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This article builds on the services agenda that Amy Ostrom et al published in Moving Forward and Making a %JGGFSFODF3FTFBSDI1SJPSJUJFTGPSUIF4DJFODFPG4FSWJDFwJournal of Service Research, February 2010). The nine priorities in the agenda are summarized in Figure 1. My focus is on fostering service infusion and growth, but the message applies to all the priorities. Information and communications technology (ICT) is the pervasive force that is changing the way we work, live, learn and play.

To understand how deeply technology is embedded in every element of life today, consider the following statistic, which ap-peared in M. Hilbert and P. Lpezs April 2011 Science article, The Worlds Technological Capacity to Store, Communicate, and Compute Information. Since 1985, there has been a 1,000-fold increase in the worlds communications capacity. This analysis ended with 2007 data, so it does not include all of the capacity gains in the last four years. Name another resource that increased 1,000 times in 20 years.

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The statistics make the point convincingly, but if you need a more human illustration, consider this question: If you could have only an indoor toilet and sanitation system or a mobile phone, which would you choose? This trade-off may not mean a lot to you, but billions of people in the world have faced this choice, and their preference is clear: Communication is valued more than modern sanitation. There are 5.3 billion mobile phones in use right now compared to 4.3 billion toilets. Today, almost four out of !ve people have a mobile phone. There is a practical reason for this. It is not simply social chat that people seek when they acquire a phone. Fast, reliable, immediate communications directly change their personal economics. Consider this story about an impoverished, isolated village. A young child was feverish for days, and the family grew worried, so the mother set off to take the child to the nearest clinic. It took two days to get there on foot. It may have been only 10 kilometers away from home, but the mother was carrying the child and the things they needed to live. When they got to the

clinic, they found that the doctor had traveled to another clinic and would not return for 10 days. The mother walked back home, which took another two daysan arduous four-day trip, all for nothing.

A simple mobile phone call could have changed that story. Better yet, if the village had Internet access, the doctor could have made a remote diagnosis, instructed the mother on how to care for the sick baby and prescribed medications. Wait, how will the medications reach the village? You might have heard that Coca-Colawhich has more than 100,000 delivery vehicles operating every daycarries medicines to the most remote ends of its distribution system, so that its supply chain serves double duty in remote areas.

When we think of modern communications, we think of the Internet. In 1995, the browser interface made the Inter-net accessible to more people. Before that, navigation was complicated, so the Internetwhich began in 1970was used mainly by academic and military researchers.

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The Internet carries all modes of communicationdata, voice and videoover the same network, so it has the power to consolidate old networks, reduce costs and increase reliability. It is all just a stream of ones and zeros !owing between people, people and machines, and just machines.

The Web was the fastest-spreading technology in the his-tory of the world, having achieved 50 million users in just "ve yearscompared to the 13 years it took television to acquire this audience (Morgan Stanley Technology Research, 1999). Facebook, however, now holds the record for the fastest dif-fusing technology: 100 million users in a single year.

Today, almost 30 percent of the entire global population is on the Internet; in the United States, the number is 77 percent. Penetration is lower in Asia at 21 percent, but the population is so large that this region contains the single largest block of users42 percent of the Web population and growing quickly (Internetworldstats.com, February 2011).

Some refer to this trend as wiring the world but, in fact, many of the network connections are wireless, not wired. Whatever you call this technology innovation, it has changed the world in just 15 years, and even more rapid change looms large on the technology horizon. This has caused market disruptions and created new winners and new losers.

TECHNOLOGY DISRUPTIONS DRIVE MARKETSAs an example, consider book publishing, an industry that is almost 500 years old. In the West, we attribute the invention of movable type in 1450 and the resulting affordability of the printed word to Gutenberg. This had wide-ranging effects on religion because it enabled ordinary citizens to read the word of God without an intermediary. It also in!uenced poli-tics because ideas could be diffused quickly and accurately across large areas, which accelerated the formation of nation states.

Now there is an alternative to the printed book: e-books. Electronic books outsold hardbound books in 2009 and pa-perback books (the most popular format) in February 2011. In a short time, the physical book has practically been re-placed by an electronic service. According to the Association of American Publishers, for February 2011, e-books ranked as the No. 1 format among all categories of trade publishing

(Adult Hardcover, Adult Paperback, Adult Mass Market, Childrens/Young Adult Hardcover, Childrens/Young Adult Paperback).

E-book sales increased 203 percent between February 2010 and February 2011. Also in 2011, Marc Parrish, an executive at Barnes & Noble, the largest U.S. bookstore op-erator, predicted that the shift from physical media to down-loads will happen faster in the book category than in either music or movies. By March 2013, e-books will be the norm, just as DVDs replaced VCR tapes and music downloads replaced CDs. A 560-year-old business model changed in less than seven years, producing new winners and new losers.

