Service co-production and value co-creation: The case for a service-oriented architecture (SOA)

European Management Journal (2008) 26, 289–297

journal homepage: www.elsevier .com/ locate /emj

Service co-production and value co-creation:The case for a service-oriented architecture (SOA)q

Andrea Ordanini a,*, Paolo Pasini b

aBocconi University, Viale Filippetti, 9, 20122 – Milan, Italyb SDA Bocconi, School of Management, Via Bocconi, 8, 20136 – Milan, Italy

Available online

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KEYWORDSService dominant logic;Co-production;Service management

63-2373/$ - see front mattei:10.1016/j.emj.2008.04.00

Authors gratefully acknopport given through their ‘ny thanks are also givenluable information during tCorresponding author.E-mail addresses: andrea.olo.pasini@unibocconi.it (P

r � 2005

wledge‘Serviceto manahe interv

ordanini@. Pasini).

Summary An emerging marketing management logic proposes a new perspective on ser-vice activities, which previously have been subject to a biased goods-dominant logic.According to this new logic, customers always are co-producers of services and co-cre-ators of value, not simple marketing targets, because they mobilize knowledge and otherresources in the service process that affect the success of a value proposition. This articleexplores this key proposition, analyzing service co-production and value co-creation phe-nomena in the business-to-business segment and focusing on the case of service-orientedarchitecture (SOA) with an in-depth, qualitative analysis of two firms pioneering theimplementation of SOA solutions.� 2008 Elsevier Ltd. All rights reserved.

Introduction

Marketing literature and practice converge around the ideathat, especially when it comes to services, customers playdifferent foundational roles in value-creation mechanisms.Marketing theory recently introduced the concept of theservice dominant logic (SDL), according to which the cus-tomer is always a co-producer of value, not a target of thatvalue, because he or she mobilizes knowledge and other re-

8 Elsevier Ltd. All rights reserved.

IBM Italy for the financialScience Award” programme.gers that provide time andiews.

unibocconi.it (A. Ordanini),

sources, and this effort influences the success of a valueproposition. According to this view, the customer becomesembedded in the service offering and ultimately is responsi-ble for the value added to the process (Vargo and Lusch,2004).

Service firms hope to exploit these concepts, particularlyin business markets in which customers take active, tangibleroles. Professional firms fully understand the value of serv-ing a knowledgeable customer, and some recently haveestablished formal initiatives to ‘educate’ customers (Anandet al., 2007). Technology service firms also have launchednew generations of service offerings based on strong modu-larization that can be managed directly by customers (Mio-zzo and Grimshaw, 2005).

Although influenced by the same guiding principle, thatof a desire to enhance the service exchange, theory and

290 A. Ordanini, P. Pasini

practice still remain disconnected. This is due to the dis-tance between the academic need to abstract an emergenttheory and the practitioner’s desire to drive forward a newand potentially rewarding business model into the market-place. This article aims to bridge the divide through anexploratory analysis that investigates how customers ac-tively contribute to service production and value generationwithin service dominant relationships.

Specifically, this analysis focuses on the adoption ofIBM’s service-oriented architecture (SOA), an example ofnew generation technology service, as implemented bytwo medium-sized firms: one of which produces goods andthe other services. Through an in-depth analysis of thesetwo cases, we carve out some exemplary instances of theco-productive role played by service customers. These the-oretical conceptualizations are then linked to the day-by-day managerial challenges faced by service providers andusers in the business-to-business (B-to-B) domain.

Theoretical background: service co-productionand value co-creation in the SDL

Co-production represents a central construct in serviceliterature (Zeithaml et al., 2006), such that the customer al-ways plays an active role in the service offering. This con-ceptualization derives from a specific characteristic of theservice provision, namely, that the production phase cannotbe disconnected from consumption activity (Lovelock andWirtz, 2004). Service activity innately transforms the fea-tures of a person or a good, which means it is not possibleto deliver a service without the active participation of thecustomer. This phenomenon is revealed in practical exam-ples such as: if a passenger misses a flight and the seat re-mains empty then no service has been provided, andinstead, the airline suffers unexploited capacity; likewisea hotel or restaurant would be similarly impacted upon;conversely, when a consumer chooses not to purchase a cel-lular phone or car, the consumption phase cannot happen,though production activity has already occurred.

