Towards Packaged IT Consulting Services: An Illustrative Case from IT Business Petteri Kaitovaara University of Turku/IT, IS Department Lemminkäisenkatu 14, FIN-20520 Turku, Finland

Mika Hyötyläinen Helsinki School of Economics and Business Administration/ Sonera Corporation Kuortaneenkatu 1, FIN-00051 Helsinki, Finland

Turku Centre for Computer Science TUCS Technical Report No 470 August 2002 ISBN 952-12-1034-6 ISSN 1239-1891

Abstract Information technology (IT)-based services - herein referred as IT services are professional services and they have to be designed and developed accordingly. In this paper we discuss on the importance of the packaging IT services in the subject of IT consultation business. The main focus is on the modeling the packaging of IT services process and highlighting its critical phases. A methodology of the packaging IT services can be used in existing professional consultative services and tasks for designing and developing IT service products, which will have accurately defined features and implementation processes. Hence, these service products can be more easily and productively sold, delivered and distributed internally as well as externally to the various stakeholders. The main contributions of this paper are both the developed model for the packaging IT services process in the field of IT consulting services, and the identification of crucial phases in that process. The importance of establishing an internally networked core development team, piloting, internal and external selling, and training phases are discussed. Finally, the paper is ended with managerial implications and avenues for further research. Keywords: information technology services, packaging of IT services, consulting services, professional services, information systems

TUCS Research Group Information Systems Research Group

1. Introduction In the debates of the differences of products and services, service tangibilization is typically associated with bringing concrete elements to intangible services (see Shostack, 1977 for discussion of the concept of intangibility; see also Levitt, 1981; and Sempels, 2002 on service tangibilization). However, we emphasize another important perspective in tangibilizing services, which is the development perspective. We illustrate this role of development with a business case of IT consulting services. Services are often launched without having been appropriately designed and tested. This usually causes severe difficulties with service delivery (Gummesson, 1994). According to Kandampully and Duddy (1999), the customer’s estimation of the value of the service is, to a large extent, influenced by the inter-relationships that the organization is able to nurture, as it is these relationships which eventually denote the value (core competence) of the service package. The same applies to information technology (IT) services. The problem in here is even more intensified due to the paradigm shift from the technology focus to service focus in IT business. These aspects create a need for similar methodologies than service blueprinting – a term coined by G. Lynn Shostack (see for example, Shostack, 1984) - for IT services. Therefore, the current imperative requires better improvement in IT services design, development, and delivery in order to avoid the ignorance of the customer. This paper has two research objectives: (1) to outline the IT consultation services design and development process here referred as the packaging of IT services; and (2) to identify the crucial phases of the process in IT consultation business. In order to reach the objectives, we start by reviewing the related theories and concepts. Second, we present an illustrative case of packaging services that is based on the authors’ involvement of IT consultation in a business environment. Third, we continue by developing a process model for the packaging IT consulting services and further examining its crucial phases. The paper ends with conclusions and directions for future research.

2. Literature Review 2.1 Tangibilizing the Intangible In Levitt’s (1972) seminal article, he suggested that service should be viewed as a type of manufacturing line. Levitt (1976) calls this productivity view of service sector as ‘industrialization of service’: complex services can be systematically industrialized “via hard, soft, and hybrid technologies” for totally people-intensive activities. Despite the criticism describing Levitt’s ideas as totally inappropriate, there are also articles that support Levitt’s suggestions. For example, as Bowen and Youngdahl (1998) who claim that the argument against the production-line approach to service rests on an outdated view of manufacturing operations. Levitt’s premise that service sector can benefit from applying techniques and philosophies developed in manufacturing is valid (Bowen and Youngdahl, 1998, p. 221). Johnston (1994) argues that service management has to learn from operations management in manufacturing. 1

