bis10 service delivery
TRANSCRIPT
Kollaborative Klassroom Template
Business Information Systems
Service Management
Prithwis Mukerjee, Ph.D.
The Importance of Services
446433 3 1.4Germany 30261163 2.2Bangladesh 30201070 2.2Nigeria 407025 5 2.4Japan 38652312 2.5Russia 20532423 3.0Brazil 35391645 3.9Indonesia 217027 3 4.8U.S. 2823176017.0India 19135155021.0China25 yr %delta S%S%G% A% WWLaborNation
Top Ten Nations by Labor Force Size(about 50% of world labor in just 10 nations)A = Agriculture, G = Goods, S = Services
20042004
United States
.Ref : Emergence of Service Science : James SpohrerServices:Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things.Agriculture:Value from harvesting natureGoods:Value from making productsSo why this workshop. Well,m for one reason the world needs service innovations like never before. In the US alone, the last two hundred years have seen an almost complete reversal in agriculture and services with manufacturing peaking around WW II. And quickly looking at the top ten nations by size of labor force we see they are just time delayed versions of the US economy. Interestingly, Adam Smith and Karl Marx both agreed one thing services were a parasite on the rest of the economy. Nevertheless the rise of the information economy and the rise of the service economy have come hand and hand and so now we ask, since we need service innovations, do we need a service science. I will argue, yes. If we are to understand the connection between innovation and productivity, we need a service science. Innovation is more than technology, it can be business model innovation, organizational culture innovation, process innovation ,and even demand innovation. All of these types of innovation can drive productivity, and a service science, properly defined, will shed light on the causal connection of innovation to productivity.
Why service science? Growing dominance of all world economies. Service science may ultimately be about understanding how to boost human-technology productivity via four types of innovation.
Source:http://www.nationmaster.comOECD reports
Services Marketing : A new paradigm ?
Servicesbroadly defined as acts, deeds, performances, or effortshave different characteristics from goodsdefined as articles, devices, materials, objects or thingss
These characteristics pose an array of vexing marketing problems not faced by goods marketers (many citations)
Developing marketing strategies to address these problems based on knowledge accumulated from goods marketing is often insufficient and even inappropriate
A new paradigm began to emerge: Services are different from goods
Outsourcing : The Boom in Services
Procurement
Perform salesProduction
Customer servicePerformMarketingManage logistics
Develop products
Supplier networkCustomer networkI T Services
Information Systems Engineering
Software Services
Prithwis Mukerjee, Ph.D.
In search of customer satisfaction
Too many things to juggle
Price
Quality
Timeliness
Budget
Fit for use
Value
confusion
Conflict of perceptions
Customer wants
Bare minimum value of services to be
Delivered at fair cost and
In reasonable time frame
Service Provider believes
That he is delivering a vast array of services
At an economic point where
Prices are low
Costs are high
ProviderPerception CustomerPerception Value
Money
Price / valuePrice / value Signing of contract
Conflict of perceptions
Customer wants
Bare minimum value of services to be
Delivered at fair cost and
In reasonable time frame
Service Provider believes
That he is delivering a vast array of services
At an economic point where
Prices are low
Costs are high
ProviderPerception CustomerPerception Value recdValue delvd
Cheated !!Exploited !!Price paidPrice recd At & After delivery
Value
Money
Defining Satisfaction
Satisfaction
Is the product of two factors
Fitment of the product vis--vis their real or perceived benefit
Quality of service in terms of meeting the service level agreements
Requirements
Are inherently fuzzy
Users may not know what they want
Service Level Agreements
Timeliness of delivery
Number of errors detected OR quantum of rework required
Value
Money
Utility X Quality
Price
=Quality expressed as SLA on
defects
schedule
Functionality
Relevance
Importance
etc
Utility
Utility is a broad word
Utility, like beauty, is in the eye of the beholder
Utility can be decomposed into a set of features that need to be supported
Ability to Add / View / Modify / Delete a record : customer, product, whatever
Do far more complex activities like compare, trigger
Any feature can be represented as a deliverable component
Any feature can be supported but with effort
Effort is associated with a cost and hence price !
Utility
Price
=
Utility
Component
X
Component
Effort
X
Effort
Price
To be Increased
To be Decreased
Utility & Features : the beneficial impact
From Intangibles to Tangibles
Utility is sometimes intangible
Components are generally more tangible
Utility
What does a client really need ?
Does he know what he needs ?
What if he is not sure ?
Is there a quantifiable definition of utility ?
MOST LIKELY NOT
Components
Do we have sufficient clarity in terms of what the component is supposed to do ?
