Business Value in Complex IT Service Engagements: Realization is Governed by Patterns of Interaction Susan Stucky, Melissa Cefkin, Yolanda Rankin, Ben Shaw, Jakita Thomas IBM Almaden Services Research {sustucky , mcefkin , yarankin , shawbe , owensby }@us.ibm.com Abstract Mutually successful win-win outcomes in complex IT service engagements are by no means easy to achieve. Typically, provider and client represent complex organizational entities with multiple agendas and diverse stakeholders involved in long-term engagements. Unsurprisingly, new opportunities to create value arise; however, value propositions can fail to be realized, especially when the provider has fulfilled contractual agreements and yet the customer has expressed dissatisfaction. How do we explain this phenomenon, and more importantly, avoid its occurrence? In this paper we examine three IT service engagements through the lens of a conceptual model based on foundational service system concepts. Cross- case analysis reveals patterns of interaction that have the potential to increase, and in some instances, diminish value over time. Our approach identifies leading indicators that mitigate risk and increase benefit to both clients and provider, enabling IT service companies to take advantage of emerging opportunities that lead to greater value co-creation. 1. Introduction Mutually beneficial, win-win outcomes in complex IT service engagements are by no means guaranteed. Provider and client are typically complex organizational entities, each with multiple agendas, diverse stakeholders and potentially hundreds of actors both human and non-human. Engagements themselves can unfold over periods of years, responding to events that are difficult to predict. It is no surprise, then, that value propositions can fail to be realized in ways that neither client nor provider expect. New opportunities to create value are also, however, likely to arise. IT service companies have at their disposal, an arsenal of tools designed to help mitigate these sorts of risks, take advantage of emerging opportunities and even to catalyze opportunities that can lead to greater value co-creation. There are elaborate processes, from engagement through delivery, binding agreements such as Service Level Agreements and other governance mechanisms. Care is taken to nurture the client relationship. Yet, sometimes this is not enough. For instance, Service Level Agreements can be met (according to both the client and the provider), yet Customer Satisfaction can be “in the tank” resulting in contracts being terminated by the client. What is missing, we ask. Where in the complex unfolding of a service engagement should we be looking for clues? In this paper we review three IT service engagements through the lens of a conceptual model we developed to account for this complex unfolding. Case 1 results from a study of service quality. The service offering in this case involves the remote management of the client’s information technology. In this paper we focus on the part of the value proposition that sets the expectation that some client IT personnel will able to focus on other, higher value work for the client. Cases 2 and 3 are service engagements in which the deliverables (a report in the first instance, and software in the second) are provided on time and to the satisfaction of the client. In both cases opportunities to create more value arise. In Case 2, the service provider comes up with an innovation that the client likes but does not adopt. In Case 3, the provider and client together come up with additional innovative features and the contract is renegotiated to reflect the changes. We say that in the second case the emergent business value is acknowledged but not realized, while in the third it is both acknowledged and realized. In order to capture the similarity across these three examples (drawn from among others there is not room to discuss in this paper) we suggest a theoretical move. We propose separate but coupled dimensions of value creation: co-creating new configurations of resources that can potentially lead to value and the actual realization of value to the business. We use what we refer to as the Transactional-Interactional Model (TIM) to model aspects of the three cases described above to reveal systematic patterns of interaction that can be associated with increasing value and decreasing value. Such patterns, we anticipate, will ultimately lead to the 1 Proceedings of the 43rd Hawaii International Conference on System Sciences - 2010 978-0-7695-3869-3/10 $26.00 © 2010 IEEE