Servitization of public service processes with a simulation modelling approach

In the last decades, as technology and society developed, governments realised the necessity to find new ways and methods to improve public services and maintain their efficiency as well as to answer to the changing needs of citizens to secure the satisfaction of the public. With growing expectations, old-school bureaucratic processes and the lack of fast and efficient solutions often turn people against the government, leaving a poor permanent impression (Richwine, 2012).

According to Nemec et al. (2019), while many research papers focus on co-production and co-creation in the international body of literature, only a few originate from Central and Eastern Europe. This paper aims to help fill this gap by focusing on intricate public services, such as the contacting procedure used at the Hungarian guardianship office. This research aims to emphasise the importance of the role played by public service employees in such processes as they are an essential part of the service just as customers.

According to Osborne et al. (2013, 2016), co-production is one of the public policy reforms, which can be considered an effective way to plan and deliver public services (Boyle & Harris, 2009; Durose et al., 2013; Nambisan & Nambisan, 2013). Osborne et al. presented the conceptualisation of co-production and highlighted how it was theoretically rooted in both public management and service management theory (Osborne & Strokosch, 2013).

In public administration and management literature, co-production originated from efforts by Ostrom (1972) and also by Alford (2014), who reevaluated Ostrom's work. The literature on the New Public Management presents co-production as “consumerism”, and also, it can be found in the literature of the New Public Governance as well as a systems-level approach to public service delivery methods.

According to Osborne et al. (2016), the theory focuses on the way of adding service user participation to the whole service process aiming to increase quality. However, from the service management perspective, the literature says that co-production is already an essential and core component of service delivery and delivery is inseparable from co-production (Osborne et al., 2016). Users have no choice, which means that co-production happens whether they know it or not; thus, co-production is an intrinsic process of interaction between service providers and users when the service delivery happens (Osborne et al., 2016).

Osborne et al. (2016) focused on the relationship between co-production and the co-creation of value through public service delivery and explored this relationship further in a detailed literature review. It resulted in the definition of “co-production as the voluntary or involuntary involvement of public service users in any of the design, management, delivery and/or evaluation of public services” (Osborne et al., 2016, p. 2).

Nabatchi et al. (2016) also defined co-production as “the involvement of both users and public sector professionals in the delivery of public services”; however, they also highlighted that “this definition is neither used consistently nor applied in ways that make clear what does (and does not) constitute co-production” (Nabatchi et al., 2016).

Because of various other definitions and interpretations, Nabatchi et al. (2017) summarised the need to clarify whether services of a guardianship office in general and the contacting procedure in particular could be examined from the co-production point of view, especially because of the nature of this complex service. According to Alford (2014), in the case of co-production, public service providers can be considered regular producers and customers (citizens) — the co-producers of the service process. However, while some authors (Brudney & England, 1983; Parks et al., 1981; Pestoff, 2006) stated that involuntary participation with one party feeling obligated to participate in the service process could not be considered as co-production, other authors (Alford, 2002, 2006, 2009; Osborne et al., 2016) disagreed. In terms of this contradiction, the authors of this article agree with the latter and, thus, examined the contacting procedure from the point of view of co-production.

Servitization can be defined as the innovation of an organisation's capabilities and processes to better create mutual value through a shift from simple selling to an integrated product and service offering that delivers value in use (Vandermerwe & Rada, 1988; Neely, 2008; Neely et al., 2011). There are similarities between private organisations and public service providers as they both aim to improve customer satisfaction, efficiency and effectiveness, but they also differ from each other in many ways.

Servitization now refers to the process of creating value by providing additional services to products (Vandermerwe & Rada, 1988). Since its first appearance, the term was studied from several angles by scholars to uncover a different kind of methods and implications of service-led competitive strategies for manufacturers (Wise & Baumgartner, 1999; Oliva & Kallenberg, 2003; Slack, 2005; Shikata, 2019).

In the last three decades, servitization has been a popular strategy in the manufacturing sector, and according to the relevant literature regarding the manufacturing industry, an increasing number of companies are complementing their products with value-added services (Vandermerwe & Rada, 1988; Wise & Baumgartner, 1999; Fang et al., 2008; Baines & Lightfoot, 2009; Kozłowska, 2020). Also, scholars have shown a steady interest in the understanding of how firms create value by adding services to products (Cusumano et al., 2015; Németh & Dőry, 2019).

