From Software Business Community

Software and services

A "service" is a style of business usually considered distinct from "product". It is surprisingly hard to define, because it comes in so many forms. Services usually have a "provider" who offers the service, and a "client" who uses and benefits from the service.

• From a functional perspective, a service is defined by its behavior, or what it does for the client.
• From an economics perspective, especially in the online world of Internet services a service is characterized by a co-production of value between provider and client. That is, value is generated for both provider and client, and both participate in the generation of that value.

Relevance to software business

Application software and services or service business are inextricably linked in several ways:

• In the sense of doing something useful for the user, application software has always been a service.
• Increasingly prevalent is the concept of software as a service, in which software's functionality is exported over the network from a shared data-center infrastructure and invoked by the user through (typically) a web browser interface, as opposed to software that is licensed to the end user or customer for them to install and executive on their own computers.
• Most service businesses of a traditional nature, like finance and retail, increasingly use software as an integral part of their provisioning of the service.

Service businesses are an increasingly important part of most developed economies, as manufacturing is increasingly outsourced to lower-wage countries. But some types of services can also migrate to lower-wage countries, such as outsourced software development or customer service.

Types of services

There are many different types of services, but some that are particularly important as an underpinning of the software business:

• Outsourced software development and outsourcing of customer service are examples of a software company or end-user organization substituting a service for an internal activity.
• Support of customers and users in provisioning, administering, maintaining, upgrading, and using software.
• Application software generally can be thought of as rendering a service to the user.
• Application software that runs in a central data center and offers functionality over the network is called software as a service.
• Many traditional service businesses in finance, retail, etc. utilize a large measure of service in the provisioning and operation of the service. Many of these businesses have a large internal software development organization.

Operational challenges in software-based networked services

Most networked services (those that are exported from a central data center to users over the global Internet) raise special issues for the software companies that provide the software. These are discussed in the article on software as a service.

Business issues in services

Running a software firm as a service business, or running a traditional service business by incorporating large measures of software, raise many business challenges.

A major challenge for many firms is identifying and executing on a business model, or way to generate revenue and profits.

Research issues

Software and services is a nascent area of research in the academic community. The industry, and especially IBM, has been working to stimulate more research into services more generally, and the application of software and information and communication technology to services in particular, though what is called "Service Science, Management, and Engineering". (The order is wrong here, presumably in order to create a nice acronym. The science happens first, then the engineering, and finally the management.)

Links

Wikipedia article on SSME
IBM SSME website

References