The quality of a service exchange clearly depend upon thecustomer, in the sense that the way they, especially in aB-to-B context, participate in the process determines thefinal service delivery and thus the level of satisfaction (Ernst,2002). As such a firm does not share its business problems,strengths, and weaknesses accurately, a consultant may beforced to provide sub-optimal service—not because of itsown deficiencies but because of poor customer participa-tion. Similarly, a key element that doctors use to make accu-rate diagnosis is the information patient provides about hisor her symptoms to those doctors. If the patient providesincomplete or incorrect information, the quality of thehealth service provided can be severely affected.

The concept of service co-production recently has beenreconsidered and enhanced. The emergent SDL (Vargo andLusch, 2004, 2006) provides a new perspective that is rap-idly gaining an established position in marketing literature.It proposes a novel framework in which services representthe forefront of economic exchange systems. Managementtheory and business practice have long centred on agoods-dominant logic, but that logic may no longer be con-sistent with the foundational role of services in a modern

economy. According to the goods-dominant logic, servicesrepresent residual activities and/or peculiar (somewhatinferior) types of product. Value results mainly throughmanufacturing and other activities realized by the firm,and the customer is exogenous and destroys value throughconsumption.

Conversely, according to the SDL, a service offers anapplication of knowledge and competencies for the benefitof another entity, which makes it the basis of any economicor social exchange. Services and goods are mere appliancesto perform a service and can be considered, respectively,the direct and the indirect ways to transfer knowledgeand skills during the service process (Vargo and Lusch,2004). Moreover, the SDL places the customer centre stage,such that the customer is always a co-producer, and theenterprise delivers not value, but value propositions. Thefirst proposition means that customer relationships consti-tute a service system, not simply market-based relations(Stevens and Dimitriadis, 2005), because the customer firmintegrates its own set of resources and competencies intoany service process (i.e. service co-production). The secondproposition relates to the first, but specifies that the valueof a service exchange emerges within the economic sphereof the, because ‘‘it is not the service itself that is producedbut the pre-requisites for the service” (Edvardson and Ols-son, 1996, p. 1476). Only when the customer integratestheir own resources may the process be completed (i.e. va-lue co-creation).

In Fig. 1, we depict the service co-production and valueco-creation phenomena in a framework that adopts SDL. Inthe remainder of this article, we explore these issues of ser-vice co-production and value co-creation in the context ofB-to-B information technologies (IT) services. Specifically,we investigate how a new generation of IT, namely, ser-vice-oriented architecture (SOA), can enhance the pro-cesses of customer inclusion and participation in serviceprovision.

Service-oriented architecture (SOA)

The SOA refers to a new generation of IT systems that pos-sess particular features in terms of power and flexibility.SOA is based on a modular foundation, such that the ele-ments within the IT system can be composed and decom-posed according to the different needs of business users(Cherbakov et al., 2005). For example, business customerscan create different IT solutions as required by different sit-uations or contexts. The customer must play a central roleduring the planning and implementation of SOA systems,which should be ‘‘tailored” to the present and future needsof that firm. In such a system, the key aspect is not whichset of technologies gets implemented but rather the ser-vices they render to benefit the activities of the businessusers (Erl, 2005).

We can define SOA several ways, according to differentpoint of views. From a business angle, it represents a setof services that improve the capability of the firm to con-duct business with customers and suppliers. From a technol-ogy angle, it is a new project philosophy characterized bymodularity, separation of concerns, service re-uses, andcomposition, as well as a new programming method based

CUSTOMER

SERVICEPROVIDER

Resourcesand competencies

Resourcesand competenciesSERVIC

E

CO-PRODUCTIO

N

VALUE

CO-CREATIO

N

Resourcesand competencies

Figure 1 Service co-production and value co-creation according to the SDL logic.

