Value Chains in IT-enabled Services: Towards a Reference Model Anna Ye Du 1 • Ram D. Gopal 2 • R. Ramesh 1 1. Department of Management Science & Systems, School of Management, SUNY at Buffalo, Buffalo, New York 14260 2. Department of Operations and Information Management, Room 376, School of Business, University of Connecticut, 2100 Hillside Road, U-1041 IM, Storrs, CT 06269-2041
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Abstract Information Technology (IT) services and IT-enabled services (ITeS) are emerging dramatically in the recent trends of outsourcing to achieve cost reduction and functional specialization. IT enables a large variety of service functions to be created and delivered seamlessly across geographic and disparate functions. This naturally leads to the concept of IT Value Chain. There is a long time literature of value chain on production goods. However, it is known that services are more difficult to model, measure and manage than productions. The creation and management of IT Value Chains can be vital to a firm’s success. Despite the growing importance of IT Value Chains, a reference model to aid in its management is yet to be developed. In this study, we address this significant lacuna and propose our own model as a starting point for firms to manage their ITeS chains. Our model comes from a systematic analysis and comparison of the organization and strength/weakness of three related reference models: IT Infrastructure Library and IT Service Management (ITIL/ITIS) model, Supply Chain Operations Reference (SCOR) model and the eSourcing Capability Model for Service Providers (eSCM-SP). Subsequently, we derive our IT-enabled service chain framework, eSCOR, an operations reference model with emphasis on eSourcing and value-chain concepts in ITeS contexts.
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1. Introduction Information Technology (IT) services and IT-enabled services have recently experienced dramatic growth as a result of outsourcing services employed by organizations in order to achieve cost reduction and functional specialization (Cady 2005). Many firms already offshore/outsource their non-core services such as call center operations (Shah and Bandi 2003). However, this only represents the tip of the iceberg; IT can enable a large variety of service functions to be created and delivered more efficiently and effectively. In addition, various service-oriented functions can be integrated seamlessly across geographic and disparate functional areas (Nof 2003). This naturally leads to the concept IT Value Chain. The central notion of IT Value Chain is rooted in the value creation and transaction of the IT-enabled services via globally distributed service networks. In a globally distributed setting, firms create and deliver key value added services to customers, while procuring non-core services from external services providers. These service providers, in turn, connect and coordinate and thus form into service networks. The IT Value Chain, while related to the concept of value chains in the existing literature, exhibits important distinctions. In most current contexts, value chain is a model that describes a series of value-adding activities connecting a company's supply side (raw materials, inbound logistics, and production processes) with its demand side (outbound logistics, marketing, and sales) (Rayport et al. 1995). Existing literature of value chain has a strong focus on the production of physical goods. For example, Croxton et al. (2001) propose a Global Supply Chain Forum Framework to conceptualize a supply chain of manufactured goods. In contrast, the notion of IT Value Chain is centered on the value creation and value flow as a consequent of IT-enabled services.
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This service oriented focus results in important differences with production processes. Services are often more difficult to model, measure, and manage (Ellram et al. 2004). While IT can potentially enhance the value added by many service activities, the sheer versatility of IT-enabled services dictates increased management attention and implies inherent complexity. The creation and management of the IT Value Chain can be vital to a firm’s success. Despite the growing importance of IT Value Chains, a reference model to aid in the management of IT-enabled Service Chains is yet be developed. The central objective of the current work is to address this significant lacuna in the current literature. The proposed reference model is developed from three related reference models: IT Infrastructure Library and IT Service Management (ITIL/ITSM) model 1 , Supply Chain Operations Reference (SCOR) model2, and eSourcing Capability Model for Service Providers (eSCM-SP)3. The objectives of our research is to analyze and compare the structures, organizations and strength/weakness of the three reference models and subsequently derive an IT-enabled service chain framework based on this analysis. The organization of this paper is as follows. Section 2 provides an operational analysis of IT services and IT-enabled services. Sections 3, 4 and 5 provide an overview and discussion of the three related reference models, respectively. Section 6 presents a comparative analysis of the three reference models. Section 7 presents the proposed framework for IT-enabled services. Concluding remarks and directions for future research are outlined in Section 8.
