Service Ontology - CiteSeerX

Ontology-Based ELectronic Integration of CompleX Products and Value Chains

IST-2001-33144

Service Ontology

Ziv Baida, Jaap Gordijn, Hans Akkermans VUA

Identifier:

VUA_SO_WP06_01_03.doc

Date:

2003-10-26

Class:

Deliverable

Responsible Partner: VUA Annexes:

Included at the end of this document

Distribution:

Public

Overview:

Contribution to WP6 from VUA

D6.1: Service Ontology

IST Project IST-2001-33144 OBELIX OBELIX: Ontology-Based ELectronic Integration of CompleX Products and Value Chains

The OBELIX Consortium consists of:

LABEIN VUA ONTOPRISE SINTEF PTSS MELHUS ENERGY SENA

Principal Contractor & Coordinator Principal Contractor Principal Contractor Principal Contractor Principal Contractor Principal Contractor Assistant Contractor

Spain The Netherlands Germany Norway Spain Norway The Netherlands

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Control Versions: Version

Date

Author

Description of Changes

01

16-May-03

Ziv Baida, Hans Akkermans, Jaap Gordijn

Creation of Document

02

31-May-03

Ziv Baida

Update, based on meeting with PTSS and LABEIN

03

10-Oct-03

Ziv Baida

Update of ontology, based on energy case study; new chapters on PTSS and energy case studies. New appendix on RDFS implementation.

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Table of Contents CHAPTER 1: INTRODUCTION

10

1.1 TOWARDS A SERVICE ONTOLOGY 1.2 WHAT IS A SERVICE? 1.3 CONFIGURING SERVICES

10 10 12

CHAPTER 2: HELICOPTER VIEW OF THE SERVICE ONTOLOGY

14

2.1 TOP-LEVEL ONTOLOGICAL VIEWS 2.2 RUNNING EXAMPLE: A CREDIT CARD SERVICE 2.3 SERVIGURATION: SERVICE CONFIGURATION 2.4 OPERATIONALIZATION

14 15 15 15

CHAPTER 3: DIVING INTO THE SERVICE ONTOLOGY

17

3.1 SERVICE VALUE PERSPECTIVE 3.2 SERVICE OFFERING PERSPECTIVE 3.3 SERVICE PROCESS PERSPECTIVE

17 20 30

CHAPTER 4: ONTOLOGIES INTEGRATION

33

4.1 VALUE ONTOLOGY 4.2 CONFIGURATION ONTOLOGY 4.3 PRODUCT AND PROCESS ONTOLOGIES

33 34 35

CHAPTER 5: SERVICE ONTOLOGY RATIONALE

37

5.1 SERVICE VALUE PERSPECTIVE 5.2 SERVICE OFFERING PERSPECTIVE 5.3 SERVICE PROCESS PERSPECTIVE 5.4 GENERIC ONTOLOGY

37 37 39 42

CHAPTER 6: BUSINESS BACKGROUND VALIDATION

43

6.1 SERVICE CHARACTERISTICS 6.2 THE 8 PS MODEL 6.3 SERVICE BUNDLING

43 44 45

CHAPTER 7: BUNDLING SERVICES IN THE ENERGY SECTOR

47

CHAPTER 8: BUNDLING SERVICES IN THE PTSS EVENT HOSTING CASE STUDY

48 Page 4



8.1 ROOM RENTING 8.2 COFFEE CATERING 8.3 BUNDLING SERVICE ELEMENTS 8.4 ANALYSIS

48 50 51 54

CHAPTER 9: CONCLUSIONS

55

APPENDIX A: SERVICE QUALITY

57

A.1 THE SERVICE QUALITY EQUATION A.2 SERVICE QUALITY A.3 MEASURING QUALITY A.3.1 THE NORDIC SCHOOL A.3.2 THE NORTH AMERICAN SCHOOL A.3.3 COMPARING SCHOOLS A.4 SERVICES VS. E-SERVICES A.5 EXPECTATIONS A.6 SERVICE EXPERIENCE

57 57 58 58 59 60 61 62 63

APPENDIX B: SERVICE CLASSIFICATION

65

B.1 GRÖNROOS B.2 LOVELOCK B.3 KASPER ET AL.

65 66 66

APPENDIX C: MACHINE-READABLE IMPLEMENTATION

68

C.1 MODELING ISSUES C.2 ONTOEDIT IMPLEMENTATION C.3 RDFS IMPLEMENTATION

68 68 73

List of Figures FIGURE 1 THREE TOP-LEVEL ONTOLOGICAL DISTINCTIONS TO BE MADE IN A GENERIC SERVICE ONTOLOGY: THE CUSTOMER-VALUE PERSPECTIVE, THE SUPPLY-SIDE PERSPECTIVE, AND THE JOINT OPERATIONALIZATION OF THESE VIEWPOINTS IN TERMS OF THE ACTUAL SERVICE PRODUCTION PROCESS .................................................................................................................. 14 FIGURE 2 THE SERVIGURATION PROCESS ............................................................................................. 16 FIGURE 3 SERVICE SUB-ONTOLOGY REPRESENTING THE SERVICE (CUSTOMER) VALUE PERSPECTIVE 18 FIGURE 4 SERVICE SUB-ONTOLOGY REPRESENTING THE SERVICE OFFERING PERSPECTIVE................. 19 FIGURE 5 SERVICE ELEMENT ................................................................................................................ 22 FIGURE 6 TWO DIFFERENT SERVICE ELEMENTS – DIFFERENT INPUTS, BUT THE SAME OUTCOMES ...... 23 FIGURE 7 RESOURCE SHARABILITY ...................................................................................................... 26 FIGURE 8 RESOURCE ............................................................................................................................. 27 FIGURE 9 SERVICE BUNDLE .................................................................................................................. 28 FIGURE 10 SERVICE SUB-ONTOLOGY REPRESENTING THE OPERATIONAL SERVICE PROCESS PERSPECTIVE ................................................................................................................................. 32 Page 5



FIGURE 11 SERVICE/PRODUCT INTEGRATION THROUGH EQUIVALENCE ............................................... 35 FIGURE 12 SERVICE/PRODUCT INTEGRATION THROUGH EQUALITY ..................................................... 36 FIGURE 13 SERVICE BUNDLES, INCLUDING A ROOM RENTING SERVICE ELEMENT ONLY .................... 52 FIGURE 14 TWO POSSIBLE COFFEE CATERING SERVICE ELEMENTS ...................................................... 53 FIGURE 15 SERVICE BUNDLES, INCLUDING ROOM RENTING AND COFFEE CATERING ........................... 53 FIGURE 16 ONTOEDIT IMPLEMENTATION OF THE SERVICE ONTOLOGY: TOP-LEVEL VIEWS ............... 69 FIGURE 17 ONTOEDIT IMPLEMENTATION OF THE SERVICE ONTOLOGY: SERVICE VALUE .................... 70 FIGURE 18 ONTOEDIT IMPLEMENTATION OF THE SERVICE ONTOLOGY: SERVICE OFFERING .............. 71 FIGURE 19 ONTOEDIT IMPLEMENTATION OF THE SERVICE ONTOLOGY: SERVICE PROCESS................ 72

List of Tables TABLE 1 MATCHING CONCEPTS OF THE SERVICE ONTOLOGY AND THE E3-VALUE ONTOLOGY ........... 34 TABLE 2 DELIVERY PROCESS VS. SERVICE OUTCOMES ....................................................................... 41 TABLE 3 8 PS MODEL ANALYSIS ........................................................................................................... 45 TABLE 4 SERVICE QUALITY: COMPARING SCHOOLS ............................................................................. 60

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References Aversano, L. and Canfora, G., Introducing eServices in business process models, In Proceedings of the 14th international conference on Software engineering and knowledge engineering, pages 481–488, Ischia, Italy, 2002. ACM Press. Baida, Z., Akkermans, H., Bernaras, A., Aguado, J. and Gordijn, J. (2003), The Configurable Nature of Real-World Services: Analysis and Demonstration, In Proceedings of the First International Workshop on e-services (ICEC03), pages 46-56, Pittsburgh, PA, 2003, Carnegie Mellon University. Berry, L.L. and Parasuraman, A., Marketing Services: Competing through Quality (New York; The Free Press, 1991) Bigné, E., Martínez, C. and Maria José Miquel, The Influence of Motivation, Experience and Satisfaction on the Quality of Service of Travel Agencies. In Kunst, P. and Lemmink, J. (editors) Managing Service Quality (Volume III), pages 53-70, London, UK, 1997, Paul Chapman Publishing Ltd. Borgowicz, A.A., Delen, L.M. and Lith, D.M. (1990), A synthesised Service Quality Model with Managerial Implications, International Journal of Service Industry Management, 1 (1), p. 27-45 Borst, W.N., Akkermans, J.M. and Top, J.L. (1997), Engineering Ontologies, International Journal of Human-Computer Studies, 46, p. 365-406. Breuker, J. and De Velde, W. V., editors. The CommonKADS Library for Expertise Modelling – Reusable Problem Solving Components, Chapter 12, Amsterdam, The Netherlands, 1994. IOS Press. Carmon, Z., Shanthikumar, J.G. and Carmon, T.F., (1995), A Psychological Perspective on Service Segmentation Models: The Significance of Accounting for Consumers’ Perceptions of Waiting and Service, Management Science, 41 (11), p. 1806-1815 Cendoya, M., Bernaras, A., Smithers, T., Aguado, J., Pedrinaci, C., Laresgoiti, I., García, E., Gómez, A., Peña, N., Morch, A. Z., Sæle, H., Langdal, B. I., Gordijn, J., Akkermans, H., Omelayenko, B., Schulten, E., Hazelaar, B., Sweet, P., Schnurr, H.-P., Oppermann, H., and Trost, H., D3 Business needs, Applications and Tools Requirements, Obelix consortium, San Sebastian, SP, 2002. Dayal, U., Hsu, M. and Ladin, R., Business Process Coordination: State of the Art, Trends, and Open Issues, In Proceedings of the 27th Very Large Databases Conference (VLDB 2001), pages 3–13, Roma, Italy, 2001. Morgan Kaufmann. ebXML website: http://www.ebxml.org, 2003 Gordijn, J., Value-based Requirements Engineering: Exploring Innovative e-Commerce Ideas. PhD thesis, Free University, Amsterdam, The Netherlands, 2002. Grönroos, C., Service Management and Marketing: A Customer Relationship Management Approach, 2nd edition, John Wiley & Sons, Chicester, UK, 2000.

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Gruber, T.R., A Translation Approach to Portable Ontology Specification. Knowledge Acquisition, 5:199–220, 1993. Gruber, T., Olsen, G., and Runkel, J., The configuration design ontologies and the VT elevator domain theory. International Journal of Human-Computer Studies, 44:569–598, 1996. Holbrook, M., Consumer value — A Framework for analysis and research. Routledge, New York, NY, 1999. Janda, S., Trocchia, P.J. and Gwinner, K.P., Consumer perceptions of Internet retail service quality, International Journal of Service Industry Management, Vol. 13 No. 5, 2002, pp. 412431. Kasper, H., Van Helsdingen, P., and De Vries jr., W., Service Marketing Management: An International Perspective. John Wiley & Sons, Chichester, UK, 1999. Kotler, P., Marketing Management, Analysis, Planning, Implementation, and Control, 6th edition, Prentice Hall, Englewood Cliffs, NJ, 1988. Leymann, F., Web Services Flow Language (WSFL 1.0). 2001. Liljander, V., Van Riel, A.C.R. and Pura, M., Customer Satisfaction With e-services: The Case of an Online Recruitment Portal, to be published in the Yearbook of Services Management 2002 – E-Services, (Eds.) Bruhn. M. and B. Stauss. Gabler Verlag. Available at http://www.shh.fi/~liljande/publicationseservices.html (last access: March 2003). Löckenhoff, C. and Messer, T., Configuration, In Breuker, J. and De Velde, W. V., editors. The CommonKADS Library for Expertise Modelling – Reusable Problem Solving Components, Chapter 9, Amsterdam, The Netherlands, 1994. IOS Press. Lovelock, C., Services Marketing, People, Technology, Strategy, 4th edition, Prentice Hall, Englewood Cliffs, NJ, 2001. Mittal, S. and Frayman, F., Towards a Generic Model of Configuration Tasks, In Proceedings of the Eleventh International Joint Conference on Artificial Intelligence (IJCAI-89), pages 1395–1401, San Francisco, CA, 1989. Morgan Kaufmann. Ojasalo, J., Quality Dynamics in Professional Services. Helsinki/Helsingfors; Swedish Schoold of Economics Finland/CERS, 1999. Roest, H., Bijmolt, T. and Pieters, R., Industrialization of Services and the Management of Quality Perceptions and Purchase Intention. In Kunst, P. and Lemmink, J. (editors) Managing Service Quality (Volume III), pages 131-147, London, UK, 1997, Paul Chapman Publishing Ltd. Schreiber, A. Th., Akkermans, J. M., Anjewierden, A. A., De Hoog, R., Shadbolt, N., Van der Velde, W. and Wielinga, B. J., Knowledge Engineering and Management, The MIT Press, Cambridge, MA, 2000. Stefik, M., Introduction to Knowledge Systems, Morgan Kaufmann, San Francisco, CA, 1995. Page 8



Vuorinen, I., Järvinen, R. and Lehtinen, U. Content and measurement of productivity in the service sector. International Journal of Service Industry Management, 9(4):377–396, 1998. Zeithaml, V. A., Parasuraman, A. and Berry, L. L., Delivering Quality Service: Balancing Customer Perceptions and Expectations, The Free Press, New-York, 1990.

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Chapter 1: Introduction

1.1 Towards a Service Ontology A service ontology is required, as we argued in the D3 deliverable of OBELIX, to support the composition of goods and services into a compound end-product or end-service. Such a composition is currently not supported by existing classification tools, which concentrate on physical goods, rather than on services. To that end, we have developed a service ontology. As the term “service” stems from the economic and business sciences, that was also our starting point. Research about traditional services (services that are not offered via Internet) in those sciences is very mature; it is characterized by a broad consensus. Research about e-services (services of which at least one important part – e.g., buying, delivery etc – is realized via Internet) is still at its early stages; it relies on the traditional service research, and searches for the differences between e-services and traditional services. The traditional service research serves as a basis for our service ontology, since we consider the term “service” in its business context, rather than its IT-context; in the IT world the terms “eservices” and “web-services” mostly refer to technologies, rather than business activities with elements as value, costs and benefits. An ontology is a well-structured model. Existing service literature, on the other hand, lacks this characteristic. Whereas economists use well-structured models for many analysis tasks, the related theory is formulated in natural language, just like humans would require. Our service ontology, however, has to be machine-readable. We consequently needed to structure the knowledge available in the service literature, so that it can be made machinereadable. A process of learning and analyzing the service literature, and then structuring the elicited information, resulted in a first version service ontology, which was then tested for suitability in case studies, and adapted. Also research on e-services was taken as input in the process. Our service ontology is first presented as a semi machine-readable reflection of the service literature. Semi, because this document is not machine-readable, but the ontology we present can be formulated in a machine-readable way as well, for instance by using the RDFS-W3C standard. In Appendix C: Machine-Readable Implementation we present also a first version of such a machine-readable implementation of the ontology. We will discuss the service ontology and its elements in this document.

