1-3 Fundamentals

Question 1

Which development can be seen looking at industry sectors distribution?

Answer 1

Most key economies have become service-dominated

Employment follows suit – the majority of people in developed countries work in services

Question 2

Example for eService that skyrocketed in the last years

Answer 2

Cloud market growth

Question 3

short definition: eService

Answer 3

Service that can be rendered electronically

Question 4

explain the potential of servitization

Answer 4

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 + …

Question 5

Name two reasons why once successful companies fail in adapting to technology changes

Answer 5

• Fear of cannibalization of their current main products

- wrong assumptions about new technologies market growth

Question 6

Explain the boiling frog dilemma

Answer 6

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.

Question 7

measurement method to show how fast digital service-based business models gain economic value

Answer 7

time to reach 50 Mio Users

• TV 38 years
• facebook 1 year

Question 8

Explain P/E ratio

Answer 8

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

Question 9

Ancient service definition

Answer 9

“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

Question 10

adequat service definition

Answer 10

“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.”

Question 11

Draw: Different service scenarios depending on involvement of people and goods / „belongings

Answer 11

see p. 51

Question 12

What does PPO stand for

Answer 12

Potential, process, outcome

Question 13

What does IHIP stand for?

Answer 13

Intangibility, heterogeneity, inseparability, perishability

Question 14

“III” scheme/ service definition with examples

Answer 14

see p. 57

Question 15

Give an example on how ICT can increase willingness to pay

Answer 15

Individualize products online

“Internet-enabled mass customization”

Question 16

draw the SOA scheme

Answer 16

see p. 64

Question 17

draw a scheme to show how software solutions developed from monolithic programs to web service based solutions

Answer 17

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“)

Question 18

draw the scheme of goods dominant logic

Answer 18

see p.69

Question 19

draw the scheme of service dominat logic

Answer 19

see p.70

Question 20

What do we need to co-create value?

Answer 20

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

Question 21

components of smart services (IBM)

Answer 21

intrumented + interconncted + intelligent = smart

Question 22

explain the complex world of services (services, eservices, digital services,…) in a “map”

Answer 22

see p.88

Question 23

create a table describing delivery, interface (X2Y) and an example of different service types (services, eservices, digital services,…7)

Answer 23

see p. 89

Question 24

First P of PPO

Answer 24

Services are independently
marketable items that are
based on the availability or
the use of
capabilities/potentials.

Question 25

Second P of PPO

Answer 25

Internal (e.g. human resources,
supplies,…) and external
factors (customers or their
objects) are applied to produce
the service.

Question 26

O of PPO

Answer 26

The supplier‘s resources are
applied to change the external
factors (customers or their
objects) in order to create value
for the customer.

Question 27

Intangibility (IHIP) Description + Critique

Answer 27

• 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).

Question 28

Perishability (IHIP) Description + Critique

Answer 28

§ 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)

Question 29

Heterogenity (IHIP) Description + Critique

Answer 29

§ 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).

Question 30

Inseperability (IHIP) Description + Critique

Answer 30

§ simultaneous production and
consumption with regard to time
and space
§ inability to inventory services
§ no quality-control before
consumption

Critique
§ Digital services?

Question 31

Technical view on service

Answer 31

A service is a software artefact with
the following characteristics:

Self-describing interface
Platform independent
Composable with other services
Based on standards