som lecture 6 technology
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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