minder chen, ph.d. associate professor of mis chair of business and economics csu channel islands...
TRANSCRIPT
Minder Chen, Ph.D. Associate Professor of MIS
Chair of Business and EconomicsCSU Channel Islands
Service Innovation and Management
Services - 2 © Minder Chen, 2009
References (I)• James Teboul, Service Is Front Stage: Positioning Services for Value
Advantage, Palgrave McMillan, 2006.
• Christopher H. Lovelock and Jochen Wirtz, Services Marketing, 6/E, Prentice Hall, 2007.
• James A. Fitzsimmons,Mona J. Fitzsimmons, Service Management: Operations, Strategy, and Information Technology, Irwin Professional Publication, 2008.
• Leonard Berry and Kent Seltman, Management Lessons from Mayo Clinic: Inside One of the Worlds Most Admired Service Organizations, McGraw Hill, 2008.
• Bill Hefley and Wendy Murphy (Editors), Service Science, Management and Engineering: Education for the 21st Century (Service Science: Research and Innovations in the Service Economy), Springer, February 1, 2008.
• Michael D. Johnson and Anders Gustafsson, Competing in a Service Economy: How to Create a Competitive Advantage Through Service Development and Innovation, Jossey-Bass, May 23, 2003.
• Robert F. Lusch & Stephen L. Vargo, The Service-Dominant Logic of Marketing: Dialog, Debate, And Directions, M.E. Sharpe, February 28, 2006.
Services - 3 © Minder Chen, 2009
References (II)
• Putting the Service-Profit Chain to Work, Heskett, James L.; Jones, Thomas O.; Loveman, Gary W.; Sasser, Jr., W. Earl; Schlesinger, Leonard A.. Harvard Business Review, Jul-Aug 2008, Vol. 86 Issue 7/8, p118-129.
• How to Sell Services MORE Profitably, Reinartz, Werner; Ulaga, Wolfgang. Harvard Business Review, May 2008, Vol. 86 Issue 5, p90-96.
• The Four Things a Service Business Must Get Right, Frei, Frances X.. Harvard Business Review, April 2008, Vol. 86 Issue 4, p70-80.
• BREAKING THE TRADE-OFF Between Efficiency and Service, Frei, Frances X., Harvard Business Review, Nov. 2006, Vol. 84 Issue 11, p92-101.
• Vargo, Stephen L. and Lusch, Robert F. (2004a) ‘Evolving to a New Dominant Logic for Marketing’, Journal of Marketing 68(1): 1–17.
• Vargo, Stephen L. and Lusch, Robert F. (2004b) ‘The Four Services Marketing Myths: Remnants from a Manufacturing Model’, Journal of Service Research 6(4): 324–35.
• Succeeding through Service Innovation: A Service Perspective for Education, Research, Business and Government, by: IfM and IBM, 2008
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Evolution of Works
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Classification of Services
• Extractive (agriculture, mining)
• Transformative (construction, food, manufacturing): Second sector
• Producer services (Business services and marketed services)
• Personal services (domestic, hotel, repair, dry-cleaning, entertainment, etc.)
• Distributive services (logistics, communication, wholesale and retail trade)
• Non-marketed services (Health, welfare, government, legal serices, education services, etc.)
Industry sector: Mining, Construction, & Manufacturing
Source: Front Stage
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Service classification – Proximity to final customers
• Business-to-business services
• Consumer services
• “self-services”
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Four Categories of Services
Information processing
(services directed at intangible assets):
Accounting
Banking
Nature of the Service Act People Possessions
Tangible Actions People processing
(services directed at people’s bodies):
Barbers
Health care
Who or What Is the Direct Recipient of the Service?
Possession processing
(services directed at physical possessions):
Refueling
Disposal/recycling
Mental stimulus processing
(services directed at people’s minds):
Education
Advertising/PR
Intangible Actions
More T-shaped Peopleto work in, study, and innovate
service systems
Social Science (People)
Management (Business)
Engineering (Technology)
Slide by Jean Paul Jacob
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Service Characteristics
• A service is a deed, a performance, a process, an effort.
