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SERVICE SECTOR

Shaping the Service sector

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Design and manufacturing of physical objects

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Innovations in the Industrial Economy

Major improvements in productivity and quality inphysically engineered systems

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Role of Technology in the Service Encounter

Technology Technology Technology

Technology Technology

Customer Customer Server Server

Server Server

Server

CustomerCustomer

Customer

D. Technology-Mediated

Service Encounter

E. Technology-Generated

Service Encounter

A. Technology-Free

Service Encounter

B. Technology-Assisted

Service Encounter

C. Technology-Facilitated

Service Encounter

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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

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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)

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Technology Convergence Enabling E-

Business

Internet

Global telephone system

Communications standard TCP/IP

(Transfer Control Protocol/InternetProtocol)

Addressing system of URLs

Personal computers and cable TV

Customer databases

Sound and graphics

User-friendly free browser

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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-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 Services

Features Electronic Traditional

Encounter Screen-to-face Face-to-face

Availability Anytime Working hours

Access From anywhere Travel to locationMarket Area Worldwide Local

Ambiance Electronicinterface

Physicalenvironment

Payment Credit card Cash or check

Differentiation Convenience Personalization

Privacy Anonymity Social interaction

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Economics of ScalabilityDimensions High Scalability Low

E-commerce

continuum

Selling

information

(E-service)

Selling value-

added service

Selling

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 support Online retailer

Example Firm Kbb.com Biztravel.com Everdream.com Amazon.com

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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

Managing the New Technology Adoption Process

Ten step process with concern for employees and

customers

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E-Business Supply Chain (Network)

Elements

Major entities including firm of interest and itscustomers, suppliers, and allies

Major flows of product, information, and money

Revenues and other benefits each participantreceives

Critical aspects: participants, relationships, and flows

Example: 7-Eleven Japan