Value delivery through product-based service

Abstract

Products and services are two ways firms delivery value to customers. In some situations firms augment physical products with services related to that product. In other situations the service offered to customers is the primary offering and it is enabled by a product. This paper investigates enterprise resource planning (ERP) software tracking its evolution from predominantly a product with associated services to an offering as a service enabled by the software product. Frameworks have been developed to analyze service offerings. Two such frameworks capture causal relationships to customer value and customer satisfaction. This paper analyzes these frameworks and applies one of them to SAP R/3 ERP software as the offering evolved towards a more pure service offering (product-based). The paper then analyzes the sufficiency and appropriateness of one framework, the service profit chain, to the current offering of the SAP R/3 ERP application service provider (ASP) product, MySAP.com. Several additions are suggested to enhance the service profit chain model.