• What is being bought is intangible.
• Services are produced and consumed almost simultaneously.
• Services in principle cannot be inventories.
• Customers are involved in the production of the services.
• Manufacturing firms also have a service component of their own.
• Instant delivery and custom design are both services.
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Service Definition
• A service is a means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks.
– ITIL Version 3
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Services Definition
• A service is a provider/client interaction that creates and captures value.
• The provider and client coordinate their work (co-production) and in the process, both create and capture value (transformation).
• Services typically require assessment, during which provider and client come to understand one another's capabilities and goals.
• A time-perishable, intangible experience performed for a customer acting in the role of co-producer (Fitzsimmons, 2001)
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Current services thinking
• A service is a provider-to-client interaction that creates and captures value while sharing risks
• Services are value that can be rented
• Services are the application of specialized competences (skills and knowledge)
• Services are autonomous, platform independent, business functions
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Distinguishing services from goods
Inseparability Services are created and consumed at the same time Services cannot be inventoried Demand fluctuations cannot be solved by inventory processes Quality control cannot be achieved before consumptionConsideration: Does the ability to tailor and customize goods to the customers’
demands and preferences mean that these goods also have an inseparability characteristic?
Heterogeneity From the client’s perspective, there is typically a wide variation in service
offerings Personalization of services increases their heterogeneous nature Perceived quality-of-service varies from one client to the nextConsideration: Can a homogeneous perception of quality due to customer
preference idiosyncrasies (or due to customization) also benefit the goods manufacturer?
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Distinguishing services from goods
Intangibility Services are ideas and concepts that are part of a process The client typically relies on the service providers’ reputation and the trust they
have with them to help predict quality-of-service and make service choices Regulations and governance are means to assuring some acceptable level of
quality-of-serviceConsideration: Do most services processes involve some goods?
Perishability (No inventory) Any service capacity that goes unused is perished Services cannot be stored so that when not used to maximum capacity the
service provider is losing opportunities Service capability estimation and planning are key aspects for service
managementConsideration: Do clients who participate in some service process acquire
knowledge which represents part of the stored service’s value? What might the impact be?
Co-produced
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Service Layering
• Pure service: Legal service, barber shop
• IT-enabled Service: Google for information search, eBay for online auction services, WebMD for online health information
• IT Services: IT outsourcing service provider (IBM Global Service), on-demand data center (EDS), on-demand computing (IBM)
• Service-wrapped IT products: iTune and iPod; GM OnStar (Emergency service + remote diagnosis & sensing + GPS & Navigation)
• Manufacturing services: IC design houses, TSMC foundry service
• Pure manufacturing: Manufacturing of commodity products
Source: Minder Chen, 2007
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Products vs. Services
• Products can be seen as the physical embodiment of the service provided.
– Cars provide comfortable transportation services
– Televisions deliver entertainment
– Cosmetics offer beatification services
– Cameras provides services for wonderful memory
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OnStar Service from GM
OnStar By GM | OnStar.com, Car Safety Device and Vehicle Security Systemhttp://www.onstar.com/us_english/jsp/index.jspScreen clipping taken: 2007/3/6, 上午 07:56
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iPod and iTune
Apple - iPod + iTunes, http://www.apple.com/itunes/, Screen clipping taken: 2007/3/6, 08:02
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• November 4, 2003 - 08:35 EST Apple today announced that its first retail store in Japan will open in Tokyo's Ginza shopping district on Sunday, November 30 at 10:00 a.m. This will be Apple's 73rd retail store, and the first outside the United States. The new store will feature five floors ….
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Inside an Apple Store
Applestore, Soho, New York, 20 Sep 2005
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Computing Clouds: Amazon Web Services
Amazon Web Services Developer Connection : AWS Solutions Cataloghttp://solutions.amazonwebservices.com/connect/index.jspaScreen clipping taken: 2007/3/6, 上午 08:08
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3 New New Things (三創 )
• Creativity(創造力) : Individual and group creativity, creative problem solving process.
