Services 4.0:A New Wave of Innovation and Partnerships

ETHOS Issue 21, July 2019

What is Services 4.0?

Over the past few decades, we have seen the services economy evolve from the era of manual services (1.0) to efficient Internet-enabled services (2.0) to self-services enabled by mobile, wireless and cloud technologies (3.0). In phase 4.0, we envision seamless services that are end-to-end, frictionless, empathic and which anticipate customer needs using emerging technologies. This is the vision for Singapore’s digital economy articulated in the Services and Digital Economy (SDE) Technology Roadmap, launched in late 2018.

Depending on the type of services offered and customers’ preferences, some organisations may choose to keep part of their products or processes at various levels, or provide Services 4.0 selectively. What is important is to figure out where this makes sense and decide deliberately, based on the potential and relevance of new technologies.

Services 4.0: An Evolutionary Journey

What Technology Trends Are Enabling This?

The SDE Technology Roadmap identifies nine key technology trends that will drive the transition to Services 4.0. I highlight three of these trends that have broad-ranging potential to change the way we experience services, how fast they can be delivered, and the kinds of jobs and skills we will see in the future.

Pervasive Adoption of Artificial Intelligence (AI)

In the next three to five years, globally, there is an expected exponential increase in commercial AI-based applications in three major categories:

• Product applications that embed AI in products and services to provide end-customer benefits (e.g., Google Maps or Apple’s Siri)
• Process applications that incorporate AI into an organisation’s workflow to automate processes or augment worker effectiveness (e.g., Robotic Process Automation), or
• Insight applications that harness advanced capabilities to inform operational and strategic decisions across an organisation (e.g., machine learning).

Retail, finance and logistics are three industries that already heavily utilise AI. In retail, AI is used to personalise recommendations, perform store and crowd analytics, and manage pricing. In logistics, AI is used to manage inventory, and optimise distribution routes, task allocation, scheduling and shipping. In finance, AI is applied in areas like identity authentication and verification, banking transactions and payments.

How might AI unlock new value? An economist might think of AI as a tool that lowers the cost of prediction. It used to be prohibitively expensive to make personalised recommendations at scale, but AI has made this accessible for many companies. Current AI tools are both specific and powerful, offering us ways of applying prediction that can facilitate better decisions under uncertainty.

Developments in machine intelligence will mean more empathic, cognitive and affective AI. AI assistants are being trained to better detect and understand emotions, analyse moods and sentiments to better connect with customers, and be more responsive in customer service.

Human-Machine Collaborations

At the heart of Services 4.0 is an ecosystem allowing machines to augment workers’ performance by automating repetitive tasks. This lets workers focus on more “human” tasks such as creativity, critical and analytical thinking, emotional intelligence, innovation and judgment. For instance, a private banker can spend more time with his clients and less time on administrative on-boarding paperwork if the back-end processes can tap on information databases and provide relevant alerts.

In what has come to be known as “collaborative intelligence”, humans and AI algorithms working together have been shown to perform better than either humans or AI acting alone. For example, in healthcare, doctors working in tandem with AI achieve higher rates of diagnostic accuracy than either AI or doctors working by themselves. In freestyle chess, a “centaur” team of humans and machines does better than either human-only or machine-only competitors.

Everything-as-a-Service (XaaS)

Everything-as-a-Service (XaaS) is an approach in which capabilities, products and processes are treated not in individual silos but as a horizontal palette of services available across organisational boundaries. With XaaS, organisations may even extend their internal services to become digital edge businesses serving external customers and partners.

Such developments are made possible by a technology ecosystem built on Cloud Native architecture. This features multi-cloud, component services that can be reused in a variety of applications, as well as Application Programming Interfaces (API) that make available component services from best-in-class providers or which offer new services to external parties. What this all means is that organisations can be more agile and flexible, gain access to a wider ecosystem of resources and deliver new products and services more quickly.

How Can the Public Sector Harness Services 4.0?

As the Public Service as a whole transforms to better serve users, Services 4.0 can help public sector agencies think through the next step in how services are provided to citizens, businesses and internal customers. There are three key aspects to consider: Anticipating Needs, Augmenting Workers and Partnerships.

Anticipating Needs

Beyond merely meeting needs, the challenge is to think about whether we can anticipate specific needs, and organise ourselves to deliver justin- time services in response or stop problems before they occur. We already have a range of tools such as design thinking to support service journeys and business process re-engineering. These can be further coupled with the power of larger or more combined datasets and AI applications, to solve real world problems or contribute to fundamental improvements in customers’ lived experiences.

