Technology Impact on Service

What is Technology?

Technology is the making, modification, usage, and knowledge of tools, machines, techniques, crafts,
systems, and methods of organization, in order to solve a problem, improve a pre-existing solution to
a problem, achieve a goal, handle an applied input/output relation or perform a specific function. It
can also refer to the collection of such tools, including machinery, modifications, arrangements and
procedures.

What is the Service Segment?

It is generally considered to embrace all those Standard Industrial Classification categories in which
(Collier 1983, Mark 1982):

1. The primary output is not product or construction.

2. Value is added principally by other means (such as convenience, amusement, feelings of well-
being, improved knowledge, security, health, comfort location availability, or flexibility) that
cannot be inventoried.
3. Outputs are essentially consumed when produced.

 Examples of service segments that’s affected by technology

o Automotive Industry
o Information Technology
o Consulting
o Banking
o Railways
o Media
o Communications and Networks

Technological effects on service

• Time saving
• More Efficient
• Unlimited Connectivity
• Transfer of goods and data with ease
• Reaching all areas (Anywhere, Anytime & Anyplace)
• Increased Safety
• Cost reduction
Technology in the Service Encounter (Fitzsimmons, Bordoloi, Service Management)

Advances in communications and information technology are having a profound effect on ways
customers’ interface with service providers. For example, the internet and airport kiosks have
changed the expectations and behavior of airline passengers. Customers no longer need to wait on
hold to reach a reservation clerk or wait in line at the airline counter to receive a boarding pass.
These trivial face-to-face interactions have been replaced with technology.

a. Technology-free service encounter: Where the customer is in physical proximity to and

interacts with a human service provider. This mode represents the traditional high-touch
service in which technology does not play a direct role.
b. Technology-assisted service encounter: Only the service provider has access to the
technology to facilitate the delivery of face-to face service.
c. Technology-facilitated service encounter: Both the customer and service provider have access
to the same technology.
d. Technology-mediated service encounter: The customer and human service provider are not
co-located physically and, thus, the service encounter no longer is traditional “face-to-face”
contact. Communications usually is enabled by voice telephone call to access services.
e. Technology-generated service encounter: The human service provider is replaced entirely
with technology that allows the customer to self-service. This mode is becoming more
common as organizations attempt to reduce the cost of providing service. Self-Service
Technologies (SST) are technological interfaces that enable customers to produce a service
independent of direct service employee involvement.

Technology in Service Innovation (Fitzsimmons, Bordoloi Service Management)

Innovation is a destroyer of tradition: thus, careful planning is required to ensure success. The
productivity benefits of new technology will change the nature of work. Any introduction of new
technology should include employee familiarization to prepare workers for new tasks and to provide
input into the technology interface design. For services, the customer’s play in the service delivery
process could be required. Customer reaction to the new technology also provides input into the
design to avoid future problems of acceptance.

 Challenges of Adopting New Technology in Services

For services “the process is the product „ because customers participate directly in the
service delivery, therefore, the success of technology innovations depends on customer
acceptance. The impact on customers is not always limited to a loss of personal attention,
customers also might need to learn new skills, or they might have to forgo some benefit. The
contribution of customers as active participants or co-producers in the service process must
be considered when making changes in the service delivery system.

 Readiness to Embrace New Technology

Technology readiness refers to a person’s propensity to embrace and use new technologies
for accomplishing goals in his or her life at home or at work. Research on people’s reactions
to technology identified eight technology-related paradoxes:
 • Control/Chaos
• Freedom/enslavement
• New/obsolete
• Competence/incompetence
• Efficiency/inefficiency
• Fulfills/creates needs
• Assimilation/isolation
• Engaging/disengaging

These paradoxes imply that technology can trigger both positive and negative feelings.

Managers face challenges when introducing new technology:

• What is the overall level of readiness of the customer base affected by the new
technology-based service?
• Understanding the technology readiness of employees is important for making the right
choices in the terms of designing, implementing and managing the employee interface.

Employees who rate highly on both interpersonal skills and technology readiness are likely to
be good candidates for tech-supporting roles.

Managing Service Innovation (Introduction to Service Engineering, Salvendy & Karwowski)

Service innovation is a growing are of interest to academics, industry, government and non-profit
organizations alike. The growth in the service sector has seen the service industry expand to a point
where it has become the dominant industry in many countries (Paton & McLauglin, 2008). Therefore,
organizations can no longer ignore service innovations, or simply assume it follows the same pattern
as product innovation has traditionally followed within the manufacturing industries (Miles, 1999).