Service co-production and value co-creation: The case for a service-oriented architecture (SOA) 291

on standards and tools that largely involve Web services.Finally, from an IT management point of view, SOA providesa new way to conceptualize and design IT applicationportfolios.

Both SOA and similar service platforms give a new mean-ing to the IT outsourcing phenomenon. Traditionally, out-sourcing IT meant completely externalizing the technologyactivities to a third party to save costs and leverage thecompetencies of suppliers (Gilley and Rasheed, 2000). Thisstrategy has its downsides: users lose control of technologyapplications, and providers tend to focus on standardized,rigid, broad solutions. In contrast, in using SOA, customersrely only partially on the provider for the service deliveryand maintain their own sense of (and learn from) businessapplications of technology. Moreover, SOA providers offermore flexibility, which business customers may exploit torespond to various business issues.

On the basis of these elements, it seems clear that SOAfits well with the idea of service co-production, especiallybecause of the key role that the business customer playsin planning the system and using/assembling different mod-ules over time. Furthermore, SOA provides an interestingcase of value co-production, because the potential contri-bution of the service system relates to how the customerfirm uses it and how well it enhances the set of resourcesand capabilities of that business user. The analysis of thetwo cases that follow will shed more light upon the phenom-ena associated with SOA application.

Methodology

Given the exploratory nature of our approach, we employ aqualitative research design based on an in-depth analysis ofrelevant cases. Qualitative analyses primarily work wellwhen the phenomenon under study is relatively new and/or the purpose of the research is not to test hypotheses,but rather to increase knowledge of a phenomenon by gen-erating new theoretical propositions (Eisenhardt, 1989). Ouranalysis roughly follows the procedure proposed by Eisen-hardt for handling a qualitative analysis: define the content

of the analysis, select relevant cases, analyze the collecteddata, and discuss the implications.

With regard to content, we focus on understanding ser-vice co-production and value co-creation phenomena inthe context of IT business services by observing how busi-ness firms implement SOA service systems. To select thecases, we consider that the set of investigated eventsshould be relevant (i.e. significant for the topic underinvestigation) and follow a clear sampling logic. Wechoose IBM as a key service provider of SOA systemsand select two early adopters that exhibit important fea-tures. First, one is a service firm (a bank), and the otheris a manufacturing firm (a watch producer). This distinc-tion enables us to determine whether service co-produc-tion and value co-creation differ according to the natureof the customer. Second, both cases represent firms witha dynamic growth path, which enables us to concentrateon a type of firms for which IT outsourcing traditionallyhas been problematic (Powell and Dent-Micallef, 1997).Third, the two firms display different strategy configura-tions: one focuses on international expansion, whereasthe other hopes to extend its product portfolio and distri-bution channels. Therefore, we can investigate service co-production and value co-creation phenomena in differentstrategic contexts.

Methodologically, our analysis derives inspiration fromthe ideal of a continuous dialogue between academics andpractitioners. Specifically, we use an iterative narration ap-proach based on the constant interchange betweengrounded evidence and theoretical reasoning.

Primary information was collected during 10 semi-struc-tured interviews with senior managers and project manag-ers from Binda and Cassa di Risparmio di Firenze (CRF) –the two companies that implemented SOA service systems– and IBM Global Value, and IBM Information Systems –the two units that acted as service providers. Each interviewlasted approximately one hour and was tape recorded. Sec-ondary archival data was provided by the organisations andemployed to both gain additional information and verifysome of the self-reported data.

292 A. Ordanini, P. Pasini

In terms of data analysis, we examine the focal casesaccording to the following steps:

– Determination of the business issues that led to theidea of employing SOA systems.

– Discussion of the SOA concept and structure in thefirm.

– Analysis of the implementation processes from anorganizational point of view.

– Observation of co-production and co-creationphenomena.

Case 1: Binda

The Binda group has been manufacturing and marketingwatches since 1906, when it opened its first shop in a smalltown located in north-west Italy. Its strategy has alwayscentred on the idea of creating a strong product brand port-folio. Since 1993, after the massive success of its Breil brandlaunch, the group has experienced continuous growth andshifted from a small craft firm to a multinational enterprise.Today Binda owns several important brands and acts as a li-censee for other key brands such as Wyler, D&G Time, andSeiko.

