Technology in Service

Learning Objectives 

Discuss the of technology in the service encounter. Describe the emergence of self-service. Place an example of service automation in its proper category. Describe different Internet business models. Understand the importance of scalability to ecommerce success. Discuss the managerial issues associated with the adoption of new technology.

Role of Technology in the Service Encounter










A. Technology-Free Service Encounter

B. Technology-Assisted Service Encounter

C. Technology-Facilitated Service Encounter







D. Technology-Mediated Service Encounter

E. Technology-Generated Service Encounter

Evolution of Self-service
Service Industry Human Contact Machine Assisted Service Electronic Service Banking Teller ATM Online banking


Checkout clerk

Self-checkout station

Online order/ pickup


Ticket agent

Check-in kiosk

Print boarding pass

Restaurants Movie theater

Wait person

Vending machine

Online order/ delivery

Ticket sale

Kiosk ticketing


Book store

Information clerk

Stock-availability terminal

Online shopping



Computer tutorial

Distance learning


Poker dealer

Computer poker

Online poker

Self-service Technologies (SST) 

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?

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

Purpose of Web-site 

A retail channel ( Supplemental channel (Barnes & Nobel) Technical support (Dell Computer) Embellish existing service (HBS Press) Order processing (Delta Airline) Convey information (Kelly Blue Book) Organization membership ( Games (

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

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: Whole-of-Enterprise: Government

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

Electronic and Traditional Services
Features Electronic Traditional

Enc il

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F c -t -f c rking rs

cc ss rket rea iance ayment ifferentiati n rivacy

nywhere rl wi e


el t l c ti n cal

Electr nic interface redit card nvenience nonymity

hysical envir nment ash r check ers nalizati n ocial interaction

Grocery Shopping Comparison
On-line Shopping Convenience Saves time Less impulse buying Disadvantages Forget items Less control Need computer Delivery fee Advantages Tr itional Shopping See new items Memory trigger Product sampling Social interaction Time consuming Waiting lines Carry groceries Impulse buying

Economics of Scalability
E-commerce continuum

Selling information (E-service) Information dominates Self-service

Selling valueadded service Selling services with goods Goods with support services Call center support

Selling goods (E-commerce)

Information vs. Goods Content Degree of Customer Content Standardization vs. Customization Shipping and Handling Costs

Information with some service Call center backup

Goods dominate

Call center order processing Fill individual orders

Mass distribution

Some personalization Mailing

Limited customization Shipping

Digital asset

Shipping, order fulfillment, and warehousing Returns possible

After-sales service


Answer questions

Remote maintenance

Example Service

Used car prices

Online travel agent

Computer support

Online retailer

Example Firm

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

Topics for Discussion
1. 2.

3. 4.

Can an Internet service encounter be a memorable experience? How does the economics of scalability explain the failure of, 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?

Interactive Exercise
The class breaks into small groups and each comes up with an Internet site that they believe will be successful in the long run and explain why.    

How would you contrast Amazon¶s business design with that of Barnes & Noble before Barnes & Noble went online? Why has not turned a profit yet and what needs to be done to achieve profitability? Will Amazon continue to be successful against ³click and mortar´ competitors, such as Barnes & Nobel, which go online? Is a model for the future of retailing?

Evolution of B2C E-Commerce in Japan

2. 3.


What features of the 7-Eleven Japan distribution system illustrate the ³Value Net Integrator´ e-business model? Does the 7-Eleven Japan distribution system exhibit scalability economics? How does the 7-Eleven example of B2C ecommerce in Japan illustrate the impact of culture on service system design? Will the 7-Eleven ³Konbini and Mobile´ system be adopted in the United States?

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