Service revolution

The global service economy is in a state of upheaval and transformation. The trends and technologies discussed here in SOA are certainly contributing to this coming shift. One thing that we can expect to see is a wider -- and more widely distributed -- array of services available vianetworked technology in the coming years. That will prove to be a threat to some as it was in the recent debate over outsourcing and offshoring, contends Uday Karmarkar,research director at the Center for Management in the Information Economy at UCLA's Anderson School of Management.

But he argues that these concerns miss the larger trend. "As painful as it truly is for people who struggle to find work in a restructuring economy, the unemployment situation will eventually be taken care of by baby boomer retirements and job creation. The real issue then is the loss of service competitiveness. We are now riding a tidal wave of change that we can think of as the industrialization of services. Global competition is on the rise, and some service markets are being invaded by foreign firms and new entrants."

Perhaps more relevant to our readers is the impact that automation technology -- in the form of Web services -- will have on this transformation."New hardware and software systems that take care of back-room and front-office tasks such as counter operations, security, billing, and order taking are allowing firms to dispense with clerical, accounting, and other staff positions," he notes. "And self-service is having a major impact: Why use a travel agent when you can book your own flight, reserve a hotel room, and rent a car online?"

Citing success stories like Thomson's legal publishing division, the professor offers a three-pronged approach (realign strategy; redesign processes; restructure the organization) for companies to follow if they hope to survive and succeed in the increasingly competitive services economy."The company that best understands and anticipates customer needs, delivers consistently high-quality service, and connects to the customer via the channel of choice wins," he adds. "To meet those challenges, top managers must put themselves through competitiveness boot camp, revamping their company's strategy, operations, and organization in the process."