1.2 What Is a Service? In order to understand what real-world services are, we should not so much look at the literature originating from the ICT area, but rather at the work done in the economic and business sciences. Since the late 70s a wealth of research on service marketing and management has been carried out in the business sciences. This literature gives a general framework on what services are and in what sense they are different from physical products. Researchers and writers such as Normann, Sasser, Lovelock, Grönroos, Heskett, Gummesson, Berry, Parasuraman, Zeithaml and others provide a set of concepts that are, in our view, suitable as input material for an ontological description of what services (viewed as Page 10



componential objects) are. Good recent overviews are Lovelock (2001), Grönroos (2000) and Kasper et al. (1999). An important observation for ontology work is that the service area in business science seems fairly mature in that it shows a consensus on many points. Representative definitions of what a service is from the literature often contain the same recurring elements. For example: • Zeithaml and Bitner: “services are deeds, processes and performances…” • Kotler: “…any act or performance that one party can offer to another that is essentially intangible…” • Grönroos: “… activities … of a more or less intangible nature that normally … take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems”. However, as Grönroos (2001) indicates, there seems to be an increasing awareness among researchers, and certainly among practitioners, that it is probably impossible and even unnecessary to continue to debate service definitions. It is submitted that instead of a definition it may be more productive to take more or less common characteristics of services and an understanding of the nature of service consumption as a starting point for the development of a an understanding of how to manage and market services. Following are some more important elements for a service ontology based on accepted concepts in the business science literature: • The 8P model for services. To characterize services, an extension of the famous 4P marketing model (Product, Price, Place, Promotion) for products is helpful. The additional P’s that are special to services are: Process, (customer) Participation, Productivity and quality, and Physical evidence (to show that the often intangible outcomes of services are actually delivered). • Service bundling and packaging. Typically, a service does not stand on its own feet, but in many cases there is a whole bundle of related services (sometimes called the service flower) needed to achieve customer satisfaction. The component-based and configuration-like nature is thus inherent to services. Hardly any of these generic concepts concerning real-world services show up in current eCommerce product classifications or standards for Web Services, a term referring to Internet-based technologies, rather than business activities. Web Services can be defined as “loosely coupled, reusable software components that semantically encapsulate discrete functionality and are distributed and programmatically accessible over standard Internet protocols”1. Hence, Web Services, however necessary and useful they are, cannot really be seen as services in the sense of the business science literature; they are currently rather restricted to Input/Output interface specifications, ignoring the essential customer-value perspective of real-world services. Generally, physical product-related approaches do not scale up to services, because many new ontological distinctions and concepts enter the picture. This has direct consequences for any service ontology.

1 Source: 2003.

http://www.stencilgroup.com/ideas_scope_200106wsdefined.html , last visited May Page 11



Further requirements on any generic service ontology are that its components should be mappable onto configuration task ontologies (e.g., Gruber et al. (1996)). This is feasible, because as mentioned above, the component-based and configuration-like nature is inherent to services. In addition, a service ontology should be consistent with ontologies that describe value creation in eCommerce, e.g. the e3-value ontology that expresses and analyzes eCommerce business models as networks of economic value exchanges between actors. A service is one type of (composite) value object that can be exchanged.

1.3 Configuring Services Imagine the exploitation of a credit card service. Several types of services are offered to various customers. A customer can choose the most simple form of a credit card, or a more expensive card which offers extra services as a free travel insurance, high withdrawal limits, travel assistance abroad, worldwide card replacement in case of loss, linking the card to a preferred supplier (e.g., KLM Credit Card) and more. Multiple aspects of this service offering can be facilitated by websites: ordering a card, transactions listing, buying other services and goods with the card and more. Another example is the online organization of events, such as conferences, board meetings, executive courses, exhibitions, et cetera. Their electronic facilitation requires many capabilities, including a good predefined classification of such events, together with a description of their properties, plus the constraints they pose on, for example, suitable times and spaces (rooms, halls, room setup). Essentially, an ontology is needed that defines the core contents of the service. In addition, electronic facilities should provide the capability to select relevant supplementary services. Such services include a travel insurance and high withdrawal limits in the credit card case, and coffee breaks, video facilities, Internet connection, translation, sound, technical assistance, or catering, in the event organization case. This again in a predefined and standardized, ontology based way, such that associated additional relationships and constraints can be automatically catered for. Next, customer needs, perceptions and requirements regarding a service usually contain many ‘soft’ statements, leave many things implicit, and often necessitate a significant interpretation and transformation step into the provider's ontological vocabulary and the components that the service provider can actually deliver (for example, a credit card that should function as a status symbol has a golden colour; a ‘round-table' meeting with video facilities results in a U-shaped room setup rather than a proper round table). Finally, the electronic support system task is to come up with a feasible design that takes all these elements and constraints into account (Cendoya et al., chapter 2 (2002)). Thus, service provisioning is generally very much a constructive, design-like activity. From the knowledge systems literature it is known that such synthetic tasks are hard, but there are ways to reduce them to more tractable tasks under certain assumptions on the knowledge structures of a domain (Breuker et al. (1994), Stefik (1995), Schreiber et al. (2000)). In particular, configuration is a simpler constructive task, based on the availability of a set of predefined components, connections, and associated parameters and constraints (Mittal et al., (1989), Löckenhoff et al. (1994), Gruber et al. (1996)). Many industries, from the automotive to the software sector, have been historically moving to product configurability through a predefined component-based approach so as to enable more efficient and qualitystable production. The service sector will be no exception. Therefore, we suggest that an important part of a paradigm for the electronic support of realworld services is a generic component-based description of services and what they contain, Page 12



in other words a service ontology, such that electronic design and production of services can be simplified to a configuration task. This task is what we will call serviguration. In a collaborative eCommerce scenario, then, the ideal is to have an intelligent support system that: • contains ontological descriptions of the service bundle contents; • translates customer needs and preferences into terms suitable from the service provider viewpoint; • can deal with all the associated constraints in automatically constructing the requested service in a configuration-like way, supporting the composition of more basic goods and services into a compound end-product or end-service. One major challenge is that the service ontology must be sufficiently generic to be useful across many application domains. We discuss below how such an ontology might look like, and present results from applying the ontology in two OBELIX-related domains: energy services and event hosting. The rest of this document is structured as follows: • Chapter 2 presents a helicopter view of the service ontology. • Chapter 3 discusses the service ontology in detail. • Chapter 4 analyses the service ontology integration with other ontologies. • Chapter 5 presents the rationale of design decisions. • Chapter 6 validates the business background of the service ontology. • Chapter 7 is about the use of this service ontology for the bundling of services in the energy sector. • Chapter 8 discusses the use of this service ontology for modelling event-hosting services. • Chapter 9 concludes this deliverable with conclusions regarding the service ontology.

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Chapter 2: Helicopter View of The Service Ontology

2.1 Top-Level Ontological Views We have developed a generic component-based service ontology, based on the service management and marketing literature. The ontology includes unique characteristics of services (compared to goods), and incorporates both a customer perspective and a supplier perspective. It allows the customer to configure compound services, based on his/her specific requirements and expectations. On a high level of abstraction, a service ontology must embody three interrelated top-level viewpoints or perspectives, as sketched in Figure 1: service value, service offering and service process. The service value perspective describes the service in a customer's vocabulary; the service offering perspective describes it in a supplier's vocabulary; the service process perspective describes how the service offering is put into operation.

Figure 1 Three top-level ontological distinctions to be made in a generic service ontology: the customer-value perspective, the supply-side perspective, and the joint operationalization of these viewpoints in terms of the actual service production process Adding value is the raison d'être of every business. The service value perspective captures knowledge about adding value. First and foremost, it represents a customer viewpoint on value creation: it expresses customer's needs, wants and expectations, and is driven by a customer's desire to buy a certain service of a certain, often vaguely defined quality, in return for a certain sacrifice (including price, but also intangible costs such as inconvenience costs and access time). The service offering perspective in contrast, represents the supply-side viewpoint: it provides a hierarchy of service components (service elements) and outcomes, as they are actually delivered by the service provider in order to satisfy customers' needs. It is important to understand that this perspective is customer-oriented, although it represents a supply-side viewpoint. It is customer-oriented because it represents the supplier’s service, the way a customer sees it. An example for this distinction is the notion of “cheap(er) service”. When we use this term, we mean that the service is cheap(er) for the customer who wants to buy it, rather than that the production costs of the service are low. The need for the service offering conceptualization to be customer oriented is also supported by Grönroos (2000). The service process perspective encapsulates knowledge about putting the service offering into operation in terms of input, process and outcome. It describes how the service is Page 14



actually carried out. In contrast to the usual production process of physical goods, customers often take active part in the service production process (participation relation in Figure 1).

2.2 Running Example: A Credit Card Service We will discuss the ontology using a running example of a credit card service, which has the advantage of being familiar to almost everybody. Applying the service ontology in OBELIX case studies (in the energy domain, and in event hosting) is discussed in separate chapters. In this case study, a person who lives in The Netherlands goes on vacation to a far destination. Instead of taking a lot of cash money with him, he decides to use a credit card. He then orders the card, receives it by mail, goes on vacation, and uses it to buy goods and services. Mostly he pays in shops/restaurants/hotels where he is physically present, but he also uses his card as a guarantee to enable a hotel-room reservation via the telephone. Sometimes he uses the card to withdraw money from ATM’s. Upon return to The Netherlands, he receives account statements in which his transactions can be traced back. To his astonishment, he finds out that he was charged a fee per transaction, next to the annual costs of the card. This cost factor was not communicated to him as he ordered the credit card.

2.3 Serviguration: Service Configuration Three relationships between perspectives are sketched in Figure 1: 1. The service value is translated into service offering (service configuration or serviguration). This process can be split into two sub-processes: a. Transformation process between the customer description of the requested service (service value perspective), and the supplier terms for describing the service (service offering perspective); the latter describe the requested service in supplier terms. b. Defining zero or more sets of service elements (service offering perspective) that satisfy this supplier description of the requested service, and thus also the customer description of his requested service. Our work, as well as the rest of this document, will concentrate mostly on the second sub-process: a task of configuring service elements. 2. The service process is an operationalization of the service offering; 3. The participation of customers (who are part of the service value perspective) in the service production process. The serviguration process starts with customer input (part of the service value perspective), and provides service offering configurations as output, expressed in ‘objective’' supplier terms (i.e., in terms of what actually can be delivered to the customer). Figure 2 sketches the serviguration process, as we envision it. Learning and analyzing this process, concentrating on the configuration of service elements, is scheduled to take place in the next phase in the OBELIX project, due in March 2004.

2.4 Operationalization The service process perspective describes how the service offering is put into operation: it captures the business processes, required to carry out a service, resource allocation (inputs) Page 15



and results (outcomes). Processes can be described using traditional Business Process Modelling techniques. Operationalization is mostly supplier-centred; customers are often mainly interested in the outcomes of the process, and not in how the process is designed. Significant parts of the service process are usually even invisible to customers (e.g. the production of a credit card). Nevertheless, customers can be part of the process. A process may relate to one supplier or involve multiple suppliers, working together in a value constellation.

Figure 2 The serviguration process

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Chapter 3: Diving Into The Service Ontology In this chapter we explain the various concepts that form the service ontology, and provide examples from the credit card running example. We discuss important concepts within all three perspectives of the service ontology. The service ontology is divided into its three perspectives, presented in Figure 3, Figure 4 and Figure 10. Notions that appear in multiple figures are explained only once in a legend. Some cardinalities, as well as concepts and relations of secondary importance were omitted from Figure 3, Figure 4 and Figure 10 for the sake of clarity.

3.1 Service Value Perspective The sub-ontology representing the service value perspective is sketched in Figure 3. Note that whereas the service offering perspective and the service process perspective include the concepts service offering and service process respectively, the service value perspective does not include a concept named service value. Wants. The starting point for the discipline of marketing – whether it refers to services or not – lies in the human needs and wants (Kotler (1998)). The term need refers to what humans need and want (to buy), and is quite straightforward. A formal definition is given by Kotler, who distinguishes needs, wants and demands: • A human need is a state of felt deprivation of some basic satisfaction. • Wants are desires for specific satisfiers of these deeper needs. • Demands are wants for specific products that are backed up by an ability and willingness to buy them. Needs are often vague; the need for “financial security”, for example, can be interpreted in many ways. Customers concretize their needs by translating them into wants and demands, based on their exposure to services and to marketing campaigns. In most cases, when a customer is interested in some service, he has already translated his needs to wants and demands. He has, as a matter of fact, already found a solution for his problem (need). We model the concept demand in Figure 3. Wants and needs are an abstraction of demands; they are not modelled separately in the figure (but they are part of the ontology). Example: feel safe (need); worldwide payment facilities (want); credit card service (demand). Service quality. Service quality is the degree and direction of the discrepancy between the customer's expectations and the perception of the service (Bigné et al. (1997)). It is an aggregation of multiple customer-defined quality requirements, related to a set of quality criteria (e.g., tangibles, reliability, responsiveness, assurance and empathy, see Appendix A: Service Quality). For a thorough analysis of this concept, including a definition of quality criteria, see appendix A. Example: Hardly any mistakes are tolerated (a typically vague customer-definition of the criterion reliability); the service provides comfort (empathy); the employees are friendly, respectful and considerate (assurance); credit card must be small and easy to carry (tangibles). Service experience. Service quality is thus defined by perceived service experience and Page 17



expectations. Perceived service is how the customer experiences the service, based on his interaction with the service organization and on his perception of the service delivery process. Note that the customer’s experience may be very different from the service provider’s perception of the own service. Example: highly reliable service; poor quality; fun. Expectations. Customer expectations embrace several different elements, including desired service, predicted service and a zone of tolerance that falls between the desired and adequate service levels (Berry et al. (1991)). Expectations are based on word of mouth communications, personal needs, past experience and external communications from service providers (Zeithaml et al. (1990)). Some expectations are vague, whereas others are concrete. Example: be able to use the credit card everywhere; feel safe.

Figure 3 Service sub-ontology representing the service (customer) value perspective Sacrifice. Sacrifice represents the costs – both financial and non-financial – that the customer associates with buying a service. In the short term, the sacrifice is the price of the Page 18



service. The long-term sacrifice, on the other hand, includes not only the price but also relationship costs. Grönroos (2000) distinguishes three types of relationship costs: •

Direct relationship costs: investment in office space, additional equipment etc.

•

Indirect relationship costs: related to the amount of time and resources that the customer has to devote to maintaining the relationship.

•

Psychological costs: caused when the staff of a firm feel that they cannot trust a supplier or service provider; unpleasant sensory experience, such as noises and smells. Psychological costs have a major impact on customers’ intention to use the services of the same supplier again in the future (Carmon et al. (1995)).

