5
Service Management (5e)
Operations, Strategy, Information Technology
By
Fitzsimmons and Fitzsimmons
Chapter – 5
Technology in Services
5-2
Learning 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.
5-3
Role of Technology in the Service Encounter
Technology
Customer
Technology
Server
A. Technology-Free
Service Encounter
Customer
Technology
Server
B. Technology-Assisted
Service Encounter
Technology
Customer
Customer
C. Technology-Facilitated
Service Encounter
Technology
Server
D. Technology-Mediated
Service Encounter
Customer
Server
Server
E. Technology-Generated
Service Encounter
5-4
Evolution 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
5-5
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?
5-6
Classification of Service Automation
 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

A machine that is the same as a fixed-sequence robot but whose set
information can be changed easily. Example, ATM machine
 Playback

(V) –
(P) –
A machine that can produce operations from memory that were originally
executed under human control. Example, answering machine
5-7
Continued…..
 Numerical

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

controlled (N) –
(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
5-8
Continued…..
 Expert

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

system (E) –
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
5-9
Purpose 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
5-10
Continued…..
 Convey
information (Kelly Blue Book)
 Communicate
 To
with membership (POMS.org)
play games (Treeloot.com)
5-11
Technology Convergence Enabling
E-Business
 Internet
 Global
telephone system
 Communications
standard TCP/IP
(Transfer Control Protocol/Internet Protocol)
 Addressing
 Personal
computers and cable TV
 Customer
 Sound
system of URLs
databases
and graphics
 User-friendly
free browser
5-12
Internet 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

Use Internet to provide news, example The New York Times
 Online

content
Retailers
Example, Amazon.com
 Transaction

enablers
Stock trading
 Market
makers – online auction, example ebay
5-13
E-Business Models
(Weill & Vitale, Place to Space, HBS Press, 2001)
 Content

Provides content (information, digital products, and services). Example,
Reuters, a British news agency
 Direct

Provider:
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
5-14
Continued…..
 Shared

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

Infrastructure:
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
5-15
Economics 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

5-16
Electronic and Traditional Services
table 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
Payment
Electronic
interface
Credit card
Physical
environment
Cash or check
Differentiation
Convenience
Personalization
Privacy
Anonymity
Social interaction
5-17
Grocery Shopping Comparison
table 5.4, pp. 114
On-line
Shopping
Advantages
Convenience
Saves time
Less impulse
buying
Disadvantages Forget items
Less control
Need computer
Delivery fee
Traditional
Shopping
See new items
Memory trigger
Product sampling
Social interaction
Time consuming
Waiting lines
Carry groceries
Impulse buying
5-18
Service 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
services
delivery and consumption of electronic
5-19
Service Process Dimensions
 Service



processes can be categorized by
Degree of customer contact and interaction
Degree of labor intensity
Degree of customization
 Electronic



Customer contact
Customization
Labor intensity
 To


services differ from traditional service
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)
5-20
Economics of Scalability
Table 5.5, pp. 116
Dimensions
High
Scalability
Low
E-commerce
continuum
Selling
information
(E-service)
Selling valueadded service
Selling
services 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
5-21
Adoption of New Technology in Services
 Challenges
of Adopting New Technology

Customer education of the use of technology

Customer acceptance

Employee training

Integration with existing technology

Industry standards

Managing change
5-22
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
5-23
Topics 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 selfservice?
4. How can we design for self-recovery when self-service
failure occurs?