Simulation for Supporting Business Engineering of Service Networks

Simulation for Supporting Business Engineering of Service Networks

Marijn Janssen (Delft University of Technology, The Netherlands)
DOI: 10.4018/978-1-60566-026-4.ch550
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Abstract

Today, the services industry provides the majority of all jobs in Western countries, and services tend to be delivered more and more using the Internet. The service economy is becoming increasingly dominant in developed economies, with knowledge assets playing a great role relative to physical and financial assets. (Rouse & Baba, 2006) Services are often characterized as intangible, perishable, experience-based, difficult-to-standardize products needing many interactions between customers and services providers. Grönroos (2001) identified three basic characteristics of services: 1. Services are processed consisting of activities or a series of activities rather than things. 2. Services are at least to some extent produced and consumed simultaneously. 3. The customer participates in the service delivery process. All kinds of information and communication technology (ICT) are applied to support the creation of service networks. Service networks are constellations of independent organizations that work together in various configurations in order to deliver services. The provisioning of services can be viewed as a series of activities leading to some observable behavior between service providers (or service brokers) and service requesters. They are delivered using the Internet, accessible from any place at any time and often involve no direct human involvement of the service provider. The term e-services is typically used to describe a variety of electronic interactions ranging from basic services, such as the delivery of news and taking out an insurance policy, to more complex services, such as the delivery of contextaware, personalized services. To understand a service network, both the network and the decision makers involved need to be understood. Stakeholder theory states that those who can effect change or be affected by it should be accounted for in the transformation process (Pfeffer, 1981). The diversity of key stakeholders and their interests makes evaluating the design and the ef- ficiency and effectiveness of service networks very complex. Often stakeholders are characterized by opposing interests, having heterogeneous systems and being part of multiple service networks. The effective management of such services network is key to success, which requires understanding each other’s interests, business processes, and information systems. Often organization network managers, a particular type of electronic intermediary (e-intermediary), specialize in coordinating such networks (Janssen & Verbraeck, 2005b). Design decisions are critical, as they determine the efficiency and effectiveness of the service networks. The development and growth of service networks requires the developer to carefully identify, evaluate, and understand the possible impact of the various design alternatives. A business engineering methodology can be of help in designing and developing service networks by providing insight into current network structure and potential structure, and by evaluating the implications of potential arrangements. Simulation can be used to compare the performance of the current and possible situations in a business engineering methodology. Simulation of service networks is much more difficult than physical networks, as the products often concerns intangibles. The objective of this article is to discuss research issues concerning the simulation of service networks to support business engineering.
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Introduction

Today, the services industry provides the majority of all jobs in Western countries, and services tend to be delivered more and more using the Internet. The service economy is becoming increasingly dominant in developed economies, with knowledge assets playing a great role relative to physical and financial assets. (Rouse & Baba, 2006)

Services are often characterized as intangible, perishable, experience-based, difficult-to-standardize products needing many interactions between customers and services providers. Grönroos (2001) identified three basic characteristics of services:

  • 1.

    Services are processed consisting of activities or a series of activities rather than things.

  • 2.

    Services are at least to some extent produced and consumed simultaneously.

  • 3.

    The customer participates in the service delivery process.

All kinds of information and communication technology (ICT) are applied to support the creation of service networks. Service networks are constellations of independent organizations that work together in various configurations in order to deliver services. The provisioning of services can be viewed as a series of activities leading to some observable behavior between service providers (or service brokers) and service requesters. They are delivered using the Internet, accessible from any place at any time and often involve no direct human involvement of the service provider. The term e-services is typically used to describe a variety of electronic interactions ranging from basic services, such as the delivery of news and taking out an insurance policy, to more complex services, such as the delivery of context-aware, personalized services.

To understand a service network, both the network and the decision makers involved need to be understood. Stakeholder theory states that those who can effect change or be affected by it should be accounted for in the transformation process (Pfeffer, 1981). The diversity of key stakeholders and their interests makes evaluating the design and the efficiency and effectiveness of service networks very complex. Often stakeholders are characterized by opposing interests, having heterogeneous systems and being part of multiple service networks. The effective management of such services network is key to success, which requires understanding each other’s interests, business processes, and information systems. Often organization network managers, a particular type of electronic intermediary (e-intermediary), specialize in coordinating such networks (Janssen & Verbraeck, 2005b). Design decisions are critical, as they determine the efficiency and effectiveness of the service networks. The development and growth of service networks requires the developer to carefully identify, evaluate, and understand the possible impact of the various design alternatives. A business engineering methodology can be of help in designing and developing service networks by providing insight into current network structure and potential structure, and by evaluating the implications of potential arrangements. Simulation can be used to compare the performance of the current and possible situations in a business engineering methodology. Simulation of service networks is much more difficult than physical networks, as the products often concerns intangibles. The objective of this article is to discuss research issues concerning the simulation of service networks to support business engineering.

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Background

Service networks can use a large variety of coordination mechanisms and structures to coordinate the activities of participants. Service networks consist of organizations cooperating together, and the management of the networks has a large impact on the total performance. Figure 1 shows a service network schematically.

Figure 1.

Example of a service network

Key Terms in this Chapter

Emulation: Actual software is written to execute something, instead of simulating it.

Service Network: Constellations of independent organizations that work together in various configurations in order to deliver services.

Discrete-Event Simulation: Models a system by changing the systems state at discrete points in time.

Agent-Based Simulation: Simulates organizations as interacting autonomous entities with their own interests and goals.

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