IT Service Operation
Customers nowadays are more aware and up-to-date than they were in the past. Therefore, they have become more demanding now. They expect high quality service enriched with supplementary services. They desire convenience and speed of delivery and that too at competitive prices.
In these days of globalisation, a customer moves across a country or the globe on official or personal work, but still expects his service provider to deliver the same quality service.
For example, he wants to use the same credit card for all his purchase and the same mobile phone service for all his communication needs across the world. However, it is not so easy for the service provider to maintain the same level and quality of service offered once the customer is physically away from the location of service providers.
Table of Content
- 1 IT Service Operation
- 2 How IT Transformed the Service Delivery
- 3 Limitations of Using Information Technology
- 4 Internet as a Service Enabler
- 5 Challenges in Adopting a New Technology in Services
- 6 Role of SMAC in Service Delivery
- 7 Role of Internet of Things (IOT) in Services
Information Technology (IT) has helped service providers to offer consistently high quality service to customers by keeping real-time track of customer data. The term ‘IT’ refers to the application of technology,such as computers and telecommunications equipment that store, recover, transmit and operate data or information.
This data is often used in the context of business. Apart from computers and computer networks, IT also consists of other information distribution technologies such as television and telephone networks.
The Information Technology Association of America has defined IT as “the study, design, development, application, implementation, support or management of computer-based information systems.”
In the service sector, IT helps organisations to formulate their competitive strategy by creating a market entry barrier for new competitors. A market entry barrier refers to obstacles that prevent new competitors toenter easily in an industry or business area.
Such entry barriers lead existing service organisations to sustain in the market. An effective entry barrier not only helps an organisation to appeal customers with a new service but also holds the customer’s interest for an enduring period.
The harder the service is to imitate, the higher the barrier for competitors to enter the market. For example, a financial service organisation may develop a complex software package to launch a unique and highly attractive financial product.
The organisation can use IT to add value to its products. The complexity of sophisticated software may leave competitors behind, giving the organisation valuable time to capture a premium market share.
IT has shifted the nature ofservices dramatically in recent years, and brought forth the concept of service innovation to help organisations in seizing opportunities and remaining in the competition. Service innovation involves methods that alter the way of serving customers to provide greater value to them.
Today, customers demand greater involvement, customisation, personalisation and flexibility from service with immediate results. As a result, organisations are becoming more customer-oriented and doing everything to satisfy the needs of customers.
IT has helped organisations in meeting with such higher customer expectations by keeping track ofdata related to customer needs and expectations. For example, IT has changed the way of contacting customers with the help of cutting-edge technologies, like self-service kiosks that can be seen easily at airline check-ins to the retailing and hospitality industries.
However, the competitiveness of these organisations depends on their skills to adapt to new IT measures and maximise their customer experience and resource performance.
As service innovation is closely related to service design and new service development, technological elements help in the application of better solutions that meet the new requirements, unarticulated needs or existing market needs. Thus, IT hastransformed the way of delivering greater value to customers and generating more revenue to the organisation.
How IT Transformed the Service Delivery
The following points explain how IT has transformed the scenario of service delivery in different areas:
- Mobile Internet has also transformed the way of service delivery. Entry of Uber and Ola in the taxi business is one prominent example that shows how IT is altering the ways of service delivery to customers and offering a competitive advantage to these service organisations.
In addition, advancement in digital payments is encouraging mobile commerce, with extensive inferences in financial services and retailing. IT, by increasing connectivity, acts like game changer to provide remote access and monitoring capability to service providers.
- With the advent of Big Data and advanced analytics, organisations, such as Amazon and Harrah’s are using customer data to personalise and tailor their services.
Continued advancement in analytic capabilities helps these organisations to draw insight from enormous, but previously untapped market, leading to identify new service possibilities. For example SATMAP is IT software that uses advanced analytics to improve services in call centres by matching callers to service agents with appropriate personalities.
This results in higher rates of customer satisfaction and serviceto-sales conversion. Organisations are using these advanced analytic tools to get ahead of their competitors.
- In addition, IT has also enabled service organisations in providing real-time service delivery with the help of the Internet of Things (IoT). IoT refers to a network of physical objects connected over the Internet using software, sensors, network connections, etc.
