The success of a service business depends on the ability to satisfy customers’ needs and desires in a competitive and changing environment. The challenge is complex. Moreover, the tools that successful managers have used to design and manage product businesses are not necessarily the same for service businesses. In fact, the best practices for service-business design are still being discovered.
Unlike goods, services cannot be stored for future use and must be delivered on demand. This intangibility makes them more difficult to measure and quantify than tangible products. However, they are essential for maintaining a company’s competitive advantage and are a critical component of its value chain.
A common definition of business services is those activities that benefit a company without producing a tangible product. These include advertising, marketing, consultation, facility management and logistics (travel, shipping, waste handling, staffing and administrative services) among others. In addition, information technology services are considered business services because they enable many other business services by providing the infrastructure and support that help companies be profitable.
Increasingly, services are being combined with physical goods to offer new product combinations and to improve customer experiences. This trend is known as’servitisation’. This is a key driver of European economic growth, contributing 11% of EU GDP and employing about a third of the EU workforce. However, the sector faces a number of challenges including low average productivity and persisting legal barriers. To address these obstacles and stimulate competitiveness, the Commission has launched a series of flagship communications and initiated a high-level task force on business services.