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Global Leaders in Business and Academia Call for New Focus on Service Innovation

Report Calls for Doubling of Funding for Service Education and Research

CAMBRIDGE, ENGLAND and ARMONK, NY - 28 Apr 2008: The University of Cambridge and IBM (NYSE: IBM) today released a report challenging governments, businesses and universities to drive increased support and funding for service innovation. Service innovation aims to improve the numerous service systems that we encounter every day, through changes in the way that technology, people, organization and information work.

The report, based on an international symposium sponsored by IBM and BAE Systems and held at Cambridge last summer, calls for a doubling of the funding for service education and research to ensure future economic prosperity and global competitiveness. More than 100 international academics and business leaders contributed to the report.

Entitled "Succeeding through Service Innovation," the report highlights the fact that service systems such as transport, communications and healthcare now form the major part of the modern economy, but suffer from a lack of support compared to manufacturing and technology research. This imbalance needs to be rectified, it argues.

According to the UN's International Labour Organisation, service jobs outnumbered agricultural and manufacturing jobs worldwide for the first time in 2007. In Britain, 75 percent of the labor force works in the services sector; in the United States, the sector accounts for more than 80 percent of Gross Domestic Product. A recent report from RTI International outlines that in developed economies, R&D investment in services typically accounts for less than one third of total R&D spending, while the service sector accounts for over two thirds of the GDP and jobs. The past few years have also seen many manufacturers of engineering products, such as BAE Systems and Rolls Royce, adopt service-oriented business models.

"Business models are changing and there are enormous opportunities for companies and economies that are able to integrate science, technology, production and service," said Professor Mike Gregory, Head of the Institute for Manufacturing (IfM) at Cambridge University Engineering Department, co-authors of the report with IBM. "The report captures the latest international thinking in the field and provides a rich resource for policy makers, industrialists and academics to drive their policies on service innovation."

In today's economy, consumers expect service interactions to work seamlessly but, more often than not, these systems can break down, resulting in problems such as lost patient records, cancelled flights or mislaid luggage. Service interactions are equally critical between business organizations. Service innovation has the potential to transform customer experience through incremental or radical changes to the service systems that deliver the experience -- examples range from self-service machines to online shopping, and from performance-based service contracts to shared business services.

"The growth of services economies, coupled with the evolution of businesses from multinational businesses to globally integrated enterprises, calls for a new, multidisciplinary approach in order for individuals, industries and countries to remain innovative and competitive," said Dr. James C. Spohrer, Director of Service Research at IBM. "Governments and businesses must play their part by developing and implementing service innovation roadmaps."

"Service-orientation is critical for our future business model which we have been transforming over recent years. Our work with the University of Cambridge is contributing to this journey and the report is welcomed as an important signpost," said Paul Tasker, Programme Director for Support Solutions Research at BAE Systems.

Technological and demographic changes, together with the development of the global economy, have all increased the scale and complexity of service systems. The same changes have left gaps in our understanding of how to manage the networks of people, technology and institutions on which thriving and successful services rely.

The report makes the following recommendations:

An electronic copy of the "Succeeding through Service Innovation" report is available online at www.ifm.eng.cam.ac.uk/ssme

Jim Spohrer, Mike Gregory and Paul Tasker are available for interview.

Notes for editors:

1. The Institute for Manufacturing (IfM) is part of the University of Cambridge Department of Engineering. It combines research, education and industrial practice to provide a unique environment for the creation of new ideas and approaches to modern industry.

In 2006, the IfM, under the sponsorship of the Royal Academy of Engineering and BAE Systems, appointed Duncan McFarlane to the UK's first professorship in Service and Support Engineering.

The IfM has been working in partnership with BAE Systems in the field since 2003 and is currently leading a major collaborative research programme with nine other UK universities to study the characteristic needs of future "through life support solutions" for suppliers of complex engineering products and services, and outline the transition from existing product-based companies.

2. Over the past five years, IBM has been working with more than 150 universities around the world to grow the adoption of SSME. Taking an interdisciplinary approach to education, SSME looks at how factors such as technology, relationship, culture, economics, and processes inform and impact the service business. Last year, U.S. World and News ranked SSME as one of top fields for graduate engineering. For more information about SSME please visit www.ibm.com/university/ssme

3. The White Paper is based on outputs from the Cambridge Service Science, Management and Engineering Symposium, held in July 2007. This symposium brought together a group of leading academics and senior industrialists in an open and interactive forum to recognise practical challenges, identify theoretical underpinnings, and explore promising avenues for development in the emerging field of Service Science. It produced an initial discussion paper and further contributions were received to the debate by inviting feedback on the discussion paper. In total, over 150 people contributed. The symposium and subsequent consultation events were sponsored by IBM and BAE Systems. Other companies attending the symposium included Rolls-Royce and BT.

Contact(s) information

Pasha Ray Dahncke
IBM Academic Innovation Initiatives
914-766-3389
646-342-4013 (m)
bipasha@us.ibm.com

Barney O'Kelly
Communications Manager BAE Systems
+44 (0) 1252 384741
+44 (0) 7803 667434 (m)
barney.okelly@baesystems.com

Tom Kirk
Communications Office University of Cambridge
+44 (0) 1223 332300
+44 (0) 7917 535815 (m)
tdk25@admin.cam.ac.uk

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