THE SERVITIZATION OF IT AND EDUCATION THROUGH CLOUD AND MOOCS

THE SERVITIZATION OF IT AND EDUCATION THROUGH CLOUD AND MOOCS Nabil Sultan (DAS, MPA, MSc, PhD [Liverpool], FHEA, CITP, FCMI, FIKE, MIoD) (University Campus Suffolk) nabil.sultan@yahoo.co.uk 1

Introduction Cloud Computing as an emerging example of a servitized industry (for IT) MOOCs as an emerging example of a servitized industry (for education) The cultural Issues facing both the servitized IT and education sectors 2

Servitizing Businesses Realizing profits through the selling of capital goods is no longer considered enough by firms. Adding services to core products is increasingly being perceived as a good approach by firms to differentiate their products from competitors. 3

Servitizing Businesses Early literature introduces servitization as a valueadded activity (Vandermerwe and Rada, 1988). A strategy of creating value by adding services to products (Baines et al., 2009). More contemporary research on serzitization focuses on service(s) as the main product service dominant logic (S-D) - rather than product and services goods-dominant logic (G-D) - where services complement a physical product (Vargo and Lusch, 2008). 4

Goods-Dominant Logic (G-D) G-D logic is centred on the good or the product, to include both tangible (goods) and intangible (services) units of output. Example: gas heating boiler manufacturers (e.g., Vaillant, Worcester-Bosch) offering contracts (paid for annually or monthly) to service their products. 5

Service-Dominant Logic (S-G) Ahamed et al (2013) provide IBM as an example of a company that moved up in the value chain from the production of hardware into (also) providing business solutions (i.e., services). These solutions, according to these authors, are drawn from an industry-leading portfolio of consulting, delivery and implementation services, enterprise software, systems and financing (i.e., IBM s knowledge and skills or capabilities ). According to Gerstner (IBM s CEO from 1993 to 2002 ), in services you don t make a product and sell it but you sell a capability and knowledge. 8

Cloud Computing Since 2007 (with the emergence of cloud computing) we began to see the main product turning into a service! 9

What is cloud computing? An IT service model that relies on the Web and technologies such as grid computing and virtualization to deliver a range of IT services through a data centre - on a pay-per-use (or pay-as-you-go) cost structure. 10

Cloud Computing s Service Structure There are broadly three types of IT services delivered by cloud computing (Sultan, 2011): Software as a Service (SaaS): it involves the remote access of software applications (e.g., productivity (Office) suites, business applications); Infrastructure as a Service (IaaS): it involves the remote access of IT infrastructure (e.g., virtual computers, processing capabilities, storage) Platform as a Service (PaaS): it involves the remote access of development software for Web applications and provisions to host those applications on desired platforms (e.g., an Apache web server running on UNIX or Linux or an Internet Information Server (IIS) running on Window NT/2000. 11

Cloud Providers Many cloud providers (e.g., IMB, Microsoft, Oracle) continue to provide their core products as tangible products (i.e., installed software or hardware). What is interesting about cloud computing is that a physical product has morphed into an intangible product that can be delivered as a service - through channels (e.g., Web, network infrastructure) different from the channels that delivered physical products (e.g., lorries, technicians). 12

Critique of the S-D Logics S-D logic (as explained earlier) defines service as being a source of benefit that is co-created with the consumer rather than embedded in the output and that the consumer-orientation is redundant (see Vargo and Lusch, 2006). It is difficult to see how the S-D logic can be applied to the cloud model! The S-D logic came under some criticism for being relevant only to managerial activities, e.g., marketing (Vargo and Lusch, 2006). Even Vargo (2011) acknowledges some of that criticism and refers to the S-D logic as a pre-theoretic lens or perspective for viewing the economic and social world differently from the traditional microeconomic view. 13

