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The managed service paradox

This paper in a refereed journal examines the contrasts in the provision of managed service in the information and communication technology (ICT) sector. It highlights the polarisation between infrastructure services, which are growing in scale and increasingly becoming commoditised and customised or even one-of-a-kind service projects. The paper refers to the approaches taken by three highly innovative advanced service companies – IBM, Ericsson, and Cable & Wireless – to packaging and delivering ICT service on a more industrialised basis.

The research was based on case studies in the three organisations, involving more than 30 semi-structured interviews. The authors identify the six-stage process that describes these companies’ journeys to date from product offerings to managed service. They explore the challenges these companies faced on that journey as well those currently facing them as they move to a higher degree of industrialisation of their managed service offer. To address these challenges, the authors propose a model with three axes: service design and development, service delivery, and service distribution. The model demonstrates how the increasing industrialisation of managed services requires an approach integrating all three of these dimensions. They also show that strong governance is required to address the impacts of technological evolution, marketplace dynamics and corporate culture.

The paper formed the basis of the academic and executive education programmes taught at Imperial College London and is the heart of the new Service Design Master’s programme at the RCA. Because of its relevance to large industrial companies seeking to make the transition from an industrial offering to a service- or solution-led offering, the paper was turned into a course that was delivered to Arup, Vodafone, Finmeccanica, Telefónica, Samsung and Laing O’Rourke. Leon and Davies (co-author) ran the course in Korea, Taiwan, the USA and the UK.