For policymakers, questions to reflect on might include how we might advance social services to better identify those vulnerable or at risk. We should think about how data and interventions can be brought together across a range of domains, such as social needs, healthcare or employment, to deliver individualised assistance for specific situations.

On the business front, we might be able to customise economic support or assistance for companies at different stages of growth, or based on particular transactions they conduct.

We should also think about how we can build citizen and customer confidence in AI. There is growing potential for AI to be deployed in our organisations in future. Internationally, there is increasing discussion about how organisations can be responsible AI users and mitigate different risks in AI deployment. Companies are starting to consider how they can minimise or mitigate inherent bias in their algorithms, or how to enhance the explainability of AI (i.e., explaining how deployed AI models’ algorithms function or how the decision making process incorporates model predictions). In January 2019, IMDA released a proposed model AI governance framework which provides a set of principles and practical guidance for organisations looking to embrace greater use of AI.¹

Augmenting Workers

Services 4.0 is about creating the workplace of the future, where humans and machines collaborate closely for higher productivity and to create greater value. Technology has the potential to boost the productivity of many jobs. Many organisations are deploying RPA to free up time typically spent on manual, time-consuming tasks such as form filling, checking figures or combining multi-source input. This enables workers to spend more time on more higher level tasks such as analysis or customer engagement. Furthermore, while AI can provide predictive power far beyond what a single human can do, it does not substitute for human judgment. AI therefore improves rather than replaces human decision-making.

What this means is that Singapore needs to invest massively in equipping our workforce with digital skills. All public officers, regardless of their roles, need to be comfortable with using technology. They will increasingly need digital skills, such as using RPA and data analytics. At the same time, relational skills such as creativity, judgement, empathy, negotiation and collaboration will be even more highly valued by organisations.

Singtel has introduced RPA assistants that augment business units’ capabilities and increase efficiencies.

Partnerships

For both the public and private sectors, partnerships are key enablers for realising Services 4.0. For citizen journeys to be more integrated, we have to connect multiple processes across agencies, or work with platforms that are already being used by customers.

Public sector organisations looking for good technology partners can tap on IMDA’s Accreditation@SG Programme, which accredits promising and innovative Singapore-based infocomm and media companies, based on technical assessments of their products, financial assessment, people and processes. The programme collaborates with government agencies to come up with potential solutions and match accredited companies to address problem statements.

Good practices to enable smooth and successful collaborations with private sector partners include:

• Staying up to date with changes in the technology landscape as well as use cases in enterprises and other government agencies.
• Sharing problem statements and domain knowledge openly, to enable collaboration and co-development of more transformative and innovative solutions.
• Management giving working teams leeway to try fast, fail fast and learn fast, to continuously iterate and keep innovating.

For a joint ideation workshop, Ministry of Culture & Youth, Ministry of Communication and Information, Infocomm Media Development Authority, and National Library Board collaborated with Taiger, an AI and business process automation company.

Conclusion

To realise the ambition of Services 4.0, Singaporeans and the enterprises they work for will have to take on digital skills and embrace digital tools and solutions. Without this, key advances in technology such as AI will remain the preserve of a small number of companies and their workforce, exacerbating wage disparities.

Whether in small or large companies, leadership is key to setting the right mindset for embracing new technology. Every technology strategy needs a people strategy. Leaders need to be clear that digital transformation is part of every business line’s responsibility, and is not just for the IT department or an innovation lab to take up. Leaders also need to help middle management understand technology so that they can change how products and services are designed and delivered. The organisation must also give workers the necessary support to pick up new skills and encourage them to invest in the digitalisation journey.

Services 4.0 is about reimagining the future and having the courage to disrupt ourselves before we get disrupted. As a nation, Singapore must reimagine our value proposition to the region and the world in a digital age, even as we strengthen the position we have already built up through physical connectivity. Our enterprises and public agencies must figure out what new value they can bring to their customers, what their competitive strengths are, and where they should bring in partners. As individuals, each of us can keep abreast of technology trends, and help each other do the same. Together, we can leverage technology to create better solutions and enable more meaningful and enriching lives.

NOTE

1. For further details, see https://www.pdpc.gov.sg/Resources/Model-AI-Gov.