Lets look at the value chains for these two publishing modes. In the traditional publishing model, an author writes a book, and a publisher edits and prepares the book for print-ing. The printer requires printing presses, ink and paper sup-plied by other industries to print and bind the book, which is then put in a warehouse until a retailer places an order. The book is transported to a retail store, where it sits on a shelf awaiting a buyer, who purchases it and takes it home to read.

In the e-book value chain, a "le stored on a server replaces the complicated, expensive printing, transporting, warehous-ing and stocking of physical products. When a customer or-ders the book, it is downloaded to a reading device (e-reader), a process that costs roughly six cents.

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t Advances in communications technology will help product companies add services to their mix to create new value.

tMobile phones, publishing and pharma are ripe for transformation. t In the future, users will access everything as a service from the cloudwith strategic

implications for todays product-dominated ICT companies.

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GLOBAL PHARMAPharma is another global industry that is ripe for a service in-fusion. In the United States, health care consumes about 17.6 percent of the entire gross domestic product (GDP), which was $2.5 trillion, or more than $8,000 per person, in 2009. The U.S. Department of Health and Human Services expects that the health share of GDP will reach 19.5 percent by 2017, according to 2011 national health expenditure data from the Centers for Medicare and Medicaid Services. Medicines ac-count for about 10 percent of total healthcare spending.

But medicines do not do any good unless they are taken as prescribed. Meanwhile, the majority of medicines are not used correctly, and that creates greater economic and physical burdens. Consider the antipsychotic drug risperidone (sold as Risperdal). It is used to treat schizophrenia and bipolar condi-tions and to control the violent behavior of some people with autism. When properly used, this drug can have a powerful, positive effectbut it takes several weeks for the drug to reach a steady state in the body and achieve the intended effects.

Unfortunately, the compliance rate for antipsychotics is less than 60 percent, according to J.A. Cramer and R. Rosen-hecks February 1998 Psychiatric Services article, Compliance with Medication Regimens for Mental and Physical Disor-ders. The more doses that are missed the higher the chances of costly rehospitalization, according to Chris M. Kozma and Peter J. Weiden, whose article Partial Compliance with Antipsychotics Increases Mental Health Hospitalizations in Schizophrenic Patients summarized the evidence in the Sep-tember 2011 issue of American Health and Drug Bene!ts. Non-compliance is costly for society because many unmedicated patients require supervision or end up in the social welfare or criminal justice systems. In addition, one cannot put a dollar cost on the inner suffering that an untreated patient endures.

The pharma industry makes pills and is paid when they are prescribed, even if they are not taken. What if this business model changed, and the health care system was paid when the patient actually took the pill? In other words, what if the pharma product business model experienced a service infu-sion?

Technology makes this feasible. I am going to tell you the story of Proteus Biomedical, a startup that were working with in California. Proteus invented a small computer chip, which it calls a raisin. It is the size of a grain of pepper and made of all organic materials. The raisin is embedded in the prescrip-tion medication, and it contains a code that identi!es the drug and dosage. When the patient takes the pill, the raisin is activated by the stomachs gastric acids and sends out a unique signal.

That signal can be picked up on the patients skin as a change in impedance, just like the galvanic skin response mea-sures that are used in psychology research. A patch that the

patient wearsit could be a wristwatch or other devicede-tects the signal and sends it over the network to a data center. If the patient misses a dose by 60 minutes, a contact center can call to !nd out what is going on. If the pill has not been detected after, say, three hours, a technician can be dispatched to track down the patient and make sure that the medication is taken. If that sounds costly, just compare it to the costs of noncompliance: constant supervision or institutionalization.

Figure 2 is a simpli!ed schematic of the network architec-ture required to do this. You can see the "ow of data between the patient and the system of caregivers. This is a service-infusion case because it changes the business model from product to service. Conceivably, in the future, the health care system will be paid for effects. (It will be paid handsomely be-cause of the savings that properly used medications produce.) Those economic incentives will cause all of the elements of the system, including patients, to collaborate toward the same ends. Technology enables this industry conversion from mak-ing pills to creating effectsa service-infusion transformation from goods to services.

There is a worldwide trend toward what we call care at a distance. Delivering health care anywhere, anytime at greatly reduced costs will help us solve the accessibility and cost problems that are vexing health care today. Here is another example, which we are rolling out now in the United States, Europe, China and India. It is called HealthPresence. A pa-tient and doctorseparated by any distancecan interact via life-size, high-de!nition displays. All of the patients vitals are transmitted over the network in encrypted form. There are high-resolution cameras to examine things like the tympanic membrane in the ear or the retina in the eyes or the back of the throat. Blood pressure, pulse and other data show up on the doctors display. You will see these soon in drugstore clin-ics and on of!ce campuses.

