Impact of service orientation at the business level

IBM Systems Journal,  Dec, 2005  by L. Cherbakov,  G. Galambos,  R. Harishankar,  S. Kalyana,  G. Rackham

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In most effective enterprises, funding of IT development and operation will also change. Because services are enterprise assets, funding models need to shift from being based on lines of business to being based on the enterprise or, perhaps, on consumption. For example, service consumption might be metered and service life-cycle operational costs might be allocated to consuming units based on their consumption rates.

In a deconstructed enterprise, business units may not have responsibility for a complete end-to-end process, but rather for services that enable the operation of other processes. Thus, the coordination and agreements between units must also be service-based. The basis for evaluation of units, teams, and even individuals will shift to delivery of service (Reference 11 [in this issue] addresses in detail the changes in organizations, management style, and even individual behavior in the service-oriented enterprise).

Emergence of service intermediaries

In traditional manufacturing that involves raw materials, enterprises are concerned with their supply chain, and especially with the reliable and timely delivery of raw materials. Their focus is on managing the risk of possible supply interruptions and delays. Similarly, service-oriented enterprises must be concerned with possible interruption of services. Services play the role of raw material in the service-oriented business.

Negotiating with and changing service providers must occur much faster than in the traditional economy. This requirement to accelerate negotiations will lead to the emergence of service intermediaries. In an environment in which consumers have the option of switching to a different service provider, service providers have the incentive to cultivate customer trust as a preventive measure. (12) Service intermediaries can help create trust by prequalifying service providers based on past experiences and other criteria. Prequalification of service providers is one of several roles that service intermediaries might play. There are other roles in which intermediaries act as liaisons between providers, consumers, or even other intermediaries. These roles and responsibilities include the following:

* Registrar--Provides registration (publication) of services, inquiries, and reports of commercially available services

* Broker--Finds the best (registered) service based on consumer-provided criteria

* Reseller--Provides proxy service for a service provider

* Billet--Provides invoicing/collecting service between consumers, providers, and other intermediaries

* Authenticator--Ensures identification of service consumers

* Service Aggregator--Aggregates commercially available specialized services

* Host--Provides physical hosting of the commercially available service (external to service provider)

There certainly will be others. The large number of intermediary roles might complicate transactions between parties. To reduce the number of interactions and contracts between parties, superintermediaries, which combine multiple roles, will evolve.