• Innovation(創新 ): Product/service and Process innovation, culture for innovation.
• Entrepreneurship(創業 ): Creating a business /enterprise, cost leadership, differentiation, focused market, etc.
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Service Innovation
• Innovation in services, in service products – new or improved service products (commodities or public services). Often this is contrasted with “technological innovation”, though service products can certainly have technological elements.
• Innovation in service processes – new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation.
• Innovation in service firms, organizations, and industries – organizational innovations, as well as service product and process innovations, and the management of innovation processes, within service organizations.
http://en.wikipedia.org/wiki/Service_innovation
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Dimensions of service innovation
• The Service Concept: A “new value proposition”.
• The Client Interface: refers to innovation in the interface between the service provider and its customers. e.g., self-service
• The Service Delivery System: A "service factory" approach— is a standardized and industrialized environment for more effective service innovation.
• Technological Options: Customer loyalty cards and “smart” RFID cards for transactions.
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Service-Oriented Model & Architecture
The service target may be the service client itself.
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Provider-Client relationship• Provider
– An entity (person, business, or institution) that makes preparations to meet a need
– An entity that serves
• Client
– An entity (person, business, or institution) that engages the service of another
– An entity being served
• Some general relationship characteristics are that the client
– Participates in the service process (also known as the service engagement)
– Co-produces the value
– The quality of service delivered depends on customers preferences, requirements, and expectations
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Five Key Areas for Service Innovation in High Tech
1. The Capture, Management and Re-use of Knowledge is progressing slowly. Where are the breakthroughs?
– In electronic self help? In professional services/consulting IP capture?
2. The Growing Complexity of the Customer’s Systems is increasing cost-to-serve and negatively effecting customer satisfaction. How can we apply innovative approaches to tracking the customer environment, the cause of problems and to facilitate cooperative service provision among different companies with common customers?
3. What are future approaches to Building Supportability Into Technology Products?
– Predict environments conducive to problems
– Sense developing problems; Take Pre-emptive actions (automated and non)
– Collect information for service providers
4. Service organizations know more about the use of products and changing customers environments than any other part of the company. How can we Turn Mountains of Data Into Usable Management Information for services management, the sales force and product development teams?
5. The Services Supply Chain is becoming increasingly complex. Innovation around the “service system” business model that can help companies partner effectively will help both the quality of customer solutions and the bottom line.
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Service innovation is inherently multidisciplinary
Science & Engineering
Business Administrationand Management
Social Sciences
Global Economy& Markets
BusinessInnovation
TechnologyInnovation
Social-OrganizationalInnovation
DemandInnovation
SSME = Service Sciences, Management, and Engineering
Knowledge sources driving service innovations…
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Manufacturing vs. Services: A matter of Degree
Manufacturing Sector Service Sector
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Three Types of Restaurants
Source: Service Is Front Stage
Teppanyaki-typeRestaurant (i.e., Benihana)
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Services: The front-stage experience
manufacturing
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In-N-Out Burger
http://www.in-n-out.com/menu.asp
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Important Factors to Fast-Food Users
• The cleanliness of the restaurant (77 percent rated this “extremely important”),
• Taste or flavor of the food (73 percent)
• Order accuracy (66 percent).
• Quality of ingredients also is highly important (64 percent)
• Temperature of food ranks next in importance (57 percent).
http://www.sandelman.com/news/pdf/2005AwardsofExcellenceRelease.pdf
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懷石料理Kaiseki or kaiseki ryōri
Manchu Han Imperial Feast (Chinese cuisine 108 dishes)
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Japanese teppanyaki cooking: Hibachi-style• Moving the backstage to the frontstage
• Dining + Entertaining (Showmanship)• http://www.benihana.com/about/the-benihana-story
• http://www.youtube.com/watch?v=P9SUw0ARqwc&feature=related
• http://www.youtube.com/watch?v=aX6gUMRqJjA&feature=related
• http://www.youtube.com/watch?v=J1LGJ4rKX0g&feature=related
• http://www.youtube.com/watch?v=3zATulLPfVc&feature=related
• http://en.wikipedia.org/wiki/Teppanyaki
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Food for Thought?