The sacrifice a customer is willing to bear must match the quality of the requested service; otherwise no service can be offered. Example: the client had to take a few hours off work in order to go to the bank – during office hours – to order the credit card; annual credit card costs; transaction costs.

Figure 4 Service sub-ontology representing the service offering perspective Page 19



3.2 Service Offering Perspective The service offering perspective (see Figure 4) represents the supply-side viewpoint of a service. This perspective centres around the concept service element. Service element. Service elements represent what a supplier offers to its customers, as presented by the supplier to its customers. It is what the business literature defines as service, a business activity (performance) of mostly intangible nature. Examples are money transfer, loans, medical treatment, transportation, haircuts, insurance, Internet connection, electricity supply and cleaning services. The business literature distinguishes three types of service elements, from a supplier perspective: a core service (the main business), a supplementary service with a supporting role (making the core service possible) or a supplementary service with an enhancing role (improving the service's value by adding extra features). Core service. A core service describes how the supplier’s business adds value to a value chain. This is the reason for the supplier’s presence on the market. Note that a firm may have multiple core services. A firm may offer banking facilities as well as insurances as its core services. Supplementary service. A service that accompanies the core service/product, ranging from finance to training. It may be of two types: • Supporting supplementary services are needed in order to enable the core service consumption. In the absence of these services, it is impossible to consume the core service. • Enhancing supplementary services are often considered to be the elements of the service that define it and make it competitive. They increase the value of the service, or differentiate it from those of competitors (Grönroos (2000)); the core service can however be consumed without them. To avoid confusion, note that the use of the terms supporting and enhancing services is author-dependent. The services that we refer to as supporting, respectively enhancing, are called facilitating services and supporting services respectively by Grönroos. Our work, on the other hand, is customer oriented, rather than supplier oriented. Since our service ontology can be used for the provisioning of services for customers, based on their needs and wants, it is important to keep a customer view on services. The customer is not interested in whether or not the service he wants to buy is considered is the core business of a supplier or not. When a customer is interested in some service, that is – for him – the most important thing, and thus the core issue (he is not aware of terminology as “core service”). Moreover, customers are often not aware of the existence of supplementary services (typically, logistical services). Consequently, we do not use the business typology for service elements as such. We will refer to this subject later on in this section. Example: when a customer is interested in “worldwide money transactions”, this is – for him – his core service. However, the provisioning of this service element requires also other service element, such as “filling ATM’s with cash”. In addition, offering free travel insurance for credit card holders as well may enhance the service. Page 20



As mentioned before, the component-based nature is inherent to services. As such, we can identify input- and outcome ports, as well as properties and constraints for service elements. A port indicates a certain resource that is either a pre-requisite for carrying out this service element (input port), or that is the result (outcome) of carrying out this service element. A service element is then characterized by its required inputs and by the outcomes it produces. The notion of ports stems from the technical system theory (Borst et al. (1997)). Inputs and outcomes may be tangible (e.g., a credit card) or intangible (e.g., the ability to perform worldwide money transactions). Some service elements may produce outcomes that are pre-requisites for other service elements. In such a case an outcome of one service element will be the input of another. Since inputs and outcomes may refer to the same thing(s), we call them resources; every port then stands for a resource. Service elements have certain properties that encapsulate business knowledge on the service. They are often referred to as attributes or parameters. We prefer the term properties, since attributes and parameters are loaded terms; they are often associated with primitive data types, as characters, strings or integers. A property, on the other hand, may be of a more complex nature. For example, the property “quality” may be defined by a set of criteria. We identify the following properties of service elements: • Quality. A customer identifies two main dimensions of quality: process quality and product quality. Although this is a generic concept, in accordance with (Grönroos (2000)) and other research, quality definition had to be verified by every business. • Productivity refers to the rate of service production. Whereas it is common to measure productivity within manufacturing industries, this issue is not often dealt with in the service literature. The business literature defines productivity from a supplier point-of-view, as the rate between (1) the quantity and quality of the output, and (2) the quantity and quality of the input (Vuorinen (1998)). It measures the economic performance of a business. Our work is customer-oriented, rather than supplieroriented. A customer is typically not interested in measuring the economic performance of a supplier; when discussing productivity, he's more likely to be interested in the rate between (1) the quantity and quality of the output, and (2) time. In some cases time may play an important role. For example building a new house according to plan A will last a year; building it according to plan B will last 16 months. In other cases the time is constant, and only the quality and quantity are relevant. For example, a movie has a fixed duration, but quality properties as the type of seats, location and bars availability, as well as quantity properties, e.g., the number of seats and the lounge size, will influence customers' choice for one cinema or another. • Sacrifice. As explained in the previous section, the sacrifice may be more than the price. It includes Grönroos (2000) the price of the service, as well as relationship costs (direct costs: investment in office space, additional equipment etc; indirect costs: related to the amount of time and resources that the customer has to devote to maintaining the relationship; and psychological costs: inconvenience, lack of trust, unpleasant sensory experience, such as noises and smells). The (financial) cost of a service is not a constant value, but a function, determined by the supplier. It may change as the service offering changes, as demand fluctuates or based on any criteria of the supplier. • Domain-specific properties may be identified per service. We defined the set of generic properties quality, productivity and sacrifice, based on the business literature. At the same time we acknowledge the fact that these generic properties may not be enough for every real-world case.

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Above properties represent business knowledge about service elements. However, in order to make possible an automated reasoning on service elements, they require a different type of descriptors as well, which we will call attributes. Unlike properties, attributes are not characteristics of service elements (defined in the business literature as business activities or performances of a mostly intangible nature). Instead, they are service descriptors that play a role in automating the support of service elements. We identify the following attributes: • ID. Every service element requires a unique identifier, so that service elements can unambiguously be related to each other. IDs are expressed using the data type STRING. • GroupID. A group ID is a unique name for a group of similar service elements. All members of the group share the same GroupID, but no other service elements do. A group is a set of service elements that deliver the same functionality, but with different properties and/or constraints. For example, all the possible ‘worldwide money transactions’ service elements form a group. A GroupID is required to enable software reason about constraints between service elements. For instance, if we model that service element ‘contracting’ has a supporting function for service element ‘worldwide money transactions’ (a financial institution will deliver financial services only after having signed a contract), the software must be able to “locate” all of the ‘contracting’ service elements. GroupIDs are expressed using the data type STRING. • Name. The name of a service element is a description of its underlying business function. It is described in natural language, and it need not be unique. It is used to communicate to customers, through a User Interface, what this service element is about. Examples are ‘worldwide money transaction’ and ‘travel insurance’. Names are expressed using the data type STRING.

Figure 5 Service element

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A constraint (Gruber et al. (1996)) is a description that limits the permissible values for properties of a service element, in our case (refer to the word ‘properties’ in its dictionary definition, rather than only the above mentioned properties). A constraint may refer to properties, to resources (inputs or outcomes), to attributes, to ports or to relationships between resources. An example constraint from the credit card case is that the amount paid is not higher than the transaction limit of the credit card holder. Two ports are considered identical if and only if their associated resources are identical. The set of all input ports, respectively all outcome ports of a service element form the element’s input interface, respectively outcome interface. Two interfaces are identical if and only if they include the same set of ports, and all their ports are identical. Note that based on this definition, two interfaces of different types (input and outcome) may be identical. Two service elements are identical if and only if: • All their associated ports (and thus resources) are identical • They have the same set of properties (quality, productivity, sacrifice and domainspecific properties) • All their properties have the same values A service element can be a composite concept, meaning that is it built of smaller components, each of which is a service element as well. A service element can thus be decomposed to smaller elements, as long as the smaller service elements can be offered to customers separately or by different suppliers. The smallest decomposed service element is called an elementary service element. The concept service element is visualized in Figure 5. As stated before, a service element is characterized by its required inputs and by the outcomes it produces. Often it is possible to achieve the same outcomes with different inputs. In such a case, the different options will stand for different service elements. This distinction is shown in Figure 6.

Figure 6 Two different service elements – different inputs, but the same outcomes Resource. As explained before, resources can either be required for the provisioning of some service element, or be the result of a service element. The natural way to understand this term is in the sense of resources for carrying out a business process. This is however not the case here. The resources we refer to in the service offering perspective describe what is being offered (which service), rather than how the service is being offered (service process perspective). There may definitely be some overlapping between the two (e.g., a credit card is a resource on both perspectives), but they are conceptually different. Example resources on both perspectives are: • Service offering perspective: credit card transaction fee, the capability to pay electronically Page 23



•

Service process perspective: employees required to carry out the process; office space, machinery required to produce a credit card. We identify several types of resources: • Physical goods: sometimes defined as ’those things that can be dropped on the floor'. Quite often the result of an interaction between customer and supplier may be that the customer has something of a tangible nature, like airline tickets or a credit card. The prime goal of these transfers is not the possession of something tangible. When services are added to a physical product (like car insurance and a car), these services may look more tangible but in fact there is no difference (Kasper et al. (1999)). This concept can be used to link the service ontology with existing product classifications, e.g. UNSPSC, eCl@ss, by means of an ontology import relationship. • Human resources: human resources may refer to the supplier (i.e., employees) or to the customer (own participation in the process). On the service offering perspective we do not model human resources where they are inherent to the service. For example: if a customer orders a credit card, it is obvious that (1) the customer spends some time on it, and that (2) an employee will handle the transaction (or at least those parts of it that cannot be automated). We model the human resources where they reflect costs or value for the customer. An example is a customer serving himself in a self-service restaurant. • Monetary resources: mostly money, but one could also consider stocks or similar value-papers. Monetary resources are, like the earlier presented notion of sacrifice, not a constant value, but a function, determined by the supplier. • Information resources: information may refer to the customer, to properties of the service, to constraints or to other resources. Sometimes information may be of economic value, for example in a news provisioning service or in a weather report service. Suppliers often value information about their customers, when trying to increase customer loyalty. Since suppliers are willing to reward customers for this information, it has economic value and is a resource. However, information resources need not be of economic value. Take for instance the service of Internet connectivity, available in multiple pricing models. The provisioning of this service requires knowledge on the pricing model that a customer has chosen. The pricing model will be a service input, but it is not an object of economic value. • Capability resources: the ability to do something is often of great value. When buying an insurance we pay for the ability to receive some service in case something goes wrong, but often we eventually do not need that service, because nothing goes wrong. In the credit card case, an important resource is the ability to buy products worldwide. • Experience resources: every service involves a service experience. The experience becomes a resource however, when it reflects costs (e.g., the earlier mentioned psychological costs) or value (e.g., an added value of going to Euro Disney is having fun; a Gold credit card is a status symbol) for the customer. • State-change resource: services are "activities... of bringing about a desired change in – or on behalf of – the recipient of the service" (Lovelock (2001)). A variety of objects can be subject to change, e.g., a customer himself (e.g., haircut, transportation from A to B, medical treatment), a physical good (e.g., car repair, shipment of goods) or information (e.g., translation services). In some services the change can be related to a property of some resource (e.g., a car's state changes in a car repair service), whereas in other services the subject of the state-change is not a resource, e.g., a passenger taking a flight undergoes a state change, but he is not a resource. In such cases the economic value of a service, from the customer point of view, is a change of state: the customer was in Amsterdam, and now he is in Sydney. He pays for this change of state. Page 24



Resources may be either tangible (physical goods, human resources) or intangible (monetary resources – since money can have a digital form, information resources, capability resources and experience resources). A resource has constraints and several properties: quality, productivity, state and possibly other, domain-specific properties. Identifying and defining relevant properties and constraints is a domain-specific task. We add a few more properties for resources2: • Type. Physical resources, human resources etc. • State. The change of state is a main characteristic of services, as we have explained. For example, in a room renting service element, the resource room has a state available as input, and a state reserved as outcome. Note that a service element does not have this property, since it is not the state of a service that changes. • Sharability. A resource can be shared if it is still available for consumption, after having been consumed already. When bundling service elements A, B and C (and possibly more) into service bundle X, service element A may have a service outcome that is required as a service input for service elements B as well as C (and possibly more). If this resource (outcome/input) is sharable, it can be used as an input by both B and C, and not only by one of them. In a different scenario, this service outcome of service element A is required by service element B, but will also be part of the outcome interface of service bundle X (implying that it can be consumed by an external entity).These two scenarios are depicted in Figure 7. Sharability is expressed by a number between 1 and infinite, standing for the number of times that this resource may be consumed. Sharability 1 means that a resource cannot be shared. • Compositeness refers to whether and how two or more resources of the same type (possibly, but not necessarily resources of different service elements) can be united into and modeled as one resource, when they appear in the same interface. Resources may either not be united into one resource (e.g., tables of type A, and tables of type B -- both physical resource -- cannot be united into one resource ), or they may be united by some formula. The formula may be simple (e.g., add the values of both resources) or a more sophisticated function. A common example for the compositeness property is the (financial) costs of services. If service element A costs 5000 Euro, and service element B costs 3000 Euro, the bundle may cost only 7000 Euro (the new price is calculated by a formula).

2 In order to fully understand two of these properties, it is necessary to be familiar with the term 'service bundle', presented later on in this section. For the time being, it suffices to say that a service bundle is a set of service elements, so that one service element may produce resources that another service element consumes.

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Figure 7 Resource Sharability Two resources are identical if and only if: • They have the same set of properties (type, quality, productivity, state and domainspecific properties) • All their properties have the same values A resource can be of one of the earlier mentioned types. Once a resource is associated with an input- or outcome-port, it becomes a service input or a service outcome. A service input is thus a resource that is a pre-requisite for a specific service element, and a service outcome is a resource that is the result of a specific service element. Those two terms make it easier for us humans to understand that resources may be required for providing a service, or be the result of providing a service, but in fact they are the same thing: a resource. The same holds on the service process level: a resource is called service input or service outcome only when it is related to some process. The concept resource is visualized in Figure 8. Example: in the case of using a credit card for buying a product, the resource payment value (monetary), representing the value of the transaction, has a state reserved as input, and a state spent as outcome. Page 26



Figure 8 Resource Service outcome. Every service element eventually results in one or more tangible and/or intangible service outcomes. They are an objective external representation of the supplier’s service elements, meaning that by delivering service outcomes to a customer, the related service elements have been provided. Service outcomes are thus objective service descriptors; they are therefore sometimes used to measure service quality. Service elements are eventually mapped into service processes; those produce processlevel service outcomes. For that reason, service outcomes belong to the service process perspective as well. Example: a customer has a credit card (physical good); a service is accessible 24x7 (capability); a customer can buy goods and services (capability). Service bundle is a set of service elements, offered to customers. A service bundle, being a complex service element, also has an input interface and an outcome interface, as defined for service elements. Service elements can be bundled in two ways: 1. Service elements A and B can be bundled if one or more outcome ports of A and one or more input ports of B refer to identical resources. 2. Service elements A and B are bundled into a service bundle if: o The input interface of the service bundle is equal to the union of the input interfaces of A and B (taking the compositeness and sharability properties of resources into consideration), and o The outcome interface of the service bundle is equal to the union of the outcome interfaces of A and B. (also taking the compositeness and sharability properties of resources into consideration) The first type of service bundle reflects a set of related service elements. Their relation may be of varying degrees. In the extreme case (see Figure 99a), the outcome interface of service element A is identical to the input interface of service element B; we call such two service elements strongly connected. In weaker cases only one or more of the outcome ports of service element A is/are identical to input ports of service element B; we call such Page 27



two service elements weakly connected (see Figure 9b). The second type of a service bundle is less classic, but yet very common. Imagine a case that multiple services are provided together, although they are not related at all. Of course, there always exists some logic behind the bundling. For example, the service provider has the capabilities to provide Internet connectivity, as well as TV programs via the same cable. We call such services independently connected (see Figure 9c). Note that although these examples and explanations refer to the bundling of two service elements, they can be generalized to the bundling of any number of service elements.

