Carlos, CA 94070 USA
Copyright © 2007 Openwater Software, Inc. All rights reserved.
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