The production of watches is almost entirely outsourcedto Chinese manufacturers, though some (highest quality)products are manufactured in Switzerland. Sales turnoverreached approximately 300 millions € in 2007. The ambi-tious strategic plan for the next five years raises internaland external organizational complexity to the highest level.Three nodes are particularly challenging:

– Internationalization. At present, exports represent29% of total turnover; the company’s goal is toincrease this percentage to 50% in three years. Cur-rently, Binda products appear in 40 countries, soldthrough local branches and a dense network of domes-tic retailers. The strategic plan aims to transform theorganizational structure of the group by creating aholding that provides shared services related to insti-tutional marketing, brands, and product developmentto all branches. Local branches have specific purchas-ing functions and financial units. Logistics and ware-housing generally are outsourced to Italian and USpartners.

– Retail expansion. Binda distributes its products lar-gely through specialized retailers, including 3000points of sale in Italy, selected among the best jewel-leries and watch shops, and 1500 points of saleabroad, spread across more than 40 different coun-tries. The company hopes to boost its new directretail channel, opening a set of directly owned shopsand a network of points of sale managed through fran-chising contracts.

– Product diversification. The future strategy of Bindarelies on the idea of extending its strongest brand(i.e. Breil) to other products lines that may sharethe same ‘fashion’ meaning, such as sunglasses, per-fumes, and leather goods. The production of thesenew products would be outsourced to both Italianand foreign partners.

These complex strategic changes create a growing num-ber of interactions that then become more complex with re-gard to managing information flows, both within the Bindaorganization and among partner firms in Binda’s network.In the first case, greater flows are expected among branchesand between each branch and the central corporation. Inthe second case, new flows may emerge when new distribu-tion chains get integrated or new franchisees or manufac-turing partners become involved.

Hence, Binda realized that such a change should induceanother change specific to the IT service infrastructure.For the information systems (IS) department, which consistsof only nine people, this decision represents a further chal-lenge. Previously, the company’s approach has been todecentralize all work required to meet the specificities oflocal markets (e.g. payment systems) and concentrateremaining efforts in the Italian headquarter (e.g. channelmanagement, after sales service, quality management).The system relies on different enterprise resource planning(ERP) systems (procurement, sales, warehouse, andaccounting), and three sales force automation systems (Mi-lan for Europe, New York for the United States, Shanghai forAsia). Local branches have no autonomous IS departmentsand fully outsource their IT. Such an approach is no longersustainable in the presence of the radical changes expectedin the strategy and structure of the group.

In response, Binda conceived of the ‘galaxy project’ thatwould implement a SOA platform on its business processes.This project was articulated as follows:

1. Identify key business processes underlying the relationalactivities between headquarters and branches, betweenthe group and the network of manufacturing partners,and between the group and the logistic network.

2. Decompose processes into key standard activities, on thebasis of frequency, execution time, complexity, users’roles, and so forth.

3. Implement IT architectures consistent with the map ofprocesses/activities identified at the previous points,which allows Binda to govern the relatively complexinformation flows more flexibly and effectively.

4. Transform the current IT system, characterized by point-to-point connectivity, into a reliable new model, with acentral enterprise service bus that governs the interac-tions among IT applications, the exchange of data in dif-ferent formats, and the decision to ‘‘plug” or ‘‘unplug”

different organizational units into the system.

For instance, Fig. 2 displays how a procurement processmight be decomposed into single activities, which thenmay be recomposed according to the SOA logic. A seriesof basic requests, such as availability checks or warehousemanagement, may be shared by different organizationalunits, whether owned shops or franchising points of sale.Related feedback about these requests—that is, informationabout goods availability or lists of shipped items—then getsshared and integrated into the IT platform. The platformacts as the enterprise service bus that works within SOA lo-gic, because it can recompose and integrate single activitiesin a process according to the needs of the business.