Levitt (1981) argues that the most important thing about ‘intangible products’ is that “the customers usually do not know what they are getting until they do not get it”. Moreover, Levitt (1981) discusses tangibilizing the intangible, making a promise into a credible expectation. There are intangibility of all products: in order to make prospective customers confident and comfortable about tangibles that cannot be pretested, organizations go beyond the literal promises of specifications, advertisements, and labels to provide reassurance. Intangible promises have to be ‘tangibilized’ in their presentation: making intangible the tangible should be done as a matter of routine on a systematic basis (Levitt, 1981). For a broader discussion on service tangibilization in terms of service management and marketing research, see Sempels (2002). Reddy et al. (1993) discusses tangibilization in the actual service mix and the corporate image (the firm itself). In order to remain competitive in a strong competition and a variety of claims of various service providers, a service firm must tangibilize or concretize its services (Reddy et al., 1993). However, Sipilä (1996) defines the concretization as the last phase (episode) of the process, in which different kinds of visible evidences and clues are collected. An example of how much a bank may try to tangibilize its service offerings (see Reddy et al., 1993, p. 15 for detailed information) by focusing on the following: place, people, equipment, communication material, symbols, pricing, services, electronic interface, brokerage services, and distribution. Thus, the bank packages its service mix attractively to attract and retain customers. Reddy et al. (1993) suggest that before launching a tangibilization program, an organization should identify customer expectations regarding the desired service quality. The service provider needs to identify target customers’ expectation of service quality. Beyond the concretizing efforts, service marketers have to make sure that the service quality is consistent (Reddy et al., 1993). Based on the examined seven-part customer contact model for services in Buttle’s research (1993, p. 37, Table 1.) the following issues appear in tangibilizing the service: teaching what the buyer should look for (evaluative criteria), educating the buyer on comparing alternative services (comparative analysis), and teaching the buyer about the uniqueness of the service (differential advantage). An example of some methods employed in the hotels for this purpose are presented by Buttle (1993): printed materials, property tour, photographic portfolio of property, observation of meeting in progress, complimentary meeting planning kit, complimentary room, complimentary food and beverage, complimentary gifts, newsletter, taste panels, “brag” book, and videos. According to Bloom (1984), professional services usually lack attributes that a buyer can competently evaluate before (or even after) making a purchase decision. Berry (1999) states that service’s story needs to be told, and a key opportunity for doing so is through the tangibles associated with the service - referring the term ‘managing the evidence’. 2.2 The Packaging of IT Services Defined Often IT (i.e., hardware and software) is defined as a platform for information systems (IS) development and use. Moreover, IT services can be defined as professional services, such as legal, accounting, or medical services, despite the fact that IT services are still an emerging domain and business. Sipilä (1996) presents a definition of the packaging of professional services as ”defining, planning, developing, describing, and

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producing services that are offered to customers, so that customers’ benefits from the (service) product are maximized, while the profit requirements of the company are realized”. Koivula (1998) calls the subject as ‘commercialization’, ‘productization’, and ‘packaging’ when discussing the knowledge commercialization in his study. Vaattovaara (1999) suggests the distinction between general services and services as products as follows: “the transformation of services as products creates clearly defined service objects with a priori defined features and implementation processes”. Kaitovaara (2001a, 2001b) defines the packaging of IT services as follows: A design and transformation process of IT services and tasks creating clearly defined IT service products with a priori defined business-relevancy features and implementation processes for the use of different kind of parties, such as selected customers. Brännback and Nieminen (1998) explore the relevance of relationship marketing as a basis for a systematic framework for IS development enabling and supporting management of current and future needs of customers in terms of the packaging IT services. In the same vein, the definition above can be extended by defining customers also as relational customers. According to Grönroos (2000, p. 34): “Once a relationship has been established, customers are customers on a continuous basis – and they should be treated as such regardless of whether at any given point in time they are making a purchase or not”. Thus, the organizations (i.e., the IT service providers) which understand this and perform like this treat their customers as relational customers. The packaging of IT services defines accurately to whom the IT service product is aimed at - i.e., the potential customers. The IT service provider has an active role but the concept and method extends orientation more towards the customer’s value creation. Hence, customer takes a more interactive role than normal. The packaging of IT services in itself does not add total value for the customer - even though IT service provider benefits the method at least in some extent. The IT service product is the value-enhancing outcome of the packaging IT services by steering the processes of customer together with the IT service provider. There are articles that provide the theory of the packaging IT services in a detailed level (see Nieminen and Auer, 1998; Brännback and Nieminen, 1998; Kaitovaara, 2001a). This paper mainly summarizes and lists a set of integrated principles, which can be used separately in a particular situation – although, the last one is mainly discussed in this paper in sense of IT consulting services. The principles are as follows: - a component view; - entries and attributes of the internal description; - the program and the process of packaging IT services. To sum the idea of the packaging IT services, the organization has existing IT services and tasks, which are base for the development of the IT service products in a cooperation with customer. The IT service products can be developed further with the packaging of IT services: the component view offers a possibility for promoting innovative future development plans, such as evolution roadmaps related to the different versions of IT service products (Kaitovaara, 2001a, 2001b).