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http://www.itil-itsm-world.com
2
Supply Chain Council, www.supply-chain.org/
3
http://itsqc.cs.cmu.edu/
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2. IT Services and IT-enabled Services IT can be viewed using the resource metaphor. As a resource, two basic issues arise surrounding the IT concept: (i) the acquisition, management and the scaling of the resource itself, and (ii) application of the resource in enabling specific organizational activities or enhancing the productivities of processes that employ it. From a functional perspective, issue (i) pertains to the management of an IT shop within an organization; while issue (ii) pertains to applying the services originating from the IT shop in the context of organization wide processes. The systems and services that address issue (i) are broadly termed as IT Services (ITS). The business activities that either exist because of certain underlying IT support or employ IT support specifically for productivity enhancements are collectively referred to as IT-enabled Services (ITeS). Consequently, while overlapping in some areas, IT-enabled services encompass a much broader set of service provisioning capabilities. In the context of outsourcing/off-shoring, both ITS and ITeS tend to be globally distributed across organizations that together support the business requirements of a primary organization. The reference model eSCM-SP considers ITS sourcing as a subset of a larger entity, ITeS sourcing, from a functional perspective. Note that an IT-enabled service has a business process component and an IT component, although they may be difficult to distinguish in many practical cases. The eSCM-SP view of a service delivery process holds this differentiation and develops the notions of traditional IT sourcing for ITS and eSourcing for ITeS. Consequently eSourcing extends traditional IT sourcing through an inclusion of task and business process outsourcing. This is illustrated in Figure 1 (Figure 1. eSCM-SP v2 documentation).
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Transportation
Sourcing Linen Services
Janitorial Service
Data Capture Integration & Analysis Human Resource Engineering Services Finance & Accounting
Customer Care
Task & Business Process Sourcing
Medical/Legal Transaction
Purchasing Application Service Desktop Provider (ASP) Maintenance
IT Sourcing Application Management
Data Center Support
Telecommunications Network Support
eSourcing
Figure 1: eSCM-SP View of Sourcing In a recent article, Economic Times (India) outlines the major components of ITS and ITeS, according to the respective industry sectors. ITS specifically address management and scaling of IT infrastructures and architectures. Some of the common elements of ITS are software development services, systems implementation and maintenance, business process re-engineering, conversion and migration (across platforms/ languages/ versions), data warehousing and mining, embedded systems, e-commerce applications and other related service components. ITeS include Business Process Outsourcing (BPO), IT-enabled operations, customer/business partner relationship management, corporate/market community management, and numerous types of on-site services. The scope of BPO is vast – ranging from back office management to even core processes such as supply chains, human resources, assets management etc.
IT-enabled operations broadly encompass technical functional
supports such as communication systems, XML strategy, e-business solutions, e-marketplace development; EDI infrastructure, ERP integration, trading partner management and workflow modeling, among others. While relationship management has a significant marketing focus
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including customer care services, customer acquisition and engagement, customer retention and growth strategies community management provides environmental support to all the sectors, including ongoing partner relationships, e-business channels, defining requirements, implementation of innovative business models, training and customer education, to name a few. On-site services mainly pertain to the on-site support of IT services, including system setup and testing, preventive maintenance and on-site help facilities. Regardless of the distinctions between ITS and ITeS, outsourcing of all functions and sectors within them is rapidly growing. Many firms source, cooperate and connect with each other extensively and these naturally morph into intersected global IT-enabled service chains. The motivation for a reference model for value chains in global ITeS arises from these developments. We draw upon three existing reference models in conceptualizing a reference framework for ITeS: (a) the ITIL/ITSM repository which is basically a functional model for ITS, (b) the eSCM-SP model that addresses ITeS at from a sourcing and procuring perspective, and (c) the SCOR model for traditional supply chains that offers significant insights into the development of a similar operations reference model for ITeS value chains. ITIL/ITSM employs a functional view of ITS, while eSCM-SP and SCOR employ the perspective of life-cycle of operations. Thus, ITIL/ITSM provides a functional perspective and eSCM-SP yields a more high-level perspective. Integrating the two and using the insights of value chains from SCOR, a comprehensive reference model for ITeS value chains can be derived. This synthesis enables us to develop a robust ontological model to assess the value generated by IT-enabled services and guide in the development of key performance metrics and value evaluation mechanisms.
