More On Services- Service Science

[C Ruiz <Cseniornyc@xxxxxxx>]

April 18, 2006-NYT
Academia Dissects the  Service Sector, but Is It a Science? 

By STEVE LOHR
On his Asian trip  last month, President Bush urged Americans not to fear the 
rise toward  prosperity of emerging economies like India. Education, Mr. Bush 
said, was the  best response to globalization, climbing further up the ladder 
of skills to  "fill the jobs of the 21st century."

But a ladder to where? That is,  where are educated young Americans likely to 
find good jobs that will not be  shipped off to India or China?

The answer, according to a growing number  of universities, corporations and 
government agencies, is in what is being  called "services science." The 
hybrid field seeks to use technology, management,  mathematics and engineering 
expertise to improve the performance of service  businesses like transportation, 
retailing and health care â as well as service  functions like marketing, 
design and customer service that are also crucial in  manufacturing industries.

A couple of dozen universities â including the  University of California, 
Berkeley; Arizona State; Stanford; North Carolina  State; Rensselaer Polytechnic 
Institute; and Georgia Tech â are experimenting  with courses or research 
programs in the field. 

The push for services  science is partly a game of catch-up â a belated 
recognition that services now  employ more than 75 percent of American workers and 
that education, research and  policy should reflect the shift. "Services is a 
drastically understudied field,"  said Matthew Realff, director of a new 
program at the National Science  Foundation to finance university research in the 
field. "We need a revolution in  services."

Kurt Koester, a 24-year-old graduate student in engineering at  Berkeley, is 
eager to take part. Yet engineering alone, he observes, can often  be 
outsourced to lower-cost economies overseas.

Mr. Koester's special  interest is biomedical engineering, which combines 
engineering and biology. He  is also taking the services science course at the 
Haas School of Business at  Berkeley. He figures it will someday help him manage 
teams of technologists,  spot innovations and new markets, and blend products 
and services. 

"I  love engineering, but I want a much broader and more diverse background," 
he  said. "Hopefully, that will be my competitive advantage."

His personal  strategy, according to economists, is the best way to prepare 
for an  increasingly global labor market.

"This is how you address the global  challenge," said Jerry Sheehan, a senior 
economist at the Organization for  Economic Cooperation and Development. "You 
have to move up to do more complex,  higher-value work."

Representatives from several technology companies,  including I.B.M., 
Accenture, Electronic Data Systems and Hewlett-Packard, and a  few universities and 
government agencies met in Washington in December to  discuss how to raise 
interest in services science. 

A further step is a  conference on education in services science being held 
at the National Academy  of Sciences today.

Whether services science will ever become a  full-fledged academic discipline 
with departments of its own is uncertain. So  far it mainly consists of 
graduate-level courses and research by professors,  though Berkeley will begin a 
certificate program in the field this fall for  graduate students in the schools 
of engineering, business and information and  management systems.

The melding of fields in services science is sure to  be tricky. Scientists 
and engineers tend to regard what is taught in business  schools as a mushy 
combination of anecdotes, success stories and platitudes,  wrapped in jargon. Put 
a few success stories together, and they become a "best  practice."

Yet a similar skepticism greeted computing decades ago. When  some advocates 
started promoting the idea of "computer science," traditionalists  sneered 
that any course of study that had to add the term "science" to its name  was not 
a science.

Eventually, computing won over the skeptics. And  today, computer science 
departments are academic fixtures.

I.B.M. was an  early champion of computer science, and it is now a leading 
corporate proponent  of services science, sponsoring workshops, awarding 
research grants and helping  develop course materials.

I.B.M. itself is a striking example of the  shift toward services over the 
last decade or two. Once known as a computer  maker, the company now gets half 
its revenue from services. And increasingly,  I.B.M. is moving into 
sophisticated technology services, by working with  corporate customers to automate and 
streamline business tasks like purchasing,  human relations and customer 
relations programs.

In recent years, I.B.M.  has shopped the global labor market, expanding 
significantly in India,  especially for software programming work. But it has also 
reoriented and  retrained its existing work force to support the swing to 
services.

The  researchers in its laboratories were dubious at first. "The response 
here was  there is no science in services," recalled Paul M. Horn, the senior 
vice  president in charge of the I.B.M. labs. "But as people got into it, they 
got  excited by working on the fascinating problems in services."

