1-3 Fundamentals Flashcards
Which development can be seen looking at industry sectors distribution?
Most key economies have become service-dominated
Employment follows suit – the majority of people in developed countries work in services
Example for eService that skyrocketed in the last years
Cloud market growth
short definition: eService
Service that can be rendered electronically
explain the potential of servitization
Traditional approach: sell a product
Now: Bundle product with a service to increase margins
The application often yields a multiple of the product value
e.g.:
- Don’t sell coffee beans only but the prepared coffee
- Don’t just sell jet engines but “propulsion by the hour” + fuel saving tools + …
Name two reasons why once successful companies fail in adapting to technology changes
- Fear of cannibalization of their current main products
- wrong assumptions about new technologies market growth
Explain the boiling frog dilemma
The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death, as the hot water makes him lose the ability to jump high enough.
Succesful companies might be comfortable in the “warm water”, telling themselves they can always join a disruptive technology when it shows to be profitable in the end. But when waiting too long they will eventually lose touch.
measurement method to show how fast digital service-based business models gain economic value
time to reach 50 Mio Users
- TV 38 years
- facebook 1 year
Explain P/E ratio
Price/earnings
price per share/earnings per share
- high P/E ratio can mean that investors see big potentials in the company so they buy shares even though earnings are small at the moment
Ancient service definition
“Services are anything of economic value that cannot be dropped on your foot”
“All economic activity whose output is not a physical product or construction
adequat service definition
“a change in the condition of a person, or of a good belonging to some economic unit, which is brought about as the result of the activity of some other economic unit, with the prior agreement of the former person or economic unit.”
Draw: Different service scenarios depending on involvement of people and goods / „belongings
see p. 51
What does PPO stand for
Potential, process, outcome
What does IHIP stand for?
Intangibility, heterogeneity, inseparability, perishability
“III” scheme/ service definition with examples
see p. 57
Give an example on how ICT can increase willingness to pay
Individualize products online
“Internet-enabled mass customization”
draw the SOA scheme
see p. 64
draw a scheme to show how software solutions developed from monolithic programs to web service based solutions
see p.65
normal service: Using a pre-programmed piece of software
-> Software is „bound“ into the calling program at build time („tight coupling“)
web service
-> Service is „remotely called“ and „dynamically bound“ at runtime („loose coupling“)
draw the scheme of goods dominant logic
see p.69
draw the scheme of service dominat logic
see p.70
What do we need to co-create value?
Co-creation of value within a system requires:
• to capture resources / information / data (!)
• to share resources / interact
• to optimize from a system point of view
components of smart services (IBM)
intrumented + interconncted + intelligent = smart
explain the complex world of services (services, eservices, digital services,…) in a “map”
see p.88
create a table describing delivery, interface (X2Y) and an example of different service types (services, eservices, digital services,…7)
see p. 89
First P of PPO
Services are independently marketable items that are based on the availability or the use of capabilities/potentials.
Second P of PPO
Internal (e.g. human resources, supplies,…) and external factors (customers or their objects) are applied to produce the service.
O of PPO
The supplier‘s resources are applied to change the external factors (customers or their objects) in order to create value for the customer.
Intangibility (IHIP) Description + Critique
- can’t be dropped on your foot
- changes state/condition of customer
- customer cannot test quality ex ante
- dependence on provider for prediction of quality and making
choices
Critique:
§ Services considered as processes are intangible, but all processes are intangible. Service may be delivered with tangible or intangible resources.
§ Goods can be intangible as well (music, video).
Perishability (IHIP) Description + Critique
§ Unused service capacity is
perished
Critique:
§ Services considered as processes are perishable, but all processes are perishable.
§ Service resources are typically not perishable
§ Goods can be perishable as well (flowers, fresh fruit, daily newspaper)
Heterogenity (IHIP) Description + Critique
§ customer specificity
§ perceived quality varies from one
client to the next
Critique
§ Providers try to standardize services and move away from heterogeneity.
§ Goods can nowadays be highly customized and heterogeneous (cars, fashion).
Inseperability (IHIP) Description + Critique
§ simultaneous production and consumption with regard to time and space § inability to inventory services § no quality-control before consumption
Critique
§ Digital services?
Technical view on service
A service is a software artefact with
the following characteristics:
Self-describing interface
Platform independent
Composable with other services
Based on standards