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3. ITIL/ITSM: Functional View of IT Services ITIL is a collection of best practices for IT operations first developed by the British government 20 years ago and now is gaining stream in the US (Worthen 2005). It is now one dominant player of best-practice framework for IT managers (Stoller 2005 and dubie 2005) and complementary to information security management best practice (Sait-Germain 2005). Toolkits Sets ITSM
Service Delivery
Service Support ITIL
Disciplines Service Level Management Capacity Management Continuity Management Availability Management IT Financial Management Configuration Management Incident Management Problem Management Change Management Service/Help Desk Release Management
Planning to Implement Service Management ICT Infrastructure Management Applications Management Security Management The Business Perspective Complementary IT Outsourcing toolkits Security
Table I. The Structure of ITIL and Its Complementary Toolkit ITIL is a repository to aid the implementation of a framework for IT Service Management (ITSM) and defines how service management is applied within specific organizations. ITIL is designed to be customizable for applications within any type of business or organization that has a reliance on IT infrastructure. ITIL includes standards for the best practices in the provision of IT services and contains seven sets as summarized in Table I. ITSM is divided into two main areas: Service Support and Service Delivery. Together these comprise the disciplines that embrace the provision and management of effective IT services. Service delivery is the management of the IT services themselves, and involves a number of management practices to ensure that IT services are provided as agreed between the Service Provider and the Customer. In this context, the notion of service delivery is broader than the
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delivery of manufactured products used in supply chains and covers the whole life-cycle of the services. Service support enables efficient and effective service delivery and also spans the delivery life cycle. ITIL emphasizes two important complementary issues: IT outsourcing and Security. ITIL was primarily designed for IT services within an organization and includes an IT outsourcing toolkit to extend the services to external support organizations. IT outsourcing does not imply a shift of management responsibilities to external organizations; on the contrary, it implies greater emphasis on the quality of in-house service integration and management. ITIL also covers all disciplines underlying security management in ITSM. ITIL provides a complementary coverage of security risk analysis and security policy. ITIL includes all the components of the COBRA methodology (Consultative Objective and Bi-functional Risk analysis) for risk assessment. The knowledge bases of COBRA include business/impact, logical access, system audit, security administration, contingency, system design, development, change control, security management and policy, physical access, hardware, operations, personnel, hazards, networks, etc. Furthermore, many issues such as contingency, change, hardware, and personnel that are specified in COBRA are already explicitly addressed in ITIL from a service management point of view. While COBRA is a framework that specifically addresses risk assessment and solution provisions, ITIL is more of a standard for best IT practices where security is an integral part. Security policies addressed by ITIL are more of guidance and solution mechanisms for the effective delivery of service management within ITSM. In particular, ITIL includes the security framework Rusecure that provides policies for security of online support, a range of customizable information security policies,
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security news and training support, glossary and reference material, practical assistance, Information Security Officer’s Manual and coverage of Information Security International Standard ISO 17799.
4. eSCM-SP: High-Level eSourcing View of IT-enabled Services The framework eSCM-SP that deals with IT-enabled sourcing, or eSourcing, uses information technology as a key component of service delivery or as an enabler for delivering services. eSourcing is often provided remotely, using telecommunication networks. Consequently, the services covered in eSCM-SP are broader than pure IT services and extend into the ITeS domains. For instance, some of the services such as finance and accounting are typical IT-enabled services. Unlike ITIL, eSCM-SP explicitly focuses on outsourcing, and its supporting range covers IT sourcing and business process sourcing, and is not limited to IT Service Management. The framework eSCM-SP has three objectives: (1) to provide service providers guidance that will help them improve their capability across the sourcing life-cycle, (2) to provide clients with an objective means of evaluating the capability of service providers, and (3) to provide a standard that service providers can use when differentiating themselves from competitors. The ultimate success of the model will be demonstrated when model adopters see fewer sourcing relationships that end due to deficiencies in service providers’ performance, more effective and efficient provisioning of services, and better relationships between service providers and their clients and partners. Therefore, eSCM-SP is very broad and more of high level, covering not only operational processes within services but also strategic development of IT-enabled services in general.
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The structure of eSCM-SP comprises of three dimensions: sourcing life-cycles, capability areas, and capability levels. A sourcing life-cycle is divided into Ongoing, Initiation, Delivery, and Completion phases, and these are summarized in Table II. Life-cycle Ongoing Initiation Delivery Completion
Comments Spanning the entire Sourcing Life-cycle. Involving engagement and various organizational levels. Effectively preparing capabilities for service delivery. Related to service delivery capabilities, including ongoing management of service delivering, verification that commitments are being met, and management of the finances associated with the service provision. Effectively closing down an engagement at the end of the Sourcing Life-cycle.
