Services with Everything

Services with everything: the ICT-enabled digital transformation of services

The Services Transformations Unfolding
The transformatio of services with ICT tools is dramatic, pervasive and far-reaching. Activities are transformed, firms are turning to services in pursuit  of value, and traditional boundaries are breaking down between products and services.

The Algorithm Revolution Transforms Activities
With the algorithm revolution, tasks underlying services can be transformed into formalizable computable processes with clearly defined ruled for their execution.
Banks, ATMs
Existing activities, when converted into computable processes, often take on new purposes and create news forms of value.

Repositioning Services to Avoid Commoditization
Many products face intense price competition
Firms see services as the solution to creating defensiblepositions in markets. They use them in a variety of ways.
Firm's hardware offerings are incleasingly enhanced in value by ICT-enabled services offerings.
Some firms go further, shifting their core businesses from selling products towards offering services delivered via ICT networks.

Products themselves can be transformed into services when delivered via ICT networks.
Products can become portals to services, or are embedded in services.

The Services Spectrum
Irreducible services: rely on humans to deliver services
Hybrid services: Rely on both humans and electronic toolsto deliver services
Automated services: Rely on ICT or other technologies to deliver services
Conventional sectoral distinctions are collapsing into "value domains"

The Limits of the Transformation: The Need for Human Judgment 
Modern finance is possible only with the ability to analyze enormous amounts of data, to perform complicated mathematical calculations and to act in real time. But how those possibilities are used whether they create widespread benefits or generate disaster depends on the judgments and talents of people.

A Range of Services Business Model Transformations
At one end, firms can use ICT services to enhance traditional business models,  extend traditional business models with ICT Enabled Activities.

The Services Dilemma
The services dilemma pits potential productivity gains against the threat of commoditization. If the services component of a business model or activity is primarily irreducible, it will tend to avoid commoditization resulting from other firms applying ICT tools to achieve similar results. However, it is then susceptible to Baumol‘s productivity trap. On the other hand, if the services component is highly codified and automated, productivity can be won, but at the cost of a continuing threat of commoditization. Thus, the need for innovation in offerings, processes and business model continues.

 The Spiral of Ever Increasing Commoditization and Competition: Pressure from a Global, Digital Era
There has been a spiral of intensifying competition and a resulting commodification of goods and services, that is increasing competition based on price alone as more and more competitors emerge for the routine and established. That spiral is driven by a digitization of information and globalization of markets.

Technology Drivers: Evolving Computing Platforms, Captured by Organizations
The ever increasing processing power, expanded storage, and connectivity meant a whole variety of things. All that brought greater functionality to the desktop, but it also meant small phones, increasing connectivity and distributed sensors embedded in everything. The advent of the Internet as a platform for the delivery of services and business activities ushered in the contemporary era in the transformation of services.

ICT based Services as Production: Recasting the Policy Debates
ICT based services can often be scaled far beyond traditional services.

Services Driving Productivity
Services were once seen as a sinkhole of the economy, immune to significant technological or organizationally driven productivity increases. Services are now widely recognized as a source of productivity growth and dynamism in the economy.

 Capturing the Benefits of the Transformation

• Connectivity  By connectivity, we refer broadly to the availability of ICT networks and tools. The notion of connectivity has evolved over time, causing a parallel shift in the potential role of the government in ensuring connectivity.
• People: Skills and Capacities Even if technology and connectivity are available, they are useless without people capable of using and implementing them
• Government as an Actor