IoT facilitates the collection and exchange of data among these connected objects. For example, Nest (recently acquired by Google) uses Machine-to-Machine (M2M) connectivity to link its smart thermostats to other home devices, such as washing machines and fitness bands.
This helps in positioning the organisation as a network hub in a digitally connected home. You will study about IoT in detail in the later section of this chapter.
Here, it should be noted that services, like products, have a shelf life. With ever-changing demand and service expectations, IT constantly brings new possibilities to service organisations.
Service providers, therefore, should periodically examine and refresh services they produce. IT can help these organisations to develop and refine their service offerings systematically to get a competitive edge.
Limitations of Using Information Technology
You studied how IT is playing a competitive role in the service sector by changing the ways of doing business. Though IT offers a number of benefits, it also brings certain disadvantages, which are:
- High implementation cost: Implementation of IT system is not a low-cost affair. This is because, in addition to the cost of hardware and software, some technology vendors require businesses to purchase a user license to operate the system.
This increases the cost of operating a business. Every business, while implementing any kind of IT system, must consider start-up expenses, such as cost of training employees with unfamiliar technology. In addition to the start-up expenses, IT systems are expensive to maintain.
For example, businesses need to hire skilled technicians to handle systems malfunction. These expenses present major limitations in the use of ITin business.
- Job elimination: Implementation of IT into business operations helps in saving a great deal of time. Though businesses view this convenience as a boon, there are certain untoward effects also.
Technology eliminates the need for human employees to a large extent. For example, automated telephone answering machines have replaced live receptionists in many organisations.
- Security breaches: This is another major limitation of using IT in businesses. Through IT, information can be stored in an electronic database to facilitate quicker and more efficient communication.
Thus, with the touch of a button, information can be easily recovered in notime. This may sometimes presents issues, vulnerable to security breaches, mainly when they are accessible via the Internet. If appropriate measures are not taken, unauthorised individuals may misuse confidential data.
Internet as a Service Enabler
The Internet is the worldwide, publicly accessible system of interconnected computer networks that use the Internet Protocol Suite (TCP/ IP) to link devices globally. It is a ‘network of networks’ that involves millions of private, public, academic, business and government networks.
These networks are linked by a broad array of electronic, wireless and optical networking technologies. They carry a huge amount of data, such as online chat, electronic mails, streaming media, file transfer, voice-over-IP (VoIP) and provide an access to the World Wide Web (www). Thus, you can define the Internet as a world-wide communication network of computers.
The Internet works as a connecting tool that links a service provider to its customers in the most cost-efficient manner. It enables a service provider to connect with its customers through a desktop computer/ laptop/tablet with Internet access using phone, cable or satellite. In addition, the advent of modern wireless communications and Web2.0 social networking (Facebook, Twitter, Linkedin and YouTube, etc.) are presenting new opportunities for service providers to connect with their existing customers and find new ones in an effective way.
In today’s competitive environment, service providers, instead of waiting for a customer to make an enquiry, are trying to push information to customers with the help of the Internet. There are certain communication-based technologies like General Packet Radio Service (GPRS) (packet oriented mobile data service on the 2Gand 3Gcellular communication system) that helps in delivering data directly to handsets.
Modern handsets like iPhone get instant messages or alerts, such as ‘a KFC store is just around the corner’, ‘your flight has been delayed’, etc. through GPRS. Many organisations use the Internet to convey information about the organisation. For example, kbb.com provides information for people interested in buying cars.
There are various service organisations that are using the Internet for solving different purposes of their business. They use the Internet to communicate not only with customers, but also with employees and suppliers. Organisations like Amazon.com and Newegg.com do not have physical stores and rely completely on the Internet to sell their products. Thus, for such organisations, the Internet works as a channel to sell a product or service.
There are certain service organisations, like chegg.com and Barnes & Noble that use the Internet to provide online textbooks (on rent), homework help, online tutoring, scholarships and internship to students.
The Internet is also used by organisations to provide technical support and offer after-sales services to customers to solve their common problems. For example, a customer can find the answer of how to set up a new computer on the Dell Computer Website www.dell.com. The Internet also helps in embellishing existing services. For example, Harvard Business School Press uses the Internet to distribute business cases that faculty can review prior to adoption. In addition, the Internet is used byorganisations to process customer’s orders conveniently.