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2.3 Consulting Services as Professional Services Gummesson (1978) defines management consultants, technical engineers, architects, accountants and advertising professionals as all providers of professional services. Depending on the source, the list only gets longer. Bloom (1984, p. 102), for example, includes also dentist and doctors to this list. Consulting in general has clearly been recognized as a professional service. Gardner (Ford, 1990, p. 348, ref Gardner, 1986) on the other hand identifies professional services by their type. According to him all services that relate to fields of finance, accounting, advertising, management, technology, architecture, law, and healthcare are professional services. Halinen (1997, p. 29) takes a different view, and instead defines just the characteristics of professional services. These include intangibility, people intensity, interactivity, customization, and ambiguity. Boström (1995, p. 151) further adds that professional services are also more or less produced and consumed simultaneously. Similar kinds of definitions have been offered for example, by Brown and Swartz (1989, p. 92). Moreover Sipilä (1996) states that creativity and knowledge are the key differentiating aspects from other services. When categorizing professional services, Gummesson (1978) and Bloom (1984) defined consulting services as being a subset of them. As we see that all the characteristics defined above are well applicable to consulting services, we feel that consulting services involve some aspects that require further understanding. The concept of consulting is open to various interpretations (Reinilä, 1995). A very broad definition is made by Lipiäinen (2000). He suggests that consulting is characterized as “a total commitment to develop the customers business”. Though this definition offers some understanding of the peculiarities associated particularly with consulting, it provides very little value to us. As Turner (1982) suggests the single most important thing in consulting being well defined hierarchy of goals, he emphasizes that those goals should be a result of a tight co-operation between the consultant and the customer. Turner (1982) further adds that the goals should be agreed on by both parties. Bebko (2000) discusses the same issues under the term, managing customer expectations. Similar conclusions are backed by Kesner and Fowler (1997). In their study they examined a case where the goals where set in isolation by the customer with disastrous implications. Moreover, Kesner and Fowler (1997) argued that the consultants and customer had very differing understandings of the goals. The focus on tight co-operation and mutual goal setting implies that in addition to particular expertise (Sipilä, 1996) of the customer’s business, consulting work requires an exceptional level of social skills (Cope, 2000; Agahi, 2002). All the different characteristics and aspects of consulting defined above have a couple of important implications to the consulting work and consultants themselves that are worth mentioning in this context. We feel that due to the people intensity, simultaneous production and consumption as well as interactivity, consulting work requires a great deal of social skills. Whereas due to intangibility, customization and ambiguity, a great deal of creativity is required.

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3. An Illustrative Case from IT Business 3.1 Case Company and Environment The case company - Sonera Corporation has a long history as a government owned telecommunications company in Finland. It went public in 1998 and since then it has undergone major structural changes. As a result of changes in 2000, a subsidiary named Sonera Juxto Oy was formed, and it had around 450 employees with a turnover of 50 MEUR. It operated as a separate subsidiary to the end of June 2002, and in July 2002, Sonera Juxto Oy was incorporated back to Sonera Corporation. This parent company has now around 7000 employees and had a turnover of 2187 MEUR in 2001. The incorporation was more of a reorganization issue, and the activities continued somewhat the same - just under a new brand. In the context of this study we speak about Sonera Juxto Oy when referring to the case company. This is necessary because the Sonera Corporation, as a whole, operates in a very wide market area whereas Sonera Juxto Oy operates in a field that has some unique characteristics. Sonera Juxto Oy focuses on delivering IT applications as comprehensive services over a fixed or wireless telecommunications network in Finland. The service portfolio of Sonera Juxto Oy covers a wide range from simple office applications to complex care and business applications and platforms. The services are characterized by mobility, security, and end-to-end management features. Since Juxto Oy wants to establish itself as a full range IT service provider, it also offers consulting services to support the implementation of the IT services. This business has in the near past been known as application renting or application service provisioning (ASP), but it is also referred as information and communications technology (ICT) business. There are discussions whether to distinguish IT from ICT and how to define these notions. However, in this paper, these two notions are merged just because in real life, they are often mixed. At its broadest, IT incorporates all of computing and telecommunications technology (see Wells, 1998, Chapter 1). The market where the case company operates is service oriented – companies want to buy comprehensive services to their problems, not separate incompatible products or applications. The market is also characterized with a high speed of technological change and information density. 3.2 Motivation for Adapting the Packaging of IT Services for Existing IT Consulting Services According to Porter (1980), when delivering services, they usually have to either be cheaper than other providers’ services, they have to have some differentiating features, or they have to be targeted to some specific market in order to raise interests among the customers. In general this very case is no different when delivering IT applications as services to customers. But in this case as the target market of Sonera Juxto Oy covers the whole Finland from small and medium-sized enterprises (SME) to large enterprises, the third option is not applicable here. In those IT applications that have already experienced some kind commoditization, the need for lower price is emphasized. Low price is important also in those applications that are newer, but in there also the need for differentiation is emphasized. The way for 5

