Monday, June 13, 2005

BW: Building a Science of Services

The global economy requires a new way of thinking about how

Technology, R&D, human resources, and management need to combine

Globalization may notbe new, but it has reached an unprecedented scale
over the past few years. Info-tech services companies, in particular,
are finding it advantageous to further globalize their workforce for a
number of reasons beyond simply lower labor costs: high concentrations
of unique skills, huge emerging economies that offer fertile ground
for innovation, and world-class centers of education that can serve as
a lightening rod for talent.

But globalizing a services workforce introduces new and unique
complexities, especially since the efficient management of people's
time and skills can mean the difference between profit and loss for a
services provider. That's why R&D for a services organization
needs to include a focus on the creation of services
"assets," as well as on new methods for improving efficiency
by optimizing the company's business model and its resources.

Services "assets" can include
software, such as a program that automates specific business
processes. Or it can be a combination of an application, business
methods, and services, such as "price-per-seat"
desktop-management services for small and midsize
businesses. Understanding the role of these assets in a services
business helps dispel a concern I hear from some graduate students in
computer science and other technical fields that a services-driven
economy is leading to erosion in fundamental technology research. In
truth, an asset-based approach to services actually creates a new
channel to the market for an R&D organization's technologies.

Services customers are often early adopters of new ideas and
technologies, making it fertile ground for development. Security and
privacy technologies, for example, have been used by insurance
companies to help investigators and auditors identify providers that
may be submitting fraudulent or abusive claims. By working with the
insurance industry, an R&D organization can develop and refine
cutting-edge security, which can, in turn, be shared with other

When it comes to
the best use of services resources -- primarily people -- R&D has
to grapple with the question of how a services company identifies
needed skills and makes them available where, when, and as long as
needed. Clearly, we're not talking a standard supply-chain scenario
here. People aren't machine parts that you can just as easily source
from worldwide suppliers.

Some of the same basic management
and distribution principles should still be applied, as people
represent a far more valuable and significant investment for a company
than parts. But these principles have to be augmented to take into
consideration decidedly human factors. This introduces a host of
variables that add enormously to the task's complexity.

Yet it's being done. Advances in mathematical research have taken our
ability to model such a situation way beyond the basic
"traveling-salesman analogy" -- a well-known mathematical
problem established long ago, where one needs to determine the optimal
order in which a salesman should visit a variety of cities around the
country in order to minimize his travel time and expense.

The complexity of the problem increases with the size of the
organization, as well as the variety of the skills involved. In a
typical services organization with global operations, we're dealing
with a huge number of "traveling salesmen," each with a
variety of changing skills, bouncing between scores of customer
projects, each with different needs and schedules, spread across the
entire world.

Imagine trying to manage all this just by looking at columns of data
on a page. Here, advances in visualization research are coming into
play. Rather than sifting through and interpreting pages of numbers,
visualization technology can provide easy-to-grasp maps. As Doppler
radar images are used to understand the impact of weather patterns on
certain areas, visualization can be used to identify skill gaps in
certain places at certain times over certain project targets.

For the longer term, some of these techniques can also be used to
predict and deal with changes in the overall workforce, such as the
bubble of expected baby boomer retirements, which could mean a loss of
critical experience and skills -- the stock in trade of any services

This is all part of a science of services -- it's not just about the
development of technologies, methodologies, and other assets for use
in the performance of services but the management and engineering of
services operations themselves. And it takes a unique combination of
technical and business-related skills and resources. These incredibly
complex mathematical models, for example, require very sophisticated
and powerful computer systems -- that is, if you expect the
calculations to complete in your lifetime. Fortunately, computing --
and now, supercomputing -- technology has been advancing in parallel,
making these calculations possible.

This is a new and rich field for scientists and engineers. And it
represents an even greater new era of opportunity for businesses. Just
as the optimization of parts supply chains helped drive down the cost
of PCs so every consumer could afford one, so too is the optimization
of intellectual-capital supply chains making the use of outside
resources through services more viable for business, government, and
other organizations. This means they can concentrate on core functions
and offload others where it makes sense.

Access to a more widely dispersed services resource can mean much more
than just closer geographic proximity to an enterprise's worldwide
operations. If properly managed, today's R&D advances can turn
those resources into an efficient, virtual talent pool.

So the traveling salesman may not be earning as many frequent-flier
miles, but his suitcase full of sellable goods will be a lot larger.