For example, airlines use the Internet to allow customers to order electronic tickets. This service removes the role of travel agents from the airline’s distribution channel and thus, saves the total cost of the airline.
Challenges in Adopting a New Technology in Services
Technologies help an organisation in capturing and gaining access to new markets and customers. However, the capability of adopting new technologies in itself is one of the biggest challenges that organisations face.
In order to achieve organisational goals, service providers often carry out complex integration of new technologies that can consume valuable time and resources. Thus, organisations need to increase their capabilities before embracing new technologies.
Apart from the challenge of increasing the technological capability, an organisation faces various other challenges while adopting new technologies.
Customer’s Readiness to Embrace New Technology
For any service organisation, the ‘process’ of delivering services is vital as it involves direct participation of customers. Thus, the success of technological innovation in any process depends largely on customer’s acceptance.
For a service organisation, adoption of new technology is not enough as customers directly participate in the service delivery process. If the customer does not accept the technology or find the technology difficult enough to understand, the whole process of delivering service would fail.
Thus, the biggest challenge of adopting new technology in the service sector is customer’s readiness to adapt to new technology or learn new skills.
Employee’s Enthusiasm to Learn New Technology
Apart from customers, employees are also affected by new technology and often require training. A poorly trained employee would fail to use new technology appropriately, which would negatively affect the service delivery process.
Service Innovation That Does Not Directly Affect Customers
Sometimes organisations waver in adopting technologies that do not directly affect customers. There are certain back-office processes, like use of magnetic-ink-character recognition equipment in banking that donotaffect the customer at all.
However, they can make the end process more reliable. For example, the use of magnetic-ink-character recognition equipment in banking can make the check-clearing process more productive.
Many a time, service organisations ignore the need of applying such technologies as they consider them as a cost-increasing factor. This limits the effectiveness of the entire service delivery process.
Quick Imitation by Competitors
Imitation of technology also presents a bigchallenge in front ofservice providers. This hampers the implementation of innovative technologies in services. As innovation and technology can be imitated freely and quickly by competitors, the prospective rewards for innovation are diminished.
Lack of Budget
It is another factor that affects the adoption of technology, especially in smaller organisations. Budget limitations acts as a constraint to small business technology adoption.
However, unavailability of funds is not the only issue; organisations sometimes find it difficult to bear the cost of new technology when the return on that investment depends profoundly on user adoption. Usually, low adoption results in the elimination of many technology projects.
Lack of Leadership Support
It is another common obstacle when it comes to the adoption of a new technology. Usually, the adoption of a new technology involves the implementation of new processes. It is therefore, the responsibility of leaders to support and motivate employees to adapt to new processes.
When a leader endorses technological innovation, motivates flexible behaviour and encourages process changes by providing appropriate training, it becomes easier for employees to adapt to the new technology.
Role of SMAC in Service Delivery
SMAC (Social, Mobility, Analytics and Cloud) is a concept that unites four technologies social media, mobility, analytics and cloud to develop an ecosystem where businesses can increase their operational performance and maximise their customer reach with minimal cost.
Social media has provided organisations with new ways to reach and interact with customers. Mobile technologies have transformed the way people communicate, buy and work. Analytics helps organisations in understanding the consumption pattern of customers for certain products/services.
On the other hand, cloud computing provides an innovative way to organisations to access technology and data required for responding swiftly to changing markets and complex business problems. Though, these four technologies can impact an organisation individually, their convergence is creating an entirely new business model for service providers.
Netflix, a media company, is often cited as an example for successfully harnessing the power of SMAC. For example, when a member of Netflix streams a TVshow from the Netflix cloud to their mobile phones, laptop or tablet, they require sign-in into Netflix with Facebook’s social login.
After watching the show, the viewer is given multiple options to provide feedback on the social media. The viewer can rate the show with stars, write reviews or just share their experience on Facebook or Twitter.
The customer data is stored in the cloud and Netflix can use it to analyse customer’s preferences for different shows. Based on data, Netflix’s recommendation engine can generate customised suggestions for individual family members who share the same account.