Table II. Four Phases of Life-cycle in eSCM-SP Ongoing Practices represent management functions that need to be performed during the entire sourcing life-cycle. Some ongoing practices typically take place at the engagement level. Others are implemented across engagements, at the organization level. However, they may be translated into objectives for lower level parts of the Service Provider, like departments, groups, teams, or individuals that may or may not correspond to a whole engagement. Initiation practices are concerned with gathering requirements, negotiating, contracting, and designing and deploying the services, including transferring the necessary resources. Delivery practices in eSCM-SP cover some of the disciplines of service support in ITIL. However, while the disciplines in service delivery management in ITIL actually cover practices other than the delivery life-cycle in eSCM-SP, ITIL does not explicitly cover this phase. Furthermore, the completion phase is clearly covered in eSCM-SP while it is tangential in ITIL. These comparisons are discussed in more detail in section 6. In the dimension of capability areas, eSCM-SP provides logical groupings of practices to help users better recognize and effectively manage the content of the model as shown in Table III. The structure of ITIL is more discipline-oriented. Some of the elements of capability areas in eSCM-SP can be found in one or more disciplines of ITIL. A detailed
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comparison of this dimension is given in section 6. Capability Areas Knowledge Management People Management Performance Management Relationship Management Technology Management Threat Management Contracting Service Design & Deployment Service Delivery Service Transfer
Phases in Life-cycle
Ongoing
One or more phases
Table III. The Capability Areas of eSCM-SP The last dimension is capability levels. eSCM-SP describes five levels addressing an improvement path that clients should expect service providers to travel. These levels are summarized in Table IV. This dimension is not explicitly covered in ITIL. Although ITIL also contains standards of best practices, it does not classify the levels among the practices in such a step-wise manner. This difference again shows that eSCM-SP is from a high strategic perspective while ITIL has an operational focus. Another difference between ITIL and eSCM-SP is that ITIL is framework-based, while eSCM-SP is both framework-based and measurement-based. eSCM-SP provides measurement for Service Providers to assess their capabilities. The philosophy underlying the use of measurement in an eSCM-SP context is goal-driven measurement. This implies that there should be a direct logical link between the business objectives of the organization and the measures of performance collected and analyzed. Using such measurements, it is possible to use eSCM-SP for evaluation and appraisal of a service provider’s capabilities by both within an organization and by third-parties. Third party evaluations lead to certifications that are common practices in the industry.
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Levels 1. Providing Services 2. Consistently meeting requirements
Best practices None 48 practices. Provided the services do not significantly vary from the provider’s experiences
3. Managing organizational performance 4. Proactively enhancing value
Additional 26 practices. Able to deliver services according to state requirements, even if the required services differ significantly from the provider’s experience. Additional 10 practices. Able to continuously innovate to add statistically and practically significant value to the services they provide to their clients and other stakeholders. No new practice. Having demonstrated measurable, sustained, and consistent performance excellence and improvement by effectively implementing all of the level 2, 3, and 4 practices for two or more consecutive Certification Evaluations covering a period of at least two years.
5. Sustaining excellence
Table IV. Capability Levels of eSCM-SP
5. SCOR: Operational View for Supply Chain Management The Supply-Chain Operations References (SCOR) framework has been developed by the Supply Chain Council. SCOR was developed as a cross-industry process reference standard for supply-chain management. The SCOR model has evolved to encompass a company’s entire value chain (Bolstorff 2005). It is related to manufactured product characteristics and life cycles (Want 2004). One major trend of research on SCOR model is to apply methodologies for production management, such as Six Sigma, to supply chain management (Malin et al. 2005 and Knowles et al. 2005). As a result, SCOR is an ideal candidate blueprint from where to develop a similar operational reference model for ITeS value chains after necessary adaptations from manufacture production to services. Process reference models integrate the well known concepts of business process reengineering, benchmarking, analysis of best practices and process measurement into cross-functional frameworks. This approach significantly differs from that of eSCM-SP. eSCM-SP sets a development path of five levels and currently there is only one organization that is certified as high as level three. On the other hand, SCOR captures the “as-is” state of a process and derives the desired “to-be” future state and establishes internal targets based on “best-in-class” results. A process reference model also contains standard descriptions of management processes and standard metrics. Such standardization and clear specification
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purposefully and unambiguously measure process metrics and enforce process controls, just like what eSCM-SP measurements are intended to work. This cross-functional property also makes SCOR basically different from ITIL which decomposes the disciplines by functionality rather than process flows. However, similarities among the three models exist; an easily identifiable similarity of SCOR to ITIL and eSCM-SP is that SCOR, as a process reference model, provides a language for communication among suppliers and customers as ITIL and eSCM-SP do. However, SCOR has clearly restricted boundaries. It spans all customer interactions, product transactions and market interactions. SCOR does not attempt to describe sales and marketing, R&D, and some element of post-delivery customer support. SCOR assumes but does not explicitly address training, quality, IT, and non SCM administration. The distinctions among the three models arising out of these factors are discussed in Section 6. SCOR is a process oriented framework and contains five processes as summarized in Table V. All these processes are essentially manufacturing-oriented. Processes Plan Source Make Delivery Return
Objectives Balances aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements Includes activities related to procuring goods and services to meet planned and actual demand Includes activities related to transforming products into a finished state to meet planned or actual demand Provides finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management Deals with returning or receiving returned products for any reason and extends into post-delivery customer support
Table V. The Five Processes in SCOR SCOR also uses the notion of levels; although it is different from that used in eSCM-SP. Figure 2 (Simplified from figure on Page 2 of Supply-Chain Council Reference Guide version 7.0) illustrates the notion of levels as used in SCOR.
