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Building a Science of Services

By Paul Horn Globalization may not be new, but it has reached an unprecedented scale over the past few years. Info-tech services companies, in particular, are finding it advantageous to further globalize their workforce for a number of reasons beyond simply lower labor costs: high concentrations of unique skills, huge emerging economies that offer fertile ground for innovation, and world-class centers of education that can serve as a lightening rod for talent.

But globalizing a services workforce introduces new and unique complexities, especially since the efficient management of people's time and skills can mean the difference between profit and loss for a services provider. That's why R&D for a services organization needs to include a focus on the creation of services "assets," as well as on new methods for improving efficiency by optimizing the company's business model and its resources.

Services "assets" can include software, such as a program that automates specific business processes. Or it can be a combination of an application, business methods, and services, such as "price-per-seat" desktop-management services for small and midsize businesses. Understanding the role of these assets in a services business helps dispel a concern I hear from some graduate students in computer science and other technical fields that a services-driven economy is leading to erosion in fundamental technology research. In truth, an asset-based approach to services actually creates a new channel to the market for an R&D organization's technologies.

PARTS AND PEOPLE. Services customers are often early adopters of new ideas and technologies, making it fertile ground for development. Security and privacy technologies, for example, have been used by insurance companies to help investigators and auditors identify providers that may be submitting fraudulent or abusive claims. By working with the insurance industry, an R&D organization can develop and refine cutting-edge security, which can, in turn, be shared with other industries.

When it comes to the best use of services resources -- primarily people -- R&D has to grapple with the question of how a services company identifies needed skills and makes them available where, when, and as long as needed. Clearly, we're not talking a standard supply-chain scenario here. People aren't machine parts that you can just as easily source from worldwide suppliers.

Some of the same basic management and distribution principles should still be applied, as people represent a far more valuable and significant investment for a company than parts. But these principles have to be augmented to take into consideration decidedly human factors. This introduces a host of variables that add enormously to the task's complexity.

TRAVELING MAN. Yet it's being done. Advances in mathematical research have taken our ability to model such a situation way beyond the basic "traveling-salesman analogy" -- a well-known mathematical problem established long ago, where one needs to determine the optimal order in which a salesman should visit a variety of cities around the country in order to minimize his travel time and expense.

The complexity of the problem increases with the size of the organization, as well as the variety of the skills involved. In a typical services organization with global operations, we're dealing with a huge number of "traveling salesmen," each with a variety of changing skills, bouncing between scores of customer projects, each with different needs and schedules, spread across the entire world.

Imagine trying to manage all this just by looking at columns of data on a page. Here, advances in visualization research are coming into play. Rather than sifting through and interpreting pages of numbers, visualization technology can provide easy-to-grasp maps. As Doppler radar images are used to understand the impact of weather patterns on certain areas, visualization can be used to identify skill gaps in certain places at certain times over certain project targets.

CRUNCHING NUMBERS. For the longer term, some of these techniques can also be used to predict and deal with changes in the overall workforce, such as the bubble of expected baby boomer retirements, which could mean a loss of critical experience and skills -- the stock in trade of any services business.

This is all part of a science of services -- it's not just about the development of technologies, methodologies, and other assets for use in the performance of services but the management and engineering of services operations themselves. And it takes a unique combination of technical and business-related skills and resources. These incredibly complex mathematical models, for example, require very sophisticated and powerful computer systems -- that is, if you expect the calculations to complete in your lifetime. Fortunately, computing -- and now, supercomputing -- technology has been advancing in parallel, making these calculations possible.

This is a new and rich field for scientists and engineers. And it represents an even greater new era of opportunity for businesses. Just as the optimization of parts supply chains helped drive down the cost of PCs so every consumer could afford one, so too is the optimization of intellectual-capital supply chains making the use of outside resources through services more viable for business, government, and other organizations. This means they can concentrate on core functions and offload others where it makes sense.

POOL PARTY. Access to a more widely dispersed services resource can mean much more than just closer geographic proximity to an enterprise's worldwide operations. If properly managed, today's R&D advances can turn those resources into an efficient, virtual talent pool.

So the traveling salesman may not be earning as many frequent-flier miles, but his suitcase full of sellable goods will be a lot larger. Horn is senior vice-president at IBM Research

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