Axel Kieninger

The Economics of Service Level Engineering

Today, the management of service quality poses a major challenge for many service providers and their business customers. We argue that the trade-off between service cost and benefit incurred by both parties is not sufficiently considered when service quality is stipulated. Up to now, neither in practice nor in academia a commonly accepted engineering approach exists to determine business-relevant performance metrics and associated cost-efficient target values to precisely identify efficient service quality. It can be expected, though, that such a systematically developed and economically well-founded Service Level Engineering approach - based on the individual economic conditions of customer and provider - can enhance the value generation in service systems formed by both these parties. In this work we lay the foundation for the field of Service Level Engineering discussing its constitutional concepts and elements. After developing a generic framework for different Service Level Engineering scenarios, we analyze one scenario - the system view - in detail as a quantitative optimization problem: In particular, we aim at the derivation of cost-efficient target values given business-relevant performance-metrics.

Co-creation of Value in IT Service Processes Using Semantic MediaWiki

Enterprises are substituting their own IT-Systems by services provided by external providers. This provisioning of services may be done in an industrialized way, separating the service provider from the consumer. However, using industrialized services diminishes the capability to differentiate from competitors. To counter this, collaborative service processes based on the co-creation of value between service providers and prosumers are of huge importance. The approach presented shows how the co-creation of value in IT-service processes can profit from social software, using the example of the Semantic MediaWiki.

Simulation-Based Quantification of Business Impacts Caused by Service Incidents

Today, business processes heavily depend on IT, so that business results are affected by the quality of supporting IT services. To gauge the quality of service from a business point of view, we need to consider the service incidents that occur over a reference period and evaluate the effect of each service incident individually. In this work, we address this problem by developing a procedure to monetarily quantify the negative impact of single service incidents on the service customer business.

Business Cost Budgets - A Methodology to Incorporate Business Impact into Service Level Agreements

In this work the authors address an IT service customer’s challenge of selecting the cost-optimal service level agreement among different options offered by an external provider. They model the customer’s optimization problem at distinctive levels of detail with regard to the description of service quality aspects. At each level of detail they explicitly consider the potential negative monetary impact of different service quality levels on a customer’s business process – reflected via the concept of “business cost.†First, they analyze which information a customer typically bases service level agreement decisions upon today and elaborate on the question which additional information a rational customer would need to take a well-founded decision. Second, the authors define a set of concepts that a customer should consider when selecting service level agreements. Third, the authors apply these concepts to develop a “business cost budget method†that enables a customer to compare multiple service level agreements and to select the cost-optimal solution of its optimization problem – assuming customer and provider to collaborate. Introducing this approach, they suggest that both parties jointly define “business cost budgets†as an additional kind of service indicator describing service quality’s adverse business impact instead of only service quality.

Transition and Delivery Challenges of Retained Organizations in IT Outsourcing

Outsourcing their IT is a difficult endeavor for many enterprises. Remaining IT organizations often face a multitude of challenges but lack the necessary capabilities for managing the outsourced services. In this paper, we provide rankings of these challenges with regard to the implementation of retained organizations and their daily business. While the most critical issues arise at the interface with the service provider, the interfaces with the own business units are problematic as well. Our findings reveal that particularly the early involvement of the own business units and the development of sufficient awareness of upcoming changes are key success factors. Our research is based on the results of an extensive explorative study. With our work, we lay the basis for a better understanding of the transition challenges of retained organizations and, thus, a mature implementation and operation of these.

Organizational Models for the Multi-sourcing Service Integration and Management Function

Multi-sourcing is gradually becoming the standard operating mode for outsourcing customers. The complex service landscapes of multi-sourcing settings, however, entail significant challenges for customers. They are struggling with managing the various providers and integrating interdependent services. One challenge is to motivate competing outsourcing providers to work together. In this paper, we present five organizational models to establish a service integration and management function in multi-sourcing. Our findings reveal that service integration and management is differentiated into strategic and operational activities. On the client side, the retained organization is the key organizational unit to perform strategic service integration and management. The organizational entity that performs the operational activities, however, varies with the respective organizational model. Our research is based on a literature review and a qualitative study. With our work, we lay the basis for a better understanding of service integration and management and, thus, more mature multi-sourcing implementations.

Risk-Reward Sharing in IT Service Contracts - A Service System View

The paper analyzes the sharing of risks and rewards in IT service contracts from a service system perspective. Using a formal model, it can be shown under which conditions a risk-reward sharing contract can be advantageous for both supplier and customer and, thus, make the IT service system that is formed by them more efficient. Decision criteria for the selection and suitable design of such contracts are developed. Risk sharing turns out to be advisable in typical situations with IT providers being more or less risk averse than their customers. The application of these results hinge on the progress of measuring risk and risk aversion in practice.

DYNSEA — A dynamic service-oriented Enterprise Architecture based on S-D-logic

Enterprise Architecture is an important basis for aligning enterprise strategy with resources. Using a new perspective on economic exchange — the so-called Service Dominant logic — DYNSEA a dynamic enterprise architecture consisting of interacting service systems is developed. Central to DYNSEA is the co-creation of value with an actively involved customer, called prosumer. In DYNSEA service systems co-create services that are described by functional and non-functional properties and supplemented by meta services for managing the functional and non-functional properties of service.

A Capability Framework for IT Service Integration and Management in Multi-Sourcing

Multi-sourcing, the blending of services from multiple external and internal providers, has gradually become the standard mode of operation in IT outsourcing. It allows companies to assemble a best-ofbreed provider portfolio and to reduce costs. A key difference between singleand multi-sourcing is the potential interdependence between services delivered by multiple providers. To deliver a seamless service to the client’s business units, various services often need to be integrated and managed as an end-to-end service. This activity is denoted as service integration and management. Many clients, however, are having difficulties implementing and performing this important task. Therefore, we explore which IT capabilities organizations need to build for performing service integration and management. After deriving challenges from literature, we perform a multi-stage qualitative study based on a series of focus group sessions and expert interviews. In a qualitative content analysis, we develop a framework of IT capabilities, which enable successful service integration and management by addressing the key challenges. We, thus, aim to contribute to more effective multi-sourcing solutions in practice and to lay the groundwork for future research in this important field.

Towards a Framework of Influence Factors for Value Co-creation in Service Systems

According to modern service science theory, value is jointly generated by several partners forming a service system. In this work, we focus on a simple two-party system consisting of a service provider and its customer. The value created by this service system hinges on the contribution of both parties. That is, it also depends on the collaboration of the customer, which is a key characteristic of services in traditional definitions. Providers, however, lack knowledge on how to identify and measure the influence factors for value co-creation, such as customer contribution. Being aware of customer contribution, providers could design and manage value propositions purposefully. In this work, we provide a first version of a framework of influence factors for value co-creation in service systems, which may serve providers as a guideline for identifying different types of customer contribution.