Technology in Services

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.

Role 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

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

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?

Fixed-sequence (F) - parking lot gateVariable-sequence (V) - ATMPlayback (P) - answering machineNumerical controlled (N) - animation Intelligent (I) - autopilotExpert system (E) - medical diagnosisTotally automated system (T) - EFT

Classification of Service Automation

Purpose 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)

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

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

Content Provider: Reuters Direct to Customer: DellFull-Service Provider: GE Supply Co. Intermediary: eBayShared Infrastructure: SABREValue Net Integrator: 7-Eleven JapanVirtual Community: Monster.comWhole-of-Enterprise: Government

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

Electronic and Traditional ServicesFeatures 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

Grocery Shopping Comparison

On-lineShopping

TraditionalShopping

Advantages ConvenienceSaves timeLess impulsebuying

See new itemsMemory triggerProduct samplingSocial interaction

Disadvantages Forget itemsLess controlNeed computerDelivery fee

Time consumingWaiting linesCarry groceriesImpulse buying

Economics of ScalabilityDimensions 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

Challenges of Adopting New Technology–The Process is the Product–Back Office vs Front Office Changes–Need for Standardization

Managing the New Technology Adoption Process–Ten step process with concern for

employees and customers

Adoption of New Technology in Services

Topics for Discussion1. 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?

Interactive Exercise

The class breaks into small groups and each comes up with an Internet site that they believe will be successful in the long run and explain why.

Amazon.com

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

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

Will Amazon continue to be successful against “click and mortar” competitors, such as Barnes & Nobel, which go online?

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

Evolution of B2C E-Commerce in Japan

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

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

3. How does the 7-Eleven example of B2C e-commerce in Japan illustrate the impact of culture on service system design?

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