Numerous examples of servitization include areas of finance, transportation, manufacturing (Dachs et al., 2012) and education (Arantes, 2020). According to the literature, servitization is usually a subscription model and can be applied to most industries in one way or another. It developed out of the necessity for businesses to remain profitable and competitive in an age where the financial aspects of design and manufacturing are becoming increasingly more challenged by emerging markets and, apparently, the concept of servitization is in strong connection with value delivery.

The servitization of public services seems to be a noble but also a tricky challenge. Several significant differences exist between private and public service providers, including, e.g., the lack of competitors. However, in essence, the ultimate goal of governments and private companies are basically the same. Although the approach may be different (top-down, bottom-up), they both aim to satisfy customers and save money while increasing efficiency and effectiveness and (Kurucz, 2016). Despite other reasons, public satisfaction is important for the government as much as for companies. However, to satisfy customers by adapting and creating new and even better products and services, it is important to know what they think about the existing situation.

According to Hockerts and Waver (2002), three main forms of Product–Service Systems exist. The first is product-oriented, and in this case, the customer gets the ownership of the product while the manufacturer provides additional services, which are related to the product directly. The second is use-oriented, where the service provider retains the ownership of the product and uses a modified distribution and payment system, such as sharing or pooling to sell the functions of the product. The third is result-oriented, in which case the provider replaces services for products (Hockerts & Weaver, 2002).

Neely (2009, 2012) extended this list with two additional categories to be able to include the full scale of servitization applications and results (Neely, 2009, 2012).

The two new categories are integration-oriented Product–Service Systems and service-oriented Product–Service Systems. In the first case, companies conduct a vertical integration adding services at the downstream of their value chain. In the second case, companies provide new services for their products in a way that they integrate those services into products (Neely, 2009, 2012).

According to Neely (2012, 2013), there are four main categories of reasons behind the application of this phenomenon: economic, strategic, environmental and technological (Neely, 2012, 2013). The first three main categories are usually considered more or less responsible for applying the concept of servitization by companies, but there is one more category, which increasingly accelerates the shift and can be considered as a major driver of servitization. This category is technological reasons (Neely, 2012, 2013).

At one point, technology was only considered as an enabler of servitization approaches. However, with the tremendous amount of new innovations introduced in the last three decades, the world is now one big pool of infinite data which can be collected and analysed in many ways to gain valuable information about customer demands and trends. Thus, the potential for new and innovative services grows with every year. According to Lightfoot and other researchers, technology will enable a higher level of service delivery, and future products and services can be tailored to individual product needs of customers. This is possible thanks to the upcoming age of The Internet of Things (IoT), which will greatly accelerate the servitization in the future as it will turn the physical world into a digital information centre (Baines & Lightfoot, 2013).

“The technology — and particularly the ability to capture and analyse “big data” — open up some new opportunities for service innovation” (Neely, 2013, p. 3).

While governments are trying to meet the growing expectations of citizens, the relationships between a citizen and a public institution become more and more complex as they mutually influence each other. Numerous IT tools are available to be transferred to the public sector to increase customer satisfaction, efficiency and effectiveness (Süle, 2018).

Manufacturing companies choose servitization due to economic, strategic, environmental and technological reasons. The same reasons apply to the public sector as well. Digitalisation and new technological solutions are already present in most public administration systems on different levels as the world approaches the age of e-government and e-governance (Jeong, 2007). While private companies and public organisations are different in many terms, fundamentally they both aim to create more effective and efficient solutions, which are not just economically acceptable but also satisfy customer needs. In other words, governments started attempting the servitization of public services. The literature clearly shows that servitization is much more than simply the creation of additional services. It also changes the way how products and services are perceived.

Professionals representing different disciplines have been dealing with the sociological and psychological analysis of the lifestyle of stepfamilies (Cheal, 2002). The actuality of the topic is proved by the rise in the number of stepfamilies, which has become a worldwide phenomenon. While 83 per cent of children in stepparent families live with their natural mother, there appears to be little recognition of the difference between “intact” and “blended” families (Beck & Gernsheim, 2002). In the Christchurch Health and Development Study, nearly one in five children had experienced three or more family situations by the age of nine (Fergusson et al., 1984). In the United States, 12-year olds who had experienced more than two family changes were more likely to show disruptive behaviour in school than those who had experienced none (Kurdek et al., 1995).