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INFORMATION AND COMMUNICATIONS TECHNOLOGY Now we come to the ultimate example of service infusion: information and communications technology. The tradi-tional computing stack is being supplanted by everything as a service.

For more than 50 years, the basic ICT business model was the same. An enterprise bought components from various suppliers and integrated these pieces to create ICT capabili-tieswhich it then consumed. We talk about the components in terms of the computing stack, which begins at the bottom with infrastructurethe networks we makeand moves up to storage, computer processors, middleware (what you might know as the operating system) and then ultimately to the soft-ware application that delivers the desired results.

This is costly, time-consuming and requires an army of expensive experts to implement and maintain. But it has been worth the effort because information technology yields such powerful productivity bene!ts.

However, if you look at the elements in the stack, you will quickly discover that there is a lot of idle capacity. Systems were built for peak surge demand, but that happens relatively infrequently, meaning signi!cant idle capacity. Amazon.com, for instance, must have enough computing capacity to man-age the holiday surge in retailing, but what does it do with that capacity the rest of the year? Amazon sells it to others, because network technology allows users who are dispersed across large areas to share pooled resources, which are assembled in virtual machines.

Virtualization means that the components within a given boxsay, a storage systemare connected to others, but they can behave as if they were a single, integrated system. This is done with a bit of software that keeps track of all of the com-ponents and ties them together with a high-speed network. In a virtualized system, some of your records may be stored on a system in Oregon while others are stored in South Carolina; you do not know and you do not care where they are, because

when you want them, all of the records are presented to you automatically.

Virtualization dramatically changes the economics of the ICT industry. Computing becomes much cheaper because there is less hardware, less electricity consumed, less cooling re-quired, less real estate to house the machines and less expensive labor to tend the systems. Lower costs mean that computing power can be applied in more places, by more people in more ways to create new value.

The change in technology also means a change in the industrys business model. In the old days, customers assembled their own ICT stack on their premises, just as you assembled all of the components you needed on your desktop. In the future, these computing services will be purchased on demand, as neededor, in industry slang, by the drinkfrom super-ef!cient service providers, such as a utility company. A few of you may generate your own electricity with solar panels or wind turbines, but most electricity is purchased from a utility that owns massive generation and distribution capacity. You buy electricity service instead of generation equipment, and, increasingly, that also will be true of information technology.

This transformation is sweeping the ICT industry today. All of the physical gear and software will be in the cloud, and you will simply tap into the cloud with any Internet-connected device you have at hand at that momenta browser operat-ing on a laptop computer, smartphone or television or perhaps from inside your automobile.

The word cloud is a reference to the way engineers diagram network architectures. When one network connects to another one, which is !lled with its own complexities, the architects simply draw a cloud to mean all the networks out there somewhere. (See Figure 3.) Cloud computing changes the way users consume information technology and converts what has been a product industry into a services businessa massive example of service infusion.

The Three QuestionsThe message in these examples is that technology fuels the

growing service-infusion trends we see today in every industry. You cannot speak meaningfully of service infusion without talk-ing about communications technology. So what? What does this mean to you as a marketing thought leader?

1. How up-to-date are your technology-by-strategy skills? Do you know enough about the available technology to be able to innovate new service models?

2. In which service categories will technology have the biggest impact? In other words, which industries or products are most primed to go through the products-to-services trans-formation? What are the best practices in making this transi-tion, and what are the traps?

3. How well do you apply technology in your research?

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Telecommunications has already created new tools and op-portunities for marketing. We can create new ways to collect data in real time, tie consumer behaviors in different environ-ments together in a holistic pattern and deliver personalized value propositions and messages precisely when they are most valuable to the consumer. Is your research taking full advantage

of these emerging capabilities?My messages are threefold: 1. Technology disrupts traditional business models, some of

which have lasted for hundreds of years. 2. Service infusiona trend that most product companies

are embracing nowrequires technology. 3. It is time to re-examine our methodological tool kit to

see if we are using all of the available technology innovationsparticularly communications and networking technologiesto execute our research agenda.

Almost everything that marketing sciences has done over the last 50 years can be done faster, more effectively and more ef!ciently in the next 50 yearsthanks to technology. MM

This article is one of a series based on presentations from the Marketing Science Institutes 50th anniversary conference, where marketing thought leaders gathered to celebrate MSIs achievements and explore the future of marketing.

R. GARY BRIDGE is senior vice president of the Internet business

solutions group at Cisco Systems Inc, based in San Jose, Calif. He may

be reached at gary@rgarybridge.com.

AMA ArticlesThe Patient Connection, Marketing Health Services, 2011

4PDJBM4USBUFHZ(PJOH.PCJMFMarketing Health Services, 2011

AMA Webcast.BQQJOHUIF)J5FDI$POTVNFS-BOETDBQF/BWJHBUJOHUIFOpportunities and Obstacles of New Technologies, sponsored by SSI, 2011

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