Thus, the convergence of social, mobile, analytics and cloud technologies presents the scope for generating new ideas regarding workflows, methodologies, services and products. In other words, SMAC works as a comprehensive tool to provide a holistic solution for business innovation. This will further provide an opportunity to increase organisational productivity.
Industry experts envisage that the convergence of SMAC will help in driving customer, businesses and technology organisations together and will become the leading disruptor to the business-technology ecosystem over the next few years.
According to Nasscom’s Strategic Review report, 2014, “The Indian software industry’s exports may grow by about 13% in fiscal year 2014 to $87 billion (around 5.4trillion today), driven by its ability to offer solutions that integrate new business models such as analytics and cloud-based services, which are part of SMAC (cloud, mobile, analytics, bigdata and social media services) with traditional ones.”
Implementation of SMAC in any organisation focuses on three fundamental changes, which are:
- Focusing on to create more digitalised business ecosystem. Digitalisation helps in combining digital and physical resources within and outside of an organisation. This integrates technologies and human talent in innovative waysto achieve operational excellence.
- Developing a digital operating model that could integrate with expanding digital ecosystems. Such a model will enable organisations to gain a competitive advantage in terms of scale, pace, agility and closeness to their customers.
- Adjusting business architecture to allow easy digital connection with customers and stakeholders. This helps in deriving business value.
SMAC is the future enterprise technology as it redefines the existing technological solutions by delivering a holistic service supported by the fusion of multiple technology enablers and entrepreneurial approaches. Let us discuss about these four technologies in detail:
Usage ofsocial media is no more than just a fashion. It has turned out to be one of the most important tools for enhancing business performance. Organisations are using social media in shaping customers’ behaviour as well as decisions.
The accessibility of social media has grown tremendously as people now take help of social media to get advice on what products/services to buy, where to shop, etc. Therefore, social media is offering vast scope for customer engagement and brand building.
There are several organisations that use social media for sales, marketing and customer service. This enables them to use the data generated by customers to further serve the bigger clusters of customers. Also, social media encourages a rapid exchange of collaborative information which can further increase business marketing results.
Today, mobile devices have transformed the way people used to access digital content. The enormous upsurge in the adoption of smart mobile devices has been so promising that it resulted in the inception of a new stream of business, called m-commerce (mobile commerce).
With the use of smartphones and tablets, digital content has got an easy accessibility by consumers. Today, users can get any digital data at any point of time without having to be stationed at a fixed location.
Mobile banking has been proved an immensely beneficial and innovative product in the financial services industry. Customers, with the help of these devices, not only buy products/services but also carry out pre-buying activities like browsing and product/service comparisons. Thus, youcan say that mobile devices are becoming an efficient channel between sellers and customers.
Every year, organisations generate billions of gigabytes of data, which if effectively analysed and utilised, can prove to be an extremely valuable asset for an organisation.
This data can be later used by the organisation as a competitive tool by predicting accurate buying patterns of customers. An organisation usually collects various types of data from different sources.
These data types and their sources are explained as follows:
- Internet data collected from social media, social networking links
- Primary research data collected from surveys, experiments, observations, etc.
- Secondary research data collected basically from industry reports, consumer data and other business data
- Location data composed from mobile devices
- Image data collected from video,satellites, surveillance, etc.
- Supply chain data, such as vendor catalogues and pricing, quality information, etc. collected from vendor, distributers, suppliers, etc.
Analytics is used by organisations to drive growth, reduce cost, improve operational excellence and transform business strategies.
Cloud computing has emerged as one of the most effective techniques of storing, collaborating and sharing data. It is vastly adopted by organisations for fostering innovation and improvising productivity. Cloud computing enables multiple users to participate in the process at the same time, thereby ensuring transparency and speed.
Further, this technique is cost effective, swift and less capital intensive. After Amazon WebServices launched a suite of cloud-based services in 2002, there has been a noticeable increase in the number of cloud service providers, who are offering various solutions for different layers of technology ecosystem.
Usually, three major channels namely: public cloud, private cloud and hybrid cloud are used to provide cloud computing services. Among these channels, public cloud services own the largest space in the total market due to their easy accessibility and low adoption cost.
