Impact of IT in Service Industry

Impact of IT in Service Industry

Impact of IT in Service Industry

IT (Information Technology) is increasingly being used to facilitate service provision and in so doing to eliminate or diminish the role of customer service personnel in service encounter.  The marketplace versus marketspace distinction drawn by Rayport and Sviokla provides a useful frame of reference to organize and facilitate this discussion. 

The respective roles played by technology and customer service personnel present advantages and disadvantages to service organizations and customers alike, and students should be encouraged to see these and to form a balanced point of view in relation to both forms of service provision. 

Pros and cons of technologically facilitated forms of service delivery from both managerial and customer perspectives

IT Pros for Management

*Service delivery standardization

*Productivity enhancement

*Faster customer response

*Improved efficiency

*Reduced labor costs

IT Cons for Management                               

*De-personalization of service encounter

*Can create distance between service provider & customer

*Can malfunction or breakdown

IT Pros for Customers

*Increased accessibility and convenience

*Direct contact and control

*Faster and more reliable service delivery

*Time saving

*Less contact with other customers

IT Cons for Customers

*Can impede access

*Potential intimidation and frustration

*Reduced contact with customer

*misleading service personnel

Impact of IT in Service Industry
Impact of IT in Service Industry
Five main factors that serve to shape service delivery strategy

These include

  1. the nature of the service itself
  2. customer preferences
  3. the firm’s positioning strategy
  4. relative costs
  5. operational requirements

Marketers need to see that the delivery of all services, regardless of the location(s), needs to be considered, planned and managed with reference to these five main factors.  This is because collectively they serve to define the manner or “how” of service delivery and, consequently, how a service organization is perceived.

Alternative Delivery Channels

The nature of a service both influences and is shaped by distribution strategy, i.e. where and how it is delivered.  Options include

  • Delegating service delivery to an intermediary (g. Bob Jane T-Marts, Midas Muffler, designated Air New Zealand agents)
  • Going to the customer’s house or place of business (g. domestic cleaning, repair and maintenance services, management consultancy and audit services)

In either situation a service provider must consider the extent to which a customer will come into contact with personnel, equipment and/or facilities, and the impact that these may be likely to have on customers and their perceptions of the service organization.  With the first two options, the actual place of service provision also needs to be planned and managed carefully. 

And if the service is to be delivered on multiple sites the planning and management considerations are immediately more complex. In some situations (e.g. the provision of credit card and insurance services) the customer may rarely or never visit the actual place of service provision.  However, the way these services are communicated, facilitated and delivered remains an important managerial and marketing issue.


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