IMS 6485: Services on the Web

1Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Topics

• Services in the Economy

• Themes

• Personalization and Customization—Limits

• Financial Services—The Glass-Steagall Act of 1934

• Online Banking, Brokerage, Mortgage, Insurance

• Real Estate Services

• Travel Services

• Career Services

• Classifying Services

• Product Based Services

IMS 6485: Services on the Web

2Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Where are Services on the Value Chain?

TRANS-PORTATIONCOMPANY

BROKER

INFORMATION FLOWS(SELLERS TO BUYERS)

FLOW OF GOODS

ADVERTISING .

INVOICE .

ORDER INFORMATION .

INFORMATION FLOWS(BUYERS TO SELLERS)

REQUEST INFORMATION .

PLACE ORDER .

MAKE PAYMENTS .

Animal

Vegetable

Mineral

INVENTORY

INVENTORY

INVENTORY

FACTORYWHOLE-SALER

INTERMEDIATE

GOODS

WHOLE-SALER

RETAILER

IMS 6485: Services on the Web

3Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Services

FIRM

- ACCOUNTING

- ADVERTISING

- HR

- BANKING

- INVESTING

- CONSULTING

- IT

- TELECOM

- COORDINATION

SERVICES

IMS 6485: Services on the Web

4Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Services in the Economy

• Services employ 76% of the US Labor Force

• $7.7 Trillion (58%) of the US economy

• What are the difference between services and products?

– Name some consumer-oriented services

• That can be delivered online?

• That cannot be delivered online?

– Can any of these be supported online?

– Same for business-oriented services

IMS 6485: Services on the Web

5Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Services and Productivity

• With 76% of the labor force and 58% of the GDP in services what are the implications of the situation described above?

• Why do we have this state of affairs?

• What can be done about it?

On the other hand, productivity [growth??] in the service sector has lagged far behind productivity in factories and on farms. Productivity in the service sector over the last decade has averaged about 1%, while farm and factory productivity has averaged about 5%. (page 587)

What this means for e-commerce is that the service sector offers extraordinary opportunities insofar as e-commerce sites can deliver information, knowledge, and transaction efficiencies. (page 587)

IMS 6485: Services on the Web

6Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Services in the Economy (cont.)

• As with retail, we want to slice and dice the world of services

– Find out which are succeeding online

– Find out which are struggling

– Find out why for each

• Be able to:

– Predict the reception for a new online service opportunity

– Find new opportunities

IMS 6485: Services on the Web

7Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Some Themes

• Watch for the effect of customer preference (taste) on the viability of online services

– Trust as a determinant of service delivery preference

• Watch for pure information or knowledge-based services vs. services coupled to a physical good or asset

• Watch for the importance of scale as a determinant of profitability

• Watch for similarities (including one huge one) between successful online service sectors and successful online retailing establishments

• Look for political or regulatory limitations on service delivery

IMS 6485: Services on the Web

8Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Personalization & Customization of Services

• Name some (traditional) services that are

– Extremely personalized

– Extremely commodity-like

– Composite

• Are there any patterns in the answers above in the services offered online?

• What constraints apply to extremely personalized services online?

IMS 6485: Services on the Web

9Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Personalization & Customization of Services (cont.)

• What tools and capabilities do human service providers apply to their professions

– Programmers? Physicians? Accountants? Attorneys?

• Can these skills be mimicked by technologies?

• Can these skills by supported by technologies?

• What may be the role of consumer preference (taste) in determining service delivery?

IMS 6485: Services on the Web

10Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

The Glass-Steagall Act of 1934

• This Act is most important now for what was repealed in 1998

– Interstate banking

– Multiple lines of business in the financial industry

• Banking

• Brokerage

• Insurance

• Why was the repeal of these provisions, coupled with the wide use of information technologies in the 1990s, so important?

– And important for eCommerce?

IMS 6485: Services on the Web

11Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Banking

• A traditional bank spends $1.07 to process a transaction, whereas an online bank can perform the transaction for 1 cent (L&T 3d Edition, p. 619)

– So the motivation for banks is there

• What is the motivation for customers to use online banking?

• Who is succeeding in online banking? Why?

• What advantage did E*Trade's online banking have over other internet-only online banks?

IMS 6485: Services on the Web

12Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Brokerage

• What market space(s) do the online brokerage services serve?

• Hint: How did stock investing work prior to the Internet brokerages?

– What were the fee structures?

– How were trades executed?

• How have the online brokers affected the traditional part of the industry?

IMS 6485: Services on the Web

13Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Mortgage Lending Services

• Why have online mortgage lending services been very slow to take hold?

– Compare to online brokerage

– What does the book say?

– What do you think?

IMS 6485: Services on the Web

14Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Insurance Services

• The success of online insurance sales have been mixed by sector

• Which are succeeding and which are struggling?

• What has been determining the successes and struggles?

• How are insurance agents paid?

– Why?

– How are insurance companies disintermediating their own agents through online offerings?

IMS 6485: Services on the Web

15Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Real Estate Services

• There is a lot going on here

• What is the role of the National Association of Realtors?

• What is the importance of the NAR ownership of the Multiple Listing Service (MLS)?

– Read the descriptions of online consumer behavior in the paragraph beginning at the end of p. 600.

– What techniques does NAR use to retain its monopoly position?

• Go to Realtor.Com and find your dream house—then report on the site's business model

IMS 6485: Services on the Web

16Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Travel Services

• What business models do we see here?

• Look at the historical market structure/value chain described in Figure 9.7 and also on pp 609-613

– Why did this market structure make sense prior to the Internet?

• What changes have Internet technologies introduced to the market structure?

– Who has benefited?

– Who lost?

– Why?

IMS 6485: Services on the Web

17Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Online Career Services

• What revenue models do these sites use?

• "It's Just Information: The Ideal Web Business" p. 619

– Do you agree?

• Look at the market segmentation

– Large general sites

– "… explosion in specialty niche employment sites"

– Does this sound familiar?

• What have your personal experiences been?

IMS 6485: Services on the Web

18Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Classifying Services

• Let's classify services alongthree dimensions

– Frequency of transactionsfor typical users

– Importance of eachtransaction

– Tie to physical resources(or information intensity)

• Are there any trends to be seen by position, regardless of the nature of the transaction?

IMS 6485: Services on the Web

19Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Product-Based Services

• Chapter 9 mentioned product-based services

– What are these?

– How are they similar to the services we have been discussing?

– How are they different?

IMS 6485: Services on the Web

20Dr. Lawrence West, MIS Dept., University of Central FloridaLWEST@BUS.UCF.EDU

Let's Invent a Service