INTRODUCTION TO ASSESSMENT AND DESIGN OF SERVICE SYSTEMS

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INTRODUCTION
Customer Service as a Key Success Factor in Competition

Services continuously gain relevance in all developed economies (Bullinger 1997). They are increas- ingly becoming a key issue in the discussion about growth and employment. Many firms now rec- ognize the need, on the one hand, to strengthen ties with existing customers by offering innovative services and, on the other hand, to win over completely new customer groups and markets. Therefore, concepts for effective service management are relevant for both service companies entering into tougher and more global competition and manufacturing companies setting up a service business to support their core products by enhancing customer loyalty. Not only traditional service providers, but also companies for whom in the past services have only represented a small portion of total business, are nowadays required to satisfy ever-more complex needs by offering a whole series of new services to their customers. In particular, many companies are now awakening to the opportunities not merely for safeguarding and expanding their own competitive position with the aid of innovative services, but also for acquiring entirely new business segments. At the same time, they are confronted with the problem of not being able to avail themselves of the systematic procedures and methods that are essential above all to develop and manage complex services. All too often, many successful services are still no more than the ad hoc outcome of individual projects and the personal efforts of employees or management.

Only a minority of firms have appreciated from the outset that crucial competitive advantages will no longer be secured by advanced technology, cost leadership, or product quality alone. On the contrary, innovative, subtly differentiated services are turning into unique selling features that set a company apart from its competitors, representing a promising strategy for success when it comes to tapping new market potentials. In Europe in particular, the discussion about services has been reduced for far too long to the simple formula ‘‘services = outsourcing = job cuts.’’ The opportunities that lie in the exploitation of new business segments and the accompanying creation of new jobs— especially when high-quality services are exported—have not been fully recognized.

The main objective of this chapter is therefore to provide guidelines for systematic design, man- agement, and assessment of service systems with particular attention to the management of service quality. To this end, fundamental approaches for defining service and service quality are described, leading to a conceptual framework for the structure of service systems. From this an assessment method is derived that supports continuous improvement in service organizations. Additionally, an emerging research area, service engineering, is outlined.

The Need for Systematic Engineering of Services

While there exists a broad range of methodologies, and tools are available on the development of goods, the development and engineering of services have not been a common topic in the scientific literature. The service discussion has focused primarily on such issues as service marketing, man- agement of service processes, and human resource management in service industries. Service devel- opment and design have been largely ignored. Of the small number of authors who have discussed the issue (e.g., Bowers 1986; Easingwood 1986), the majority belong to the service marketing dis- cipline. Approaches based on engineering science are still rare in the service sector to this day. One exception is Ramaswamy (1996). This deficit can be attributed to a single basic cause: the lack of tangibility of services as a research and development goal. That is to say, the development of services is a much more abstract process than the development of material goods or software. So far only a few, very generic attempts have been made to reduce this high level of abstraction and try to capture services operationally as the goal of a systematic development procedure. However, many companies have recently begun (not least as a result of the growing pressures of competition) to rethink their strategies for service provision. They want their services to be ‘‘regular products,’’ that is, reproduc- ible, exportable, even tangible and therefore developable. Services must undergo a systematic design process like any other product.

During the second half of the 1990s, service engineering has emerged as a new research discipline (Fa¨hnrich 1998; Meiren 1999). It is a technical discipline that is concerned with the systematic development and design of service products using suitable methods and procedures. What distin- guishes the development of services from the development of conventional, material products is that with services, the interaction between customers and employees plays a crucial role. Thus, several questions require special attention (Hofmann et al. 1998):

• The design of the customer interface and customer interaction

• The design of the service processes

• The selection and training of personnel

• Optimized support for front-office staff (i.e., those employees in direct contact with the custom- ers).

An interdisciplinary approach is essential for solving development tasks of this nature. Service development must therefore integrate knowhow from a variety of scientific disciplines, notably en- gineering sciences, business studies, industrial engineering, and design of sociotechnical systems. Topics receiving particular attention within the field of service engineering are:

• Definitions, classifications and standardization of services: Until now there has been only a diffuse understanding of the topic of service. In particular, international definitions, classifica- tions, and standards, which are necessary in order to develop, bundle, and trade services in the future in the same way as material products, are currently not available. Research questions to be solved include which structural elements of services can be identified, how they should be considered in the development, and how they can be made operational, as well as which methods and instruments could be used for the description and communication of internal and external services.

• Development of service products: The development and design of services requires reference models, methods, and tools. Research topics include reference models for different cases (e.g., development of new services, development of hybrid products, bundling of services, reengi- neering or redesigning of services) and different service types, analysis of the transferability of existing methods (e.g., from classic product development and software engineering) to the de- velopment of services, development of new service-specific engineering methods, and devel- opment of tools (e.g., ‘‘computer-aided service engineering’’).

• Coengineering of products and services. Offers of successful, high-quality products are often accompanied by service activities. Particularly for companies willing to make the move towards an integrated product / service package methods for combined product / service development are presently not available. Concepts for simultaneous engineering of products and services are necessary, for instance.

• R&D management of services. The development of services must be integrated into the orga- nizational structure of companies. In practice, there are very few conclusive concepts. The consequences of this include a lack of allocation of resources and responsibilities, abstract development results, and insufficient registration of development costs. Research topics include which parts of a company must be integrated in the service development process; which orga- nizational concepts (e.g., R&D departments for service development, virtual structures) are suitable; how information flow, communication, and knowledge can be managed; how the de- velopment process can be controlled; and how a company can continuously bring competitive services to market.

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