When we apply the general framework of service co-pro-duction and value co-creation from Fig. 1 to the Binda

Check for availiabity

Warehouse mgmt

List of shipped items

CENTRAL SYSTEM(Binda Retail )

SHOP SYSTEMSHOP SYSTEM

Incoming purchaseorders

EnterpriseBinda Bus

FranchiseeFranchisee

Owned shops Franchising

FranchiseeFranchiseeSHOPSYSTEMSHOPSYSTEM

Purchaseorders

List of shippeditems

Availability

FranchiseeFranchisee

Figure 2 Process decomposition in the SOA logic: managing retail purchases in Binda.

Service co-production and value co-creation: The case for a service-oriented architecture (SOA) 293

group, we note that the customer (i.e. Binda) provides itsown resources in the service provision process, such asknowledge of business processes, market experience andknowledge, and so forth, as Fig. 3 reveals. These resourcescombine with the technical resources and competencies ofIBM, especially those related to SOA platforms. After theservices have been co-created, Binda employs them as nec-essary and integrates them with another set of resourcesand competencies, such as the company’s brand, logisticpartners, distribution channels, new products, and so on.This final combination leads to value-creation. Thus, thiscase shows that Binda co-participates to the service produc-tion process by offering a set of resources; it is also co-

IBM

HW and SWProject mgmt skills

Architectural competenciesSOA G

ALAXY

PROJECT

MARKET

COU

EX

Brand imaNew produ

Supplychain pRetail chann

Figure 3 Service co-production and value

responsible for the value generated from the applicationof those services to its own economy.

A further element that characterizes the SOA co-produc-tion logic is that IBM (IT service provider) does not apply atraditional structured methodology to implement the solu-tion; instead, IBM and Binda work together during all phasesof the project, including establishing a joint steering com-mittee, a mixed project management team, and a largerset of people and processes that belong to both the firmand the IT provider (see Fig. 4). This choice fosters a reci-procal learning loop, because IBM continuously refines itscapability to project and implement the SOA solutions indifferent business contexts (i.e. fashion industry), and Binda

BINDA GROUP

Business processes knowledgeMarket experience (fashion)Knowledge of retail channel

S AND

NTRY

PANSION

gectsartnersels

co-creation in the case of BINDA group.

Figure 4 The joint IBM/BINDA team for projecting and implementing the SOA galaxy project.

294 A. Ordanini, P. Pasini

improves the knowledge of its key processes and activities,as well as the map of relationships that exist among them.This approach provides a concrete example of what it meanswhen both providers and users bring resources and capabil-ities into a service process; the value-creation process is aco-generated process.

Case 2: Cassa di risparmio di firenze

With the case of Cassa di Risparmio di Firenze (CRF), weconsider a situation in which a service provider (bank)rather than a manufacturing producer applies the SOA solu-tion. When CRF was created in 1998, its aim was to create asignificant concentration or cluster of saving banks in thecentral area of the Italy. Since, then five local brancheshave been aggregated into the focal Firenze branch, eachembedded in its own territory. Moreover, the group containsa set of autonomous organizational units focused on com-plementary services, such as leasing, factoring, insurance,and domestic loans, which enables CRF to offer its custom-ers a wide range of services and solutions.

In addition, the CRF group has strategic partnerships withtwo leading players in the European financial market, BNP/Paribas and Intesa/S.Paolo, and recently began an interna-tional expansion into Eastern Europe. Currently, CRF main-tains more than 550 local branches (19 in Romania) and aportfolio of more than 1 million customers. The group activ-ity falls along different distribution channels: private bank-ing centres (22), business centres (35), and a network ofmore than 300 financial promoters and agents. The top man-agement of the CRF group recently announced a growth planfor the next five years, with specific aims:

– Foster the continuous innovation of products andservices.

– Extend multi-channel strategies, especially by lever-aging new technologies (Internet and digital TV).

– Simultaneously, improve flexibility and efficiency incustomer relationships.