achieving lower prices in renting IT applications is generally believed to be a very efficient application production. It covers all the IT platforms, back-up systems, helpdesks, applications, procedures, and processes that are needed to provide the application as a service to the customer. In order to have an efficient application production all the associated processes and applications have to be conceptualized, packaged and modularized. In Sonera Juxto Oy this was done partly with the help of an international de-facto standard, Central Computer and Telecommunications Agency’s IT infrastructure library (ITIL) framework. Although it was recognized that an efficient application production is certainly a prerequisite for low prices it was not believed to be enough. Some studies, Mizoras et al. (2001), showed high return on investment (ROI) figures as over 1000% when IT applications are rented instead of being bought. But the researches, Mizoras et al. (2001), further stated that in order to achieve such high ROI figures, the above mentioned characteristics - conceptuality and modularity - should be present through the whole implementation project: from development and consultation to technical implementation and organizational adaptation. So if the service implementation has preceded a general type of consultation project, the ROI figures will not be as high as possible. The delivery of IT applications by renting them will probably provide higher ROI figures than with the usual approach but the full potential is not achieved, should not also the consulting phase be equally modularized and conceptualized. The objective was that by packaging of IT consulting services, similar kind of - as in the ITIL framework conceptuality and modularity could be brought also to the consulting phases. This in turn would enable the case company to help the customers to get to those high ROI figures. 3.3 Research Methodology The research has been designed and positioned for reflecting the research topics that is to be investigated. In terms of research design, the constructive approach can be defined as managerial problem solving through the construction of models, plans, organizations etc. Constructions refer here to entities which produce solutions to explicit problems. The task of the researcher as a construction builder is to try to implement a desired change from an initial state to a target state. (Järvinen and Järvinen, 1995; Järvinen, 1999; Kasanen et al., 1993) Further in this research, the research approach is conducted by the interpretive nature. Interpretive research can help researchers to understand human thought and action in social and organizational contexts (Klein and Myers, 1999). The selected method for the case is action research (AR) with constructive research. AR differs from case study as theory is developed bivalently: theoretical understanding of both the object to be tested and understanding the change process associated with the process of testing. Hence, the main differentiator between the methods is the role of intervention on the same research topic. Technically there are no strict definitions or agreed principles of AR but action researchers are encouraged to adopt an interpretive assumption and use more qualitative approaches. The positivist conception of science has dominated, for example, the physical sciences for more than a hundred years. Thus, this type of research, has been the target of criticism from positivists, who typically

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view experimental and survey research as the only "valid" modes of scientific inquiry (Kock et al., 1997). Nevertheless, AR offers an opportunity to understand a phenomenon in its context. The general aims of the approach is to contribute the research as well as the practical concerns. In this way the theory leads to practice and vice versa. The researcher learns from the practitioners and the practitioners learn from the researcher. AR is a matter of collaboration with participants. (Baskerville, 1999; Baskerville and Wood-Harper, 1998; Checkland and Holwell, 1998; Järvinen, 1999; Stowell et al., 1997; Susman and Evered, 1978; Yin, 1984) AR can be viewed as a cyclical process with five phases (Susman and Evered, 1978): - diagnosing, identifying or defining a problem; - action planning, considering alternative courses of action for solving a problem; - action taking, selecting a course of action; - evaluating, studying the consequences of an action; - specifying learning, identifying general findings. The infra-structure within the client system and the action researcher maintain and regulates some or all of these phases jointly. Susman and Evered (1978) consider all five phases to be necessary for a comprehensive definition of AR. There are a variety of different research forms within the class of AR approaches (see e.g., Lau, 1997) but this five-phase process was adapted straightforward. Due to the given short time-frame on this very case, there were no more iterations regarding to the process. The application of the AR process is described shortly as follows. Due to the reasons of organizational and environmental changes in the business context - a change from internal IT service provider organization to the external one dealing with real “paying” customers, the IT service offering of the Consulting Team was diagnosed as needing efficient improvement efforts. In the phase of action planning, it was outlined that the combination of development and tangibilizing efforts will solve the problem. Therefore, the packaging of IT services was selected a course of action. As in this paper, the consequences of the selected action are evaluated and learning specified. The project outcome was well-defined and easy-to-understand for both the customers and the employees of the case organization. Despite the fact that the IT core service’s content cannot be revealed on this paper because it can be imitated by some of the competitors, the actual IT service process of this case can be shortly described. The customers will first receive a certain amount of preliminary works that are related to the content of the forthcoming workshop. Subsequently, the consultants arrange a workshop for the customers within their premises, and the consultants create various notes based on the customers’ responses to their questions. Afterwards, in a fixed time frame, which is already informed to the customer during the sales phase, the consultants create with a certain methodology new documentations and slides by using their computers. In the last meeting with the customers, the consultants arrange a presentation gathering in which they give the results of the consulting study and proposal for the future development efforts and projects. The preliminary works to the customers, the workshop with the related questions, the agendas for the workshop and the presentation gathering, as well as the structure for the contributions are all a priori defined - as ready as it is possible for the customer projects to come. As summed up, the given problem was solved, and the two-way learning cycle was adopted by the responsible organization. It give a set of principles to approach and solve the problem of this kind in the future. 7