Utility
Component
Utility
LowHighLowHighClarity of UtilityBeneficial Impact of Incremental Effort
Save a life
Implementation of an Immunization program
Order Tracking system
HR welfare system
Advertising Programme
Community Welfare Programme
Utility
Component
Effort
Price
Components
LowHighLowHighClarity of Features / Specs / ComponentsBeneficial Impact of Incremental Effort
Custom DevelopmentNew ProductDevelopment
Zero error program
Create a work of Fine Art
Smart Algorithm
ERP PackageImplementation
User Friendly system
Utility
Component
Effort
Price
Service Level Agreements
Quality can be expressed in terms of service levels
There are many kinds of service levels
Number of bugs in the code, number of defects in the service
Time required to deliver the service
The initial product / service
Subsequent bug fixes
Time required to respond to a request
Service levels can in general be met with additional effort
Effort is associated with a cost and price.
QSLA
Price
=
QSLA
Effort
X
Effort
Price
Big Picture
Utility
Component
X
Component
Effort
X
QSLA
Effort
X
Effort
Price
Value
Money
Utility X Quality
Price
==Contract Efficiency
Process Efficiency
RealFuzzyBit
Process Efficiency
How to reduce effort ?
Better skills
Sharing scarce skils
What if you dont have the right kind of skills ?
Better processes
Better governance
Quality Processes
QSLA
Effort
Component
Effort
Methodology
Functional Specification
Program Review ChecklistComplexityDetermination / EstimateTechnicalSpecification
Test
SupportUnit Test PlanProgram Source CodeCode Bundle / DemoUnit Test ResultsSupport(optional)Pre-Production Support
Remote Team ReviewClient
Review Client
Review Remote Team(s)Landed TeamFunctional
Design EstimateTechnical
DesignDeliverTestSupportDevelopMethodology ComponentCommunication
& Coordination
(all teams)
Technical Design WalkthroughCode ReviewClient Sign Off
LegendTask With DeliverableTask Without DeliverableOptional Service AreaProcess Checkpoint
Processes SEI CMMi Level 5 Standards
Level 3 - Defined
Processes in place and understood by all
Level 4 - Managed
Processes under measurement & control
Level 5 - Optimising
Processed under measurable improvement
Contract Efficiency
Effort (orCost ) is a fact but Price is determined by the market
Fixed Price
Most beneficial for the client as he is assured of a cap on his exposure
Not so beneficial when service provider is unable to deliver the service because of cost over-runs.
Penalties are fine but the overall objective was NOT to collect penalties
Time & Material
Most beneficial for the service provider as his exposure is limited
Client will have to pay for the inefficiency and faulty analysis techniques
Is there a middle way ?
Effort
Price
Effort
Effort X Rate
Nature of Services
Development Project
Implementation of certain services
System development
System upgrade
Short(er) duration
6 24 months
Higher degree of uncertainty
Dependence on other factors
Dependence on other system
More demand on flexibility
SLAs are in terms of
Number of errors
Time schedule of completion
Maintenance Project
Support of certain applications
Bug fixes
Enhancements to meet business needs
Longer duration
3 5 years, extending to 10 years
More predictable in terms
People requirements
Time schedules
SLAs in terms of
Turnaround on multiple small transactions
Pricing Strategy
Two stage-pricing strategy
Fixed Price for analysis and design
Fixed price for development and deployment determined AFTER the first stage
Quasi Flexible Pricing Strategy
Unit cost for labour
Determine number of components
Share effort for each component with client and get agreement on overall effort
Fixed price based on this effort
Significant scope change after design phase would be paid for at time and material rates
Contract Negotiations
Ethics and Honesty
Soft Skills
Creativity
Contract should be fair to customer and service provider
Contracts should be fair to both parties otherwise project will never succeed
New, gullible customers can be initially fooled by escape clauses but does not work in the long run.
Many contracts are too biased towards customer and allow scope of significant corruption
Two Stage Contracts
Master Services Agreement : focusing on the various legal aspects
Appendices that are more technical and focus on actual project requirements, deliverables, timelines and cost
Master Services Agreement
Appendix - I
Appendix - II
Structure of the Contract
Master Services Agreement
Definition of Terms
Services to be performed
Compensation, taxes etc
Warranties
Indemnities
Limitation of liability
Ownership of Intellectual property
Confidentiality
Deliverables and Time Schedule
Scope Change Management
Force Majeure
Suspension & Termination of Project
Arbitration
General Provisions
Binding Nature of Agreement
Choice of Law
Designated Contact Points
Appendices / SOW
Overwiew
Scope of Work
Components of the solution
Methodology to be used
Deliverables
Work Plan / Schedule
Cost / Price
Fixed Part
Variable Part ( if any )
Payment Milestones
Out of pocket Expenses
Project Specific Assumptions
Exclusions
To Sum Up .
Requirements
Need to be defined, articulated
Value and utility has to be defined
Process Efficiency
Is the key to striking a balance between
Client Satisfaction
Vendor Profitability
Pricing Strategy
Has to be such that it is fair to both parties and is seen to be fair to both sides as well
Client Satisfaction
Can be only achieved if we can demonstrate value for money
Utility
Component
QSLA
Effort
Component
Effort
Effort
Price
Value
Money
The Devil is in the Detail
Process Efficiency
Development Projects
Maintenance Projects
Project Governance Models
Contract Efficiency
Market Drivers
Estimation Techniques
Creative Contracting
Thank You
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