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Top Level (Process Types) Configuration Level (Process Categories) Process Element Level (Decompose Processes)
Implementation Level (Decompose Process Elements)
Figure 2. Three Levels of Process in SCOR
The Top Level (Process Types) defines the scope and content for a supply chain. Here the basis of competition and performance targets are set. Next, the Configuration Level is specified in terms of Process Categories. For example, a company’s supply chain can be “configured-to-order” at level 2 from 30 core “process categories”. Companies implement their operations strategy through the configuration they choose for their supply chains. The Process Element Level (decompose Processes) defines a company’s ability to compete successfully in its chosen markets, and consists of: process element definitions, process element information inputs and outputs, process performance metrics, best practices where applicable, system capabilities required to support best practices and systems/tools. Companies “fine tune” their operations strategy at Level 3. SCOR also indicates that there should be a fourth level termed Implementation Level, which would consist of further decomposed process elements. Companies could implement specific supply-chain management practices at this level. The Level 4 also defines practices to achieve competitive advantage and to adapt to changing business conditions. However, SCOR leaves this level out of its scope. The toolkits for these levels as provided by SCOR are manufacturing-oriented.
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6. Putting It All Together First, we compare ITIL with eSCM-SP in each dimension and associated properties of eSCM-SP. As discussed in section 4, Delivery practices in eSCM-SP actually cover some disciplines of service support in ITIL. Examples are listed in Table VI. On the other hand, the disciplines in service delivery management in ITIL actually cover practices other than the delivery life-cycle in eSCM-SP. Examples are listed in Table VII. In addition, while the completion stage is clearly covered in eSCM-SP, ITIL does not explicitly address this stage. Delivery Practices in eSCM-SP Trading to clines and end-users Identifying and controlling modifications Identifying problems that impact the service delivery and taking both preventive and corrective action
Related Disciplines in Service Support in ITIL Service/Help Desk Change Management, Release Management Incident Management, and Problem Management
Table VI. Comparison of Delivery Practices in eSCM-SP with ITIL Disciplines in Service Delivery in ITIL Service Level Management Capacity Management(e.g. Demand forecasting) Continuity Management (e.g. BIA)
Related Life-cycle in eSCM-SP Initiation Ongoing Ongoing
Table VII. Comparison of Service Delivery in ITIL with eSCM-SP The structure of ITIL is more discipline-oriented. Some of the elements of capability areas in eSCM-SP can be found in one or more disciplines of ITIL. However, it should be noted that the eSCM-SP identifies and specifies those capacities with much more higher and strategic capabilities and ITIL specifies more on decomposing the functions into small sub-functions. This main differentiation arising out of this dimension is that eSCM-SP comes from a very high strategic level while ITIL focuses more on the implementation level. A comparison of eSCM-SP capability areas with ITIL disciplinary classification is provided in Table VIII.
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Capability Areas Knowledge Management People Management Performance Management Relationship Management Technology Management Threat Management Contracting Service Design & Deployment Service Delivery Service Transfer
Related Disciplines in ITIL Configuration Management Configuration Management Service Management Configuration Management Incident Management Service Level Management Service Level Management Service Delivery Service Delivery
Table VIII. Comparison of Capability Areas in eSCM-SP with ITIL Next, the dimension of capacity levels is not explicitly covered in ITIL. Although ITIL also contains best practices for standards, it does not classify the levels among the practices in such a step-wise manner. This difference again shows that eSCM-SP is from a high strategic perspective. Finally, another major difference between ITIL and eSCM-SP is that ITIL is framework-based, while eSCM-SP is both framework-based and measurement-based. The eSCM-SP provides measurement mechanisms for service providers to assess their capabilities. ITIL does not contain such evaluation and certification systems as provided by eSCM-SP based on the measurement. However, we could argue that each discipline in ITIL has its own built-in metrics and measurement mechanisms. For example, in the discipline of financial management, there are already a set of financial metrics to measure the performance of this area. Other disciplines, such as capacity, continuity, availability, etc. all have their built-in technical metrics that are widely used in the related technical sectors. So ITIL has a potential to model some metrics by disciplines and make them easy to understand and implement. Hence, we suggest to model the metrics for our proposed model in section 7 based on the disciplines of ITIL. Since SCOR is developed for supply chains of manufactured goods and ITIL and
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eSCM-SP are developed for IT services and IT-enabled services, we compare SCOR with ITIL and eSCM-SP to depict the differences and similarities between the manufacturing and IT sectors. The first comparison occurs on the boundaries of the models. Compared with ITIL, SCOR makes IT as an assumption and focuses more on the manufactured goods. Compared with eSCM-SP, SCOR’s boundary is more process-oriented and of less strategic direction. The parties considered in SCOR include a central company running a supply chain, its suppliers and customers. The suppliers and customers can be both internal and/or external. Another difference is in the identification of processes. The Plan and Delivery processes in SCOR are covered by both ITIL and eSCM-SP. Since SCOR is more manufacturing-oriented the Make and especially the Return processes are not covered in either ITIL or eSCM-SP. One may argue that in service-oriented sectors the design and delivery of services could include activities that transform efforts into services to meet specific demands for services as the Make process does. However, there would be significant differences in the logistics and scheduling processes between manufacturing processes and service functions. However, the Source process can be regarded as related to IT Outsourcing as specified in ITIL. Furthermore, as the eSCM-SP is fully intended for service providers, it does not contain sourcing processes that may be incurred by the service providers themselves. Table IX summarizes the main similarities and differences among the three models.