What is Disruptive about Cloud Computing? Cloud computing represents a new example of a S-D logic (and a disruptive innovation). It represents a paradigm shift in the way people view IT resources. IT (e.g., software, hardware) can now be provided as a service that can be bought when needed and at measured proportions (pay-as-you-go), i.e., it disrupts an existing (G-D) IT market and creates a new (S-D) IT market. 14

What is Disruptive about Cloud Computing? Disruptive Innovations (according Clayton Christensen and his colleagues, 2003): Occur less frequently. Occur when characteristics (e.g., high cost, inconvenience, complexity) of existing products prevent many people from obtaining them (i.e., they target non-consumers) (Christensen, 1997; Christensen and Raynor, 2003; Christensen, Anthony and Roth, 2004). Most importantly, they can destabilize existing markets and result in the failure of well-established companies and create new markets. (Think of the PC!). 15

What is Disruptive about Cloud Computing? New Market (Disruptive Cloud Innovation) Delivering IT as a physical product has been disrupted by cloud computing. A new market of delivering IT services in the cloud (i.e., remotely) has emerged. Consumers (e.g., medical researchers requiring HPC) have access to unlimited processing power at affordable prices (and which they can access speedily) (see Sultan, 2010b). Consumers no longer need to invest in complex IT infrastructures (complexity is removed). 16

Massive Open Online Courses (MOOCs) Definition: A life-long learning initiative aimed at delivering free courses through online platforms to an unlimited number of students without any entry requirements for registration. 17

The Origin of the Idea of Making MOOCs Free Khan Academy (2006). In 2008 two Canadians offered a free online learning course entitled Connectivism and Connective Knowledge 2008 (CCK08) to anyone in the world. The course was offered formally through the University of Manitoba. The emergence of the University of the People (UoP) in 2009. Courses provided by UoP are free. Students pay a small registration fee ($US 50) and exam processing fee ($US 100). 18

The Beginning! In 2011 Stanford University s course Introduction to Artificial Intelligence was made free to anyone in the world and delivered by Sebastian Thrun (part time professor at Standford) and Peter Norvig (computer scientist working for Google). The course attracted 160,000 online students from 190 countries (worldwide) and was the catalyst for establishing Udacity. 19

The Explosion! MOOC Platforms (since 2012) and Supporters Udacity (e.g. Google and NVidia) Coursera (e.g., Stanford, Princeton, Michigan, Pennsylvania) edx (e.g., Harvard, MIT, Georgetown) Udemy Futurelearn (Open University and other leading UK universities) Iversity (Germany) Idraak (إدراك) - Jordan Rwaq (رواق) Saudi Arabia 20

MOOCs: a Disruptive Innovation? Because MOOCs target non-consumers: People who aspire to Western Higher Education (HE) but cannot afford it. People who do not have the required pre university qualifications. Busy (working) people. Home-bound people (perhaps due to sickness or other reasons). It also removes many of the inconveniences and issues associated with a traditional class-based education, e.g., heavy costs, registering at certain times of the year, commuting, attending classes, finding a seat in a crowded classroom. Because MOOCs (have the potential) to create a new market in education. 21

Education as a Service (EaaS) MOOCs have the potential to commoditise education by providing education as service (EaaS) thus mimicking the Cloud Computing model. Registered MOOC students could end up paying for their education on a pay-as-you-go basis, similar to what many companies now pay for their cloud services. MOOC providers could end up becoming the new Cloud providers of education! 22

Organizational Culture Organizations are typically resistant to change. Reason: Incumbent firms have values that will not prioritize disruptive innovations (Christensen, Scott and Roth, 2004). Result: Failure (Kodak is an example)! Famous past incumbent failures: American Telegraph Company (Western Union). President of Western Union (William Orton) described Bell s invention as electrical toy. 23

Organizational Culture Larry Ellison, the founder of Oracle, once criticized the rush of cloud computing and described it as fashion-driven and complete gibberish and commented that it would be hard to make money in this technology which he saw as lacking a clear business model (Johnson, 2008; Hasson, 2008). 24

