A Prototype for Service-Based Costing Jürgen Dorn and Wolfgang Seiringer Institute of Software Technology and Interactive Systems, Vienna University of Technology Favoritenstrasse 9-11, A-1040 Wien, Austria juergen.dorn@ec.tuwien.ac.at, wolfgang@seiringer.info Abstract Service systems consider the co-creation of values in a process between provider and consumer with a win-win situation for both. Service-Dominant Logic demands a new view on economic activities where competences of provider and consumer are the most important resource for value creation. Given these assumptions, we investigate whether costs in a service system shall be accounted in a different way to reflect the change in view. If service provision is seen as a process, activity-based cost models seem to be appro- priate. We argue that an extension is necessary, be- cause a service is co-created by resources of service provider and consumer. Furthermore, activities per- formed by the consumer are not under control and therefore additional uncertainty has to be considered. Our research question is whether we are able to com- pute service costs with a higher degree of accuracy than with traditional cost models. 1. Introduction In most economies the service sector is growing, however, the productivity in this sector is typically much lower than in the first two economic sectors. Service science tries to understand and to address services to improve the efficiency of creating new services and to improve the productivity in this sector [1]. A service system is the main abstraction in service science to investigate phenomena in service science and to foster innovation in the service sector [2]. Service-Dominant (S-D) Logic is a new approach to marketing [3]. Motivated by the growing importance of services for our society, Vargo and Lusch present an approach being in contrast to traditional Goods Logic. The traditional logic is based on the exchange of goods or respectively the exchange of goods for money. If a good is sold from a provider to a customer it is already produced, potentially stored in a warehouse and con- ceptually the transaction of exchanging good and money can take place at the same time. Such a transaction can be modeled easily by a change in a database. In a state-based knowledge rep- resentation this can easily be modeled. Either we have two states or if we do not assume the two actions to take place at the same time, we have three states and two state changes. In a conceptual accounting frame- work such as REA (Resources, Events and Agents) [4] two events are modeled when two agents exchange re- sources. If this accounting is done in real-time, an agent can determine at any time the amount of its re- sources (money and goods) by a database operation. Proponents of REA claim that with such a computa- tional model traditional financial balance computation is obsolete because no double entry accounting is necessary [5]. Services are different to goods in several aspects. Services are co-created by provider and customer and thus the customer has to invest at least effort in its co- creation. If the customer is a company with employees of different degree of competences and an employee is needed for the service consumption, the success and the efficiency of a service provision is also dependent on the selected employee at the customer side. It is said that the provider makes only a value of- fering to the customer. If we account costs of services, we have to consider costs at both sides: at the provider and the customer side. If we only want to estimate at which price a provider shall offer a service, we might consider only costs at the provider side. However, if we want to sell services we have to compare different value offerings on the market and then we have to compare full prices including the cost for the customer, because the customer has also to consider the offered price and its own costs in co-creation of the service. In a service system, the cooperation of agents also re- quires to consider the common costs. Moreover, as stated by S-D Logic, the most impor- tant resources in services are the competences of the human resources. Thus, we especially have to account the costs of human resources and need a detailed cost model for levels of competences. If an expert is re- quired for a service, the service must be more expen- 2013 46th Hawaii International Conference on System Sciences 1530-1605/12 $26.00 © 2012 IEEE DOI 10.1109/HICSS.2013.56 1298 2013 46th Hawaii International Conference on System Sciences 1530-1605/12 $26.00 © 2012 IEEE DOI 10.1109/HICSS.2013.56 1300