Figure 9 Service bundle Service offering is a set of one or more service elements and service outcomes. Both service bundle and service offering describe which elements of value a business offers to its customers. The difference between a service offering and a service bundle is that the latter does not include a direct reference to the service outcomes, associated with the service elements. The service offering, on the other hand, may include the service outcomes without service elements. The need for the notion service offering, next to the notion service bundle, stems from customer’s inclination to assess a service based on some observable outcomes. The service offering does not have to include all of the outcomes, associated with its service elements, but only a subset thereof – the subset that is of interest for a customer at certain circumstances. The service offering may therefore be of use in the transformation process of customer input (service value perspective) into a supplier description of the service (service offering perspective). Supplier. The term supplier is quite straightforward; it is an economically independent entity Page 28



that offers services and/or goods to its environment, in return for certain sacrifices. An important ontological decision is defining the relation between a supplier and a service element: does a supplier supply a whole service bundle, on the one extreme? Or only an elementary service element, on the other extreme? The first option contradicts with the goal of enabling collaborative eCommerce scenarios, where a customer can bundle services of multiple suppliers. It seems undesired and not useful to limit the relation between a supplier and a service element. We therefore decided to link an elementary service element to one supplier. An elementary service element is supplied by one supplier. A complex service element – in essence a service bundle – can be offered by multiple suppliers. Function is a relationship between two service elements, that defines the dependencies between these service elements. It represents a constraint on how these two service elements may or may not be bundled. This is not like the earlier mentioned constraints, that refer to the internal characteristics of a service element. A function is thus a constraint of the configuration (or: bundling) of services, rather than on the service elements themselves. A Function is defined as a formula, that receives two inputs of type ‘service element’ (A – the dependee, and B – the dependent), and produces as output a set of possible configurations of these two inputs. The constraints, represented by functions, are business driven. For example: •

Two services provide the same benefits for customers, and can therefore be used as substitutes

•

The provisioning of one service element requires the availability of some equipment, that is provided with another service element. Consequently, consuming one service element requires the consumption of the other service element as well.

•

Two service elements can be bundled to reduce operational costs (e.g., one billing service element instead of two)

•

The provisioning of many services requires also some billing service. Thus, a billing service is most likely to be bundled with practically any service element. In that case, it will be classified as a supporting service, according to the definition given earlier in this chapter.

•

A travel insurance service adds value to a flight: if anything goes wrong (customer gets ill, luggage is lost etc), the customer is assured to be assisted and/or compensated. A supplier that offers flights may therefore decide to offer travel insurances as well: by increasing the value of his service offerings, he improves his market position. For a customer who is interested in a flight, the flight will be his core service: the main service he wants to buy. He can buy also a travel insurance, which will be an enhancing service element: it is not required in order to make possible the provisioning of the core service element, but it adds value to it.

Every service element may have a number of functions (e.g., each possible “money transactions” service element will have a ‘enhancing/core function with all of the “travel insurance” service elements). We defined the following types of functions (with A, B as service elements): 1. Enhancing/core (A, B): B is an enhancing service of A (and thus A is a core service of B). This means that service A is a main service a customer is interested in, whereas service B: Page 29



2.

3.

4.

5.

a. Is not required for the provisioning of service element A b. Adds value to service element A c. Is an optional service element, next to A This function implies that if a customer wishes to buy service element A, he is presented with the option to buy also B, but he is not obliged to buy B as well. It can be denoted as: A Æenh B Output: {A], {A,B} Supporting/core (A, B): B is a supporting service of A (and thus A is the core service of B). In business terms, it means that A cannot be provisioned without B, or: A Æsupp B Output: {A,B} Very often B will not present value as such for customers (e.g., billing services), but yet it must be provided to enable the provisioning of A. This function implies that if a customer wishes to buy service element A, he is obliged to consume service element B as well. Bundled (A, B): Also in this case, if a customer wishes to buy service element A, he is obliged to buy also B. However, the reason is different. In this case service element B is not a supporting service element, but the bundling is required due to some business logic, such as: a. Cost efficiency reasons b. Legislation c. Marketing reasons It can be denoted as: A Æbund B Output: {A,B} Note that when using this function, we mean that two services must be bundled, and not that they may be bundled. Substitute (A, B): The benefits presented by A (in terms of service outcomes) for a customer are also presented by B (but B possibly offers more benefits). B can therefore be bought instead of A. Customers can then choose which one of them they prefer. They can, of course, also choose for both of them. It can be denoted as: A Æsubst B Output: {A}, {B}, {A,B} Note that this is not a transitive relationship: A Æsubst B does not mean B Æsubst A as well. Excluding (A, B): If service element A is consumed, service element B may not be consumed. This may have several reasons, e.g., a. Business reasons: A and B are competing services, and the supplier does not want to provide them together b. Legislation prohibits selling both services together It can be presented as: A Æexcl B Output: {A}

3.3 Service Process Perspective The service process perspective is presented in Figure 10. Page 30



Service process. Service process is the core of the service process perspective; it includes all the business processes required to make possible the offering of a service element. The service process is concerned with how the process of service production and consumption is organized within the supplier’s organization, and with the customer’s involvement in that process. It may be specified using existing technologies as ebXML (ebXML (2003)) or WSFL (Leymann (2001)). Example: customer registration, international money transfers. Delivery process. The delivery process is mentioned by Lovelock as a component of the service offering (Lovelock (2001)). Since there is a broad consensus in the service literature, claiming that service production and consumption cannot be separated (Lovelock (2001), Kotler (1998) and more), we represent the service delivery as part of the service process concept. It is the part of the service process, which is visible for the customer. Service processes are executed by a series of service encounters, when customers and employees meet. Note that there are situations where the customer as an individual does not interact with the service firm (e.g., a plumber enters the university to fix a leak while an employee is not in his room) (Grönroos (2001)). Example: ordering a credit card; withdrawing money from ATM’s; using a credit card to make a hotel room reservation via the telephone. Invisible service process. All parts of the service process that the customer is not exposed to. The customer is mostly not interested in how they are executed, but only in their result. Since our ontology is customer-driven, invisible service processes are of secondary importance in our work. Example: a credit card company maintains Service Level Agreements with banks. Service input. Inputs are resources used to produce service outcomes. They can be tangible or intangible; some may be consumed (e.g., food), whereas others continue to exist after the process terminates (e.g., offices). Example: bank employee; customer (a credit card will not be used without the active involvement of its holder); ATMs. Service outcome. The service process results in service outcomes. This concept belongs conceptually to the service process perspective, since it is the output of the process; we nevertheless included it also in the service offering perspective, where service outcomes eventually play a role in the service configuration process, for which this ontology will be used. Example: a credit card (physical good).

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Figure 10 Service sub-ontology representing the operational service process perspective Service inputs and service outcomes are subclasses of the earlier presented resources; they may be of any of the earlier mentioned types, or possibly other types. As explained in the previous section, resources on the service process perspective may be different from those on the service offering perspective, since they refer to how the service is offered, rather than what is offered.

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Chapter 4: Ontologies Integration Hardly any work is stand-alone work, since everything exists within some environment: a context in which it functions. A business’ environment includes the competitors, the market segments it aims at, possibly legislation and more. An information system’s environment includes the place where it is used, the stakeholders who are involved in it and the goals it is designed to achieve. The service ontology’s environment includes the information systems and ontologies it will be used with, the actors involved in using it and more. In order to be successful, a system – in its broad definition and thus not only an information system – must fit in its environment, and thus be integrated with other components within that environment. In this chapter we examine issues related to integrating the service ontology with other relevant ontologies. Ontologies integration is a process of finding and defining commonalities between the ontologies. Since ontologies are formalizations of terms (concepts) and relations among them (Gruber (1993)), integrating ontologies is the process of mapping overlapping or similar concepts in those ontologies. Thus, two ontologies can be linked, when they include common (the same), or very similar concepts. In the rest of this chapter we examine how the service ontology can be integrated with other ontologies.

4.1 Value Ontology A value ontology can be used to evaluate financial feasibility of business models. The OBELIX project includes the e3-value ontology, a value ontology for exploring eCommerce ideas. It is based on the exchange of value objects (e.g., money, rights, or anything else that is of economic value for at least one of the actors involved (Gordijn (2002))), and deals with the kind of value, rather than with what the value actually is in specific cases. Table 1 presents a mapping between concepts of the service ontology and the e3-value ontology. e3-value Ontology Actor

Service Ontology

Discussion

Customer, Supplier

The e3-value ontology is about exchanging value objects between economically independent actors. Customer and supplier are the most basic actors in every service offering or service bundle. The service ontology does not link the concept supplier with the concepts service offering or service bundle, but with the concept service element (reflecting a core service or a supplementary service). As a result, a service offering/bundle can be offered by a group of suppliers, each of which supplies a different service element (e.g., Amazon.com provides books, but DHL caters for the shipping). The service ontology enables the customer to obtain his required service elements from one or more supplier(s). The e3-value ontology then enables understanding the financial feasibility of that model, from the suppliers’ perspective. Page 33



Value activity

Service element

Value Object

Resource

A value activity is a collection of operational activities which can be assigned as a whole to actors (Gordijn (2002)). A service element is a collection of one or more elementary service elements, that a supplier (or possibly a set of suppliers) offers to a customer. Actors exchange value objects in the e3-value ontology. The customer has some demands, which can be met by the supplier’s service elements and related service outcomes. Those outcomes are the supplier’s value, from the customer’s point of view. In return for (satisfying his needs and wants through) service outcomes, the customer offers a sacrifice to the supplier: money (monetary resources) and possibly some relationship costs (e.g., experience resources, human resources). These are service inputs. Since the service ontology is customer driven, it presents the complete picture of a supplier’s value for the customer (in the form of service outcomes). That relation does not hold in the reverse direction: since the service ontology is not supplier driven, it shows only some of the value that a customer offers to the supplier. For example, the switching from one supplier to a competing one is a value object that a customer can offer to a supplier; this, however, is not modelled by the service ontology. Resources modelled by the service ontology may be value objects, in terms of the value ontology.

Table 1 Matching concepts of the service ontology and the e3-value ontology Note that the concepts value interface (e3-value ontology) and input/outcome interface (service ontology) are not equivalent. Whereas in the e3-value ontology a value activity may have one or more (possibly many) value interfaces, and the value activity can be made possible by a subset of its (possibly many) interfaces, in the service ontology a service element has exactly two interfaces (of differing types), and it requires both of them to be complied with, for the service to be provided.

4.2 Configuration Ontology Integration between the service ontology, developed by the VUA and the configuration ontology, developed by LABEIN, is in fact the main issue in the serviguration process: configuration of services. This integration is feasible, because as explained above, the component-based and configuration-like nature is inherent to services. The task of integrating both ontologies is part of the next phase in the OBELIX project, due in March 2004. We nevertheless considered it already, and developed a general idea of how this integration will take place. Integrating both ontologies will be centered around the concept component, the building brick of a configuration. Service elements are captured as components, with ports, properties and constraints. The two earlier presented ways of creating service bundles correspond with the two types of configurations, as presented by he configuration ontology: • Bundling through identical ports (strongly connected and weakly connected service Page 34



•

elements) corresponds with a configuration through connections. Bundling independent service elements corresponds with configuration through association.

The integration process will be performed mainly in cooperation between VUA and LABEIN; other partners will participate in case studies during this process.

4.3 Product and Process Ontologies A standardized product classification scheme facilitates the selling and buying of products, by providing a common, machine-readable coding for products, and thus facilitating the exchange of information between suppliers and customers. Example schemes are UNSPSC, eCl@ass, RosettaNet and NAICS3. As explained in D3 of OBELIX (Cendoya et al., chapter 10 (2002)), those are supplier-oriented classification schemes for products. Note that the notion products stands for physical goods as well as services. Nonetheless, the focus of these schemes is on physical goods, rather than services. The service ontology includes the notions physical good and service element. Both are subclasses of the notion product. Product ontologies refer mainly to physical goods. They can be integrated with the service ontology through the equivalent concepts (see Figure 11) product (product ontology) and physical good (service ontology). Product ontologies where the term product refers to both physical goods and services, can be integrated with the service ontology by adding a superclass product to the concepts physical good and service elements; this superclass will then be equal to the concept product in those product ontologies (see Figure 12). Note that the relation service element uses physical good is an indirect one. The ontology includes the relation service element uses service input. The latter is a resource, and physical good is a subclass of resource.

Figure 11 Service/product integration through equivalence

Process ontologies facilitate the exchange of information regarding business processes. Examples are the Process Specification Language (PSL), WFML and ebXML. These are naturally supplier-oriented, since the customer is typically not interested in modelling the supplier’s business processes. Just like product ontologies, also process ontologies can be integrated with the service ontology by importing them (see Figure 10). Such integration may be of great importance for service management goals, but at the moment we see no role for it in the customer-oriented serviguration process, since this process does not concentrate on the service process as such.

3 UNSPSC: http://www.unspsc.org, eCl@ss: http://www.eclass.de, RosettaNet: http://www.rosettanet.org,

NAICS: http://www.census.gov Page 35



Figure 12 Service/product integration through equality

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Chapter 5: Service Ontology Rationale As explained before, the service ontology presented in chapters 2 and 3 is based on the service marketing and management literature. Nonetheless, our work wasn’t limited to translating economic and business terms, expressed in natural language, to a machinereadable model; we considered various interpretations for numerous terms, and made multiple design decisions. In this chapter we present the rationale behind the decisions we made in this process. Multiple service-related concepts are important for service marketing activities, but do not play a role in service configuration, the reason behind our service ontology. Consequently, we chose not to include those concepts in our ontology, unless they were very basic ones. In that case, we included them for the sake of completeness.

