A Service Dominant Approach

The perennial question: should IT be a service provider? The safe answer is yes. This is the one that won’t get you into too much trouble. The problem is a part of me wants to say no. Well, not so much no, but not exactly or exclusively. The danger in becoming a service provider is that is all you end up being. The two disciplines that have taken this approach to the extreme are IT and HR. Setting themselves up as services, with defined service catalogues, help desks and call centres, etc. Which are the two departments that perennially struggle to overcome the ‘attention deficit’? Exactly.

This is despite the fact they provide knowledge and expertise on two resources that, combined, are woven throughout the organisation and are key to innovation? Let’s look at it another way. Do you see finance positioning itself as a service provider in as an extreme a way as IT and HR? Rarely, this is despite the fact that finance, human resources and IT are all woven throughout the organisation. As a CIO of an Australian organisation on my research project observed: why does finance get away with the service deficiencies he was transforming and improving?

Surely the aim is not to solely be a service provider, but to be service dominant?

The Essence of being Service Dominant

Traditionally, we’ve understood we have ‘goods’ and ‘services’ and these are marketed in different ways. A relatively new theory of marketing is service dominant logic (2004) , in essence this proposes a fundamental shift in world view, the shift being that we exchange services, and goods are just transmitters of embedded knowledge which customers use in a value creation process of their own. The argument being we should market, engage, sell, exchange and relate on the basis of service being the fundamental basis of exchange.

I’m paraphrasing something with a substantial body of knowledge behind it, so we’ll get into more detail later, but for now consider this from the perspective of IT.

As can been seen above, a service dominant approach relates to how IT positions, markets and conceptually understands what it actually does, how it does it and how value is created. We exchange goods all the time with individuals, departments, clients and various other stakeholders be they networks, servers, applications, etc. But it’s not that ‘good’ that is valuable, it’s the service that the ‘good’ delivers and, more importantly, the innovation and value creation individuals, teams and departments can create when they exploit the service.

IT is inherently wired to orientated itself towards a service dominant logic approach. This will be ever increasingly true and failure to recognise this accounts for a core of why IT fails to deliver or is perceived to fail to deliver. This will be even clearer when we look at the foundational premises of service dominant logic in more detail.

The Foundational Premises

The service dominant logic view is built on 10 foundational premises. Originally there was eight, but these got tweaked, modified and enhanced over time to produce re-assessed ten in 2008. We can discuss the delivery of IT in the context of the ten foundational premises of a service dominant world view, as there is a lot of synergy,

In terms of IT “service is the fundamental unit of exchange”, any IT department that doesn’t run on this basis can already be classified as failing. Exactly how this is recognised in terms of practices and processes, be it ITIL or a range of other options, can be subject to debate, but the principle is true. This is because “goods are a distribution mechanism for service provision” both in terms of what IT should recognise as the basis of what is being delivered but also in terms of what the consumer values. The goods that are worked with on a daily basis in the IT landscape be it servers, routers, networks, applications, etc, aren’t offering value in and off themselves, they only offer value through being used, primarily through the services they support.

The definition of ‘goods’ can also be stretched to artefacts produced in the pursuit of projects, analysis work, models in enterprise architecture initiatives, etc. These artefacts, or ‘goods’, are also only a distribution mechanism for the ultimate delivery of service outcomes and / or the exchange of knowledge. They have little value in and off themselves. This can also get lost in many proscriptive methodologies. Agile methods recognise this and are often substantially more service dominant compatible.

Critically, IT experiences an extreme version of “indirect exchange masking the fundamental basis of exchange”. It is all too common for the essence of what is being exchanged between IT and the ultimate consumer to get lost. This happens because IT services are provided through a complex configuration of goods, suppliers, partners and financial arrangements in which attribution of finance to outcomes is complex and not often clear. As well as being complex in and off itself, this can distant staff from the service-based exchange, instead their interest and goals are incidental to the fundamental basis of exchange (service) or potentially at odds with it. The clarification of the critical, fundamental basis of exchange in IT is complex.

Importantly, the IT department “cannot deliver value but only offer value propositions”, this is because the “customer is always a co-creator of value” and the “service-orientated view is inherently customer orientated and relational”. This can often get missed, with IT believing they deliver value through applications and service availability, in truth they only deliver the proposition of value, the rest comes down to the potential of the proposition being engaged with and used by the consumer collaborating with IT to create actual value and, ideally, innovation. An unused application or the service it is the ‘distributing’ has no value!

