Creating the jobs of the future

Universities develop 'services science'

By Steve Lohr

Published: TUESDAY, APRIL 18, 2006

NEW YORK: On his Asian trip last month, President George W. Bush urged Americans to not fear the rise toward prosperity of emerging economies like India. Education, Bush said, was the best response to globalization, climbing further up the ladder of skills to "fill the jobs of the 21st century."

But a ladder to where? That is, where are educated young Americans likely to find good jobs that will not be shipped off to India or China?

The answer, according to a growing number of universities, corporations and government agencies, is in what is being called services science. The hybrid field seeks to use technology, management, mathematics and engineering expertise to improve the performance of service businesses like transportation, retailing and health care - as well as service functions like marketing, design or customer service that are also crucial in manufacturing industries.

A couple of dozen universities - including the University of California at Berkeley, Arizona State, Stanford, North Carolina State, Rensselaer Polytechnic Institute and Georgia Tech -are experimenting with courses or research programs in the field.

The push for services science is partly a game of catch-up, a belated recognition that services now account for 70 percent of the U.S. economy, so education, research and policy should reflect the shift. "Services is a drastically understudied field," said Matthew Realff, director of a new program at the National Science Foundation to finance university research in the field. "We need a revolution in services."

Kurt Koester, a 24-year-old graduate student in engineering at Berkeley, is eager to take part. Yet engineering alone, he observes, can often be outsourced to lower-cost economies overseas.

Koester's special interest is in biomedical engineering, which combines engineering and biology. And he is also taking the services science course at the Haas School of Business at Berkeley. He figures it should help him someday better manage teams of technologists, spot innovations and new markets, and blend products and services.

"I love engineering, but I want a much broader and more diverse background," he said. "Hopefully, that will be my competitive advantage."

His personal strategy, according to economists, is the best way to prepare for an increasingly global labor market.

"This is how you address the global challenge," said Jerry Sheehan, a senior economist at the Organization for Economic Cooperation and Development. "You have to move up to do more complex, higher-value work."

Representatives from technology companies including International Business Machines, Accenture, Electronic Data Systems and Hewlett-Packard, a few universities and government agencies met in Washington in December to discuss how to raise interest in services science. A further step is a conference on education in services science being held Tuesday at National Academy of Sciences.

IBM is a leading corporate proponent of services science, sponsoring workshops, awarding research grants and helping develop course materials.

IBM itself is a striking example of the shift toward services over the past decade or two. Once known as a computer maker, the company now gets half its revenue from services. And increasingly, IBM is moving into sophisticated technology services, by working with corporate customers to automate and streamline business tasks like purchasing, human relations and customer relations programs.

In recent years, IBM has shopped the global labor market, expanding significantly in India, especially for software programming work. But it has also reoriented and retrained its existing work force to support the swing to services.

The researchers in its laboratories were dubious at first. "The response here was there is no science in services," recalled Paul Horn, the senior vice president in charge of the IBM labs. "But as people got into it, they got excited by working on the fascinating problems in services."

Baruch Schieber, 48, is one of the converts. After joining IBM in 1987, Schieber did basic research and published articles in scholarly journals mostly on algorithms that optimize computing calculations. Yet the math techniques used to make work flow efficiently through a computer - a complex system - can be applied to other complex systems in business. That is what Schieber did, first in manufacturing and later in services.

One recent assignment had Schieber studying drivers and dispatchers at Boston Coach, a limousine service that operates in 10 cities. His job was to create a computerized optimization system to improve the utilization of vehicles and drivers in Boston and New York, where the company handles more than 1,000 rides a day.

The system gathered real-time data on car locations, reservations, travel times, traffic patterns, airport conditions and flight times. The system generated recommendations to the dispatchers about which car and driver to send for each ride. The car utilization rate rose 20 percent, and revenue increased 10 percent.