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The IT Revolution

Based upon the ability of the computer to tirelessly acquire, store and process data, the initial view of the computer industry was that IT offered the greatest benefits for productivity enhancement within service firms and potentially the creation of new service propositions. This expectation however was not followed by actual events and although service firms embraced IT for most of the twentieth century this move was not accompanied by any significant improvement in service firm productivity or the launch of any radically new products.

This situation underwent fundamental change, however, following the advent of the Internet. The potential of instant access to information and the ability to order products and services online on a 24/7 basis from any location totally changed the nature and future opportunities in virtually every service industry sector. More recently the advent of mobile technology such as the smartphone has further altered and in some cases completely changed the dynamics and nature of supplier-customer interaction within service markets (Weinberg 2001).

Tyson (1998) posited that the key reason why IT was unable to deliver the previously promised technological advances prior to the arrival of the Internet was that the scale of benefits of computers and related technology required certain technological advances necessary for the world to enter the ‘Intelligence Age’. His definition of the nature of required technological advances included:

1. The convergence of electronic devices such as computers, telephones

and televisions to permit all of these to be linked via the Internet.

  • 2. Faster download speeds and the ability to link data acquisition systems such as remote sensors to send data via the Internet without the need for hardwired connections.
  • 3. Access to significantly larger lower cost data storage and analysis capability which is now available following the arrival of cloud computing.
  • 4. More sophisticated data analysis through access to low-cost advanced statistical analysis software of the type used in automated Customer Relationship Management systems.
  • 5- The automation of decision making within organisations by exploiting advances in Artificial Intelligence (AI) systems.

Wright and Dawood (2009) noted that it was not until the twenty- first century that the necessary advances were in place across computing, electronic communications and exploitation of the Internet to permit the implementation of Tyson’s Intelligence Age. This new era, which has been labelled by some as the ‘Smart Age’ (Anon. 2010), offers new opportunities to those service firms with core competences in the area of acquiring and analysing very large data sets thereby permitting exploitation of smart age technology for creating a competitive advantage based upon a superior understanding of customer needs.

The arrival of the Smart Age means service organisations seeking to enhance performance need to determine whether they have, or need to develop, internal competences capable of exploiting the new sources of opportunity to enhance product or service provision affordability. One source of opportunity is from acquiring real-time data about customers which permits rapid identification about how new or improved products or services can be made available and also supports more accurate customer targeting. The second opportunity involves those smart products which offer new services to customers while concurrently sustaining performance of existing products. The third opportunity is service organisations’ ability to access real-time data about all aspects of internal organisational processes. This assists the rapid identification of ways in which processes might be improved and provides early warning of new performance problems before these have an adverse impact.

The potential outcome of greater reliance upon smart technology often is the ability to replace humans with some form of non-human system capable of acquiring, processing and analysing data. In relation to the exploitation of smart technology the outcome can be of the following types:

  • 1. Tangible applications, where the technology is used to enhance the customer’s service experience through either improving performance or reducing costs.
  • 2. Information applications, where the technology is used to enhance information available to the user.
  • 3. Layeredapplications, where the technology is used to direct the user to another knowledge source or to assist in supporting a superior purchase outcome.

In order to exploit advances in technology to evolving new paradigms for delivering services, enhancing customer satisfaction or improving productivity, service firms must comprehend the nature of the latest advances in digital technologies and how these can provide the basis for implementing fundamental organisational change. The problem facing many service operations, especially those in more mature industries such as retailing or banking and also within the public sector, is that the senior management may lack sufficient technological knowledge to determine whether the latest advances can deliver the cost/benefit outcomes that are being claimed (Waters 2013). It is for this reason that the start point in seeking to determine how new technology may impact a future service strategy should be based around assessing the role of people in the delivery of processes. Options available could include:

  • 1. Totally or partially removing people by a move to service provision automation.
  • 2. Simplifying people tasks to permit the employment of lower-skilled, lower-cost staff.
  • 3. Utilising fewer, more highly skilled staff to fulfil more-complex roles, whilst automating less-complex tasks.
  • 4. Acting as an intermediary by utilising mobile technology to link customers with a pool of freelance service providers.

The rapid pace technological change which is occurring in relation to the Internet and mobile communications in terms of the impact on the nature of services offered and the processes associated with service delivery does mean that identifying and sustaining a competitive advantage in today’s online world is becoming increasingly complex. Those organisations which still rely upon process models and systems evolved in the terrestrial world during the second half of the twentieth century should expect increasing problems in countering the activities of pure play and mixed play service providers. It can also be predicted that the Internet and associated mobile technologies will become the dominant platform through which to deliver an increasingly large number of new and improved services in both private and public sector organisations (Zoric and Braek 2011).

On-Demand Service Companies

Case Aims: To illustrate how the smartphone is changing service provision markets

The traditional company model is that of undertaking activities internally when this is cheaper than buying in goods from the market. This model is undergoing fundamental change because many people are connected to the Internet via mobile devices and are members of social networks. As a consequence new firms are being created which offer services to customers, but draw upon a pool of organised self-employed people to deliver the service (Anon. 2015). One such example is Handy, which customers can call using the company app to order a wide range of diverse home services ranging from cleaning to assembling flat-pack furniture. Another example of this new service provider model is Uber, the limousine and taxi service, which acts as an intermediary linking people who want transportation to the thousands of independent drivers who undertake the service request.

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