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Lecture - 3 Service Delivery System

Strategic Positioning Through Process Structure

Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital. Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.

Structural Positioning of Healthcare Services

* Hospitals Services * General Practitioner * Forensic-Testing Lab * Diagnostic services only * Specialist: Treatment only LOW DIVERGENCE * Outpatient Clinic HIGH DIVERGENCE

* Retailer of Orthopedic Supplies


* Medical Counseling

Taxonomy of Service Processes

Low Divergence (Standardized Service) Processing of No customer contact Goods Dry Cleaning Information People Check processing Goods High Divergence (Customized Service) Information People Auto repair Computer Tailor programmin g, building design Air traffic control Operating Bagging of Documentin Using a an groceries g medical health elevator history club Mass Landscapin Counseling transporta g service tion systems Haircut Taxi service

Indirect customer contact No interaction (sefservice) Buying form vending machine

Internet purchase ATM transaction

Direct Customer contact

Customer- Food Class service service in a lectures worker restaurant interaction

Production-line Approach to Service Design

Limit Discretion of Personnel
Division of Labor Substitute Technology for People Standardize the Service

Customer Participation
Encourage Co-production by Customer Free air miles for Internet ticketing

Promote Demand Smoothing Half-price drinks before 6:00pm


Information Empowerment
Employees Relational Databases

Customers Internet Web Site

Physical Evidence and Presentation Must in Service Delivery Design

Place People Equipment Communication material Symbols Price

How to Increase Quality Control

Invest in good hiring and training procedures Standardize the service-performance process Monitor customer satisfaction

Matching Demand and Supply Care to be taken designing Service delivery mechanism
Demand side Differential pricing Nonpeak demand Complementary services Reservation systems Supply side Part-time employees Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion

Improving Service Quality

Listening Reliability Basic service Service design Recovery Surprising customers Fair play Teamwork Employee research Servant leadership


Solutions to Customer Failures

Redesign processes and redefine customer roles to simplify service encounters Incorporate the right technology to aid employees and customers Create high-performance customers by enhancing their role clarity, motivation, and ability Encourage customer citizenship where customers help customers

Factors Leading to Customer Switching Behavior Service Delivery Failure symptoms Pricing Inconvenience Core Service Failure Service Encounter Failures Response to Service Failure Competition Ethical Problems Involuntary Switching


Gaps that Cause Unsuccessful Service Delivery

Gap between consumer expectation and management perception Gap between management perception and servicequality specifications Gap between service-quality specifications and service delivery Gap between service delivery and external communications Gap between perceived service and expected service

Customer Contact View of Services

Degree of Customer Contact Influences Potential Efficiency of Service Separate High- and Low-Contact Operations
Consider Sales Opportunity and Production Efficiency Tradeoff

Service Delivery Strategies

Strategy In-sourcing Out-sourcing Co-Sourcing Knowledge Process Outsourcing (domain-based business expertise) Application Outsourcing All parts internal External resources for specific and defined areas (e.g. Contract cleaners) Mixture of internal and external resources Outsourcing of particular processes, with additional expertise from provider External hosting on shared computers applications on demand (e.g. Survey Monkey, Meet-o-matic) Outsourcing of specific processes e.g. HR, Library Circulation, Payroll Sharing service provision over the lifecycle with two or more organisations (e.g. Shared IT 16 Corpus/Oriel) Features

Business Process Outsourcing Partnership/Multi-sourcing

The Service Lifecycle

Service Strategy
Strategy generation Financial management Service portfolio management Service Operation Demand management Problem & Incident management Service Design Request fulfilment Capacity, Availability, Info Event & Access management Security Management Service level & Supplier Continual Service Management Improvement Service Transition Service measurement & reporting Planning & Support 7-step improvement process Release & Deployment 17
Asset & Config management Change management Knowledge Management

Service Strategy
What are we going to provide? Can we afford it? Can we provide enough of it? How do we gain competitive advantage? Perspective
Vision, mission and strategic goals

Position Plan Pattern

Must fit organisational culture

Service Strategy has four activities

Define the Market Develop the Offerings Develop Strategic Assets

Prepare for Execution


Service Portfolio Management

Prioritises and manages investments and resource allocation Proposed services are properly assessed
Business Case

Existing Services Assessed. Outcomes:

Replace Rationalise Renew Retire

Demand Management
Ensures we dont waste money with excess capacity Ensures we have enough capacity to meet demand at agreed quality Patterns of Business Activity to be considered
E.g. Economy & electricity, Congestion Charging


Service Design
How are we going to provide it? How are we going to build it? How are we going to test it? How are we going to deploy it?
Holistic approach to determine the impact of change introduction on the existing services and management processes

Processes in Service Design

Availability Management Capacity Management Supplier Management Service Level Management Information Security Management Service Catalogue Management

Service Level Management Key area in Delivery System Design

Service Level Agreement (SLA)
Operational Level Agreements

Underpinning Contracts
External Organisation Supplier Management

Can be an annexe to a contract Should be clear and fair and written in easy-to-understand, unambiguous language

Success of SLM (KPIs)

How many services have SLAs? How does the number of breaches of SLA change over time (we hope it reduces!)?

Things you might find in an SLA

Service Description Incident Response times Customer Responsibilities Hours of operation Resolution times Critical operational periods User Response times Availability & Continuity targets Change Response Times

Types of SLA
All customers get same deal for same services

Different customers get different deal (and different cost)

These involve corporate, customer and service levels and avoid repetition

Right Capacity, Right Time, Right Cost!

This is capacity management Balances Cost against Capacity so minimises costs while maintaining quality of service