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• Complimentary flatbed pick-up & delivery of your vehicle.
• New Express Service: Oil change in 30 minutes.
• Loaner Vehicles and complimentary car wash with every service.
• Longo Lexus courtesy pickup and dropoff shuttle (within a 15-mile)
• Guest Lounge with complimentary cappuccinos, coffee, tea, and pastries.
• Kids Play Area with children's movies and games.
• Guest Business Center provides computers, copier, fax and printer, & phone.
• Wireless internet access available throughout our facility.
• Starbucks Coffee and Subway sandwich restaurant located at our facility.
http://www.longolexus.com/AboutServiceAndParts
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Empowered Customer-Focus Processes
Values and Quality delivered to
Customers timely
Empowered Font-line worker
Customer-facing Process
Manager as Coach
Teamwork
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The Progression of Economic Value
WELCOME TO THE EXPERIENCE ECONOMY. Pine, II, B. Joseph; Gilmore, James H.. Harvard Business Review, Jul/Aug98, Vol. 76 Issue 4, p97-105.
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Build a Bear Workshop
• http://www.buildabear.com/aboutus/ourcompany/process.aspx
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Servant Leadership
• Customer
• Distributors/Dealers
• Front-line workers
• Supervisor
• Managers
• CIO, CFO, COO
• CEO
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Employees and Customers
“You don’t get happy guests with unhappy employees.”
J. W. Marriot
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Value Chain of People
Employee
Value
Customer
Satisfaction
Business
Profitability
Shareholder
Value
++
+
++
+
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Service Profit Chain
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Lifetime Value of a Customer
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The Service Triangle
WOM: Words of Mouth
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The Service Triangle
Frontline employee
Customer
Firm
Product and process formulation
Low turnoverProductivity Loyalty
High-quality internal services and Good internal management
Revenue growth and profitability
Relationship
Value of service provided
(Teboul, 2005, p. 33).
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Customer Loyalty
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Zappos.com
• YouTube - Zappos on Nightline www.youtube.com/watch?v=tFyW5s_7ZWc
• Amazon acquires Zappos for $850M Million
• Video from Jeff Bezos about Amazon and Zappos
• Zappos on face book http://www.facebook.com/zappos?v=app_3801015922
• http://twitter.com/zappos
• http://ag.arizona.edu/rtip/Symposium/2008/08_powerpoint/c_adkins_zappos.pdf
• Why Zappos are so successful in selling shoes online?
• How would you use Web 2.0 for your business?
• Anything unique about the Web site design?
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Zappos at a Glance• Founded in 1999,1600 employees (half in Las Vegas,
Nevada, half in Louisville, Kentucky)
• Zappos is “Powered by Service”
• Providing the best online shopping experience possible.
– Fast, Free Shipping. Free return shipping. 365‐day return policy.
– Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.
• Best selection:
– Over 1200 brands, over 200,000 styles, over 900,000 unique UPCs. Over 4 million items in warehouse
– Photography in multiple angles & 100% in‐house.
– 100% of products inventoried (no drop ship).
• Zappos is a service company that happens to sell shoes, clothing, handbags, eyewear, watches (and eventually a bunch of other stuff).
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Zappos Core Value
1. Deliver WOW Through Service 2. Embrace and Drive Change 3. Create Fun and A Little Weirdness 4. Be Adventurous, Creative, and Open-Minded 5. Pursue Growth and Learning 6. Build Open and Honest Relationships With
Communication 7. Build a Positive Team and Family Spirit 8. Do More With Less 9. Be Passionate and Determined 10.Be Humble
http://about.zappos.com/our-unique-culture/zappos-core-values/deliver-wow-through-service
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Zappos Success• encouraging customers to order as many products as they wanted
in order to “try them on,” then offering free return shipping for a full 365 days
• only listing products on the site when stock was in their own warehouse (which actually lowered sales by 25% at a time when the company was still in the red)
• Run warehouse operation 24/7 to deliver super-fast turnaround on orders, despite it being an inefficient way to manage fulfillment
• encouraging customers to call them about nearly everything. Their call center takes 5,000 calls per day, and employees work independent of scripts, quotas, or call time limits. The longest call to date has been four hours. Zappos views the phone experience as a branding device, and speaks to virtually every customer at least once.