According to Kasanen et al. (1993), constructive research process can be divided into the following six phases: - finding a practically relevant problem which also has research potential; - obtaining a general and comprehensive understanding of the topic; - innovating, i.e., constructing a solution idea (the core element of a successful constructive study); - demonstrating that the solution works; - showing the theoretical connections and the research contribution of the solution concept; - examining the scope of applicability of the solution. There are some overlapping with the selected research methodologies of this case, especially in the process phases of AR and constructive research. Thus, most phases of constructive research can be defined as already stated above in AR. However, in the essential phase of constructing a solution idea, it was innovated that the principles of packaging of IT services can be used in this kind of problem situation. In this sense, the case is a successful constructive study. Finally, from validity and reliability standpoints, multiple sources of evidence were used in order to improve validity of the research. The gathered information of the faceto-face interviews was checked and re-checked by developing more specific questions. The key members of team reviewed and verified the draft papers during the early phases of research. Reliability was improved by archiving e-mails, interview notes, and documents.

4. Developing the Model for the Packaging of IT Consulting Services 4.1 Applying the Packaging of IT Consulting Services for the Case Viardot (2000) lists IT services for business: consulting services, systems engineering services, systems integration services, support services, outsourcing services, network services, and e-business solutions. In the same vein, Viardot (2000) notes that IT services are “a subtle mix of information, knowledge, and technology”. In this paper IT consultation services rely heavily on persons who support planning, design, creation, delivering, management, provision, or using of IT. There are articles related on effective consulting and managing the consultant-client relationship (see for example, Turner, 1982; Bebko, 2000; Kesner and Fowler, 1997). The illustrative case in this paper regards to people-processing professional services with a high expertise IT component. The program and the process of packaging IT services – already discussed more thoroughly in the terms of an internal IT service development (see Nieminen and Auer, 1998) – formed a basis for the IT consulting development phases. In this project, the ideas as well as the principles of the packaging IT services were extended. Thus, some new phases for the process were introduced.

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In a case like this, where controlled change in service management is pursued, the role of internal training and selling of the IT service product is noteworthy. The bottom line is that if the IT service product can be communicated easily to the internal organizations within the company, it becomes possible for it to support the ultimate communication and selling efforts towards the external, real customer. 4.2 The Process of the Packaging IT Consulting Services Bowen and Youngdahl (1998) note that there are more arrangements in place in manufacturing for employee participation than is true in the service sector. The packaging of IT services – operating in IT services sector – requires (internal) employee and external customer participation in IT service development. In this paper, the packaging of IT services model concentrates on the activities that are performed after the project has been decided to be launched. So this model will not explore questions essential prior to the project start such as how the original idea is developed into a project or how the project manager (PM) is selected. The process of the packaging IT services is considered to end when the IT service product is rolled-out. There are four main steps in the model (cf. Figure 1).

Prepare

Design & Develop

Pilot

Implement

Roll-Out

Figure 1 Steps towards the packaged IT consulting services. The prepare step is needed for a well-defined IT consulting services offering, and the project for this effort is started by setting up a core development team. In the step of design & develop, the team defines the content and gathers information, which can be also used for marketing purposes. Hence, the IT service product is created and documented, and the implementation processes are defined. Based on the experiences and feedback in the evolutionary pilot step, the IT service product is modified. In the implement step, internal activities will secure the fluent roll-out of the finalized IT consulting service product. The steps are further divided into 12 phases, and the whole process is depicted in Figure 2.