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Items Purposes
ITIL Implementation of a framework for ITSM. (Framework-based.)
Business Ranges
IT Service
Organization Scope
Within the organization, with complementary toolkits for IT outsourcing 7 sets of infrastructure library Provided as standards
IT-enabled outsourcing
Processes
Service Delivery and Service Support. Sub-disciplines cover part and/or whole life-cycle of ITSM. IT outsourcing is covered.
Sourcing Life-cycles: Ongoing, Initiation, Delivery, and Completion. No coverage of sourcing by the service providers themselves.
Management Function levels
IT Services and all parts that have IT reliance
Engagement level, and across engagement at the organization level
Delivery process
Service Level Management, Capacity Management, Continuity management, Availability Management, IT Financial Management. Covering some initiation, completion, and ongoing processes in eSCM-SP. (Examples are under the discussion of eSCM-SP.) Not explicitly covered
Ongoing management of service delivery, verification of meeting commitments, and financial management. Covering some service support disciplines in ITIL. (Examples are under the discussion of eSCM-SP.)
Deliver stock product, deliver made-to-order product, deliver engineered-to-order product, and deliver retail product. More manufacture oriented.
Clearly covered
Not explicitly covered
No explicit coverage. Some of them are fragmented in some disciplines with very limited coverage. (Note: ITIL is from an implementation perspective, so does not contain a lot of strategic items.) Not explicitly covered in ITIL. Although ITIL also contains best practices for standards, it does not classify the levels among the practices in such a step-wise manner. No explicit coverage.
Identified and specified with a lot of breadth and depth. (Note: this unique dimension differentiates that eSCM-SP is from a very high strategic level.)
No explicit coverage.
Five levels that the Service Providers can go through the path from low to high. This unique dimension again shows that eSCM-SP is from a high strategic perspective. Goal-driven measurement
No explicit coverage.
There is systematic full evaluation by third party for certification purposes
Captures the “as-is” state of a process and derives the desired “to-be” future state and establishes internal targets based on “best-in-class” results. So SCOR is a process reference model. Standard process reference implemented purposefully, described unambiguously, measured, and controlled Membership is open to all companies.
Structure Best practices
Completion phase Capability areas
Capability levels
Measurement
Evaluation and certification
eSCM-SP To improve capability, evaluate capability, and differentiate from competitors, so to improve customer relationship. (Both framework-based and measurement based.) IT-enabled sourcing: IT sourcing, and Task & Business process sourcing
3 dimensions and 5 levels of path 84 practices are provided as standards
SCOR A cross industry standard for supply-chain management. A process reference model. Containing standard metrics. Providing a language to communication. All customer interactions, all product transactions, and all market interactions. Compared with ITIL, SCOR makes IT as an assumption and more focuses on manufactured goods. Compared with eSCM-SP, SCOR’s boundary is more process-oriented and of less strategic direction. Own company, supplier, and customer.
3 levels of process detail Captures the “as-is” state of a process and derives the desired “to-be” future state and establishes internal targets based on “best-in-class” results. Plan, Source, Make, Deliver, and Return. More manufacture- and less service-oriented. Make and Return Process are not covered in ITIL and eSCM-SP. Customer interactions, all product transactions, and all market interactions. does not attempt to describe sales and marketing, R & D, and some element of post-delivery customer support. SCOR assumes but does not explicitly address training, quality, IT, and non SCM administration.