Organizational Culture Why IT Vendors Can fail (in a Cloud environment): Reluctance to give up their traditional ( maintenance for life ) business model Satisfaction with their current success Fear of the unknown 25

Organizational Culture Some Vice Chancellors (in the UK) look at MOOCs with some derision! Why should they bother with something like this when they are generating enough resources through student fees?! But was this not like how Kodak viewed digital photography?! 26

Any Questions? 27

Bibliography Ahamed, Z., Inohara, T and Kamoshida, A. (2013). The Servitization of Manufacturing: An Empirical Case Study of IBM Corporation, International Journal of Business Administration, 4 (2), pp. 18-26. Bailey, D. 2010. Are you up to the cloud challenge?, Computing, 24 June: 9. Baines, T. S,, Lightfoot, H. W., Benedettini, O. and Kay, J. M. 2009. The Servitization of Manufacturing: A Review of Literature and Reflection on Future Challenges. Journal of Manufacturing Technology Management 20 (5): 547 567. Campbell, S. 2009. Timesharing 2.0. HPC Wire. Available at: http://www.hpcwire.com/specialfeatures/cloud_computing/features/timesharing-20-66169142.html Christensen, C.M. 1997. The Innovators Dilemma: when new technologies cause great firms to fail, Harvard Business School Press, Boston, Massachusetts. Christensen, C. M and Raynor, M. E. 2003. The innovator's solution : creating and sustaining successful growth, Boston, MA: Harvard Business Press. Christensen, C. M., Roth, E. A., and Anthony, S. D. 2004. Seeing what s next: using theories of innovation to predict industry change. Boston, MA: Harvard Business School Press. 28

Bibliography Christensen, C. M., Scott and Roth, E. A. 2004. Seeing What's Next: Using Theories of Innovation to Predict Industry Change. Boston, MA: Harvard Business Review Press. Golden, B. (2009). Forrester bucks conventional wisdom on cloud computing. CIO. http://www.cio.com/article/496213/forrester Bucks Conventional Wisdom on Cloud Computing (accessed on: 1 August 2009). Hasson, J. 2008. Cloud computing is for the birds, FierceCIO. http://www.fiercecio.com/story/cloud-computing-birds/2008-10-11 (accessed on: 5 July, 2009). Horn, M. B. and Christensen, C. M. 2013. Beyond the Buzz, Where Are MOOCs Really Going? ; http://www.wired.com/opinion/2013/02/beyond-the-mooc-buzz-where-are-they-going-really/. Johnson, B. (2008), Cloud computing is a trap, warns GNU founder Richard Stallman, The Guardian, http://www.guardian.co.uk/technology/2008/sep/29/cloud. Lefèvre, L., and Pierson., J-M. Energy savings in ICT and ICT for energy savings. Ercim News. http://ercim-news.ercim.eu/en79/special/introduction Sultan, N (2010a), The Power of the Cloud in the Hands of SMEs, International Journal of Services Technology and Management, In Peer-Review Process. Sultan, N (2010b), Cloud computing: making headway with the scientific community, High 29 Performance Computing, Nova Publishing.

Bibliography Vandermerwe, S. and Rada, J. 1988, Servitization of business: adding value by adding Services. European Management Journal 6 (4): 314 324. Vargo, S. L. and Lusch, R. F. 2006. Service-Dominant Logic: What it is, What it is not, What it Might be. In The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, Lusch R.F, Vargo S.L. (eds.). ME Sharpe: Armonk, NY, pp. 43 56. Vargo, S. L. and Lusch, R. F. 2008. From Goods to Service(s): Divergences and Convergences of Logics. Industrial Marketing Management 37 (3): 254 259. Vargo S. L. 2011. Market systems, stakeholders and value propositions: Toward a servicedominant logic-based theory of the market. European Journal of Marketing 45 (1-2): 217 222. 30

Data Centre Return 31