The service industry has passed manufacturing and agriculture to become the fastest-growing and most dominant industry in each of the world’s key economies. In the US alone, services now account for 80% of the total gross domestic product according to the National Academy of Engineering. While services have become a dominant economic driver, businesses, government and academia have not increased service research and innovation to reflect its growth and impact on the economy. At a time when customers are demanding more business value and Wall Street is looking for ever improving operating margins, technology companies must learn to innovate in this rapidly growing and strategic part of their business.  Without increased services R&D, the gap between customer demands and the industry’s ability to deliver value poses serious competitive and economic threats.

Service is an especially important issue for the high tech industry, where customers are demanding more services and where service has emerged as a major source of revenue, an enabler of product sales and a significant portion of a company’s earnings per share. High tech companies have responded in various ways to the increase in demand for services. For example, many companies take advantage of regions with low-cost labor as a response to the changing service landscape. However, competition in the service marketplace will happen on many fronts – including efficiency, scalability, and creativity – and the only way to obtain competitive advantage on all fronts is through more research and innovation. 

Product research and technical innovation has driven much of the growth in the technology sector over the past forty years.  Unfortunately, we have not yet seen the equivalent effort or breakthroughs in service innovation. Research in services is needed to obtain empirical data on the subject and to develop scalable, competitive and creative approaches for service in the high tech industry. 

Organizations who are willing to be the first to build a new service business model will be the leaders of this new services economy.

Companies need to understand the shift in the market landscape and act today. The service research gap is like the Global Warming issue… if we wait until we see evidence of these problems popping up, it will be too late. Corporations, governments and academic institutions have a responsibility to take action and commit their unique strengths and resources to rapidly filling the service market gap. The Service Research and Innovation Initiative (SRII) is striving for the following commitments:

• Corporations - Commit to funding a permanent service R&D budget; active involvement in the Service Research and Innovation Community (SRIC) and work with government and academia to develop service research.
• Governments - Sponsor research in universities and applied research centers; get involved in the SRIC; work with industry and academia to develop service research.
• Academic Institutions - Increase core research in services, establish curricula, programs and degrees for service disciplines (e.g. management, operations, design, etc.); collaborate with industry to develop research in commercially relevant areas; get involved in the SRIC.