LECTURE - 3

TECHNOLOGY AND AUTOMATION

Learning objective

• To appreciate the role of technology and automation in

services
3.7 Technology in Services

Technology in different firms can be seen in various types as shown in Figure 3.14

Technology in companies or firms

Develop technology Utilize or implement Utilize technology which

technology for internal in turn contributes in
automation service encounter
FIGURE 3.14: TYPES OF TECHNOLOGY ADOPTED BY DIFFERENT
COMPANIES

Examples for Types of Technology in Services

 Service firms which develop technology

 Telephone companies

 Software developers

 Internet service providers

 Service firms utilize or implement technology for internal automation

 ERP connecting all functions of manufacturing industry

 Extranet & internet connecting all supply chain partners

 Specialized functions outsourcing: transactions, e- procurement

 Provide self- service technologies(SST) to clients like ATM, easy and

convenient to use blood pressure or diabetics related digital gadgets
  Technology that contributes in service encounter

 Same old service supplemented by technology

 Same old service automated

 Provide quick and accurate service to clients

 Provide customization and convenience

The motivation of developing or utilizing technology by companies is shown in

Figure 3.15.

FIGURE 3.15: MOTIVATION TO ADOPT TECHNOLOGY

3.8 Technology and Service Competitiveness

 A value chain in any organization is composite of primary activities and

supporting activities where each activity is required to initiate cost reduction
or differentiation strategies to create value collectively. Technology can act
as a perfect binder or glue which links all the activities or functional areas of
 any company and hence facilitate to generate more valuable service. Each
activity of any organization such as marketing, accounting, physical creation
of product, procurement, after sales service etc. has two components;
physical and information processing component. Information processing
component can leverage on evolving Information technology and intelligent
networks to enhance the value which transforms to competitiveness.

 Intelligent networks not only link computers within the organizations but
also help in networking with suppliers and customers. The employees can
share improvement activities among themselves and also with suppliers.

3.8.1 Forms of Technology In Services

Technology and automation are central requirements for service development for
most of the service organizations. Technology has completely revolutionized the
services and changed the way we live. For example radio taxi service and tracking
the location of courier or parcel.

The technology can be seen in various forms as mentioned below.

 Integrated technologies

 Integrated services

 Service on demand

 Networking technology

3.8.2 Integrated technology

 Coupled technologies like IT coupled with satellite tracking helps in making

decisions based on the availability of real time information.
  Radio taxi using satellite technology where each radio car is GPS installed
has become the preferred choice for commuters. It has very good integrated
and centralized booking system which helps in making the car available
within minutes to any preferred location of customer like MERU service in
Delhi.

3.8.3 Integrated services

 Technology allows distinct but related services to work together to create

many new possibilities. Now a days, smart card options are getting
popularized in many countries, where the same smart card can be used to
commute on various public transportation systems like bus, metros, railways
as well as buying limited credit of grocery at limited grocery outlets

3.8.4 Service on demand

 Customers can order the products by sitting at home or from anywhere using
various modes of technology like web, mobile.

 Customers can even get the delivery of the goods at home.

 There are many options to pay the bill through credit card, internet banking
and mobile banking

 By utilizing all the above options customers handles a greater control of the
service and its delivery.

3.8.5 Networking technology

 Intelligent networks comprised of links between computers and networks

have provided the option of connecting all the employees within
organization and connecting suppliers and customers
  These networks have facilitated information sharing and transmission of data
among all the entities connected through intelligent networks. Employees
can make informed decisions and avoid duplication of roles and efforts.

 It encourages knowledge management where a lot of repetition and

ambiguity in serving a customer can be avoided.

Technology in service example: 7-Eleven

7-Eleven is famous convenience store chains in Japan which remain 24 hours open.
Customers can order grocery through internet or using mobile with facility of
making payments at the store while getting delivery from stores. Customers can
order from home, office or while commuting from office. Customers generally take
the delivery at later date which gives the opportunity to 7-Eleven to stock less
inventory. This reduces the space related costs and inventory costs of 7-Eleven. At
the same time due to online ordering, 7-Eleven has added more items which need
not to be stocked for longer in the limited space of retail stores.

