1. Services Science: rationales and its raison d'être Dr Diem Ho Member of the IBM Academy of Technology III FORO: “Services, Sciences, Management and Engineering” (SSME) 16-17 September 2008 Palacio de la Magdalena, Santander [email_address]

2. Economic Evolution: moving toward Services and then? Top ten nations by labor force size (about 50% of world labor in just 10 nations) A = Agriculture , G = Goods , S = Services >50% (S) services, >33% (S) services 2004 2004 United States The largest labor force migration in human history is underway, driven by urbanization, global communications, low-cost labor, business growth and technology innovation (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Services: Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things 44 64 33 3 1.4 Germany 30 26 11 63 2.2 Banglad. 30 20 10 70 2.2 Nigeria 40 70 25 5 2.4 Japan 38 65 23 12 2.5 Russia 20 53 24 23 3.0 Brazil 35 39 16 45 3.9 Indonesia 21 70 27 3 4.8 U.S. 28 23 17 60 17.0 India 191 35 15 50 21.0 China 25 yr % delta S %S %G %A % WW Labor Nation

3. The Roles of Higher Education and Its Value Creation Innovations Disseminating knowledge Creating new knowledge Application of knowledge “ Business schools need to have a two-track faculty, with the second track being a clinical faculty, that is, ...those who would bring into the classroom the world of practice and experience”. JEFFREY E. GARTEN (former YSM dean) New Technologies / Knowledge Society/Businesses Develop values Assimilate Acquire Create Discover Understand business challenges Knowledge Cycle

4. Engineering Science Services Science Cost Utility Quality Perception Services Science and Engineering: Value Creation HOW VALUES ARE CREATED Services focus on creating Utility Value or Perceived Value for a product/asset. They are in contrast with Engineering which focuses on Cost and Quality Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things Product-focussed Client-focussed Intrinsic Client perceived Product /Asset Values

5. University Relations © 2007 IBM Corporation Science and Humanity Disciplines Management Engineering Science Services Science Cost Utility Quality Perception Product Values Services Science as a discipline in university

6. 2005 © Route to Market: Servitization vs Productization Products Clients Clients Clients Clients Reusable assets Residues of common assets Productization Servitization Business or Societal Challenges Clients Services Mass Customization Globalization GIE GIE: Globally Integrated Enterprise

7. Economic Evolution: Servitization and Productization Products Services Client’s needs Service complexity Product complexity Products Services Products sophistication nomad agriculture goods services integrating by Integration ? Driver: moving closer to users New Technologies / Knowledge Society/Businesses Develop values Assimilate Acquire Create Understand business challenges Technical Vitality

9. Innovation and Value Creation: Value Matrix Where innovation can target? Can innovation value measured? Where values should show up? Products & Services Governance & Business Integrity Operations/ Processes/ Resources Market & Competitors Customer Intimacy Product/Service Leadership Market Singularity Operations Excellence Regulation Compliance/Social Responsibilities Customers Productivity Profit Revenue Market Share Value Challenges

10. SHAREHOLDER´S VALUE MARKET SHARE PRODUCTIVITY REVENUE PROFIT MARKET SINGULARITY REGULATION COMPLIANCE SOCIAL RESPONSIBILITIES PRODUCTS & SERVICES LEADERSHIP OPERATIONS EXCELLENCE CUSTOMER INTIMACY Ultimate Objective Fundamental Indicators (KPIs) Business Expectation Government/Society Expectation Value Creation Utility Quality Perception Cost

17. About the speaker : Dr Diem Ho is Manager of University Relations for IBM Europe, Middle East and Africa (EMEA). His mission is to build and manage relationships of mutual value for IBM and the academic community. Diem’s past research interests covered many disciplines in Science, Technology and Finance/Economics. He has published widely in physics, mathematics, image processing, remote sensing, engineering, optimization and finance. Last year he co-edited/authored a special issue of the Computational Economics on Stochastic Process and Data Analysis published by Springer. In recent years, he has lectured intensively on Higher Education Reform and is a member of the peer review teams for the EFMD-EQUIS and EPAS accreditation programs and a member of the EPAS committee. He is an associate editor of the journal of Computational Economics and is a member of the IBM Academy of Technology. Before assuming his current position, he was an EMEA practice leader with the IBM Management Technologies Consulting Group, specializing in using Technologies to address Business Challenges in Banking and Finance sector. Before joining IBM, Diem was a university professor and he continues to supervise PhD thesis to-date. Diem obtained two Master degrees and a PhD in Magnetospheric Physics at Stanford University, California.