Table IX. Main Similarities and Differences among ITIL, eSCM-SP and SCOR
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7. eSCOR: An Integrated Operational View of ITeS Based on the discussion above, we develop an operational reference model for IT-enabled service chains. The principal blueprints for this proposal originate from SCOR, which is also an operational reference model. However, some processes in SCOR deals with manufacturing and product transfers. Those are adapted for IT-enabled services, based on ITIL and eSCM-SP. The features of eSCOR have been developed from an integration and synthesis of concepts from SCOR, eSCM-SP, and ITIL together. These features are summarized in Table X. Items Purpose Business Ranges
ESCOR A process reference model for IT enabled eServices IT-enabled sourcing: IT sourcing and Task & Business process sourcing. All customer interactions, all product transactions, and all market interactions. Organization IT-enabled service outsourcing. Own company, service Scope providers, and service purchasers. The latter two can be both internal and external. Structure One major dimension of processes life-cycle. (can be extended with 3 dimensions and 5 levels of path as in eSCM-SP, 3 levels of process detail as in SCOR) Best practices Captures the “as-is” state of a process and derives the desired “to-be” future state and establishes internal targets based on “best-in-class” results Processes Plan/Ongoing, eSource, Initiation/preparation, Deliver, Post-delivery customer support/ Completion Management Customer interactions, all eService transactions, and all market Function levels interactions. Not attempt to describe sales and marketing, R & D, and some element of post-delivery customer support. ESCOR assumes but does not explicitly address training, quality, IT, and non eService Chain Management administration. Delivery Ongoing management of eService delivery, verification of process meeting commitments, and financial management. Deliver prepared product (e.g. Telecommunications Network Support), deliver prepare-to-order product (e.g. Finance services over IT), deliver engineer-to-order product (e.g. Engineering services), and deliver retail product (e.g. Purchasing via e-commerce). Completion Clearly covered phase Capability Here can adopt what eSCM-SP identifies and specifies. areas
Comments Based on SCOR Based on both eSCM-SP and SCOR
Based on both SCOR and eSCM-SP
Based on both SCOR and eSCM-SP
Based on SCOR, since the purpose of ESCOR is more like an operation reference model. As to be discussed in the next table, this item is based on all the three models: SCOR, eSCM-SP, and ITIL Since the purpose of this model is a process reference model for IT enabled eServices, I set the boundaries that is similar to SCOR with minor adjustment to reflect that what flow over the chains are eServices. The first part is based on eSCM-SP, which covers the special issues of delivery IT enabled services. The second part is based on SCOR. The deliver are also put into 4 categories. The four examples are found in the examples of e-Sourcing in eSCM-SP
Based on eSCM-SP
Since capability management is an important part in IT services, adoption of such a dimension can improve communication, which is the purpose of an operation reference-model. This area, together with the disciplines identifies in ITIL, can be built into the metrics of ESCOR. Capability Captures the “as-is” state of a process and derives the desired Based on SCOR, since the current model is a process levels “to-be” future state and establishes internal targets based on reference model. “best-in-class” results. Measurement Standard process reference implemented purposefully, described Based on SCOR, since the current model is a process unambiguously, measured, and controlled reference model. Evaluation and Membership is open to all companies. Based on SCOR, since the current model is a process certification reference model.
Table X. Features of eSCOR 19
We proposed eSCOR model starts with SCOR, as SCOR includes a very clear classification of processes on the cycle dimension to build a chain. Hence, the flows from operations to operations can be clearly identified and specified. eSCM-SP also includes a dimension of life-cycles. Its processes on this dimension have been used for the adaptation from SCOR, since SCOR is more manufacturing-oriented and includes processes that are not suitable for the service-oriented model. However, the three-dimensional structure of eSCM-SP makes it more complex than the other two models, SCOR and ITIL. Since eSCOR is an operational reference model, these two dimensions are excluded and only the life-cycle dimension is retained in the current presentation. Note that ITIL adopts a structure of concepts and disciplines. SCOR and eSCM-SP tend more to put various small disciplines into integrated processes. As shown in the tables in section 2, a discipline could correspond to more than one process and a process could involve more than one discipline. Consequently, eSCOR adopts the life-cycle of processes as in SCOR and eSCM-SP, and corresponds to the disciplines of ITIL into individual processes in ESCOR. The proposed eSCOR model is developed and presented at a convenient level of granularity of concepts and relationships ontology for IT services value chains in Table XI. The ontology essentially comprises of five processes in the eService-Chain Operations Reference-model eSCOR. The processes are illustrated in Figure 3.
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Processes Plan/ Ongoing
e-Source
Initiation/ Preparation
Deliver
Post-delivery customer support/ Completion
Comments Based on SCOR, also covers the ongoing phases in eSCM-SP at the engagement level. The organizational level strategic practices in ongoing phases in eSCM-SP would not be covered here, since the current model is more operational reference model. Based on IT-enabled sourcing scope as defined in eSCM-SP, the difference from eSCM-SP is that the e-Sourcing direction is to procure services instead of providing services. This process is wider than IT outsourcing in ITIL, but also comes from the view of service procurement. The definition of Initiation is based on eSCM-SP. Process Preparation can be regarded as a counterpart of Make. The Initiation in eSCM-SP covers from understanding client’s requirements to service design and deployment. Those coverage can be regarded as counterparts of Make and Engineer in the Make process of SCOR. I used Preparation here to refer to those contents. This process is covered by all three models. Here the delivery in this IT operation reference-model mainly targets on IT-enabled services. Similar to Deliver in SCOR, Deliver here can be classified into four categories: Deliver prepared product (e.g. Telecommunications Network Support), deliver prepare-to-order product (e.g. Finance services over IT), deliver engineer-to-order product (e.g. Engineering services), and deliver retail product (e.g. for Purchasing via e-commerce). The examples above come from the example of IT-enabled services in eSCM-SP, since the service scope of ESCOR is similar to that of eSCM-SP. In SCOR there is a Return process after Deliver. In eSCM-SP there is a Completion phase in the sourcing life-cycle. Both deal with some part of the post delivery services and should be included as a value-added process in the service chain.
