Page 157 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes 7.3.4 Changes of Technology

For the past two decades high technology advances have accelerated at a growing speed. Rather
than speaking of high technology versus low technology it has become more appropriate to
speak in terms of high knowledge intensity versus low knowledge intensity. With high
knowledge intensity we mean that advances in knowledge has taken place at such speed within
certain industries that cutting edge knowledge – often a basis for competitive advantage – has
been rendered obsolete within a year or even within a few months. Within ICT the life cycle of
new knowledge has been calculated in terms of months and within biotechnology the life cycle
is becoming increasingly short and in some areas can be as short as half a year or one year.
Hence access to new knowledge and an ability to create new knowledge has become a major
source of competitive advantage, which has also become increasingly costly. For example, the
ICT industry embarked on a massive outsourcing trend in the early 1990’s and the industry
mantra was to focus on core capabilities and to outsource all non-core activities. This was and
apparently still is a universal business mantra in any capital intensive industry. In many other
industries the IT function was outsourced providing numerous business opportunities. At the
same time the World Wide Web (WWW) emerged as a new and extremely powerful infrastructure
as well as a basis for business development. The ICT industry was busy filling markets with
technologies and applications. They paid very little attention to building strong customer
relationships and to ask the fundamental questions: who needs this? Who really needs this?
Does the customer really need what we are selling?

Changing Landscape: Suddenly, the party was over. Markets matured and the entire ICT sector
was facing the challenge of having to find markets. Only a few of those companies, which started
out in the 1990’s, managed to survive intact. The business was less and less about developing
new technologies and more and more about finding new areas of application. Applications,
which customers really needed. Those surviving companies did so because they had, from the
beginning, paid attention to building customer relationships. Perhaps this is one reason that
eBay remains the only significantly profitable e-commerce firm. In ICT this could mean
developing user friendly and functional products and services. This is achieved firms can capture
profit from the value they create for customers.

Did u know? A web service is a black-box component that can be accessed using exposed
end points.

7.3.5 Changing Responses

Recent scientific advances meant escalating knowledge intensity and an increasing demand for
high specific skills within new areas such as genetics, genetic engineering, biomedical
engineering, or molecular biology. There simply were not very many people in the world that
mastered such skills, and science was constantly discovering novelties increasing the demand
for ever-newer skill sets. Advances of biotechnology enabled new small companies to establish
themselves as providers of new scientific knowledge, which they offered to traditional
pharmaceutical companies. Suddenly the R&D process was disintegrated and the field had to
learn how to conduct corporate boundary crossing collaborative R&D. The development of
networks and a customer relationship approach to R&D began. The ICT sector was faced with
having to finds means of learning how to find markets, by learning to build customer relationships
together along with developing new technologies. The biotechnology sector faced the challenge
of learning to operate their business in a new way based on boundary crossing collaboration,
where the partners essentially could be defined as customers, and they occurred at all stages of the
R&D process. R&D and innovations management had become relational and success would be

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