Research Justification

From the critical reviews on the literature, it can be concluded that this research is particularly important either in contributing to the limited research in this subject area as well as to investigate and to explore the management of the services procurement processes within the organizations. Therefore this research can be of great value and importance especially towards the contribution of knowledge in this subject area due to the following arguments: The literature reviews several definitions in services (as discussed in Section 2.1: What are services) and conclude that services is an activity, a process, the performance or experience that are performed to satisfy the needs and requirement of the customers. Although this definition claims that the services activities, performances, processes or experiences may be associated with goods/products/materials or software; to include all these in this research, will make the research scope overwhelming. Therefore services categorization (as discussed in Section 2.4: The Categorization of Services) is important for this research to narrow down the research scope. Thus, the literature on services categorization has helped to obtain the best suitable services categorization when refining the research scope in this research. Before categorization, several commonly found services were listed (as discussed in Section 2.2: The Examples of Services) to provide a clearer explanation on services categorization. Based on the critical review on the categorization of services, services can be categorized into component services, semi-manufactured services, instrumental services and consumption services. This categorization is most suitable for this research as it greatly helps to differentiate services based on the involvement of end customers. As discussed in earlier context, component and semi-manufacture types of services may involve the actual end customers therefore this categorization may not be utilized. Considering the time frame provided and the availability of resources, this research will ideally focus on the support functions types of services within an organization. Hence, this research will be investigating and examining the services that are categorized as instrumental and consumption services.

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From the overview on services growth and the industrialization of world economy, it can be concluded that the current world economy is very services based. As discussed in earlier context, OECD is established from a total of forty countries, which account for approximately 80 percent of the world trade and investments. Provided that within these OECD countries, the seven largest economies in OECD countries are services based, which account for more than 50 percent growth and revenues that are generated from services. Hence it is concluded that research in services are of great importance. Peter Smith, the owner of procurement excellence and editor of Spend Matters in Europe

suggests that with the growth of outsourcing, the procurement of services is a critical and a major growth area (Smith, 2010).

Despite the growth and increasing importance in the services sector as well as the services economy, the literature in services particularly in services procurement is limited. Previous research on this subject area either focuses on a specific type of services or a specific process within services procurement. Indeed, within these research, some of the researcher suggested investigating the decision-making model for different types of services (Valk and Rozemeijer, 2009) while Lian and Laing (2005) argue that there is not a single mechanism that will fit all services procurement situations. Indeed, Fitzsimmons et al. (1998) concluded that the decision process for services might differ depending on the services to be purchased. Therefore this research intends to identify, investigate and explore the management practice of procurement process for services within the organizations. Several model of procurement process for services were discussed in detail in Section 2.7: The Procurement Process for Services. Andersson and Norman (2002) have distinguished the procurement processes for basic logistics services and advance logistics services. As explained, some of the procurement processes may not be required or necessary in the basic types of logistics services. It is therefore argued that the procurement processes may differ between different types of services. Hence, it can be argued that a simpler type of services may require a simpler procurement process for services while a more advanced type of services may involve more procurement steps. Furthermore, most of the research in services procurement process are conceptually developed without empirical validation. As a result, this give rise to several research questions that need to be discussed and require further

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investigation and examination on the different procurement processes for different type of services. The research questions include:

R.Q1. How do companies manage their procurement process for services?

R.Q2. Are these procurement processes managed effectively and efficiently?

R.Q3. Do they have different procurement processes or a standardized procurement process for different types of services?

R.Q4. How closely do companies’ practices actually follow the conceptual framework based on the literature?

Furthermore this research has identified several challenges in services, particularly in the procurement of services. These challenges can be summarized within the procurement process of services as illustrated in Figure 2.10: Matrix on Challenges in Services Procurement within Each Services Procurement Process (based on literature reviews)

This diagram also concludes the major steps in services procurement process that includes:

1) Needs/Requirement Identification / Specification Identification / Information Search / Request for Information / Request for Proposal

2) Select & Contracting Suitable Supplier 3) The Service Process/ Implementation 4) Evaluation

Figure 2.11 clearly identifies and summarises the different procurement process for both consumption services and instrumental services based on the literature review.

Figure 2.12 Research Aims, Objectives & Research Gaps clearly illustrates the Research Aims and Objectives in a cohesive manner. Research Gaps are also being identified.

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Figure 2.13 Diagram of Research Questions that fulfil the Research Objectives and Identified Research Gaps demonstrate how Research Questions have been designed in answering and fulfilling the main Research Aim and Objectives. The following Chapter THREE critically discusses, evaluates, justifies and provides the research methodologies and methods that have been adopted to fulfil the research aims and objectives.

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Figure 2.10: Matrix on Challenges in Services Procurement within Each Services Procurement Process (based on literature reviews)

Figure 2.10: Matrix on Challenges in Services Procurement within Each Services Procurement Process (based on literature reviews) Source: Author Authors Procurement Process Model for Services Types of Services The Example of Services (Fitzsimmons et al., 1998) Four Purchasing Process Need

Identification SelectionVendor

(Edvardsson, 1990) Four-Phase Purchasing Process Need Detection Selection (Van Weele,

2005) Six-Step Model SpecificationSpecify

Select Suitable Supplier Contract Selected Supplier Order Services from Supplier Expedite and Monitor Services (Valk and Rozemeijer, 2009) Extended Purchasing Process (Eight- Steps Model) Specify Specification Request for Information (RFI)) Detailed Specification Select Suitable Supplier Contract Selected Supplier Order Services from Supplier Expedite and Monitor Services (Andersson and Norman, 2002) Eight Purchasing Process Define and Specify Services Request for Information (RFI) Request for Proposal (RFP) Negotiation Contracting (Day and Barksdale, 1994) Organizational buying Process for Professional Services Recognizing A Need or Problem Selecting the Professional Service Provider Evaluating the Quality of Service Delivery Evaluation of the Quality of Outcome ("Product")

Author Core Processes Evaluation

Evaluating the Considerat

ion Set

Services specification is more difficult, less precise, less accurate

Author

Needs/Requirement Identification / Specification Identification / Information Search /

Request for Information / Request for Proposal Select & Contracting Suitable Supplier The Service Process/ Implementation

Evaluate the Contract/Supplier Understand the Volume of Purchase Simplify and Standardize Evaluate the Contract/Supplier Instrumental Services Accounting & Finance, Banking, Advertising, Sales & Marketing, Consultation, Human Resources (HR.), IT Market Survey Defining Purchase Goals Identifying the Initial Considerat ion Set Refining the Considerat ion Set Catering, Cleaning, Secretarial, MRO Implementation Final Consumption and _Evaluation

Consumption Services

Procurement Process Steps

Information Search Performance Evaluation

The Challenges in Services Procurement

Underestimate Services

Less contribution from the professional (Information System) Inexperience buyers

Decentralized procurement process in services Non-strategic Purchase Services are perceived less complex

Services is difficult in performance evaluation Involve high level of human participation, knowledge and time (Service Procurement Decision Making)

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