The greatest value adding sector with a dynamic development

There is a growing demand for products which are offered complete with services to cater to individual customer wishes. Increasingly, products and services are offered as a package. This makes for unique features which are an advantage in the face of global competition. Innovative services play a key role for industry and innovation policy. This is why the Federal Government has launched "Innovations in Services" programme.

35 percent of all gainfully employed persons - more than 27 million - and a considerable percentage of self-employed persons in Germany work in the field of knowledge-intensive services. This is therefore the biggest value adding area. Services contribute roughly 70 percent to value added. According to the Research and Innovation Expert Commission, knowledge-intensive services account for about 37 percent of the entire value added in Germany. This is much higher than the value added accounted for by goods with high intensity in the field of research and development (R&D), which is just under 14 percent. In particular in difficult economic times, many services are crisis-proof. Forecasts for 2009 predict that only the service industries will see a positive growth in the national accounts. In forecasts for 2010, services occupy the first seven ranks with the highest growth rates.

Innovative services are particularly relevant as important input step for R&D intensive industries. Growth in future markets like logistics, multimedia and health is closely linked to this. A look at structural change in the US makes this even clearer: The production of research-intensive goods is declining while, at the same time, specialization in knowledge-intensive services is increasing.

What makes services innovative

With the "Innovations with Services" programme, the Federal Ministry of Education and Research (BMBF) supports the study of the factors that drive and inhibit innovations in services. The aim is to make use of the innovation potential of modern services. The programme focuses on core topics of the service industry and aims to develop methods and instruments for optimizing existing and developing new services.

Project Example:
Personal Health Manager

Lack of exercise and malnutrition cause many diseases. Health insurance schemes and employers are struggling with high costs resulting from cardio-vascular problems, back complaints and diabetes. Prevention and fitness programmes with individual coaching are effective but are only available to few people for financial reasons. At the same time, the competition also forces fitness service providers to limit their staff-intensive customer support. This is where the Personal Health Manager from the Sprint research project (Systematic Design for the Integration of Product and Service - Hybrid Value Added in the Health Industry) comes in. The combination of products (fitness equipment, pulse watches, mobile terminal devices) and services (support, training plans) enables trainers to support many more people than an individual coach could. Recurring processes and routine tasks will be automated and supported. The time saved can be used by the trainers to provide regular personal support. The trainees are given location-independent training aids and can document their progress. The project has an interdisciplinary structure and pools competences from industry and science in sub-areas of business economics, computer science, service development, innovation and technology management and sports medicine. (http://www.projekt-sprint.de)

The economic significance of services is not sufficiently reflected in education and research. A comparison with the US shows that the R&D intensity of the service industry in Europe is clearly lagging behind. Increasing the R&D intensity to US levels would mean that the gap in industry's R&D intensities between the US and Europe would be closed by 80 percent. Joint efforts of industry, science and politics are needed.

Hallmark of excellence "Services Made in Germany"

The Research Alliance has given a number of recommendations for action. These include the establishment of endowed chairs focusing on services and the development of a label for "Services Made in Germany". Furthermore, the Research Alliance has established a Services Taskforce. It supports the implementation of recommendations for action. The Services Taskforce has a uniquely broad representation with 35 companies and institutes involved. It has already generated great dynamics for the field of innovations and cooperation between industry and science.

The Federal Government has taken up the recommendations of the Research Alliance to link services research more strongly with technological research and other fields of research involving further activities: With the Health Regions of the Future and Energy Efficient City competitions, it has launched the first pilot projects in which services research makes a major contribution to meeting social policy challenges. Health logistics in particular has become an important task for the future. The close links between ICT and microsystems technology with services are the focus of the funding priorities on "Technology and Services in Demographic Change" and the "Ambient Assisted Living (AAL)" programme to enable the elderly to lead an independent life. Further measures will follow within the framework of the "Services 2020" action plan.

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  Service industry

  The service sector - which encompasses a vast spectrum of business activity including trade, hotels and restaurants, transport, communication, credit and insurance, corporate services and more - is a major driver of economic growth in Germany. Today the service industry accounts for nearly 70% of GDP and the labour market, with employment expanding most rapidly in the financial, rental and corporate services sectors.
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