Chapter 05 Technology in Service McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Learning Objectives Describe the five roles of technology in the service encounter. Give industry examples of the evolution of self-service from human contact, to machine assisted, to electronic service. Describe the eight uses of web sites. Describe and differentiate the eight generic E-business models. Explain what is meant by scalability an how its is relevant to E-commerce. Describe the managerial issues associated with the adoption of new technology. 5-2

Role of Technology in the Service Encounter   Technology Technology Technology Customer Server   Customer Server   Customer   Server   A. Technology-Free Service Encounter B. Technology-Assisted Service Encounter C. Technology-Facilitated Service Encounter Technology Technology Customer Server   Customer Server   D. Technology-Mediated Service Encounter E. Technology-Generated Service Encounter 5-3

Evolution of Self-service Service Industry Human Contact Machine Assisted Internet Facilitated 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 5-4

Self-service Technologies (SST) Challenges 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? 5-5

Classification of Service Automation Fixed-sequence (F) - parking lot gate Variable-sequence (V) - ATM Playback (P) - answering machine Numerical controlled (N) - animation Intelligent (I) - autopilot Expert system (E) - medical diagnosis Totally automated system (T) - EFT 5-6

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 5-7

Purpose of Web-sites Retail channel (Amazon.com) Supplemental channel (Barnes & Nobel) Technical support (Dell Computer) Embellish existing service (HBS Press) Process orders (Delta Airline) Convey information (Kelly Blue Book) Communicate with membership (POMS.org) Play games (Treeloot.com) 5-8

Electronic and Traditional Services 5-9

Grocery Shopping Comparison 5-10

E-Business Models 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 5-11

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 5-12

Economics of Scalability Dimensions High Scalability Low E-commerce continuum Selling information (E-service) Selling value- added service 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 IT support Online retailer Example Firm Kbb.com Biztravel.com Everdream.com Amazon.com 5-13

Adoption of New Technology in Services Challenges of Adopting New Technology The Process is the Product Back Office vs Front Office Changes Need for Standardization Readiness to Embrace New Technology The Case of Radio Frequency Identification 5-14

Topics for Discussion Can an Internet service encounter be a memorable experience? How does the economics of scalability explain the failure of Living.com, an online furniture retailer? What are the characteristics of early adopters of self-service? How can we design for self-recovery when self-service failure occurs? What could be the explanation for the high customer satisfaction scores in Table 5.6 for Internet services? 5-15

Amazon.com How would you contrast Amazon’s business design with that of Barnes & Noble before Barnes & Noble went online? What are the advantages and disadvantages of each of the two designs? Is Amazon.com a model for the future of retailing? 5-16