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Copyright © 2006 by The McGraw-Hill Companies, Inc. ll rights reser!e".McGraw-Hill/Irwin

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Technology in ServicesTechnology in Services

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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 propercategory.

Describe different Internet business models.

Understand the importance of scalability to e-commercesuccess.

Discuss the managerial issues associated with the adoptionof new technology.

Technology – www – ecommerceTechnology – www – ecommerce

3.5 million listing for common items

E-bay has become preferred place to buy and sell

Virtual auctions giving periodic feedback on your bid givingyou opportunity to revise bid – reverse auction

Drawback – you have to pay for an item before it is shipped

Buyer may have to go through a lot of trouble to get hismoney back in case of misrepresentation by seller

Amazon.com

7-11 in Japan

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

Technology Technology Technology

Technology Technology

Customer Customer ServerServer

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

Model A

Technology Free Service Encounter

Customer is in physical proximity and interacts with a humanservice provide

Traditional high touch service we experience daily

Most personal service and professional services like advocate, taxconsultant, doctor

Model B

Technology assisted service encounter

Health care service such as MRI , Airport check in

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Model C

Technology facilitated service encounter

Both customer and service provider have access to technology

Financial planner explaining options to the client

Model D

Technology facilitated service encounter

Customer and human service provider are not physically togetherTelephone or online internet chat or skype call for seeking a

service

Model E

Technology generated service encounter

IVRS

ATM, Checkpot scanning at super market, vending machines

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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 predictablepattern?

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 aservice 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)

Machine repeatedly performs successive tasks in a givensequence, condition or position whose sequence can not bechanged easily

Example – automatic parking lot gate

Variable-sequence (V)

Machine is fixed sequence machine but the sequence can bechanged easily

Example - ATM

Classification of Service AutomationClassification of Service Automation

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Playback (P) - answering machine

Machine that can reproduce sequence / steps from memory thatwere originally executed under human control

Numerical controlled (N)

A programmable machine which can execute steps as per theprogram which can be changed

animation

Intelligent (I)

A machine with a sensory perception device such as visual ortactile that can detect a change in the environment - can makedecisions / choices as per the program

autopilot

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Expert system (E) – 

Using a inference engine

medical diagnosis

Totally automated system (T)

Performs physical and intellectual tasks by itself

Electronic fund transfer

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Purpose of Web-sitePurpose of Web-site

A retail channel (Amazon.com)

Supplemental channel (Barnes & Nobel)

Technical support (Dell Computer)

Embellish existing service (HBS Press)

Order processing (Delta Airline)

Convey information (Kelly Blue Book)Organization membership (POMS.org)

Games (Treeloot.com)

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Technology Convergence EnablingE-Business

Technology Convergence EnablingE-Business

Internet

Global telephone system

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

Addressing system of URLs

Personal computers and cable TVCustomer databases

Sound and graphics

User-friendly free browser

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Internet ModelsInternet Models

Internet access providers

Portals – providing variety of services - search, email,directories, message boards etc.

Informational content – New York Times

Online retailers – Amazon

Transaction enablers – e trade, stock exchange

Market makers – e bay reaching new markets

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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: Reuters

Direct to Customer: Dell

Full-Service Provider: GE Supply Co.

Intermediary: eBay

Shared Infrastructure: SABRE

Value Net Integrator: 7-Eleven Japan

Virtual Community: Monster.com

Whole-of-Enterprise: 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 ServicesElectronic and Traditional Services

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 Electronicinterface

Physicalenvironment

Payment Credit card Cash or check

Differentiation Convenience Personalization

Privacy Anonymity Social interaction

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Grocery Shopping ComparisonGrocery Shopping Comparison

On-lineShopping

TraditionalShopping

Advantages ConvenienceSaves time

Less impulsebuying

See new itemsMemory trigger

Product samplingSocial interaction

Disadvantages Forget itemsLess controlNeed computerDelivery fee

Time consumingWaiting linesCarry groceriesImpulse buying

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Economics of ScalabilityEconomics of ScalabilityDimensions High Scalability Low

E-commercecontinuum

Selling

information(E-service)

Selling value-

added service

Selling

services withgoods

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 Somepersonalization Limitedcustomization Fill individual orders

Shipping andHandling Costs

Digital asset Mailing Shipping Shipping, orderfulfillment, and

warehousing

After-sales service None Answer questions Remote

maintenance

Returns possible

Example Serv ice Used car prices Onl ine t ravelagent

Computer support Onl ine retai ler

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

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Challenges of Adopting New TechnologyThe Process is the ProductBack Office vs Front Office ChangesNeed for Standardization

Managing the New Technology Adoption Process

Ten step process with concern for employees and

customers

Adoption of New Technology in ServicesAdoption of New Technology in Services

Managing the New TechnologyAdoption Process

Managing the New TechnologyAdoption Process

1. Orientation and education – Trade shows, involvement oftop management

2. Technology opportunity analysis – feasibility study

3. Application requirement analysis

4. Functional specifications

5. Design specifications - specific engineering design forcustomers and employees

6. Implementation planning

7. Equipment selection and contracts

8. Implementation

9. Testing the technology

10. Review of results

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Topics for DiscussionTopics for Discussion

1. Can an Internet service encounter be a memorableexperience?

2. How does the economics of scalability explain the failure ofLiving.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-servicefailure occurs?

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Interactive ExerciseInteractive Exercise

The class breaks into small groups and each comesup with an Internet site that they believe will besuccessful in the long run and explain why.

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Amazon.comAmazon.com

How would you contrast Amazon’s business design with thatof Barnes & Noble before Barnes & Noble went online?

Why has Amazon.com not turned a profit yet and whatneeds to be done to achieve profitability?

Will Amazon continue to be successful against “click andmortar” competitors, such as Barnes & Nobel, which goonline?

Is Amazon.com a model for the future of retailing?

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Evolution of B2C E-Commerce in JapanEvolution of B2C E-Commerce in Japan

1. What features of the 7-Eleven Japan distribution systemillustrate the “Value Net Integrator” e-business model?

2. Does the 7-Eleven Japan distribution system exhibitscalability economics?

3. How does the 7-Eleven example of B2C e-commerce in

Japan illustrate the impact of culture on service systemdesign?

4. Will the 7-Eleven “Konbini and Mobile” system beadopted in the United States?

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E-Business Supply Chain (Network)Elements

E-Business Supply Chain (Network)Elements

Major entities including firm of interest and its customers,suppliers, and allies

Major flows of product, information, and money

Revenues and other benefits each participant receives

Critical aspects: participants, relationships, and flows

Example: 7-Eleven Japan