Business services are various tasks and activities that support a business, although they do not deliver a tangible product. For example, information technology is a service that supports many other business services such as procurement, finance and shipping.
The industry is driven by a growing need for value-added services that reduce costs and facilitate the coordination of supply chain management. For example, warehousing services that combine logistics with transportation have helped companies streamline and accelerate the distribution of goods.
These services have become increasingly common in new and emerging markets, resulting in rapid growth of the industry across the world. This growth has been facilitated by a combination of increasing competition, technological innovation and growing demand for new business solutions to meet the transforming needs of businesses.
In addition to reducing costs, the industry also helps firms achieve better alignment with their customers, facilitating a more efficient and profitable business model. A good example of this is in the field of customer relationship management, whereby service providers develop tools that allow customers to engage with a company over an extended period of time and share relevant data with the firm.
The challenge of a service business, like that of a product company, is to create an offering that attracts and retains customers. But unlike the process of designing a product, which relies on what buyers will value, the process of designing a service must be based on the experiences that customers will want to have.