3.9 Modes in Which Technology act as Customer & Service

Provider Interface

Customer can contact service provider either face-to-face or face-to-screen where

technology plays different roles as shown in Figure 3.16 and 3.17.
 Custom Custom Custom

Technology Technology Technology

Service Service Service

provider provider provider

(a) Technology Free b) Technology c) Technology

service encounter assisted service facilitated service
encounter encounter

FIGURE 3.16: TECHNOLOGY IN FACE-TO-FACE CONTACT

Face To Face Contact: Examples

(a) Technology free service encounter

- High touch service like business consultant & client interaction

(b) Technology assisted service encounter

- Only service provider has access to the technology

- For example ultra-sound scan of patient

(c) Technology facilitated service encounter

- Both customer & service provider has access to same technology

- Life insurance planner gives consultation using computer or web based

insurance models
 FIGURE 3.17: FACE-TO-SCREEN CONTACT

Face To Screen Contact: Examples

(d) Technology mediated service encounter

- Customer calling service provider over telephone to book tickets

(e) Technology generated service encounter

- ATMs

3.9.1 Impact of Technology on Service Firms

 Productivity

 Introduction of Technology in services has reduced the labor as well

as operating cost tremendously. It can be widely observed in banking
sector where almost all operations are handled by the customers
themselves over internet. It has reduced the number of personnel
required in this sector.
  Offering new services

 Technology has given an opportunity to offer new services like web

based educational teaching and wider options of various software
related tools on cloud computing

 Reducing risks which can turn to be a costly event

 Installation of CCTVs and explosives detection devices at public

places like airports and railway station helps in avoiding risks of
attacks and infiltration.

 Control mechanisms

 Many operations can be controlled now by using Technology or

Information technology. The courier service companies provides an
opportunity to track the status of courier delivery. RFIDs have come
as blessing for many logistics and transportation service providers
which can track their vehicles for quick delivery of the orders.

 Widening the reach of distribution channel

 IT has helped to increase the market segment from the local or

regional reach to global reach. The online booking for hotels and
airlines can be done any where from the world

3.9.2 Role of Internet or IT or E-commerce

There is a dramatic shift in the way companies provide service over internet across
all industries as shown in Table 3.3.
 TABLE 3.3: TRADITIONAL SERVICE PROVIDED OVER INTERNET

Industry / Experience Traditional Way Internet / IT Application

Shopping Physical presence in the shop Online buying

Education Classroom Teaching E- learning

Online consultation using
Medical Physical visit to doctor
Video conferencing

3.9.3 Types of Internet Models Based on the Specialized

Facility as Intermediaries

1. Selling and buying products online

– Amazon, travel or movie tickets

2. Provider of same information through supplemental channel

- Add website to convey information on all products

3. Online technical support

– Dell and HP

4. Online entertainment or e-learning

– Online games

– Video lectures

5. e-markets or e- trade

– Online auctions

– Reverse auctions
 – Online buying & selling stocks

6. Communication/ transactions service using portals

– Email service news provider by Yahoo

– Document sharing by Google

3.9.4 Service Operations Related Challenges In Managing

Technology

 Investments in the right technology as well as future-proof technologies

 Reliable and up-to-date databases

 Reliable technology

 Capability to centralized the operations

 Capable and competent staff to handle technology related issues

 Trade-off between complete cut-off from personal touch with customer like
self-service technology and retaining some personal touch.

3.9.5 Economies of E-services

For a customer electronic services are just like face-to-face services which exhibit
simultaneity and intangibility. Along with other factors which makes the service
hetrogenous (discussed in module 1) in electronic services, different hardware and
network related capabilities makes the services more hetrogenous in terms of speed
and reliability of e-service. Managing electronic services is equally challenging for
service providers as shown in Figure 3.18. In e-services the revenues can be earned
in the form of transaction fees, information and advise and commission and
 advertising fees. Due to nature of services, it is difficult to quantify the benefits of
e-service.

Customer’s perspective Service provider’s perspective

 Speed of delivery  Cost of technology
 Reliability of information  Returns from technology
 Security

Very difficult to measure due to

intangibility of e-service but still can be
benefitted

For customers For server providers

 Choose right capability of  Capability of filing patents
modem & type of royalty & licensing revenues
connections

FIGURE 3.18: CHALLENGES IN QUANTIFYING BENEFITS OF E-

SERVICES