Magazine Article | October 1, 2002

Why S-Business?

Source: Field Technologies Magazine

Formerly a tagalong to product sales, customer services are now at the heart of successful businesses - both high-tech and low-tech.

Integrated Solutions, October 2002

In its early years (1960s to 1980s), services were primarily defined with computers. Essentially, they were the repair and support of hardware and software. That's the business we remember as high-tech services. Well, that has changed and continues to change at a rapid pace in today's Internet world. The role of services in today's organizations is increasing, making the services industry broader than just the high-tech services industry. This is the basis for the concept of s-business. Why is this transition happening now in advanced economies? Though manufacturers have always provided customer service, the "new service" reflects a much broader form of offering that generates revenues and profits.

A New Strategy For Services
S-business is here to stay and will continue to influence businesses around the world. There are more companies moving from a product focus to a product-and-services focus. This transformation will move services into a more strategic role. In some instances, companies will become services-led. For example, we will see s-business take the lead by "pulling through" products and additional services, not the reverse, as it once was, where product sales came first, with services playing the role of a mere tagalong.

IBM is a good example of this today. IBM has built a recognized brand in IBM Global Services, which generates more than $33 billion in revenue and employs over half the corporation's workforce. Ten years ago, the company provided services strictly to support IBM products. In the mid-1990s, they were deployed to maintain account control. Today, IBM regards services as a business in its own right. The current CEO, Samuel J. Palmisano, once headed up IBM Global Services. Services have become the heart of IBM.

Is S-Business Everybody's Business?
You might say, "That's fine for IBM, but how can other companies make the transition from being product-centric to product-and-services-centric?" I think anyone can follow the IBM model and make the transition to s-business. A recent study conducted by AFSMI, titled "The State of S-Business: An International Report of Progress, Performance and Best Practices," by Dr. James A. Alexander, supports this. According to the study, "The importance of s-business in the marketplace is steadily increasing, as widening and deepening customer requirements are mandating that the impact of services become a critical factor in the buying decision process. The more important and complex the issues that customers face, the more critical are the services sold to address those problems. Furthermore, as customers view more and more products as commodities, services are often the only differentiating factor in comparing competitive offerings."

As customers demand more and more robust services - whether high- or low-tech services - organizations will have to step back and reassess their portfolio of services offerings and their overall attitude toward services. For most organizations, their future lies in embracing s-business.