scribed in a machine- processable format and other systems interact with the Web-service in the manner prescribed by its description using standardized messages. Service Innovation for Electronic Services For the purpose of this work, an electronic service will be defined as a business activity of value exchange that is accessible through an electronic interface. In that sense, an electronic service as it will be understood within the context of this work lies at the intersection of the business definition of a service (i.e., business activity of value exchange) and the technical implementation of a Web-service. Such a ser- vice is more than the pure technical implementation of a Web-service or another software implementation. The service has to implement a business activity that a user attributes value to. Yet, services delivered in a nonelectronic fashion, such as services offered by hospitality, are not within the scope of this work. An e-service following our definition may be provided through a single implementation of a Web-service or through a collection of Web-services that together form a new value-added service which is thus delivered through an electronic interface. 7.2 What Makes E-Services Different? We argue that certain distinct characteristics of electronic services mandate a cus- tomized development process for these services as opposed to traditional new ser- vice development. Through an analysis of existing research related to electronic services we identified five key areas of difference: (1) the cost structure of services, (2) the high degree of outsourcing, (3) rapid development of new services, (4) the availability of transparent service feedback, and (5) the continuous improvement of services. The following sections motivate each area of difference. 7.2.1 Low Marginal Costs of Service Delivery The economics of information have been recognized as dramatically different from the economics of physical items (Evans and Wurster, 2000). This leads to a unique cost structure both in comparison wi