The United States Census Bureau (2003) reported that 16 per cent of all families with children living at home were classified as stepfamilies. In Hungary, every sixth child lives in a stepfamily (Spéder, 2005). Besides the rising international publicity (Ahuja et al., 1998; Felker et al., 2002; Beck & Gernsheim, 2002; Fisher et al., 2003) several research programmes were started in this topic (Corfman & Ehmann, 1987; Foxman et al., 1989; Schumaker Dyke, 2005).

Before introducing the literature background, it is inevitable to define what stepfamily means. (1) A stepfamily, also known as a blended family or reconstituted family, is a family, in which one or both members of the couple have children from a previous relationship. The member of the couple to whom the child is not biologically related is the stepparent, specifically the stepmother or stepfather (Mintel, 2005). (2) A blended family is a family that is formed when separate families are united by marriage or other circumstance (Barker, 2003, p. 46). (3) A reconstituted family (also known as a blended family) is the sociological term for the joining of two adults via marriage, cohabitation or civil partnership, who have children from previous relationships. (4) A new family made from the remnants of divorced families (Biblarz & Gottainer, 2000).

In Germany, stepfamilies were first mentioned in 1984 (Sager et al., 1983). Earlier, such families were founded by the remarriage of widows with children. However, a large-scale rise in the number of divorces became the reason for the frequent creation of stepfamilies (Clarke & Joshi, 2005). According to Sager (1983), a stepfamily is formed by marriage (or cohabitation) of two partners, of whom at least one had already been married. Visher and Visher (1995) defined a stepfamily as a symbiosis where at least one adult had the role of a stepparent. From the point of view of the systems approach, a nuclear family contains a couple or a parent subsystem and a child–sibling subsystem. Parents who do not live together with the family after the divorce play an important role in the life of the new family as well (Allan & Crow, 2001). The importance of the role and values of the family was also emphasised by Huszka and Platz (2017).

McGoldrick and Gerson (1987) completed a family map with a genogram. From the outside, a stepfamily might not differ from a nuclear family; however, there is a significant difference between the two (Hetherington, 1999).

The analysis of stepfamilies reveals special importance of borders, positions, hierarchy and the connecting subsystems. The most important comprehensive typology was made by Sager (1983), who made a distinction between 24 types of stepfamilies. Papernow (1980) denoted two types, namely, (a) a simple stepfamily-system (one parent–child system and a stepparent) and (b) a complex family (the subsystem of two parents and a child). According to the opinion of Burgoyne and Clark (1981), more differentiated categories are necessary, and step-families with one or more common child require a diverse definition.

Verena Krähenbühl (2011) et al. elaborated on a typology which distinguishes whether a stepfather or a stepmother joined the system: (1) a family with a stepmother, (2) a family with a stepfather, (3) a complex stepfamily, (4) a stepfamily with a common child or children, and (5) a part-time step-family. Stepfamilies are less solidary than other families, and they encounter conflicts due to differences of family members (Bien et al., 2002; Clingempeel et al., 2004; Tinson & Nancarraow, 2007). Children have less voice in each decision since the family members do not want the situation to be more complex (Tinson et al., 2008). Their common thinking is family-centred, which is why it is often observed that they try to frame their lifestyle into that of normal families, denying the differences (Bray & Berger, 1993). For the members of step-families, one source of difficulties is that it is not clear what role is required from them (Fischer, 2005). These families have no common history; therefore, conflicts can occur regarding child-upbringing and decision-making in connection with everyday tasks (Lawton & Sanders, 1994). Research indicates that problems, such as poverty, mental health and behavioural issues, difficulties at school, and general health problems occur more often among the children (Cockett & Tripp, 1994). The hardest problem to solve is the material clash. Money is extremely important in our lives. Although it is common for a household to manage finances together, some decision can be made separately (having separate bank accounts) (Lansford et al., 2001). Stepfamilies have to plan more than nuclear families, which can make household planning and marriage greatly important (Clark, 2008). However, the family type affects their purchase decisions-making and the characteristics of the process itself as well (Rogers-Rose, 2002; Brown, 2004). Eisingerné et al. examined the purchase decision process in patchwork families, stating a difference in the processes applied by patchwork families compared to nuclear families (Eisingerné et al., 2012; Eisingerné, 2014).