Table XI. The Five Processes in eSCOR
Plan/ Ongoing Plan/ Ongoing
Deliver Post-deliver /completion
Supplier’s supplier
eSource
Post-deliver/ completion
Plan/ Ongoing
Initiation/ Preparation
Deliver
Post-deliver/ completion
Supplier Internal or external
eSource
Initiation/ Preparation
Post-deliver /completion
Deliver Post-deliver /completion
Your Company
eSource
Initiation/ Preparation
Post-deliver/ completion
Deliver
Post-deliver/ completion
Customer Internal or external
Deliver Post-deliver /completion
Customer’s customer
Figure 3. IT-enabled Service Chain Modeled by eSCOR Since eSCOR is based on the cycle dimension of SCOR, we draw some similarities and differences between eSCOR and SCOR as follows. The process structure in eSCOR is similar to SCOR. However, the processes themselves are different between the two models as they reference different domains – manufacturing and ITeS. Further, note that Since IT-enabled services can be combined in many areas of a company’s operations, the deliver process of the supplier can be connected to any other process of the company and could even have some
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connections to the customers of the company. A classical example of this would be the outsourcing of call centers and help desk facilities. In this case, the third-party service providers’ delivery of help desk services could be chained with the delivery processes of the company’s own services and then link to the eSource services of the customer. Figure 4 illustrates this service chain in terms of the three-way relationships among the supplier, the company, and the customer. Thus the relationship and the connections among processes in service chains can be more varied and complex than those in supply chains.
Figure 4. Three-way (Supplier, Company, Customer) Relationship The eSCOR model also points to some key metrics for assessing the value generated by IT services and their underlying modeling issues. As discussed above, the key metrics for assessing the value generated by IT services are based on the disciplines in ITIL and capability areas of eSCM-SP, since these two models are more relevant to IT-enabled services than SCOR. In this regard, note that many of, the metrics used in SCOR also come from various disciplines, such as using Return on Supply Chain Assets to measure the performance of assets. In general, each discipline in ITIL has its built-in measurements. For example, Return on eService Chain Assets arises from the discipline of financial management. Similarly, other metrics in performance measurement such as capacity, continuity, availability,
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security, etc would originate from their respective disciplines. Since ITIL is uniquely equipped with multi-disciplinary metric structures, eSCOR draws from this repository for operational measurements. In addition, eSCOR adopts some capacity metrics in the engagement level (as different from the organizational and strategic levels, since the current focus is on operations.) for evaluation and self-appraisal. In the next stages of development, eSCOR could adopt SCOR’s style to develop a set of metrics for each level. The separation between customer-facing and internal facing operations needs to be incorporated. For example, in the disciplines of capacity management, the customer-facing performance attributes would include performance monitoring, application sizing, demand forecasting, and modeling, and the internal-facing performance attributes would include workload monitoring, resource forecasting.
8. Conclusions and Future Research IT-enabled services have emerged dramatically in recent years. IT has created new business opportunities in the service sector and also continues to enhance the traditional services. We use the notion of IT value chains to depict the value creation and transaction of the IT-enabled services via the globally distributed service networks. IT enhances the value of many services offerings. However, the versatility and diversity of IT-enabled services require increasing management attention. Consequentially, the creation and management of the IT Value Chain is vital to a firm’s success. In this paper, we analyze and compare the structures, organizations and strength/weakness of three reference models (ITIL, eSCM-SP, and SCOR) and develop an IT-enabled service chain framework (eSCOR) using their integration and extraction of best relevant features. The proposed eSCOR model could serve as a starting
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point for a firm to manage its IT Value Chain. We develop this model at a fairly high level. An important direction for future research is to extend the model from a top-down approach that is more clearly scoped. Our strategy of our future research in this area is: (a) keep the upper level model simplified, (b) extend it to a specific domain (e.g. security), (c) run a Delphi study with selected experts in the domain to refine the reference model, (d) extend it to a case-based ethnographic-style study over a set of selected organizations, (e) refine the model before it is ready for public commentaries. This will also open up several models at the lower levels – economic, organization design, services bundling and architectures, etc. to name a few. We are currently investigating these research avenues.
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