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Prototyping with internal organization

Establishing the core development team

IT service product specification definition

IT service product’s content creation

IT services and tasks information gathering

Documenting the content for all parties, incl. marketing, sales etc.

Piloting with (external) customer

Tuning material for production, marketing, sales etc.

Selling the IT service product to the first customers

Selling the IT service product for the internal organization

Roll-out of the IT consulting service product

Finalizing and concretization of the material

Training the IT service product for internal organization

Figure 2 The process in the case of IT consulting services. The packaging of IT services process starts with the establishment of the core development team and it is considered to end when the IT service product is rolled-out. The phases that lie on the same vertical level, can be completed more or less simultaneously. Table 1 describes the phases more accurately.

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Table 1 Description of the phases of the packaging IT services in IT consultation. Phase

Description

Prepare Establishing the core development team

Before the actual IT services packaging project can start, the core development team has to be established. This is most likely an activity for the project manager to do. The members of the core development team should represent all the necessary parties that are needed when offering the IT service product after its roll-out. In this way, all necessary standpoints are taken into account.

Design & Develop IT service product specification definition

The core team sets target specifications, by reviewing issues such as market potential, customers and the business logic, for the upcoming IT service product on consultation. This phase sets boundaries and aims at a common understanding of the goals among the project members.

Design & Develop IT services and tasks information gathering

It is often possible that there are some preliminary IT services and tasks to start with. Hence, related information and knowledge on the particular consultation is gathered around the organization by the core development team. Based on this, an overview is generated on what already exist and what has to be created. Also information concerning the particular business area should be gathered. This information will form the basis for the high level concept and specification.

Design & Develop IT service product’s content creation

The content, including such issues as theories on the current consultation subject, methodological issues, pre-defined delivery and implementation processes, and a set of questions for the customer are collected, and - as needed - developed. The purpose of this phase is to define the overall methodological framework as well as the actual content.

Design & Develop Documenting the content for all parties, incl. Marketing, sales etc.

After the content and framework of the consultation product are specified and developed, those ideas are put on a paper. Also material for internal and external marketing and sales efforts are created e.g., easy-to-understand slides, brochures, and reports. This phase helps the knowledge transfer that has to be conducted in situations such as training the usage of the IT service product or internal communication purposes.

Pilot Prototyping with internal organization

IT service product can be prototyped with internal organization, in order to test and evaluate its usability. This phase has its affect to the content of the IT service product and it acts as a general rehearsal for the external piloting phase. Its purpose is to make sure that no essential issues have been forgotten.

Pilot Piloting with (external) customer

Piloting with external customer or customers gives valuable feedback of the IT consulting service – such as the IT service delivery time and the content suitability for the customers - for the core development team based on the market perspective. This is a very essential phase, since thus far the team has been dealing with the development – without just any specific external view on the subject. This phase also has great motivational aspects in the form of confidence and trust.

Pilot Tuning the material for marketing, sales etc.

The documentation is revised according to the feedback gathered from the internal organization and the customer. The material is also fine-tuned to pass the possible IT service provider organization’s brand demands so that it can be externally marketed.

Implement Selling the IT service product for the internal organization

Changes on organization’s existing IT services and tasks, especially those that are described as people-processing professional services with a high expertise IT component, needs to be sold for the rest of the IT service provider organization. This phase will increase awareness of the developed IT service product and its delivery process.

Implement Selling the IT service product to first customers

Before selling to the internal organization, the product has to be sold to first real customers. This will increase the credibility of the IT service product, as it can be proved that it really responds to the market demand.

Implement Finalizing and concretization of the material

When the product is being sold to the internal organization, there will emerge discussion and feedback that has to be incorporated to the final version, so that it will get the internal organization’s approval. In this finalization and concretization phase the difficult service is transformed into as a concrete service as possible for the customer.

Implement Training the IT service product for the internal organization

After the IT service product is concretized, it has to be trained to the people that will be dealing with it. The purpose is to ensure that those people will have wide enough competence and expertise to carry out their part on its delivery process. In this training phase also all the documentation will be handed out.