The plan clearly has several implications for CRF’s ISdepartment and demands a radical change to sustain themore complex and articulated information flows among dif-ferent units and organizations. For this reason, in mid-2007,CRF conceived of its ‘territorial multi-channel platform’project, based on the implementation of a SOA solution

for its business processes. This project required facilitymanagement services and management of new hardware;according to the interviewed managers, it was based onsome basic principles:

– ‘‘Keep an eye on old habits”: Do not create new appli-cations if you do not need new capabilities; identifyredundancies.

– ‘‘Restructure applications into services” to avoidduplications and give meaning to business processes.

– ‘‘Be patient” because building shared servicesrequires time, analytical thinking, and mutual efforts.

To the CRF group, the SOA project should provide severaladvantages. First, the company hopes it will reduce totalcosts of ownership and the risk of technical obsolescenceby eliminating peripheral servers and reusing software com-ponents. Second, it should increase speed and flexibility inthe design and implementation of new activities and ser-vices across different delivery channels, because of themodularization potential. Third, it offers the possibility toupgrade or adjust the whole system in the presence ofchange, because of the SOA’s innovation potential. Fourth,for local branches, the project provides the opportunity toaccess a flexible, easy-to-use tool that enables them tomanage customer relationships across 360�.

The SOA methodology implemented in this case coversboth the modelling (strategy) and the architectural (imple-mentation) phases (see Fig. 5). It may be articulated inthree interconnected steps:

– Identification of services, components, and flows.– Specification of services, components, and flows.– Consolidation of realization decisions.

On the basis of this procedure, CRF and IBM (IT servicepartner) identified 250 basic services that mark an ‘average’branch, and then more than 130 others developed withinthe alternative distribution channels. These services getdecomposed into sets of basic components, which can berecombined according to business needs. Fig. 6 shows anexample of how an apparently simple process—opening abank account—can be decomposed in several basic activities.

After the business aspects have been componentized,they can be ‘covered’ by corresponding functional aspects,and the SOA solution acts to interconnect and aligns these

Figure 5 Projection of the SOA platform for CRF.

Browse product

catalogue

OPENING A BANK ACCOUNT: BASIC ACTIVITIES

Identify customer

Collect customer document

Customer risk

profile

Establish unique contact

Handle privacy

procedure

Prepare contract

Collect customer signature

Assign contractual conditions

Manage first

deposit

Figure 6 Process decomposition in the SOA logic: opening abank account with CRF.

Service co-production and value co-creation: The case for a service-oriented architecture (SOA) 295

two dimensions. According to several interviewees, ‘‘SOAallows for business and IT personnel to adopt a neutral lan-guage: interactions are facilitated not because one is forcedto adopt the language or the codes of the other, but be-cause both use a platform that translates and integratestwo languages in one unifying frame”. Moreover, ‘‘it is notrare to see a marketing manager speaking about businessfunctions and an IT specialist talking about system compo-nents while both are looking at the same issue”.

This case again provides an opportunity to apply thegeneral framework of service co-production and value co-creation. Each party invests resources and competenciesinto the service process, and we can appreciate theseinteractions as assisting the process of service co-produc-tion or value co-creation. In this case, as Fig. 7 shows,CRF provides not only its business experience but also ITresources and competencies that its IS department hasaccumulated. At the same time, IBM offers service provi-sion not only in terms of its IT capabilities but also inthe form of knowledge about banking operations that ithad gathered from its previous consultancy activities. Asin the case of Binda, CRF remains co-responsible for thevalue created from its use of the territorial multi-channelplatform, because it relies on complementary business as-sets, such as new banking products and services, brands,distribution channels, and so forth.

Finally, as for Binda, we must consider the mutual effortmade by IBM and CRF in the project phase. A consulting

committee composed of CRF top management, an IBM chiefproject, and the CRF executives responsible for key projectsengaged in constant supervision of the territorial multi-channel platform project (see Fig. 8). The committee takesresponsibility for setting roles and tasks, planning and allo-cating resources, and control. Supervision of single sub-pro-jects is delegated to an executive committee; each of thesesub-project teams consists of a group of function analysts, adevelopment team, a group expert in IT architecture, and afacility management team. Those employees responsible forspecific banking products and services then connect to therelated project teams.

