1. Chapter 4 Services and Information Technology

2. Learning Objectives Discuss the role of the customer in service process innovation. Place an example of service automation in its proper category. Discuss the managerial issues associated with the adoption of new technology. Discuss the competitive roles of information. Explain the virtual value chain concept. Discuss the limits in the use of information.

3. Technological Innovation in Services 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

4. 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. Examples of Automation in Services Wholesale and retail trade, 23.1%* F Dry cleaner’s conveyor V Point-of-sale electronic terminal F Newspaper dispenser I Self-serve grocery checkout V Automatic car wash T Automated distribution warehouse V Automatic window washers T Automated security systems V Optical supermarket T Telemarketing Utilities an government services, 17.9%* F Automated one-person garbage trucks I Airborne warning and control systems V Mail-sorting machine I Doppler radar V Optical mail scanner T Electric power-generating plants N IRS Form 1040EZ reader T Electric computer-originated mail

6. Examples of Automation in Services (cont.) Health care services, 7.6%* F Electronic beepers I Automated medication-delivery systems F Pacemakers I Electronic ambulance-dispatching systems V CAT and MRI scanners I Medical information systems V Fetal monitors Restaurants and food services, 6.0%* F Assembly-line and rotating-service V Automatic french fryer cafeterias F Vending machine

7. Examples of Automation in Services (cont.) Financial services, 4.9%* F Pneumatic delivery systems V MasterCard II --the electronic checkbook V Automated trust portfolio analysis E Stock trading V Automated teller machines T Electronic funds transfer systems V IBM 3890 encoded-check processor Transportation services, 4.9%* F Automatic tollbooth I France’s TGV trains I Air traffic control systems I Ship navigation systems I Autopilots T Space shuttle I Bay Area Rapid Transportation system Communication and electronic services, 2.2%* V Collating copying machines T Teleconference phone, Picturephone V Two-way cable television T Telephone switching systems P Telephone answering machines

8. Competitive Role of Information in Services Strategic Focus Competitive Use of Information On-line Off-line (Real time) (Analysis) Creation of barriers to entry: Data base asset: External Reservation system Selling information (Customer) Frequent user club Development of services Switching costs Micromarketing Revenue generation: Productivity enhancement: Internal Yield management Inventory status (Operations) Point of sale Data envelopment Expert systems analysis (DEA)

9. The Virtual Value Chain Stages in Physical Value Chain (Inbound logistics, Production process, Outbound logistics, Marketing/Sales) Market place vs Market space Creating New Markets Using Information (Gather, Organize, Select, Synthesize, and Distribute) Exploiting the Virtual Value Chain (Example of USAA).

10. Limits in the Use of Information Anticompetitive (Barrier to entry) Fairness (Yield mangement) Invasion of Privacy (Micro-marketing) Data Security (Medical records) Reliability (Credit report)

11. Mrs. Fields Strategic Use of Information Strategic Focus Competitive Use of Information On-line Off-line (Real time) (Analysis) Creation of barriers to entry: Data base asset: External (Customer) Revenue generation: Productivity enhancement: Internal (Operations)

12. Mrs. Fields Management Information System Advantages Disadvantages

13. Mrs. Fields Questions How might the MIS contribute to a reported 100% turnover of store managers? Will the MIS support or inhibit the growth of outlets (domestic and overseas)?