Baruch  Schieber, 48, is one of the converts. After joining I.B.M. in 1987, 
Mr. Schieber  did basic research and published articles in scholarly journals, 
mostly on  algorithms that optimize computing calculations. Yet the math 
techniques used to  make work flow efficiently through a computer â a complex 
system â can be  applied to other complex systems in business. That is what Mr. 
Schieber did,  first in manufacturing and later in services.

One recent assignment had  Mr. Schieber studying drivers and dispatchers at 
Boston Coach, a limousine  service that operates in 10 cities. His job was to 
create a computerized  optimization system to make sure the company's vehicles 
and drivers in Boston  and New York, where the company handles more than 1,000 
rides a day, were used  as much as possible.

The system gathered real-time data on car locations,  reservations, travel 
times, traffic patterns, airport conditions and flight  times, and it generated 
recommendations to the dispatchers about which car and  driver to send for 
each ride. As a result, the amount of time the cars had  passengers rose 20 
percent, and revenue increased 10 percent.

Today, Mr.  Schieber is working on a project for the National Wildfire 
Coordinating Group, a  team with representatives from five federal agencies 
including the Forest  Service. His task is to use computer models to help determine 
where to station  limited manpower and equipment around the country to minimize 
the destruction  from forest fires. His models use data on terrain, 
vegetation, wind, rainfall,  public records of fires, and other variables.

Across the spectrum of  services, Mr. Schieber sees plenty of opportunity to 
apply his skills. "There's  just so much room for optimization," he observed.

The service sector, to  be sure, is huge and diverse. There are lots of 
service workers in low-wage  jobs, from fast-food servers to janitors. Services 
science will have scant  effect on them. Their incomes are limited by their lack 
of marketable skills,  not by global competition. Those kinds of local service 
jobs are not migrating  offshore.

An accumulation of technological advances is behind the growing  interest in 
services science. High-speed Internet access, low-cost computing,  wireless 
networks, electronic sensors and ever-smarter software are the tools  for 
building a "globalized services economy," said Anatole Gershman, director of  
research at Accenture Technology Labs. "That's what is new here."

The  current wave of technology, according to Mr. Gershman, is the digital 
equivalent  of national railways and electric motors in the 19th century. They 
paved the way  for new companies, among them national retailers like Sears, and 
new kinds of  industrial organization, like assembly-line mass production.

He points to  projects his company is doing as examples of services made 
possible by new  technology. In transportation, networked sensors and analytic 
software are being  used to diagnose the condition of engines. The goal is to 
make the mechanical  upkeep of vehicles like jets and municipal buses more 
intelligent, shifting from  regimented maintenance schedules to as-needed 
maintenance, which can reduce  repair and maintenance costs by 50 percent, he said.

In health care, Mr.  Gershman said, it should be possible to use tiny 
implants to monitor a person's  biological functions, whisk reports wirelessly to 
personalized databases,  automatically analyze the results and send alerts and 
updates to patients and  doctors.

"Just what will be done with this technology we don't know," Mr.  Gershman 
said. "But the significant thing is that we now have the underpinnings  for the 
construction of new services."

Traditional service functions like  marketing and customer service are also 
being transformed by information  technology. The rapid growth of the Web and 
e-commerce has brought an explosion  in the quantity of customer and market 
data, and a computerized means for  tracking consumer behavior.

Today, marketing researchers routinely use  analytic and modeling software 
tools to test hypotheses against statistics from  customer databases, polling, 
economics and sociological studies. "It's really  made the field much more 
scientific," said Mary Jo Bitner, academic director of  the Center for Services 
Leadership at Arizona State University.

Even in  manufacturing, the competitive edge of many American companies lies 
in the  intangible realm of service work. Look at the iPod. Apple Computer 
farms out the  manufacturing of its popular music player to subcontractors in 
Asia. But Apple  designed the iPod and wrote the software for easily finding, 
storing and playing  music. It built the iPod brand, and guided its advertising 
and marketing. In  short, Apple keeps for itself the most intellectually 
challenging, creative  work, which adds the most value and pays the highest wages.

The high-end  work, experts say, typically taps several disciplines and 
requires conceptual  thinking and pattern recognition. Such work cannot be easily 
reduced to a simple  step-by-step recipe. "Those are the jobs that are very 
hard to automate or ship  to India," said Frank Levy, a labor economist at the 
Massachusetts Institute of  Technology. 

Services science is an attempt to give university students a  broader set of 
skills and adopt a broader research agenda for the economy of the  future. "We 
in academia have to find ways to contribute research to improving  our 
economic performance in services and to help students succeed in this  
knowledge-based services economy," said Henry Chesbrough, who is teaching the  services 
science course at Berkeley.