• deciding to invest in “surprise” (free) upgrades to overnight shipping for most customers. This means that most orders are delivered within 24 hours, despite the web site indicating it will take 2-5 business days.
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Zappos: 10 Things Learned in e‐commerce 1. The e‐commerce business is built on repeat customers
2. Word of mouth really works online
3. Don’t compete on Price
4. Make sure your web site inventory is 100% accurate
5. Centrally locate your distribution
6. Customer service is an investment, not an expense.
7. Start small, stay focused
8. Don’t be secretive. Don’t worry about competitors
9. You need to actively manage your company culture
10. Be wary of so‐called experts…INCLUDING US!!!
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Service blueprint components
Physical evidence
Customer actions
OnstageEmployee actions
BackstageEmployee actions
Support processes
Line of interaction
Line of internal interaction
Line of visibility
Desktop PC and applications, ticket, records
IT request, problem call to help desk, etc
Takes call, opens ticket, visit to employee desk side
Refers to manuals, asks for help from team
Time recording, payroll, training, etc
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Customer Life Cycle
Welcom
e
Awareness
GettingTo Know
Win
back
Targeting
Account
Management
Intensive
Care
Pre-Divorce/Divorce
Translate Failure into Success!The Proof!
"Moments of Truth"
Cross-Selling,Profit Opportunities
Delivery, Welcoming service andContinuous Contact Processes
Sales Processes (Including Business Partners)
Market and Customer Research and analysis
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MOT Analysis Example: A Credit Card Company
• Pri to MOT – Recognition
– Information gathering
– Comparison
• MOT – Applying for Credit Card
– Receiving Credit Card
– Using Credit Card
– Providing Information
– Changing and Upgrading
– Gifts giving
– Emergency Assisting
• After MOT– No usage follow-up
– Stop membership follow-up
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Customer Experiences of an Airline Passenger: SAS
SAS Scandinavian Airlines
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Value Creation Cycle for a Full Service Hotel
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Think from the Customer Back
The CustomerThe Customer
Management
Organization
Functions/Processes
Activities/Tasks
DefineOutcomes
RedesignOutputs
DetermineActivities
DefineJob Responsibilities
DevelopOrganization Structure
* Adapted from The Price Waterhouse Change Integration Team, Better Change, Irwin, 1995, p. 163.
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EC and Business Processes
Seller Customer
Co
rpo
rate
Dat
abas
es
Provide Info
Get customer
Provide info
Fulfill Services
Support
Identify need
Find source
Evaluate offerings
Purchase
Operate, Maintain, Repair
Phone, fax, e-mail
Web site
Newsgroups
Net communities
Web site
EDI
Web site, phone, fax, e-mail, e-mailing list
Credit cards, e-cashP.O.s
Demos, reviews
Send info
Data sheets, catalogs, demos
Request info
Web surfing
Web searches, web ads
Deliver soft goods electronically
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The Service Portfolio
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Service Support Model
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The Service Delivery Process Model
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Service-Oriented Enterprise Architecture
View SERVICE PROCESS People Information Motivation
Strategic View
Service Strategy
Service Value Chain Framework
Customer Segmentation & Employee Attributes
Enterprise-Wide Conceptual Information Model
Visions, Missions, & Business Strategy
Tactic View
Service Portfolio & Catalogue
Customer Management Activity Model
Organizational Structure & Human Workflow
Logical Data Model
Business Goals
Operational View
Service Operations & Web Services
Service Blueprinting
Service Teams Physical Data Model & Dimensional Model for Data Warehouse
Performance Measure