Chapter – 5

Technology in Services

5

Service Management (5e)

Operations, Strategy, Information Technology

By

Fitzsimmons and Fitzsimmons

5-2

Learning ObjectivesLearning Objectives

Discuss the of technology in the service encounter. Describe the emergence of self-service. Place an example of service automation in its proper

category. Describe different Internet business models. Understand the importance of scalability to e-commerce

success. Discuss the managerial issues associated with the adoption

of new technology.

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Role of Technology in the Service EncounterRole of Technology in the Service Encounter 

Technology Technology Technology

Technology Technology

Customer Customer 

Server 

Server 

Server 

Server 

Server 

CustomerCustomer

Customer

D. Technology-MediatedService Encounter

E. Technology-GeneratedService Encounter

A. Technology-FreeService Encounter

B. Technology-AssistedService Encounter

C. Technology-FacilitatedService Encounter

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Evolution of Self-serviceEvolution of Self-service

Service Industry Human Contact Machine Assisted Service

Electronic Service

Banking Teller ATM Online banking

Grocery Checkout clerk Self-checkout station Online order/ pickup

Airlines Ticket agent Check-in kiosk Print boarding pass

Restaurants Wait person Vending machine Online order/ delivery

Movie theater Ticket sale Kiosk ticketing Pay-for-view

Book store Information clerk Stock-availability terminal Online shopping

Education Teacher Computer tutorial Distance learning

Gambling Poker dealer Computer poker Online poker

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Self-service Technologies (SST) Self-service Technologies (SST)

Does customer adoption of self-service follow a predictable pattern?

How do we measure self-service quality (e.g., ease of use, enjoyment, and/or control)?

What is the optimal mix of SST and personal service for a service delivery system?

How do we achieve continuous improvement when using SST?

What are the limits of self-service given the loss of human interaction?

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Fixed-sequence (F) – A machine that repetitively performs successive steps in a given operation

according to a predetermined sequence, condition, and position, and whose set information cannot be changed easily. Example, automatic parking lot gate

Variable-sequence (V) – A machine that is the same as a fixed-sequence robot but whose set

information can be changed easily. Example, ATM machine

Playback (P) – A machine that can produce operations from memory that were originally

executed under human control. Example, answering machine

Classification of Service AutomationClassification of Service Automation

Continued…..Continued…..

Numerical controlled (N) – A machine that can perform a given task according to a sequence, conditions,

and a position as commanded by stored instructions that can be reprogrammed easily. Example, animated characters at an amusement park

Intelligent (I) – A machine with sensory perception devices, such as visual or tactile

receptors, that can detect changes in the work environment or task by itself and has its own decision-making abilities. Example, autopilot for a commercial plane

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Continued…..Continued…..

Expert system (E) – A computer program that uses an inference engine (i.e decision rule) and a

knowledge base (i.e. information on a particular subject) to diagnose problems. Example, maintenance troubleshooting for elevator repair

Totally automated system (T) – A system of machines and computers that performs all the physical and

intellectual tasks that are required to produce or deliver a service. Example, electronic funds transfer

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Purpose of Web-sitePurpose of Web-site

A retail channel (Amazon.com) These firms sell exclusively through the Internet

Supplemental channel (Barnes & Nobel) Buy in-store or on-line

Technical support (Dell Computer)

Embellish existing service (HBS Press) Cases that you can get on-line instead of typically being mailed

Order processing (Delta Airline) Electronic tickets

Continued…..Continued…..

Convey information (Kelly Blue Book)

Communicate with membership (POMS.org)

To play games (Treeloot.com)

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Technology Convergence Enabling E-Business

Technology Convergence Enabling E-Business

Internet

Global telephone system

Communications standard TCP/IP (Transfer Control Protocol/Internet Protocol)

Addressing system of URLs

Personal computers and cable TV

Customer databases

Sound and graphics

User-friendly free browser

Internet ModelsInternet Models

Internet access providers Firms such as America online provide access to World Wide Web and email

service.

Portal They provide a variety of service that include information searching, news,

white and yellow pages, etc. – Example google, Yahoo.