5.1 Service Value Perspective Customer satisfaction Customer satisfaction is a main pillar of the service marketing and management disciplines; many authors address this issue, and research has been trying to find ways to measure satisfaction, a very supplier-oriented activity. Our service ontology, on the other hand, is customer-driven and serves for configuring services from the customer’s point of view; the customer satisfaction does not play a notable role in this process, and is therefore not modelled in the service ontology. Sacrifice Customers’ sacrifice is not limited to money, as explained before. Sacrifice plays a double role in the serviguration process: the customer gives an indication of acceptable sacrifice as input for the process. The process then produces configurations as output; each configuration has a price tag, an indication of the required sacrifice. In case studies we have performed so far, the sacrifice was limited to the financial costs of a service. Other services may definitely include relationship costs. We therefore model both in our service ontology.

5.2 Service Offering Perspective Service offering The term service offering is also referred to as the service package model (Grönroos (2000), Lovelock (2001)). It describes the bundle of services that are needed to fulfil the needs of customers in targets markets (Grönroos (2000)). This package, then, determines what customers receive from the organization, but it does not consider the (perceived) quality of the service package. This shortcoming is probably due to the fact that the service package model was developed to help businesses develop a service offering, in the sense of what they should offer to their customers. Ensuring high quality was not part of the decision what to offer. Service outcome The lack of customer-defined quality measuring criteria for the service offering is crucial from the customer’s perspective; a customer is very often interested in the quality of a service, before he decides whether or not to buy it. Since our ontology is customer-driven, we were Page 37



required to add this new dimension to the service offering. As explained before, the service offering is a customer-oriented, supply-side viewpoint. The quality dimension must therefore be customer-oriented (i.e., describe what a customer can observe), but also supply-driven (i.e., an objective description of what the supplier offers). To fill that gap, we introduced the concept service outcome. It is an objective description of the results of buying a service (supply-driven), the way a customer can observe it (customer-oriented). The business literature does not discuss this customer-oriented concept as such. It often characterizes a service as “having intangible outcomes”, but those outcomes are not discussed as a business-term. Instead, it focuses on supplier-oriented concepts: core service and supplementary services. This in inconsistent with the acknowledgement that customers do not buy goods or services, they buy the benefits goods and services provide them with (Grönroos (2000)). The latter statement is crucial for understanding the need to introduce the concept service outcome: service outcomes are an objective reflection of those benefits. Also other concepts that the business literature discusses, e.g. delivery process and distribution channel, incorporate a supplier-oriented perspective. We will argue in section 5.3 that it’s not the delivery process and the distribution channel themselves that the customer cares about; he is interested only in the consequences of the delivery process or of choosing some distribution channel. And those are expressed as service outcomes. Service outcomes should ideally satisfy the customer’s needs and wants. A subset of the needs and wants can be satisfied with tangible items, whereas others are of intangible nature. Service outcomes can be of either type: tangible or intangible. The quality of a service refers to the technical quality (what the customer receives), the functional quality (how service is performed) and reputation (Grönroos (2000), see Appendix A). All three are covered by the concept service outcome. Examples from the credit card case study are: • Technical quality: a customer has a credit card (tangible); a customer can buy goods and services (intangible) • Functional quality: a service is accessible 24x7 (intangible) • Reputation: a customer owns a status symbol (tangible, in case of a Gold card) The place of service outcomes in our ontology has evolved during the process of creating the ontology. At first, when we modelled information from the business literature, service outcome was solely part of the service process perspective, with the following relation: service process results in service outcome. At a later stage we realized that a customerdriven perspective of service should concentrate on the service outcome, rather than on the supplier-oriented service elements. We then included the service outcome in the service offering perspective, as well as in the service process perspective, and added the following relation: service element results in service outcome. To conclude, whereas the service literature does not analyse the term service outcome as a business term beyond discussing the intangible nature of service results, we consider it to be part of a customer-oriented service offering perspective. Image Several authors emphasize the importance of the concept image (or: brand) in determining the perceived service quality. Many customers are willing to pay extra, if they receive their service or good from a company with a certain image. For marketing this is indeed an important issue. We are however not interested in the image itself, but in what is behind it. For example, an image can stand for a status symbol (e.g., Ralph Lauren clothing vs. Hennes&Mauritz), or for safety (Volkswagen vs. Hyundai). The added value of Ralph Lauren and Volkswagen is not their image itself, but what the image stands for: a status symbol and safety – both are outcomes of buying the specific services/goods from those suppliers, rather than from other suppliers. For that reason, we did not model the concept image as an Page 38



independent concept related to the service quality (service value perspective). Instead, it is a type of intangible service outcome, which is part of the service offering perspective. Service classification A great number of service classification schemes or criteria can be found in the service literature. Examples are given in Appendix B. Every classification scheme fits the reason of using it. We found that all classification schemes are supplier oriented, and lack the componential structure that is required to configure services. The classification schemes are another example of a management tool that is not helpful for our task: serviguration. Product Many people refer to physical goods, when they use the term product. The business literature considers products to be the core output of any types of industry (Lovelock (2001)); all products deliver benefits to the customers who purchase and use them. There are two types of products: services and goods. Services are actions or performances, whereas goods are physical objects or devices (Lovelock (2001)). Our service ontology concerns services; goods may be used in the service process. The service ontology therefore includes the concepts service element and physical good; both are conceptually subclasses of the concept product. The latter was not included in the ontology, since it has no function in our work. It may be used to integrate the service ontology with other ontologies, where the concept product is present. If such a need rises, product can easily be identified as a superclass for the concepts service element and physical good. Note that we use the term physical good, rather than good. The adjective physical is redundant, since a good is always physical. We prefer the term physical good in order to make the ontology more readable for readers who are not familiar with business terms. Intermediaries Intermediaries help shape the customer’s service experience and satisfaction of the complete service offering. If an intermediary does not meet the customer’s expectations, the customer will not be satisfied with the main service provider as well, since the customer sees the whole service offering as one package. He is not interested in the fact that the supplier has outsourced some of his activities to a third party. We therefore decided not to model intermediaries as separate entities. They will however be modelled by the e3-value ontology, where the cooperation between multiple suppliers (actors) is a key issue.

5.3 Service Process Perspective Service process The service process is an aggregation of business processes. A lot of research has been performed in this field, resulting in multiple ways to model processes and to reason about them (Dayal et al. (2001), Aversano et al. (2002) and more). We faced the question how much this concept should be decomposed in the service ontology. Case studies we performed showed that the customer is aware of only a subset of the (sub)processes, and that their internal structure is not relevant for the customer as such; only the outcomes of a process are relevant for the customer. Those outcomes are covered by the concept service outcome (examples are given in Table 2). The service process itself is thus not required for the serviguration process. The service process is still a part of the service ontology, since it is required to understand the whole service concept, but it is not used for the serviguration process.

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Delivery process Lovelock argue (Lovelock (2001)) that a service offering consists of three components: the core product (or service), supplementary services and the service delivery. Since there is a broad consensus in the service literature, claiming that service production and consumption cannot be separated (Lovelock (2001), Kotler (1988) and more), we represent the service delivery as part of the service process concept, rather than the service offering concept. It is the part of the service process, which is visible for the customer. Delivery process is part of the complete service ontology. We argue that it does not play a direct role in the serviguration process, although it may have major influence on the customer’s decision whether or not to buy certain services from a certain supplier: it’s the resources involved in the process that matter to the customer, and not the process itself. We argue that the characteristics of the delivery process that may influence the customer are represented by the service outcomes. Examples are given in Table 2.

Delivery Process Characteristic

Description of Related Service Outcomes

Resource Type

Service is distributed via Internet Service is distributed via Internet

Service can be bought 24/7 Customer can buy the service from anywhere Service is worldwide accessible Customer can SEE outcomes BEFORE buying the product/service Customer can SEE outcomes BEFORE buying the product/service (this resource does not exist if telephone is chosen as a distribution channel) Customer must go to a selling point to obtain the service Service can be obtained during working hours only Customer can buy the service from anywhere Service is worldwide accessible

Capability Capability

Capability

Supplier needs a lot of employees

Human

Service requires low relationship costs

Monetary, Human, Experience Monetary

Service is distributed via Internet Service is distributed via Internet Service is distributed via selling points

Service is distributed via selling points Service is distributed via selling points Service is distributed via the telephone Service is distributed via the telephone Service employee comes to the customer’s location to deliver the service Service employee comes to the customer’s location to deliver the service Service employee comes to the customer’s location to deliver the service Self-service Self-service Self-service

Service is more expensive Customer serves himself A minimal number of service employees is available Price of the service is low

Capability Capability Capability

Human Capability Capability

Human Human Monetary Page 40



Do-it-yourself

Do-it-yourself Personalized delivery process Personalized delivery process Personalized delivery process Delivery process provides a lot of physical evidences

Supplier delivers components, rather than an assembled product (thus the customer has to assemble the components) Price of the service is low Intensive collaboration between the customer and the service personnel Service is more expensive Supplier needs a lot of employees Service is more expensive

Human

Monetary Human Monetary Human Monetary

Table 2 Delivery Process vs. Service Outcomes Visibility line Visibility line is an imaginary line that distinguishes between two parts of the service process and elements: the part that the customer perceives, and is aware of, and the part that is hidden from the customer. The latter influences the perceived service quality indirectly only. Customers are generally interested in the outcome of a process, rather than in the process itself. Furthermore, customers will not consider service and process elements that are hidden from them, when they participate in the serviguration process. Also case studies we performed did not provide us with a reason to add this concept to the service ontology. For the sake of completeness, we included the concepts delivery process and invisible service process in our ontology, as elements of the service process. The visibility line is the imaginary line that distinguishes those concepts one from another. Distribution channel Lovelock (2001) defines service offering as a combination of a core service/product, supplementary services and a delivery process. Time and place, together with other factors, shape the delivery process. Both are heavily influenced by the choice of a distribution channel: distributing a service via selling points (shops) implies that the customer needs to go to specific locations, mostly during working hours. Choosing Internet as a distribution channel implies a time and place independence. A distribution channel is part of the delivery process. We consequently decided not to model it separately, for the same reason as mentioned for the delivery process: its essence is captured by the notion of service outcome. As Table 2 shows, the added value that certain distribution channels present to a customer are well covered by service outcomes. The added value of modelling this concept will be re-examined in future case studies. Customer involvement/participation in the process As mentioned before, the customer is mostly actively involved in the process of producing and consuming a service. However, considering his involvement in the delivery process is supplier-driven; it may be important when analyzing the service process (a supplier-driven analysis, in terms of resource allocation). For the rest of the ontology, from a customer perspective, when his involvement is an important factor (e.g., self-service restaurant, do-ityourself shops), it is covered by the concept resource, as explained in Table 2. We consequently argue that there is no need to model customer involvement in the process separately.

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5.4 Generic Ontology We mentioned in the introduction chapter of this document that the service ontology ought to be generic, in the sense that it can be used across multiple domains. Considering multiple case studies, we realized that every domain has specific features that are important for configuring services. Our challenge was defining those features in such a way that they can be used across multiple domains, but still be domain-specific. Luckily, we didn’t have to re-invent the wheel; others have done that before. The generic nature of services is visible on the customer-perspective of service (service value perspective), as well as the supplier-perspective of service (service offering perspective). On the customer’s side, the service literature contains a broad discussion about generic service descriptors. Those are the service quality criteria we discuss in Appendix A. The criteria themselves are generic, but domain-specific knowledge must be used to define the requirements that customers pose, regarding those criteria. Domain-specific knowledge is required to prioritize criteria in a specific domain. For example: reliability is more important in medical insurances than in cleaning services. Furthermore, customers will have differing reliability requirements for those services. On the supplier’s side, the ontology is generic in a more straightforward way: the decomposition of a service into core service and supplementary services is completely independent of any domain-specific knowledge. It is based on the understanding that every service is centered around some core service, which gives a response to the core need of a customer.

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Chapter 6: Business Background Validation Business science literature was the starting point for this service ontology; we read and analyzed the business literature, draw information and modelled it. We deviated from the traditional business literature, where the theory’s rationale did not fit into our use of a service ontology: serviguration. Many issues turned to be mostly relevant for service marketing and management, but not for serviguration. By deviating from the business literature we face the risk that our service ontology no longer fits into important business frameworks. In this chapter we examine whether our service ontology fits such frameworks.

6.1 Service Characteristics Theory Services have four major characteristics that greatly affect the design of marketing programs (Kotler (1998), Kasper et al. (1999)): 1. Intangibility • •

Buyers will look for signs or evidence of the service quality. They will draw inferences about the quality of the service from the place, people, equipment, communication material, symbols and price that they see. Therefore the service provider’s task is to “manage the evidence”, to “tangibilize the intangible” (Kotler (1988)). Service marketers are challenged to put physical evidence on their abstract offers.

2. Inseparability •

Services are typically produced and consumed at the same time.

3. Variability •

Services are highly variable, as they depend on who provides them and when and where they are provided (Kasper et al. (1999) call this characteristic inconsistency, rather than variability).

4. Perishability •

Services cannot be stored. This is not a problem when demand is steady, because it is easy to staff the services in advance. When demand fluctuates, service firms have difficult problems (Kasper et al. (1999) call this characteristic inventory, rather than perishability).

Analysis Services are distinguished from goods mostly by their intangible nature. Intangible concepts are hard to describe in a precise way for humans, let alone for machines. Intangibility is thus a main challenge in facilitating machine-dominated service offering. The service ontology deals with the intangible nature of services at various levels: • The customer defines his requested service quality. Quality criteria may relate to tangibles (e.g., a credit card must be small and easy to carry) or to an intangible aspect of the service offering (e.g., hardly any mistakes are tolerated). Page 43



•

•

Few services are pure services, i.e. they do not involve any physical goods. Most of the services are a combination of intangible services and tangible goods. So is the service offering, as modelled by the service ontology. A service always consists of service elements (at least one core service), but a service element may use or include physical goods (resources) as well. Service outcomes describe the results of consuming a service. Also they may be of two types: tangible (e.g., customer has a credit card) or intangible (e.g., service is accessible 24x7).

Inseparability is mostly related to the service process perspective of a service. We acknowledged the inseparability of service production and consumption by distinguishing between processes, based on their side of the visibility line, rather than on whether they are part of service production or service consumption. Variability concerns issues as the professionalism of service personnel and the supplier’s image, as factors that influence the service quality. These issues are tackled by service quality criteria (e.g., the employees should be friendly, respectful and considerate) and by quality properties of service elements and resources. Perishability is a supplier-oriented operational aspect of services; it belongs within the service process perspective. The customers are not concerned with the supplier’s ability to “store” services for later sale. This characteristic of services is thus not tackled by our demand-driven service ontology.