This can account for a large degree of IT project failures. As a discipline, we have got better at delivering larger and more complex projects, but the errors can often arise in believing the delivery of the ‘technology project’ has inherent value. It doesn’t. The process of the consumer co-creating through a relationship, ideally throughout the project, but certainly post-project, to actual realise benefits and create value is often what goes adrift, which can be just as much to do with leadership across the organisation than it can IT alone.

This can be resolved through IT Governance based on collaborating to realise value. The Governance mechanism acting as a way to ensure desirable behaviours and responsibilities based around recognising value propositions, delivering them and establishing the relationship mechanisms and accountability to ensure that the co-creation process takes place to realise value. It’s not just about control, IT Governance orientated purely around control is already failing.

The co-creation and benefits realisation process around IT is complex because “all social and economic actors are resource integrators” and “values is always uniquely and phenomenologically determined by the beneficiary”. Basically, everyone that touches IT is a potential integrator of resources, be it a manager looking to innovate in his business unit, or a team leader looking for tools to manage his development team. They have the potential to integrate resources, including value propositions from the IT department, or elsewhere, to create value. This value is determined by those who perceive they benefit.

The goal of IT should not be to limit the potential innovation in those actors, but to help, support and advice them. This is going to be ever more true in the proceeding years as IT value propositions to integrate became ever more prevalent and available on demand. IT also has to recognise that what they perceive as value isn’t necessarily what there proposed beneficiary determines as valuable. IT Governance has a large part to play in this area, as well as agile, collaborative based approaches to mapping out benefits and how they can be realised.

Ultimately, accepting that IT is overwhelming orientated, or should be orientated, to a service dominant approach should be an uplifting opportunity for IT. The approach recognises that “operant resources are the fundamental source of competitive advantage” and “all economies are service economies”. This plays to the strength of IT, if leaders are capable of grasping the opportunity. IT effectively lives or dies not on the basis of ‘goods’, but on the basis of resources, very specifically human resources providing intellectual capital which is what is effectively the unit of exchange to enable services with value propositions and co-create value with consumers. This is very much compatible with the resource-based view of strategy, that is uniquely configured resource are what delivers competitive advantage (if utilised on the correct opportunities). This will be increasingly true as IT becomes more infrastructural. It also makes ‘IT’ more integrated into the business and focused on outcomes, not necessarily the many and varied goods.

A Cloud Future

IT is rapidly becoming infrastructural, something you can access on demand at a moments notice like a utility. We still have a bit of a journey to go, but the trajectory has been clear since the late 90′s and Cloud as a concept and model is a significant step in that direction.

As this transition takes place and picks up pace the ‘goods’ element of IT becomes even less important as it can be commissioned quickly and easily as a commodity from resource pools internal (private cloud) and external (public cloud) to the organisation. A service dominant world view will become ever more critical to IT as the ‘good’ becomes ever less uniquely valuable. It will be the co-creation that is valuable and the social and economic resource integrators. That’s why we can’t be too glib about Cloud.

As the senior IT leader in an organisation I wanted to transform the thinking of the development team in terms of the model of project management and how they approached projects. Key to this was hearts and minds, but also a tool that embedded the philosophy I wanted to engender. I didn’t have to commission servers and install software to do this, I just signed-up to project management software in the Cloud. The ‘goods’ became virtually invisible, what was important was the service it made available and the co-creation and business change that could occur around its value proposition so I could begin to lead on changing project approaches.

The agility and availability of IT in the future will make the two key meta-competencies of a service dominant approach critical: collaborative capability and absorptive capability. The various practices and processes used by IT are going to need to be re-orientated around these two competencies. Every practice and artefact produced needs to be focused on increasing collaboration, enhancing organisational learning and the sensing and absorption of new information from across the organisation, clients and the environment. In order to work with various parties in an open, truthful and symmetric manner.

A service dominant compatible approach to IT Governance and critical IT practices (project management, enterprise architecture, benefits management, etc) will be critical in forging relationships, integrating with the business and constantly leveraging knowledge resources and enabling ‘actors’ to integrate and innovate in ways that are desirable. After all, it’s entirely possible it may be the IT practices that are slower and not correctly focused, rather than the availability of the technology in the future.

…And Finally

When asked if IT should be a service provider I tend to think: only in as much as anyone else. Technology is woven through the business and Cloud models will allow IT to work in an agile and engaged manner, due to IT no longer being too damned slow.

The value is in the service provided, the ‘goods’ just being transmission mechanisms. Critically, the service is one of relationships to ensure resources and knowledge spread throughout the organisation are utilised to their maximum, to deliver on value propositions to the organisation, teams and individuals by co-creating value through defining services and innovating off them. Only a highly collaborative, integrated and relationship-based approach is going to deliver.

Are you a service provider? Answer yes or no if we wish, but certainly reply with a service dominant message and approach.