Discussion and conclusions

Although based on exploratory research, our analysis con-veys several interesting insights for both the further devel-opment of theoretical constructs and best practice inrelation to the emergent service dominant logic field ofstudy. First, these two cases provide concrete examples ofsome key SDL principles, which offer further evidence ofthe conceptualization of services as applications and ex-changes of specialized knowledge between providers andusers of a service. Our research thereby helps clarify thekey constructs of service co-production and value-co-crea-tion in the context of B-to-B services and offers new insightsto this stream of literature (Ramirez, 1999; Vargo andLusch, 2004). Co-production means that the business cus-tomer must be open, in terms of releasing its existing knowl-edge base, with the service provider: the provider can onlymaximise the service exchange benefits with free and openaccess to the customers knowledge and expertise. Co-crea-tion means that value, enhanced by the use of a businessservice, also depends on the resources and competenciesthat exist in the customer’s organization. The service pro-vider contributes to the value proposition associated withthe service (which has been co-created with the customer):exploitation of the potential only occurs when the value

CRF GROUP

IBM

HW and SWProject mgmt skills

Architectural competenciesKnowledge banking operations

Business processes knowledgeMarket and customer experience

Information systems expertiseSOA TERRITORIAL

MULTI-C

HANNEL

PROJECT

Orientation to innovationNetwork of local branches

Inclination toward digital tech

EXTENDING PRODUCT

PORTFOLIO

AND DISTRIBUTIO

N

CHANNELS

Figure 7 Service co-production and value co-creation in the case of CRF group.

Consulting Committee

Executive Committee

Functional analysts

Facility management team

IT architecture expertsDevelopment team

Consulting Committee

Executive Committee

Functional analysts

Facility management team

IT architecture expertsDevelopment team

Teams specialized on bank products and services

Figure 8 The joint IBM/CRF team for projecting and implementing the SOA territorial multi-channel project.

296 A. Ordanini, P. Pasini

proposition is applied together with the resources and capa-bilities to the customer’s business processes.

Second, our analysis provides some insights into certainaspects of the IT literature, especially those streams thatdeal with architectures and service platforms. The casesshow how SOA principles purposefully match the businessprocess logic, creating a ‘‘neutral” language that helps alignIT and business domains. This neutral language also providesa means to interpret SOA as both a technology applicationand a business outlook. The cases of Binda and CRF offerseveral hints about a potentially fascinating perspectiveon new-generation services, such as SOA, as potentialbridges over the logical distance between IT tools and busi-ness issues (Sabherwal and Chan, 2001). Properties such asmodularization, re-use and flexibility move such servicesto the forefront of this challenging perspective. The casesalso show that this bridge requires continuous, wide, anddeep collaboration between the service provider and ser-vice user during all phases of the service process, fromthe earliest steps of projecting the architecture to the veryend phases of specific implementation.

Third, the analysis provides some insights for practitio-ners. Our cases detail the implementation process of SOAsolutions and how they might affect the current and pro-

spective management of business processes. To exploitthe potential of these solutions fully, business managersshould: (1) contribute actively to IT solution planning, notsimply outsource key decisions; (2) reason ahead in termsof how solutions fit with or enhance the set of existing re-sources and capabilities; and (3) recognize that they are al-ways responsible for much of the service outcome and thevalue created through its use.

As we have noted, this article summarizes exploratoryresearch. We hope that the findings and recommendationsmight be reconsidered, extended, and challenged in furtherstudies, with the aim of advancing knowledge in the servicemanagement field.

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Andrea Ordanini is Associate Professor inthe Management Department at BocconiUniversity, and Associate Director of theCustomer and Service Science Lab at thesame University. He has been visiting pro-fessor at the University of California atIrvine and at the London School of Eco-nomics. His research interests are focusedon: service management, IT services, andfirm’s competitive advantage.

Paolo Pasini is Adjunct Professor of Infor-mation Systems Management and Director ofBusiness Intelligence Observatory at SDABocconi, School of Management. His mainfields of research concern: IT innovation,Business and Service IT-Based Innovation,Business Intelligence and Decision SupportSystems, IT Strategy and Management.