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4.3 Key Issues in the Packaging of IT Consulting Services Despite the fact that we see the packaging of IT services being more on design and development footing than typically has been associated with service tangibilization, it was such an interesting finding that the crucial phases in the process were found from other phases than in the essential content development work. In a professional service organization, such as an IT service provider organization, the know-how and information can be gathered and transferred into concepts, models, and methodologies. The laborious documentation phase can be handled as a project. But in the end, these issues are mainly a matter of time and available personnel. We argue that the real challenges arise in the phases highlighted in the Figure 3 below.

Prepare

Design & Develop

Pilot

Prototyping with internal organization

Establishing the core development team

IT service product specification definition

IT service product’s content creation

IT services and tasks information gathering

Documenting the content for all parties, incl. marketing, sales etc.

Piloting with (external) customer

Tuning material for production, marketing, sales etc.

Implement

Roll-Out

Selling the IT service product to the first customers

Selling the IT service product for the internal organization

Roll-out of the IT consulting service product

Finalizing and concretization of the material

Training the IT service product for the internal organization

Figure 3 Crucial phases in the process of the packaging IT services. The underlying reasons and findings of each of the phases are discussed in a more detailed level as follows. Establishing the core development team The first challenges relate to the establishment of the core development team. The composition of the core team is established partly on the basis of relevant expertise and partly on the basis of internal and external relationships. The expertise is needed for the particular IT service product and the relationships for both communicating as well as selling it. Moreover, the core development team is responsible for the whole project. Piloting with external customer In the pilot phase the core team is expanded for the first time. The expansion is more complicated because it involves external parties. The role of customer feedback, based on the real market environment, cannot be ignored since it is the first actual step demonstrating that the IT service product really meets the demanding market demands. Before this phase, it cannot be implemented or sold as easily as a real IT service product. In this phase, the quality of the core teams external relationships is put under a real test. 12

Selling the IT service product to the first customers Since the characteristics that are looked for from the customer’s standpoint in the actual selling phase differ somewhat from those in the pilot phase, a different approach is needed to build these relationships. The project team continues expanding here. This phase is a very crucial one, because the phase of selling the IT service product for the internal organization becomes overly difficult task without any external references. By having such references, the credibility of the IT service product will be increased. The challenge becomes from the fact that until now, only the core development team knows the IT service product well enough. In other words, the external relationships of the core development team come under a serious test. Selling the IT service product for the internal organization In the internal selling phase, some executive managers become members of the project team. The IT service product has to get approval also from the executive managers before it can be communicated further in their responsible organizations. This is not so self-evident as one might think, and it gets much harder as more innovative and fresh ideas as well as concepts are concerned. The approval ensures that the IT service product has the support from the managers at higher levels. The members of the core team have to act as messengers towards the executive managers within the IT service provider organization and thereby, get their attention. The value of internal relationships of the core development team is again emphasized in this phase. Training the IT service product for internal organization In the project team experiences its final expansion. This phase in the packaging of IT service process is challenging. The underlying logic of the IT service product as well as ideas and concepts around it, have to be communicated to a heterogeneous group of people in a simple but straightforward way. The importance of the previous phase is still underlined, since the executive managers’ attitudes towards the IT service product will have an impact on the successful completion of training.

5. Conclusions 5.1 Summary and Findings In pure terms of service tangibilization or ‘managing the evidence’, it has been quite hard to bring something new for the IT services, which typically require understanding of the information technology context as well. This may be caused by the service tangibilization techniques themselves which are not extensive enough in the field of IT services. The IT service provider can concretize its services conventionally for the customer, for example, by creating brochures, printed material, or even mouse pads with the name of the current IT service (even if it has a name at all). But it is not just about the marketing perspective. Often it is not the case that the IT service provider can just add some tangible evidence to IT service, and then consider everything to be ready for the customer consumption process. This study has three main findings. First, we argue that in order to succeed in service tangibilization, a more comprehensive view has to be taken. This need for a holistic process approach for the packaging of IT services became evident also with the case of IS design and development in the business-context by Kaitovaara (2001a, 2001b). As 13

