Monday, December 3, 2012

Understanding Business Services 2

In December 2006 I blogged on the topic of Explaining SOA to the Business Audience. It started out “I note resurgent interest in LegoTM blocks as a metaphor for explaining to the business audience the value of SOA. My advice is don’t treat the business audience as dummies!” The blog goes on to explain business services using the Laundry metaphor, and how business people get the concept because they understand “services”.

However, while my explanation was and remains perfectly OK, I will be the first to admit that I have moved on. The basic service model works perfectly, but in today’s fast moving, business innovating world, we need new vocabulary that is even more compelling, that goes beyond SOA and transactional efficiency.  

In their book Competing for the Future [1], Gary Hamel and C. K. Prahalad advise that traditional business responses to market and competitive pressure such as reengineering, downsizing and outsourcing are inadequate and insufficient. The outcome of this activity is typically just keeping one step ahead of declining margins and profits of yesterday’s business. Instead senior management need to get off the treadmill of restructuring and reengineering and instead reinvent their industry, imagining and creating their future.

What I didn't say in 2006 was that you don’t reinvent an industry by analyzing business processes! The business process is “how” the enterprise works. Instead we need to be looking at “what” the business is - business services, the external, composite offering that enables core capabilities to be used in many different contexts. We need to elevate the concept of Business Service to the level of business offering and business product that externalizes the enterprise capability. I suggest simple definitions as follows:

Business Service: A service provided by an enterprise to its ecosystem of customers, suppliers or partners that provides one or more capabilities that facilitate a discrete business outcome according to a contract.  Example: Amazon EC2 
Business Service Operation: An execution of one or more capabilities provided by an enterprise to its ecosystem of customers, suppliers or partners according to a service contract. Example: Data load under Amazon EC2.

In Table below I have summarized some of the Hamel Prahalad strategies and shown how these are implemented as Business Services.

Hamel and Prahalad go on to pose the question, “Why did it take US automakers 40 years to decode the principles of lean manufacturing pioneered by Toyota?” Answer – because those principles challenged the core assumptions of US auto executives.

I suggest we need to establish a business centric perspective of Business Service that is as closely linked to business offering implementation as it is to the internal SOA. This will cause us to challenge some of our core principles and assumptions. It's NOT about LegoTM, it's about business services and business agility.

[1] Gary Hamel and C. K. Prahalad , Competing for the Future, published by Harvard Business School Publishing, Reprint 1996


  1. David,
    while I agree with your arguments about the value and role of Business Service, I am confused a bit with that you refer to an enterprise as a business unit and external consumers as the only consumers of a Business Service. IMO, any business unit or team may be a provider of Business Service regardless the enterprise boundaries - outside and inside of the enterprise.

    Business Service realises certain business functionality now or can do it in the future. In the latter case, the Business Service is understood as an implementation of certain business capabilities.

    I have provided my definition of Business Service and some comments about it in the BLOG "What a Business Service is"[]

    1. Michael, Good catch! In this post I was focusing on the role of the Business Service in business model innovation; the Business Service as an offering. I fully agree the concept of Business Service is equally applicable intra enterprise (apropos your blog), and there's no reason why the level SLA should differ. Your comment caused me to consider whether the same level (life cycle) of product management and marketing would be applied to internal services. In practice this is probably not reality today. However as organizations morph into collections of discrete capabilities offering business services, quite possibly organized as multiple business entities, all the elements of product management and marketing should be relevant.

    2. It is good to know we are in the agreement, David.

      As of internal (regulated) enterprise market of business capabilities/service, I am not sure about marketing but product management should be at the same level for sure. This not only because of internal Business Services can/should be able, in essence, serve external consumers but mostly because internal Business Services should be competitive with external services; otherwise, internal consumers re-focus on external providers quickly (referencing to the internal organisation of Service-Oriented Enterprise in new book

  2. I have clarified this in the research note 'Service Concepts 101' that I authored, that includes in the comment that that "customer could be considered to include internal as well as external customers, for example where one line of business is offering services to another."

  3. It's good to see the link between services and capabilities being articulated in this and other recent articles. My own preference is to take a services oriented approach whereby services realise capabilities which are in turn underpinned by resources and again in turn marshalled by functions (and almost certainly controversially, processes). However I also think that it's a case of horses for courses - there is no one "right way". Let's keep the focus on services !