6.2 The 8 Ps Model Theory Four issues are of great importance for the marketing of physical goods (referred to as products; Kotler (1998)): • Product: quality, features, options, style, brand name, packaging, sizes, services, warranties and returns. • Price: list price, discounts, allowances, payment period and credit terms. • Place (or distribution): channels, coverage, locations, inventory and transport. • Promotion (or communication): advertising, personal selling, sale promotion and public relations. These four criteria are referred to as the 4 Ps Model. Services differ from products, as argued before. Especially customers’ involvement in the production process, and the importance of the time factor, require extra elements to be added for Integrated Service Management (Lovelock (2001)). The 4 Ps model, enriched with four new elements, becomes the 8 Ps Model of service management (Lovelock (2001)). New elements are: • Process (the design of) • Productivity and quality. Productivity relates to how inputs are transformed into outcomes that are valued by customers, whereas quality refers to the degree to which a service satisfies customers by meeting their needs, wants and expectations. From a marketing point of view, these two elements should be treated strategically as interrelated. • People. Many services depend on direct, personal interaction between customers and a firm’s employees. The nature of these interactions strongly influences the Page 44



•

customer’s perceptions of service quality. Physical evidence. Due to the intangible nature of services, service quality can’t always be made visible easily. Physical evidences provide a tangible evidence of the service quality. Examples are factory appearance, train ticket or folding the edge of a toilet-paper roll, as a sign for having cleaned a hotel room.

Analysis Table 3 lists the 8 P’s of service management, and the matching concepts in the service ontology. Some of the concepts were not modelled, since they do not contribute to the serviguration process; they are supplier-oriented, rather than demand-driven terms. 8 Ps concept Product Price Place / distribution

Promotion Process Productivity & quality People Physical evidence

Service ontology concept Service element; physical good (resource) Sacrifice Service outcomes (the consequences of using a certain distribution channel, in terms of accessibility and other customer quality criteria). Issues as inventory and transport relate to the service process; they were not modelled. Not modelled Service process Service quality; service process; also properties of service elements and resources Customer; employee (part of the supplier; human resource) Service quality (tangibles is one of the quality criteria); resource Table 3 8 Ps Model analysis

6.3 Service Bundling Theory Typically, a service is provided along with other related services; the composition of all those services has added value for customers. Grönroos (Grönroos (2000)) mentions that services consist of a bundle of features, which are related to the service process and the outcome of that process. Some of those features may be offered “for free”, without charging the customer an extra amount of money. Their price is then “hidden”, or bundled with the price of other features. Bundled services are sometimes referred to as the “Flower of Service model” (Lovelock (2001)). In discussing service products, Lovelock distinguishes between the core product that the customer buys and the set of supplementary services that often accompany that product (Lovelock (2001)). Analysis Bundling services is the core idea behind service configuration. If a service had been a stand-alone item, there wouldn’t have been any need for serviguration. Our work is thus a result of this service characteristic. Bundling service elements into a service bundle or a service offering is supported by the distinction we make, based on the service literature, between the core service, supporting supplementary services and enhancing supplementary services. They reflect, respectively, the main service that a customer is interested in, services that are required in order to Page 45



enable the offering of a main service, and services that are not required, but add value to the whole bundle. The third group, enhancing supplementary services, provides customers the opportunity to ask for more/less, based on personal requirements, preferences and acceptable sacrifice. For example, a customer who orders a credit card can choose whether or not he is interested in the enhancing service of extra high withdrawal limits. Choosing for this service would mean he orders a Gold credit card, and is charged a higher annual fee. This scenario concentrates on bundling services, offered by one supplier. The service ontology supports also the bundling of service elements offered by multiple suppliers, because a supplier is related to a service element (i.e., core service, supplementary service), rather than to the whole service offering/bundle (which includes a bundle of service elements). Thus the ontology supports collaborative scenarios as: • Ordering a credit card from MasterCard and traveller cheques from American Express • Organizing an exhibition (supplier A), booking hotel rooms (at multiple hotels, say suppliers B, C and D) and food catering (supplier E).

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Chapter 7: Bundling Services In the Energy Sector The energy sector served us as a case study for using our service ontology. Several services are offered to customers, next to the traditional electricity supply service. These include broadband Internet access, IT-services and more. Services can be bundled for various reasons, e.g.: • Meeting more demands of customers (thus serving them better) • Marketing reasons: electricity is an anonymous product; it is therefore difficult to market it independently • Lowering costs, and thus also price for the customer • Using existing infrastructure for other goals than first intended (thereby earning more money with low costs) The VUA and SINTEF collaborate on analyzing energy services, as a case study for the use of this service ontology. We have prepared an extensive analysis of energy services, and we also investigate how the use of the e3-value methodology and the service ontology can be combined. The results of our work include: • A detailed description of available energy services, based on the service ontology • A mapping between important customer terminology for describing requested services and supplier terminology for describing available services within the energy sector • Knowledge on reasons to bundle services in the energy sector Our results are presented in D7.1 of OBELIX: Energy E-Services Case Study Results for TrønderEnergi AS. Readers are referred to that document for further details.

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Chapter 8: Bundling Services In the PTSS Event Hosting Case Study Hosting an event is a complex service, where customers are presented with ample possibilities to choose from available services with differing characteristics, such as the number of people, the type of event (conferences, board meetings, executive courses, exhibitions, and more), the available equipment and catering. A future scenario would include providing accommodation and possibly transportation for meeting participants. PTSS and VUA have collaborated on modelling part of an event hosting service, using our service ontology. Our results were published in Baida et al. (2003); an updated version of the analysis is presented in this chapter. Our example includes the following five service elements; more service elements can be identified, but that is not necessary to demonstrate how our theory can be put into practice: • hosting a meeting • planning (organizing) a meeting and room renting • coffee catering and equipment provisioning Hosting a meeting is obviously the main service that a customer is interested in. The provisioning of this (core) service element requires the availability of supporting service elements: organizing a meeting and room renting. We can therefore define the following two functions: Hosting a meeting Æsupp Organizing a meeting Hosting a meeting Æsupp Room renting The decision whether or not to choose coffee catering and equipment provisioning (service elements that are not required, but they add value: enhancing service elements) depends on the requested functionalities and quality requirements of the customer, and on the price he's willing to pay. We can therefore define the following two functions: Hosting a meeting Æenh Coffee catering Hosting a meeting Æenh Equipment Provisioning In the following sections we analyze the service elements room renting and coffee catering. Each of them is actually a name for many service elements, since two service elements (e.g., two coffee catering services) with differing sets of properties (e.g., sacrifice, quality) are considered to be different service elements. Resource properties of secondary importance are omitted for simplicity. Where the valid values of properties are important, we mention it. Note that it is the supplier's task to decide which values are valid per property.

8.1 Room Renting Like many other supporting service elements, room renting as a service happens ''behind the scenes''. For a customer who organizes a meeting, the existence of a space for the meeting goes without saying. A supplier, on the other hand, sees a more complex process behind it. Page 48



Room renting has the following properties: Quality: Is not considered in our running example. Examples would be regular or high quality, whereby high quality could imply mahogany tables (as a constraint). Productivity: Refers to the maximum number of people that can participate in a meeting. Two resources determine the productivity of this service element: the room itself, and the setup (how tables and chairs are organized, e.g. in an O-shape or a U-shape). Productivity, expressed in a number (integer), is thus the maximum number of people in a room, considering the room setup. Sacrifice: Price. Room renting requires the following service inputs4: Payment. Type: monetary resource. Room. Type: physical good. State: available. Productivity: number (as explained before, it depends on the setup). Room renting results in the following service outcomes: Room. Type: physical good. State: reserved. Productivity: number of people. Room-setup. Type: physical good (a setup is an organization of tables and chairs). State: O or U (no other values are allowed for a meeting). Productivity: number. Room renting has the following constraints5: • Relation between the resources room and setup (some setups are not possible in specific rooms; the productivity of a room depends on the room setup). • Price (sacrifice) is a function that depends on the supplier's pricing strategy, and takes quality and productivity issues into consideration. • The value of service property sacrifice is equal to the value of service input payment. • The value of the service property productivity is determined by the productivity of the resources room and room-setup. • If we had considered the quality property, we would have had constraints on the service outcome room (various rooms may offer differing levels of luxury).

4 For the sake of simplicity, we do not model the sharability and compositeness properties of resources in this

chapter. They were nevertheless considered in our work. 5 We provide generalized, and thus not machine-readable example constraints; they can be further specified

with concrete values. For example, if resource 'room' has value 'room X', then valid values for resource 'setup' are 'O' or 'U'. Page 49



8.2 Coffee Catering A meeting can be held without coffee catering. Including this service element in a service offering will probably make the service more expensive. The customer may choose one of several predefined service quality levels. Coffee catering has the following properties: Quality: This is a composite property; it is composed of two properties: product quality (referring to the variety of products to be provided) and process quality (referring to the degree of required customer participation vs. employee doing the work). The possible quality values are: Product quality: (1) Basic: coffee, milk, sugar and cutlery; (2) Regular: basic, plus water and cake; (3) Luxurious: regular, plus juice, tea and several types of cakes Process quality: (1) Basic: catering is brought in, but not served (self-service); (2) Regular: catering is brought in and served; (3) Luxurious: catering is brought in, and served upon request (employee remains in room for a long period) Productivity: Maximum number of people to be served. Sacrifice: Price. Coffee catering requires the following service inputs: Room. Type: physical good. State: reserved. Productivity: number of people. Customer/Employee. Type: Human resource. This resource depends on the chosen process quality. We model only human resources that are not inherent to the service: we do not model the employee who brings the coffee to the meeting room. Basic process quality implies that the customer has to serve himself (in return for a lower price), and is thus considered as a human resource. Regular quality is the standard service, in which an employee brings refreshments to the meeting room, serves it and leaves the room. In such a case we do not model human resources, because they are inherent to the service. Luxurious quality implies that the employee remains in the room for a longer period, to serve coffee upon request. This last part of the service is not inherent to the service (and reflects costs for customers); it is thus modelled as a human resource. Payment. Type: monetary resource. Coffee, milk etc. are inputs on the service process perspective, but not on the service offering perspective, since on this perspective they are invisible to the customer, as inputs. They are, however, modelled as outcomes on the service offering perspective, since they reflect -- as outcomes -- what the customer pays for. As input they reflect value (costs) for the supplier, and as outcomes they present value for the customer. Only the latter type of resource is modelled on the service offering level. Coffee catering results in the following service outcomes: Page 50



Coffee. Type: physical good. Productivity: number of people. Milk. Type: physical good. Productivity: number of people. Sugar, water, cake etc: based on the chosen product quality. Ability to freshen up. Type: capability. A coffee catering service during a meeting is not only about consuming beverages and/or snacks; it provides meeting participants with the opportunity to take a break and gain some new energy. Productivity: number of people. Coffee catering has the following constraints: • Process quality (basic, regular, luxurious) determines the service input of type human resource (valid values: customer, null, employee, respectively). • Product quality (basic, regular, luxurious) determines the service outcomes of type physical good (coffee, milk etc). • Price (sacrifice) is a function that depends on the supplier's pricing strategy, and takes quality and productivity issues into consideration. • The value of service property sacrifice is equal to the value of service input payment. • The productivity of the resource ''ability to freshen up'' equals the lowest productivity value of the resources coffee, milk, sugar, cake etc.

8.3 Bundling Service Elements Due to the function ‘Hosting a meeting Æsupp Room renting’, room renting has to be part of every service bundle for meetings. Coffee catering is an enhancing service element -- the decision whether or not to include it in a service bundle depends on the customer. When configuring these two service elements (with the core service of hosting a meeting, of course), we face two conceptually different levels of configuration. The first level reflects a high level decision regarding the services to be configured: (1) only room renting, or (2) room renting AND coffee catering. The second level is choosing which of the various room renting service elements and (possibly) coffee catering service elements to configure. As explained before, a coffee catering service element with product quality X, and a coffee catering service element with product quality Y are two different components -- two different service elements. The same holds for room renting, or for any other service element. An important observation can be made regarding room renting and coffee catering: they can be weakly connected. A reserved room is an outcome of the service element room renting, as well as an input of the service element coffee catering. Figure 13 presents the first option for a service bundle: the bundle includes a room renting service element, but no coffee catering. It shows two different service bundles, with two different room renting service elements. The difference between them is limited to the productivity property (number of participants), but typically the price would be different as well. Figure 14 presents two examples of possible coffee catering service elements. In the first one, the process quality is set to regular, implying no human resource input. In the second one, the process quality is basic, implying that the customer is an input of type human resource. Finally, Figure 15 shows two of many possibilities to bundle a room renting service element with a coffee catering service element. This is where we see that both service Page 51



elements can be weakly connected; an outcome resource of the room renting service element is also an input resource of the coffee catering service element. Both examples presented in Figure 15 combine weakly connected service elements. Whereas the coffee catering service element in Figure 15a requires two inputs, in Figure 15b it requires three inputs (next to two more inputs required by the room renting service element). The service bundle would consequently have four and five service inputs respectively. But since one input is satisfied internally, the service bundle eventually has only three and four inputs respectively.

Figure 13 Service bundles, including a room renting service element only

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Figure 14 Two possible coffee catering service elements

Figure 15 Service bundles, including room renting and coffee catering Page 53



8.4 Analysis Even with only two simple service elements, room renting and coffee catering, a supplier can offer a broad variety of services; a room has to be suitable for a certain number of people, and can be organized in various ways (room setups). A further – very realistic – complication would be to include requirements on available equipment (e.g., network connectivity). Also a simple service as coffee catering may be offered in different setups (product and process quality); ample possibilities to configure a service bundle exist. Analyzing the meeting case with domain experts revealed that the service is much more complex than expected. The component-like analysis of the service offering is new to the business, and mapping a service offering into service elements and resources is a timeconsuming task. It is required though to make implicit knowledge explicit, and to facilitate a machine-enabled scenario of offering services. Analyzing the meeting case study was a useful exploration activity to domain experts as well. It helped understand characteristics of the service, which were not explicitly acknowledged as such before. Mainly, domain experts concluded that two quality dimensions are important for customers in organizing a meeting: product quality and process quality. This corresponds with the Nordic school for service quality (Grönroos (2000)), and not with the North American school (Zeithaml et al. (1990)), also used by Kotler (1998) and by Lovelock (2001). The process provided us with new insights on the service ontology. Mainly, the distinction between resources on the service offering level (stand for {which service is provided) and resources on the service process level (relate to how the service is provided) was not yet clear at earlier stages.

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Chapter 9: Conclusions The motivation for this service ontology lies in the fact that current eCommerce is still mainly characterized by the relatively straightforward trading of commodity goods, whereas significant additional steps are needed to enable more advanced business scenarios involving collaborative eCommerce concerned with real-world services. Service is a loaded term, with differing meanings in the business world and IT world. It is a traditional, well-established field of research within the business research community, where the notion service relates to a primarily intangible activity of value exchange between customer and supplier. In the IT world, services mostly refer to Web Services: to technologies rather than business activities. The IT-definition of services does not capture the economic nature of a real-world service, a service that a customer buys from a supplier. The business definition of a service captures the economic nature of services very well, but it is not structured and precise enough to facilitate a machine-enabled configuration of complex services. Neither does it provide enough insight into the customer’s perspective on what services are, since it was created for supply-side goals: service marketing and management. To that end, we have created a generic, customer-oriented service ontology, based on the scientific literature in service management and marketing. Sound business fundaments make it possible to model and understand the economic nature of services; an IT-oriented method of modeling – defining concepts, relations between them and constraints – facilitates the ontology’s electronic use. Being a reflection of the business literature, together with the possibility to formulate this ontology in a machine-readable way, it is suitable for supporting collaborative eCommerce concerned with real world services. The service value perspective of our service ontology links service notions with a clear conception of customer value. We have discussed the key concepts of a service ontology that satisfies these requirements. The presented service ontology captures an understanding of what services are; this knowledge is formulated in a component-like model. The next step in our work will be to define and analyze the process necessary for serviguration: service configuration. Serviguration will require the integration of the service ontology with a configuration ontology, so that defining service bundles becomes a configuration task, in which service elements are the building bricks. The OBELIX consortium cooperates on studying that process, based on our existing work (service ontology and configuration ontology) and case studies of OBELIX partners. We have studied various case studies in differing depths, and learned that the service ontology is generic enough to be used to describe the service offerings over multiple domains. The process of studying case studies, together with OBELIX partners, is still continuing.