 Types of Innovations

Innovation can be broken down into four basic types, 4P’s of innovation (Francis and Bessant, 2005)

• Product innovation: changes to products or services that are provided by an organization

• Process innovation: Changes to the manner in which the products or services are
delivered to the customer.
• Position innovation: Changes in context in which the products or services are introduced
• Paradigm innovation: Changes to the mental model used by the organization in
developing the business.

 Managing Innovation in Services

Within the modern service organization, for process innovation to flourish, the most
important factor differentiating successful from unsuccessful innovation has been the degree
of collaboration between those responsible for product development and those responsible
for service delivery (Rothwell, 1992).
 However, there are difficulties in rebalancing how an organization tries to simulate the 4P’s
of innovation, because it’s very much based on tacit-to-tacit knowledge exchange (Nonaka et al.,
2003).

Organizations must find ways of stimulating the way employees think about how they work,
how they can improve their work processes, and how they can support the customers’ needs
in a manner that creates value for both the business and the customer (McLaughlin and Paton, 2008).
Broadly speaking, this requires the organization to consider the following aspects when
trying to build an innovative culture.

• Motivating employees
• Capturing innovative ideas
• Modifying work practices
• Stimulating cross-boundary innovation

New Service Development (The NSD process cycle, adapted from Johnson, 2000)

Ideas for new service innovations can originate from many sources. Customers can offer suggestions.
Frontline employees can be trained to listen to customers’ concerns. Customer databases can be
mined for possible service extensions. Trends in customer demographics can suggest new services
and new advances in technology.

In the development stage of a new service, new ideas are screened, and winning concepts are
developed and tested for feasibility. Concepts that pass the development hurdle are then considered
in the “analysis” stage to determine their potential as a part of a profitable business venture. After
project authorization, successful concepts move to the “design” phase. Considerable time and money
are expended in design to create a new service product and process that can be field tested with
appropriate personnel training a “full launch” that could be available nation- or worldwide.
The NSD process is driven by enablers: teams that are cross-functional, tools such as spreadsheets,
and an organization context that includes a culture of accepting innovation. The people component
consists of both employees and customers. Employees must be recruited, trained, and empowered
to deliver service excellence embodied in the product. The role of the customer needs to be defined
with appropriate motivation to foster the desired behavior. Notice in both cases the need for
systems to accomplish the required tasks. Some systems are found in the back office to assist
customer facing employees in service delivery. Others are found in the front office which interfaces
directly with the customer. Technological advances often are the basis for service innovation. Thus
the organization must include technology monitoring as an activity to protect its competitive
position.

High impact technologies (Future Service Management, 2009 Böhmann, Turel, Bremerich)

• Remote services & remote monitoring

• Tracking & tracing
• Mobile ICT technologies
• Automation of service delivery and system administration
• Service-oriented architectures
• Internet-based customer integration
• Service platforms
• Data mining for diagnostics and decision support

The role of remote services is emphasized in many measurements and thus the underlying
technologies are a force for changing service business models and service delivery systems. Tracking
and tracing technology close important gaps in the information chain about material components or
can be used to redesign service interactions. They can provide more and better data that can enable
the design of new services or the improvement of existing ones. The same holds for mobile ICT
technologies that particularly serve dispersed service organizations delivering on-site professional or
technical services.

However, may be the expected impact of Web2.0 technologies for customer interaction and
integration on the internet. New ways of communicating and collaborating offer opportunities to
redesign services, in particular customer support. By the same token, the same technologies give the
voice of the customer an even greater weight as community-based design of products and services,
or user-generated support services raise new requirements for product and service suppliers. It is
notable that the growing infusion of IT into products now gives rise to new opportunities for creating
service demand, Machine-to-machine service sales.

Likewise, there is a close relationship between new service development and an organization’s IT
infrastructure. The implementation of many services now require changes in enterprise IT systems to
support service processes or even in the embedded IT systems. Thus new and more flexible IT
architectures can act as a strong facilitator for service innovation. Closely related, new and open IT
platforms may facilitate the implementation of cross-organizational service process, potentially
leading to new service ecosystems populated by suppliers, intermediaries and consumers of services
whose interaction are facilitated by new web-service technologies.