noted, the IT service provider has to design, delimit and further develop existing IT services and tasks into a clearly defined IT service products. Based on our experiences the real challenge is to handle the total chain of the packaging IT services, starting from the preparing, design, and development phases to the needed testing and piloting phases. In addition the whole process has to be managed and controlled in a professional and comprehensive way. Second finding, which is related to the first finding, is the recognition of the most crucial phases in the total process; establishing an internally networked core development team, piloting, internal and external selling, and training. All of the phases included adding new actors to the previous composition and thus building new relationships. This supports the suggestions of Kandampully and Duddy (1999) that the relationships inside and outside the organization eventually assist the firm in adding value to both customers and the firm simultaneously. By concentrating to these particular phases the advanced IT service products with their tangible evidences, will be easier to market, sell, and deliver. Furthermore, value of the IT service products are easier to communicate and extract in the business environment. Typically these phases have received little attention, especially internal and external selling, in the context of service tangibilization. Thirdly, we argue that applying the packaging of IT services in the IT consulting business the need for social skills - essential in professional services in general – cannot be eliminated. Good social skills for succeeding in a customer-IT service provider dialogue are needed since we are dealing with people-intensive professional services. Though the need for the social skills of consultants with the packaged IT consulting services can basically be reduced, the case can also be just the opposite in some instances. These kind of cases will most likely come up in situations where the applicability of the packaged IT consulting service is extended to its limits. 5.2 Managerial Implications When adequately applied, the packaging of IT services as an approach provides useful insight for managers. From managerial standpoint it can be seen as a vehicle that makes possible for the IT service provider to efficiently produce IT consulting services. The IT service products and their related processes are designed as ready as possible for forthcoming interactions with the customers. Hence this research has three managerial implications. First, as the four-step process model suggested, the IT service packaging process is not merely about design and development work, even though this perspective is elemental. If the process is initiated, managers should see that the crucial phases - establishing an internally networked core development team, piloting, selling, and training - are just as important, and they cannot be ignored. We see that managers should pay special attention to these phases, and ensure that they are assigned time and resources they deserve. This will play a major role in ensuring that the work done in designing and developing the IT service will ultimately reach a real business value. If these phases are not handled properly the offered services will ultimately be nothing more than a pile of PowerPoint slides.

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Second, the IT service products, even the most successful ones, have their limitations. It is important for managers to understand that the IT service products are clearly delimited – they cannot be total “amoebas”, which can be applied in every business case. Advantageous IT service products and their name can be vitiated because of applying them in the unsuitable business cases. Finally, although we have argued that with the packaging of IT services efficiency gains can be achieved, it is not a guarantee for a successful customer experience of IT consulting services. This is greatly due to the fact that the nature of professional IT consulting involves person-to-person interactions, which can neither be totally designed beforehand nor predicted (Turner, 1982; Bebko, 2000; Kesner and Fowler, 1997). Hence, the real manifestation is related to the IT service provider’s consulting offering through individualized human interaction (cf. Cope, 2000; Agahi, 2002). We understand, of course, that it is not possible to package all in the wide range of IT consulting services. In general, every IT service products have customizing/tailoring components strongly present. But still, there will remain a need also for completely tailored IT consulting solutions for the customer. 5.3 Further Research The forthcoming studies could focus on the following five different areas. First, the process could be examined from a management perspective to distinguish more accurately the managerial decision points and challenges. Second, the notion that the crucial phases were all characterised with adding new member to the project signals it could be interesting to study the process from the networking perspective. Third, the process could be also studied from the knowledge management perspective, since it involved at lot of information gathering, processing, and transferring. Fourth, it would be important to study the IT service product’s lifecycle after the roll-out and thus, focusing on development and management issues. Fifth and finally, information systems development literature often mentions the importance of understanding users, their requirements, and the environment they are working. In these terms, a variety of IS development models exist. However, they do not provide sufficient guidance for dealing with customer relationships, as noted by Brännback and Nieminen (1998). We see that the packaging of IT services forces the IT service provider to consider value-generating issues and processes from the customer’s viewpoint in the early phases (episodes) of the approach. It focuses on giving the customer what the customer wants in a co-operation relationship with the IT service provider. Therefore, the presented methodology for IT services design and development is a shift from a transactional approach to a relationship approach - despite the fact that the ideas of the packaging IT services do not take the whole IT service provider organization towards a total relationship management. Having said that, it will require more, a strategic decision, which is founded on – to cite Grönroos, “a marketing attitude of mind” - in every member of the IT service provider organization. Being a part of it, this shift develops understanding on how to develop, manage, and market IT consulting services both internally and externally.

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Turku Centre for Computer Science Lemminkäisenkatu 14 FIN-20520 Turku Finland http://www.tucs.fi/

University of Turku • Department of Information Technology • Department of Mathematics

Åbo Akademi University • Department of Computer Science • Institute for Advanced Management Systems Research

Turku School of Economics and Business Administration • Institute of Information Systems Science

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