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Appendix A: Service Quality

A.1 The Service Quality Equation It is generally accepted that the quality of a service is a function of the comparison between the (customer-)perceived service and the customer’s expectations regarding the service (Bigné et al. (1997)). We will name this statement “the service quality equation”. In other words, the quality of a service is determined by what the customer expects to get, compared with what he gets (the way he, rather than the supplier, perceives it). The following sections discuss the three pillars of the service quality equation: service quality, expectations and service experience.

A.2 Service Quality Customers have differing needs, past experiences, expectations and perceptions of the term quality, resulting in the subjectivity of their quality requirements. Nonetheless such information is translated to objective supplier notions by businesses in every service act. Every time a customer calls a business and says s/he wants ‘a high quality service’, ‘a beautiful hotel room’, ‘a good meal’ etc., the service personnel maps those notions into objective, supply-side domain-specific terms. The mapping of subjective customer information into ‘objective’ supply-side terms is thus done by service personnel daily, based on the interpretation of those notions in their domain. By capturing their knowledge (a knowledge acquisition task), this mapping can be made explicit for use by a configuration tool. Developments in service quality research have been classified by Borgowicz et al. (1990) into two schools: the Nordic school and the North American school. The first (Grönroos) distinguishes three basic elements of quality: technical (outcome-related), functional (process-related) and reputation (image-related). The North American school, (Parasuraman, Zeithaml and Berry) centres its approach on the customer, the only true judge of service quality, conceptualising the act of service as the customer’s opinion as to overall superiority or excellence of a service. Service quality is described as the degree and direction of the discrepancy between the customer’s expectations and the perceptions of the service. If customers receive exactly or more than they expect, they will be satisfied. Thus customer satisfaction and service quality are very tightly related. Lovelock (2001) lists the following benefits of customer satisfaction and service quality: •

Insulates customers from competition

•

Can create sustainable advantage

•

Reduces failure costs

•

Encourages repeat patronage and loyalty Page 57



•

Enhances/promotes positive word of mouth

•

Lowers costs of attracting new customers

A.3 Measuring Quality A.3.1 The Nordic School Grönroos distinguishes (Grönroos (2000)) three basic elements of quality: technical quality (outcome-related), functional quality (process-related) and reputation. The technical (outcome-related) elements refer to what the customer receives, i.e. the result, in terms of characteristics easily identifiable and measurable by the organization itself on basis of technical criteria, normally standardized. Functional (process-related) elements refer to how service is performed to the customer. Reputation (image-related) is the consequence of corporate image of the organization performing the service. Grönroos (2000) presents seven criteria of good perceived service quality: 1. Professionalism and skills. Customers realize that the service provider, its employees, operational systems and physical resources have the knowledge and skills required to solve their problems in a professional way (outcome-related criterion). 2. Attitudes and behavior. Customers feel that the service employees (contact persons) are concerned about them and interested in solving their problems in a friendly and spontaneous way (process-related criterion). 3. Accessibility and flexibility. Customers feel that the service provider, its location, operating hours, employees, and operational systems are designed and operate so that it is easy to get access to the service and are prepared to adjust to the demands and wishes of the customer in a flexible way (process-related criterion). 4. Reliability and trustworthiness. Customers know that whatever takes place or has been agreed upon, they can rely on the service provider, its employees and systems, to keep promises and perform with the best interest of the customers at heart (processrelated criterion). 5. Service recovery. Customers realize that whenever something goes wrong or something unpredictable happens the service provider will immediately and actively take action to keep them in control of the situation and find a new, acceptable solution (process-related criterion). 6. Serviscape. Customers feel that the physical surrounding and other aspects of the environment of the service encounter support a positive experience of the service process (process-related criterion). 7. Reputation and credibility. Customers believe that the service provider’s business can be trusted and gives adequate value for money, and that it stands for good performance and values, which can be shared by customers and the service provider (image-related criterion).

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According to Roest et al. (1997), literature shows that consumers use a limited amount and diversity of service quality dimensions. They distinguish the following service quality dimensions: technical quality, functional quality, and reliability. The first and second one are identical to Grönroos’ types of quality elements. They define the third dimension as follows: Reliability involves consistency of performance and dependability. It is closely related to the uncertainty feeling by or the perceived risk of the consumer provoked by the variability of service quality. Reliability (Roest et al. (1997)) and reputation (Grönroos (2000)) are however closely related.

A.3.2 The North American School It is generally accepted that the quality of a service is a function of the comparison between the perceived service and the customer’s expectations regarding the service (Bigné et al. (1997)), as suggested by the North American School. Parasuraman, Zeithaml and Berry propose (Zeithaml et al. (1990)) a scale consisting of 22 items, known as SERVQUAL, to measure service quality on the basis of the discrepancy between perceptions and expectations. Zeithaml et al. (1990) name ten generic dimensions that customers use to evaluate service quality. Lovelock (2001), Kotler (1998) and many other authors follow them. The ten dimensions are independent of the type of service: 1. Access: The service is easy to access in convenient locations at convenient times with little waiting. 2. Communication: The service is described accurately in the consumer’s language. 3. Competence: The employees possess the required skill and knowledge. 4. Courtesy: The employees are friendly, respectful and considerate. 5. Credibility: The company and employees are trustworthy and have the customer’s best interest at heart. 6. Reliability: The service is performed with consistency and accuracy. 7. Responsiveness: The employees respond quickly and creatively to the customers’ requests and problems. 8. Security: The service is free from danger, risk or doubt. 9. Tangibles: The service tangibles correctly project the service quality. 10. Understanding/knowing the customer: The employees make an effort to understand the customer’s needs and provide individual attention. The various statistical analyses conducted in constructing SERVQUAL revealed considerable correlation among items representing several of the above mentioned dimensions. Competence, courtesy, credibility and security are grouped into assurance. Access, communication and understanding the customer are grouped into empathy. Therefore the five dimensions of SERVQUAL are: 1. Tangibles: appearance of physical facilities, equipment, personnel and communication Page 59



material. 2. Reliability: ability to perform the promised service dependably and accurately. 3. Responsiveness: willingness to help customers and provide prompt service. 4. Assurance: knowledge and courtesy of employees and their ability to convey trust and confidence. 5. Empathy: caring, individualized attention the firm provides its customers. SERVQUAL is the de facto tool for understanding the service expectations and perceptions of customers. It measures the perceived quality and the expectations by statements about the five dimensions. The customer is requested to grade the statements on the scale between 1 – strongly disagree – and 7 – strongly agree.

A.3.3 Comparing Schools When trying to match the SERVQUAL quality dimensions with Grönroos’ quality dimensions, we obtain the following matrix: Grönroos’ quality dimensions 1 S E R V Q U A L

1

X

2

X

3 4 5

2

4

5

6

7

X X X

X

3

X

X X

X X

X

X

X

Table 4 Service quality: comparing schools Observations: 1. Grönroos makes a distinction between the tangible items (“physical resources”) and the service environment. The latter is also physical, but has other, non-physical, aspects as well. He places the tangible items under the dimension Professionalism and Skills, and the environment under the dimension Serviscape. The SERVQUAL tool, on the other hand, puts both physical resources and the physical environmental elements under one dimension: Tangibles. The intangible environmental aspects of a service (e.g., atmosphere) are not discussed directly; they can be seen as part of the empathy quality dimension. In that sense, one may say that the SERVQUAL model underestimates the importance of the intangible environmental aspects of a service. 2. There is an n-n relationship between most of the dimensions in the two lists. For example: Grönroos’ dimension Reliability and trustworthiness is related to two of the SERVQUAL dimensions: Reliability and Assurance. And in the other direction: the SERVQUAL dimension reliability is related to three of Grönroos’ dimensions: professionalism and skills, reliability and trustworthiness, and service recovery. 3. Grönroos’ dimension Accessibility and flexibility actually consists of two different Page 60



issues. Accessibility fits into the SERVQUAL dimension Empathy, whereas Flexibility fits into the SERVQUAL dimension Responsiveness. Both schools are very widely acknowledged in the service literature. The SERVQUAL tool is the de facto tool, although it has been subject to some critics as well. Six of Grönroos’ dimensions are covered well by the SERVQUAL model, but the North American School doesn’t give the same attention to the dimension Serviscape.

A.4 Services vs. e-Services For a steadily increasing number of consumers, online services are becoming not only a viable, but also an attractive alternative to visiting service outlets or phoning call centres. Inconvenient opening hours of private and public service outlets have limited consumers’ possibilities to consume them at leisure, whereas online services offer 24 h availability and other valuable benefits. Reasons why customers are thought to prefer self-service technologies (SST), such as electronic services (e-services) are: convenience, avoiding human contact, saving time, and feeling more in control of the service process (Liljander et al. (2002)). An important question is, to what extent traditional service quality models, such as SERVQUAL can accommodate technology by adding a fourth leg to the services marketing pyramid (firm, customers and personnel). A sound theoretical basis and extensive empirical research are needed in order to answer that question. Traditional service quality dimensions may not be appropriate in their original form, but the differences between consumer evaluations of e-services and traditional services need also not be so large that traditional models have to be discarded completely. Based on recent publications, Liljander et al. (2002) propose that traditional quality dimensions, such as those in SERVQUAL, can be adapted to capture the new media. Additional dimensions will be needed, however, in order to fully explain consumer evaluations of e-services. Traditional service quality research has focused on highly intangible services. Here the interpersonal character of the delivery largely determines the perceived quality of the service. e-Services, on the other hand, are not of an interpersonal nature. Research is needed on whether the definitions and relative importance of the five SERVQUAL service quality dimensions change when customers interact with technology rather than with service personnel. Dimensions that closely resemble the SERVQUAL scales can be constructed. Nonetheless, additional dimensions may be needed to fully capture the construct of eservice quality. Research on e-service quality is still in its early stage, and there is no de facto standard, as the SERVQUAL for traditional services. Also a SITEQUAL was published (not by the intellectual and spiritual parents of SERVQUAL), but compared to the two above schemes, it is by far less complete. So far, research concentrated mostly on the quality of retail websites, where a customer can buy products, rather than services. Example for such research are Liljander et al. (2002) and Janda et al. (2002). Liljander et al. (2002) suggest five e-quality dimensions: reliability, responsiveness, customisation, assurance/trust and user interface. Janda et al. (2002) suggest five dimensions as well : performance, access, security, sensation and information. The two schemes are similar. Janda et al’s dimension access is Page 61



however reflected to a very limited degree only by Liljander et al.’s dimensions User Interface and Customization. Liljander et al’s scheme does not address the variety and universality of products/services directly, which Janda et al. discuss. As explained before, both schemes refer to B2C, and are mostly product oriented. Our service ontology does not specify how to measure service quality. That would require a service quality ontology, which is beyond the scope of this project. Instead, we presented a short analysis of available research on that field. When implementing a tool for e-services, one must pay attention to specific – and possibly domain specific – characteristics of eservices, rather than traditional services.

A.5 Expectations According to Lovelock (2001) and Berry et al. (1991), customers’ expectations embrace several different elements, including desired service, predicted service and a zone of tolerance that falls between the desired and adequate service levels. •

Desired service is the type of service customers hope to receive. It is a wished-for level of service – a combination of what customers believe can be and should be delivered in the context of their personal needs. However most customers are realistic and understand that companies can’t always deliver the level of service they would prefer; hence, they also have a threshold level of expectations, termed adequate service. Adequate service is the minimum level of service customers will accept without being dissatisfied. Among the factors that set this expectation are situational factors affecting service performance and the level of service that might be anticipated from alternative suppliers. The level of both desired and adequate service expectations may reflect explicit and implicit promises by the provider, word-of-mouth comments, and the customer’s past experience (if any) with this organization.

•

Predicted service is the level of service customers actually anticipate receiving. It directly affects how they define adequate service on any given occasion. If good service is predicted, the adequate level will be higher than if poorer service is predicted. Customer predictions of service may be situation specific. For example, from past experience, airline passengers may expect a meal during a three-hours flight, but only a snack during a one-hour flight.

•

Zone of tolerance. The inherent nature of services makes consistent delivery difficult across employees in the same company and even by the same service employee from one day to another. The extent to which customers are willing to accept this variation is called zone of tolerance. A performance that falls below the adequate service level will cause frustration and dissatisfaction, whereas one that exceeds the desired service level will both please and surprise customers, creating what is sometimes referred to as customer delight. One can think of the zone of tolerance as the range of service within which customers don’t pay explicit attention to service performance. By contrast, when service falls outside the range, customers will react either positively or negatively. The zone of tolerance can increase or decrease for individual customers depending on factors such as competition, price or importance of specific service attributes. These factors most often affect adequate service levels, whereas desired service levels tend to move up very slowly in response to accumulated customer experiences

Ojasalo (1999) and Grönroos (2000) use a different classification of expectations. Three Page 62



different types of expectations can be identified: fuzzy, explicit and implicit expectations. These can be characterized in the following way: •

Fuzzy expectations exist when customers expect a service provider to solve a problem but do not have a clear understanding of what should be done.

•

Explicit expectations are clear in customers’ minds in advance of the service processes. They can be divided into realistic and unrealistic expectations.

•

Implicit expectations refer to elements of a service which are so obvious to customers that they do not consciously think about them but take them for granted.

In spite of the existence of those two classification schemes, there appears to be a consensus about which factors influence expectations: •

Word of mouth communications

•

Personal needs

•

Past experience

•

External communications from service providers. These include direct and indirect messages conveyed by service firms to customers (print advertisements, brochures, a receptionist’s promise etc)

One factor whose influence on expectations is subsumed under the general influence of external communications is price. This factor plays an important role in shaping expectations, particularly those of prospective customers of a service. The very often-quoted gap analysis model (Grönroos (2000), Zeithaml et al. (1990)), a conceptual model for service quality, analyses the gap between customers’ expectations and perceived service. This, however, is beyond the scope of this document.