The question may arise whether public services, district offices or their sub-departments have anything to do with patchwork families and their members. The answer is yes, and primarily at guardianship offices. The workers of guardianship offices deal with such cases daily, providing services to members of patchwork families. Typical cases for patchwork families are:

cases related to alimony,

Based on the literature review, it seems important to highlight the legal regulation applicable to contacting. According to the governmental decree 331/2006 (XII.23) on the roles and responsibilities in child protection and guardianship affairs and on the authority and jurisdiction of guardianship offices, par. 9, the district office for child protection and guardianship affairs (guardianship office):

decides about the communications between the child and the parent, or another person in charge of contacting, orders monitored contacting in justified cases, and also orders the mandatory child protection mediation procedure or the use of the mandatory supported procedure,

The following laws apply to the activities of the guardianship office in general and contacting procedure in particular:

Pars. 4:178–185 of Chapter 18 on exercising parental supervision of the Fourth Book (Family Law) of Act V of 2013 on the Civil Code deal with communications.

The basics of the research are provided in the model below, which is the basic model of the contacting procedure applied by guardianship offices (Fig. 1). This model illustrates the above-mentioned procedure, for the administration of which the law ensures 60 days. The procedure is considered a “production process”. The pending question for the continuation of the research is whether this model is applicable in the case of patchwork families in its current form and whether 60 days were enough for the procedure involving patchwork families as participants.

A simulation is an imitated operation of a real process or system over time. This includes the creation of an artificial history of the system and the observation of this artificial history in order for the creator to draw conclusions about the operational characteristics of the real depicted system (Bernard et al., 2000; Bohács, 2012).

A discrete-event simulation model is defined as one, in which the state variables change only at those discrete points in time, at which events occur. Discrete-event system simulation is the modelling of systems, in which the state variable changes only at a discrete set of points in time.

The discrete-event simulation tracks the state changes in the model components at the time the changes occur. Unlike continuous simulation, where the clock runs in a continuous manner, the clock in discrete-event simulation jumps from one scheduled event to the next. Events can schedule other events, such as an object entering a machine, which schedules an event for the same object to leave the machine. Discrete-event simulation only shows the state changes of the model components at certain points in time, not continually over time. When certain events take place, certain model components change their state and, thus, control the simulation (Bernard et al., 2000; Bohács, 2012).

A simulation is a test, in which a system or the expected or actual behaviour of the system is studied in a physical or computer model of the process. Accordingly, simulations are simplifications of reality that focus more on the system as a whole and less on its details. The simulation imitates a real phenomenon with the help of the available alternative technological solutions, which most often means a simulation software developed for this purpose. The purpose of the simulation is to create the same or very similar conditions for users in the virtual environment at the model level as the simulated phenomenon. This allows using a virtual environment that mimics the operation of the original system to accomplish a specific task, which greatly facilitates, e.g., various efficiency and optimisation efforts (Bernard et al., 2000; Garrido, 2009).

The purpose of the simulation is to understand the features and essence of processes. It allows answering the question “What would happen if…?” without any financial or safety risks. Changes can be made to parameters, and different setups can be tried to find the optimal solution during the design or review phase. The simulation requires a model that properly describes the steps, relationships and features of the process. The level of detail and what “properly” means is always a valid question. These models are simplified descriptions of reality and, as a rule of thumb, the model should be simple but also detailed enough to grasp the general and studied behaviours of the real process (Bohács, 2012; Banks et al., 2013; Prateek, 2015; Martijn, 2017).

The model not only describes the relationships and the steps of the processes but features of the steps. These features involve parameters such as processing times, input rate, etc. In the case of modelling an existing real-world process, such parameters must be measured or estimated as distributions to simulate significantly more cases than measured. The way the model is described is based on the framework that is used. Usually, simulation frameworks provide ways and tools to describe the models, while also allowing to “operate” or “run” these models. This framework, the set of rules that describe how to operate the model, can be executed manually or, more optimally, by software (Prateek, 2015; Martijn, 2017).