Thus, you can say that Social Media, Mobility, Analytics and Cloud (SMAC) are the four pillars that support business innovation across an organisation.
Social media allows businesses to reach their customers at any place and at any time as most customers use mobile technologies to communicate, search and buy products/services.
Behind all this social media communication, there is a careful strategy by organisations to understand customer’s experience and preferences with the help of data analytics and cloud computing software.
This ultimately enables an organisation to:
- customise content as per the needs ofits customers
- nurture and facilitate innovation
- increase velocity of processes
- involve in faster and informed decision making
- adapt to business environment changes
- simplify business conducting processes
- take less time to deliver (concept to market)
Role of Internet of Things (IOT) in Services
The Internet of Things (IoT) refers to a system of connected computing devices, mechanical and digital machines or objects that are embedded with electronics, software, sensors, actuators and network connectivity to enable these objects collect and exchange data. In other words, IoT uses sensors, actuators and communication technology embedded into physical objects to keep track and control of these objects over networks like the Internet.
The usage of these devices involves three main steps, which are:
- Capturing data using sensors
- Collecting data over the network
- Making a decision based on analysis of the data. This decision making can further help in improving productivity of current processes.
Capturing data using sensors 2. Collecting data over the network 3. Making a decision based on analysis of the data. This decision making can further help in improving productivity of current processes. IP address and embedded with software, sensors, etc. to transfer data over the Internet. The concept of IoT has been given by Kevin Ashton, cofounder and executive director of the Auto-ID Center at MIT.
Ashton introduced the term in a presentation, made to Procter & Gamble in 1999. He explained the potential of the IoT as:
- Today computers – and, therefore, the Internet – are almost wholly dependent on human beings for information. Nearly all of the roughly 50 petabytes (a petabyte is 1,024 terabytes) of data available on the Internet were first captured and created by human beings by typing, pressing a record button, taking a digital picture or scanning a bar code.
- The problem is, people have limited time, attention and accuracy – all of which means they are not very good at capturing data about things in the real world.
If we had computers that knew everything there was to know about things – using data they gathered without any help from us – we would be able to track and count everything and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling and whether they were fresh or past their best.
IoT has evolved from the merging of wireless technologies, Micro-electromechanical Systems (MEMS), micro services and the Internet. The basic architecture of an IoT system consists of smart devices, an embedded system such as a microcontroller with network connectivity capability, and a gateway/local network, all connected through the Internet.
IoT considers that objects of everyday life, such as roadways, cars, pacemakers, fitness bands, smart billboards, refrigerators, air-conditioners or even pets can be equipped with sensors that can track useful information about these objects or things.
If these objects have a unique IP address and are connected with the Internet, the information can be shared with equipment, powered by analytics to generate automated and personalised responses that do not require human intervention.
Thus, IoT presents a concept where allsmart thingsin the world are connected to each other and communicate with each other with no or minimum human intervention. The goal of IoT is to create a better connected world with the help of smart objects, providing services which are real-time, inexpensive and non-intrusive.
IoT tends to revolutionise the approach to service management as everything connected to the Internet requires process and technology support, which ultimately brings the need of service management. IoT can help service organisations to innovate and improve their business model, reduce costs and risks and improve the overall value of services they deliver and support.
Also, IoT can speed up and increase the capabilities of service providers in creating and maintaining valuable automated processes that could eventually enhance and transform the overall service delivery system.
Take an example of an organisation where one of their computer devices is not working appropriately. In such a case, IoT would use sensors embedded within the device to flag the problem automatically. The service desk would get the notification and solve the problem even before the user logon the computer.
Today, a number ofservice organisations, dealing in healthcare, retail, sports and fitness, safety and security markets, are investing in sensor-enabled devices that connect to the Internet.
The IoT with its numerous sensors embedded in devices collects and analyses data that can beused to understand human behaviour and improve technology, health services, products, customer service and service management. IoT is changing traditional behaviour and business models all around the world.
Service providers are embracing new ways to improve service management capabilities by increasing focus on delivering valuable design services with customer value and business outcomes in mind.
IoT by offering support in better service delivery manages user experience and overall user engagement. Thus, it helps service providers in keeping their promise of delivering the best services to customers.