A.6 Service Experience A service experience occurs at any interaction between a customer and a service organization, whether service personnel is involved or not. Examples are a customer who orders a credit card at the bank or calls a helpdesk (involving service personnel, in our running example), or even watching TV, listening to a CD and visiting a website (not involving service personnel). Many factors influence a customer’s service experience: service personnel, other customers (e.g., a customer is disturbed by another customer’s misbehaviour), technology (e.g., low website accessibility), operations (e.g., customer is being sent from one employee to another to solve a problem; lack of resources at the supplier’s side), expectations (e.g., high expectations can cause disappointment), circumstances (e.g., time, place) and more. Following are important issues regarding a customer’s service experience: • Service experiences are context-dependent. Based on any of the influencing factors a service can be experienced in different ways by different customers, or even by the same customer. • Tangible service outcomes often shape a customer’s service experience; they Page 63



•

provide a way for the customer to estimate the mostly intangible service experience. Therefore the service provider tries to “manage the evidence”, to “tangibilize the intangible” (Kotler (1988)). Intermediaries, third parties who execute a part of the service offering for a supplier, play an important role in the service experience. If they fail to satisfy the customer, the customer will perceive the whole service as inadequate, and often consider the main supplier responsible, since he bought the service from the main supplier, and not from the intermediary.

Investing in a good service experience is a strategic choice that suppliers face. Based on the business strategy, a supplier can choose to present itself as a low-cost competitor, in which case customers would buy his services due to their low price, even though the service experience is not spectacular. On the other hand, a supplier can decide to market itself as a provider of an excellent service experience. His clients would be willing to pay more, for the special experience. Ahold, a worldwide operating food retailer and foodservice operator, is a well-known example of the latter type of supplier. The company profile6 states: “A close network of food retail and foodservice companies provide a superior shopping and service experience in the local market place.”

6 Source: Ahold website 2003)

http://www.ahold.com/aboutahold/companyprofile.asp (last visited: May Page 64



Appendix B: Service Classification Existing service classification schemes differ very much from product classification schemes, where the notion product mostly refers to physical goods. Physical goods are tangible; they can be described objectively, and their performance can most often be measured and described well: a car is green, blue etc.; a detergent is good if it removes stains; a cable is two metres long etc. Services, on the other hand, are mostly of intangible nature. Service characteristics cannot be observed objectively, and their quality is context-sensitive: it is customer- and circumstances-dependent. Existing service classification schemes consequently do not provide a unique code per service, as do product classification schemes. Instead, they provide a way to group services, based on some criteria, which depend on the reason behind the classification. Thus the term classification has different meanings when considering product classifications and service classifications. In the remainder of this appendix we list common service classifications, as developed by researchers on the field of service marketing and management. Note that a common opinion on how to classify services does not exist yet (Kasper et al. (1999)). Authors agree that concepts used in classifying services should be viewed on a continuum instead of in a discrete way. For example: often one does not buy a pure tangible good or a pure intangible service, but a combination of both.

B.1 Grönroos Grönroos discusses (Grönroos (2000)) two criteria for service classification: •

High-touch/high-tech services

•

Discretely/continuously rendered services (based on the nature of relationship with the customers)

High-touch services are mostly dependent on people in the service process producing the service (e.g., haircut). High-tech services are predominantly based on the use of automated systems, information technology and other types of physical resources (e.g., Internet shopping). Continuously rendered services are services such as industrial cleaning, security services, goods deliveries, banking etc. They involve a continuous flow of interactions between the customer and the service provider, creating ample opportunity for the development of a value relationship with customers. For providers of discretely used services, such as hair stylists, many types of firms in the hospitality industry, providers of ad hoc repair services to equipment and so on, it is often more difficult to create a relationship that customers appreciate and value.

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B.2 Lovelock Lovelock (Lovelock (2001)) offers the following criteria for classifying services: 1. The degree of tangibility or intangibility of service processes. Different service delivery systems imply different roles of employees and different experiences of customers. 2. Who or what is the direct recipient of the service process? Service can be directed at customers at person, or at restoring or improving objects that belong to them. In the latter case, customers remain uninvolved in the process of service delivery and don’t consume benefits until later. 3. The place and time of service delivery: customers may need to visit the service organization or the service should come to the customer. 4. Customization versus standardization: all customers receive the same service, or service features (and processes) are adapted to meet individual requirements. 5. Nature of the relationship with the customers. Suppliers and customers may have a formal relationship (each client is known to the organization, and transactions are individually recorded), or customers are unidentified. 6. Extent to which demand and supply are in balance. 7. Extent to which facilities, equipment and people are part of the service experience.

B.3 Kasper et al. Kasper et al. (Kasper et al. (1999)) provide two service classification schemes. The first one is comprehensive, but therefore complex. It is based on nine criteria: 1. Services and goods. The difference between services and goods can be formulated in its most extreme form as the difference between intangibles and tangibles. 2. Profit versus non-profit. This criterion is similar to the distinction between marketable and unmarketable services, or regulated (and protected) service markets versus deregulated service markets. 3. Markets and industries. Used for defining markets, and hence customers and competitors. 4. Internal and external services. One way of looking at the functioning of organizations is to analyze the cooperation between individuals and departments as if they were each other’s customers. 5. The consumer/customer/client and his/her service buying behaviour. Here, the main distinction to be made is between consumers (consumer services) and other organizations (industrial services), hence who is the target group? 6. The relationship between the service provider and the customer. Kasper et al. (1999) adopt this criterion, given by Lovelock (Lovelock (2001)). Page 66



7. The service provider’s knowledge, skills and capacity. This is the organization’s ability to be market-oriented and therefore provide excellent service quality. 8. The service delivery process. Customers can play differing roles in the delivery process, depending on how the process of “creating” the service delivery within the company is organized. 9. The physical site of the service delivery. This issue deals with all operational aspects with respect to the physical place (scenery) where the service delivery process takes place. It can also be labelled in terms of the physical distance or physical proximity of the service encounter. The second service classification scheme that Kasper et al. present (Kasper et al. (1999)) is simpler. It divides the spectrum of services into four groups, based on two criteria: the degree of differentiation and the degree of customization, resulting in following service classes: 1. Standard core services 2. Standard augmented services 3. Customized core services 4. Customized augmented services Core service refers to the bare minimum of a particular service without any bells or whistles or specific features (supplementary services). It is the heart of the service. Augmented service encompasses the core service plus all the additional services. All kind of services can exist in between the two extremes of core and augmented services. The degree of differentiation thus reflects whether only a core service is supplied or augmented service. The degree of customization, on the other hand, refers to the degree of adapting a service to the customer’s needs: putting the customer first, taking into account the firm’s positioning relative to its competitors

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Appendix C: Machine-Readable Implementation Although this is ahead of planned schedule, we have already implemented the service ontology, using the RDFS-W3C standard. The implementation was created using OntoEdit, a tool developed by an OBELIX partner. Screenshots thereof are provided below. The implementation will be further refined in the future. As explained before, the service ontology includes three perspectives: service value, service offering and service process. Similarly, our implementation includes three top-level concepts: serviceValueConcept, serviceOfferingConcept and serviceProcessConcept. All other concepts are subclasses of these three top-level concepts.

C.1 Modeling Issues A careful reader may identify what appears to be inconsistencies between the implementation presented below and the visualizations, through which the service ontology was described in Chapter 3: Diving Into The Service Ontology. In such cases the implemented version (below) is the correct one. We chose to deviate from the implementation in our visualizations in situations in which communicating our ideas and reasonings regarding the ontology becomes unnecessarily complicated, or in situations in which complexity needs to be reduced in order to keep the visualization understandable. In this section we describe the differences between the implemented ontology and the visualizations thereof. •

•

In the description of our ontology, we described the three service-value concepts need, want and demand. To reduce complexity, Figure 3 – where the service value perspective is visualized – does not include the concepts need and want, but only the concept demand. We mentioned that a demand is a type of a want. The implementation, on the other hand, includes all three concepts. The implementation does not include the concepts service input and service outcome, but only their superclass: resource. A resource is called service input or service outcome only when it is related to a service element. These terms make it easier for us humans to understand the to roles of resources (a resource may be a prerequisite for the provisioning of a service element, or the result of a service element), but they encapsulate no extra knowledge or functionality. We therefore omit them from the implementation of the ontology.

C.2 OntoEdit Implementation Figure 16 present how the service ontology was implemented using OntoEdit.

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Figure 16 OntoEdit implementation of the service ontology: Top-level views Page 69



Figure 17 OntoEdit implementation of the service ontology: Service value Page 70



Figure 18 OntoEdit implementation of the service ontology: Service Offering Page 71



Figure 19 OntoEdit implementation of the service ontology: Service process Page 72



C.3 RDFS Implementation The OntoEdit implementation of the service ontology is presented hereunder using the RDFS-W3C standard.

http://www.newOnto.org/1066305735082#constraint In the function A-->B A is the dependee B is the dependent Both are service elements http://www.newOnto.org/1066305735082#function_hasDependent_serviceElement http://www.newOnto.org/1066305735082#interface http://www.newOnto.org/1066305735082#need http://www.newOnto.org/1066305735082#serviceElement_resultsIn_outcome http://www.newOnto.org/1066305735082#resource_hasA_quality Page 73



http://www.newOnto.org/1066305735082#property_quality http://www.newOnto.org/1066305735082#elementaryServiceElement http://www.newOnto.org/1066305735082#elementaryServiceEl_includes_complexSe rviceElement http://www.newOnto.org/1066305735082#sacrifice http://www.newOnto.org/1066305735082#resource http://www.newOnto.org/1066305735082#customer_hasA_need http://www.newOnto.org/1066305735082#serviceElement_uses_Input http://www.newOnto.org/1066305735082#demand Page 74



http://www.newOnto.org/1066305735082#enhancingCore http://www.newOnto.org/1066305735082#capabilityResource In the function A-->B A is the dependee B is the dependent Both are service elements http://www.newOnto.org/1066305735082#function_hasDependee_serviceElement http://www.newOnto.org/1066305735082#want_concretizes_need http://www.newOnto.org/1066305735082#complexQualityDescriptor http://www.newOnto.org/1066305735082#bundle_includes_serviceElement http://www.newOnto.org/1066305735082#informationResource Page 75



http://www.newOnto.org/1066305735082#serviceElement_hasA_function http://www.newOnto.org/1066305735082#serviceBundle http://www.newOnto.org/1066305735082#excluding http://www.newOnto.org/1066305735082#serviceElement_hasA_sacrifice http://www.newOnto.org/1066305735082#stateChangeResource http://www.newOnto.org/1066305735082#serviceProcessConcept http://www.newOnto.org/1066305735082#serviceElement_hasA_domainSpecificProp erty http://www.newOnto.org/1066305735082#quality_describes_want Page 76



http://www.newOnto.org/1066305735082#physicalGoodResource http://www.newOnto.org/1066305735082#resource_hasA_type http://www.newOnto.org/1066305735082#customer http://www.newOnto.org/1066305735082#property_domainSpecific http://www.newOnto.org/1066305735082#property_productivity http://www.newOnto.org/1066305735082#function http://www.newOnto.org/1066305735082#serviceElement_hasA_groupID http://www.newOnto.org/1066305735082#psychological Page 77



http://www.newOnto.org/1066305735082#resource_has_sharability http://www.newOnto.org/1066305735082#serviceOfferingConcept http://www.newOnto.org/1066305735082#elementaryWant_includes_complexWant http://www.newOnto.org/1066305735082#supplier http://www.newOnto.org/1066305735082#serviceQuality http://www.newOnto.org/1066305735082#complexWant_includes_want http://www.newOnto.org/1066305735082#humanResource http://www.newOnto.org/1066305735082#complexServiceElement Page 78



http://www.newOnto.org/1066305735082#property_compositeness http://www.newOnto.org/1066305735082#compexServiceEl_includes_serviceElemen t http://www.newOnto.org/1066305735082#serviceElement_hasA_name http://www.newOnto.org/1066305735082#serviceValueConcept http://www.newOnto.org/1066305735082#elementaryQualityAttribute http://www.newOnto.org/1066305735082#direct http://www.newOnto.org/1066305735082#resource_hasA_state http://www.newOnto.org/1066305735082#price Page 79



http://www.newOnto.org/1066305735082#serviceElement_hasA_outcomeInterface http://www.newOnto.org/1066305735082#serviceOffering_includes_serviceOutcom es http://www.newOnto.org/1066305735082#invisibleServiceProcess http://www.newOnto.org/1066305735082#serviceProcess_resultsIn_serviceOutcom e http://www.newOnto.org/1066305735082#quality_describes_demand http://www.newOnto.org/1066305735082#want http://www.newOnto.org/1066305735082#interface_consistsOf_port Page 80



http://www.newOnto.org/1066305735082#customer_hasA_want http://www.newOnto.org/1066305735082#property_sacrifice http://www.newOnto.org/1066305735082#outcomeInterface http://www.newOnto.org/1066305735082#port http://www.newOnto.org/1066305735082#complexWant http://www.newOnto.org/1066305735082#serviceElement_hasA_quality http://www.newOnto.org/1066305735082#serviceElement_hasA_ID http://www.newOnto.org/1066305735082#monetaryResource http://www.newOnto.org/1066305735082#serviceProcess_processes_serviceInput< /rdfs:label> Page 81



http://www.newOnto.org/1066305735082#resource_hasA_productivity http://www.newOnto.org/1066305735082#deliveryProcess http://www.newOnto.org/1066305735082#serviceOffering http://www.newOnto.org/1066305735082#serviceElement_hasA_productivity http://www.newOnto.org/1066305735082#serviceElement_hasA_inputInterface http://www.newOnto.org/1066305735082#quality_describes_need Page 82



http://www.newOnto.org/1066305735082#property_state http://www.newOnto.org/1066305735082#customer_isWillingToGive_sacrifice http://www.newOnto.org/1066305735082#demand_concretizes_want http://www.newOnto.org/1066305735082#elementaryWant http://www.newOnto.org/1066305735082#substitute http://www.newOnto.org/1066305735082#experienceResource http://www.newOnto.org/1066305735082#property http://www.newOnto.org/1066305735082#inputInterface http://www.newOnto.org/1066305735082#indirect Page 83



http://www.newOnto.org/1066305735082#relationshipCosts http://www.newOnto.org/1066305735082#supplier_supplies_serviceElements http://www.newOnto.org/1066305735082#resource_has_compositeness http://www.newOnto.org/1066305735082#serviceElement http://www.newOnto.org/1066305735082#concretizedBy http://www.newOnto.org/1066305735082#customer_hasA_demand http://www.newOnto.org/1066305735082#property_type http://www.newOnto.org/1066305735082#bundled Page 84



http://www.newOnto.org/1066305735082#serviceElement_hasA_constraint http://www.newOnto.org/1066305735082#serviceOffering_includes_serviceElemen ts http://www.newOnto.org/1066305735082#property_sharability http://www.newOnto.org/1066305735082#serviceProcess http://www.newOnto.org/1066305735082#complexQuality_includes_quality http://www.newOnto.org/1066305735082#elementaryQuality_includes_complexQual ity Page 85



http://www.newOnto.org/1066305735082#resource_hasA_domainSpecificProperty http://www.newOnto.org/1066305735082#supportingCore

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