Information content Use Internet to provide news, example The New York Times

Online Retailers Example, Amazon.com

Transaction enablers Stock trading

Market makers – online auction, example ebay

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E-Business Models(Weill & Vitale, Place to Space, HBS Press, 2001)

E-Business Models(Weill & Vitale, Place to Space, HBS Press, 2001)

Content Provider: Provides content (information, digital products, and services). Example,

Reuters, a British news agency

Direct to Customer: Provides goods or services directly to the customer. Example, Dell

Full-Service Provider: Provides a full range of services in one domain. Example, financial, health,

industrial, chemical) directly and via allies. Example, General Electric Supply.

Intermediary: Brings together buyers and suppliers by concentrating information. Example,

eBay

Continued…..Continued…..

Shared Infrastructure: Brings together multiple competitors to cooperate by sharing common IT

infrastructure. Example, SABRE reservations system

Value Net Integrator: Coordinates activities across the value net by gathering, synthesizing, and

distributing information. Example, 7-Eleven Japan

Virtual Community: Creates and facilitates an online community of people with a common

interest, enabling interaction and service provision. Example, Monster.com, the job placement firm.

Whole-of-Enterprise: Provides a firmwide single point of contact, consolidating all services provided

by a large multiunit organization. Example, U.S. federal Government

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Economics of E-BusinessEconomics of E-Business

Sources of Revenue: Transaction fees Information and advice Fees for services and commissions Advertising and listing fees

Ownership Customer relationship Customer data Customer transaction

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Electronic and Traditional Servicestable 5.3, pp. 114

Electronic and Traditional Servicestable 5.3, pp. 114

Features Electronic Traditional

Encounter Screen-to-face Face-to-face

Availability Anytime Working hours

Access From anywhere Travel to location

Market Area Worldwide Local

Ambiance Electronic interface

Physical environment

Payment Credit card Cash or check

Differentiation Convenience Personalization

Privacy Anonymity Social interaction

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Grocery Shopping Comparisontable 5.4, pp. 114

Grocery Shopping Comparisontable 5.4, pp. 114

On-lineShopping

TraditionalShopping

Advantages ConvenienceSaves timeLess impulsebuying

See new itemsMemory triggerProduct samplingSocial interaction

Disadvantages Forget itemsLess controlNeed computerDelivery fee

Time consumingWaiting linesCarry groceriesImpulse buying

Service Product DimensionsService Product Dimensions

Electronic services are intangible

Heterogeneity due to different perceptions of customers (depends on your speed of connection, your computer’s ability, your level of knowledge)

Simultaneous delivery and consumption of electronic services

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Service Process DimensionsService Process Dimensions

Service processes can be categorized by Degree of customer contact and interaction Degree of labor intensity Degree of customization

Electronic services differ from traditional service Customer contact Customization Labor intensity

To provide electronic service a firm has On-line part, where the customer interacts (like front-office) Of-line part, which helps on-line part to happen (like back-office)

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Economics of Scalability Table 5.5, pp. 116

Economics of Scalability Table 5.5, pp. 116

Dimensions High Scalability Low

E-commerce continuum

Sellinginformation(E-service)

Selling value-added service

Sellingservices with

goods

Selling goods(E-commerce)

Information vs. Goods Content

Information dominates

Information with some service

Goods with support services

Goods dominate

Degree of Customer Content

Self-service Call center backup

Call center support Call center order processing

Standardization vs. Customization

Mass distribution Some personalization

Limited customization

Fill individual orders

Shipping and Handling Costs

Digital asset Mailing Shipping Shipping, order fulfillment, and warehousing

After-sales service None Answer questions Remote maintenance

Returns possible

Example Service Used car prices Online travel agent

Computer support Online retailer

Example Firm Kbb.com Biztravel.com Everdream.com Amazon.com

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Challenges of Adopting New Technology Customer education of the use of technology

Customer acceptance

Employee training

Integration with existing technology

Industry standards

Managing change

Adoption of New Technology in ServicesAdoption of New Technology in Services

Continued…..Continued…..

Managing the New Technology Adoption Process Japanese model vs American model of introducing change Ten step process with concern for employees and customers

• Orientation and education• Technology opportunity analysis• Application requirements analysis• Functional specifications• Design specifications• Implementation planning• Equipment selection and control commitments• Implementation• Testing of technology• Review of results

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Topics for DiscussionTopics for Discussion

1. Can an Internet service encounter be a memorable experience?

2. How does the economics of scalability explain the failure of Living.com, an online furniture retailer?

3. What are the characteristics of early adopters of self-service?

4. How can we design for self-recovery when self-service failure occurs?