SERVICE MANAGEMENT

Lesson 8: Service Management

Service Management
2

Defining design attributes

Specifying design performance standards

Generating and evaluating design concepts

Developing design details

Improving performance

Assessing satisfaction

Measuring performance

Implementing the design

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Implementing the design

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Design implementation plan

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Design implementation activities

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Specify the objectives of each component plan Identify the leaders of each component team Coordinate the timelines of the component plans Communicate progress of implementation to senior management and customers Resolve unexpected timing and implementation conflicts

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Design implementation team structure

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Consists of team leaders from component teams Should be supported by a project mentor or champion Subject matter experts should be included in the team

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Design implementation plan coordination elements

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Frequency face-to-face meetings Frequency of telephone meetings Medium of communication among team members (paper, fax, electronic mail) Project milestones and critical dates Frequency of communication to senior management Process for issuing timely warning about delays or impediments
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Service construction plan

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Service construction activities

9

Identify service construction team members Identify sub team leaders and sub team members Define contents, format, and distribution of operating procedures Write operating procedures Define system integration requirements Define reporting requirements Develop systems to support new design Specify organizational structure to manage and support new service operations Define training requirements for employees and customers Develop required training methods

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Service construction team structure

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Members should be personnel responsible for operation of the new design Construction activities can be performed by designated sub teams

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Coordination elements
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Team members must be available for the duration of the entire project Enumeration and scheduling of activities should be clearly specified Schedules, formats, and contents of team meetings should be clearly documented

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Testing plan

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Testing activities
13

Select the members of the testing team Select the customers to be involved in the test Select the locations for the test Specify the design characteristics to be tested Define the measures for evaluating the performance of the design during the test Conduct test, collect data, and analyze performance Determine causes of performance problems Correct deficiencies in design, implementation, and testing
Service Management
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Testing team structure

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Team members should be a blend of design team members, service construction team members, and managers from the test site

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Coordination Elements
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Testing should be carried out under realistic conditions Test should not give specialized treatment to trial customers Test team should not consist only of best employees Test should be carried out for a long enough duration to obtain accurate information

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Communications plan

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Communications activities
17

Identify the communications needs of various customer groups Determine the information to be passed on to various levels of employees Select one or more communication vehicles Specify the format and content of the information Disseminate timely and accurate information to customers and employees Collect customer and employee feedback about the quality of the communication Enhance material and delivery based on this feedback
Service Management
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Communications team structure

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For large projects, the communications plan may be part of an advertising campaign Training managers may be used to inform a large number of employees For small projects, service construction or design implementation team members may be used for communications It is better to separate the communications plan from the design implementation and service construction plans
Service Management
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Coordination elements
19

Effectiveness of communication depends on timeliness and accuracy Communications must be coordinated with project milestones to improve timeliness Procedures must be developed to assure accuracy of information As far as possible, communications must be supported by documentation
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Rollout and transition plan

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Rollout and transition activities

21

Define, sequence, and carry out the activities that need to be completed before the deployment date at each work location Define, sequence, and carry out activities that need to be completed on deployment date Define, sequence, and carry out transition activities a few days to few weeks after deployment Develop contingency plan in case deployment fails
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Rollout and transition team structure

22

Rollout team members must manage the implementation details at each work site Rollout team members need to be local agents of change Rollout team at each location should encompass a variety of job functions Change management function should be performed by both managers and non-managers
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Coordination elements
23

Systematic coordination is needed between the service construction team and rollout team Interface between service construction team and local rollout representatives should be clearly documented Rollout plan must ensure that all preparations are complete by the deployment date

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Service management plan

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Performance monitoring and stabilization activities

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Measure performance of the service Measure cost of service and utilization of resources Analyze areas of unsatisfactory performance or excessive cost Resolve service performance problems

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Strategic service improvement activities

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Determine the satisfaction of customers with the service Evaluate the financial or market impact of improved customer satisfaction Identify attributes where satisfaction improvement has the greatest impact Develop service improvement alternatives for these attributes Determine the amount of effort to be expended on these alternatives Select and implement feasible and cost-effective alternatives
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Service management team structure

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Service management team different from day-to day service operations team Service management team is a post-implementation monitoring team Service management team is a post-implementation design team Service management team should have members from all organization involving in planning, selling, delivering, maintaining, and billing for the service
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Coordination elements
28

Service management may require changes to the service and the organization over time Service management plan must clearly specify how these changes are coordinated and implemented

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Measuring performance

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Measures for service monitoring and improvement

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Service performance measures test whether the service performs as expected by the design Customer measures evaluate how service performance satisfies customers Financial measures determine how the behaviour of satisfied customers affects profitability

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Performance monitoring and stabilization process

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Select the design attributes to be analyzed Measure the performance effectiveness of each selected attribute Measure the capability of each selected attribute Measure the efficiency of key processes Perform effectiveness analysis to identify attributes that do not meet standards Perform capability and efficiency analysis to check for unusual performance changes
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Performance monitoring and stabilization process

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Perform exception analysis to test whether performance changes can be attributed to unique, uncontrollable causes Perform sub process analysis to identify sub processes and functions where the performance changes occur Perform root cause analysis to determine the cause for performance changes in each sub process or function Decide if any corrective action is necessary Take action immediately or include in service improvement plan for future implementation
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Service performance metrics

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Effectiveness metrics measure performance relative to a target or standard Capability metrics measure the intrinsic ability of a process to meet performance standards Efficiency metrics measure the cost of delivering the service and resources utilized

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Data collection and tracking system guidelines

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Select a few, critical items for measurement Sample, if necessary Automate, if possible Avoid paper forms Develop easy data access and reporting capabilities Decentralize data analysis Make data collection part of job function Openly communicate the objective of data collection
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Data analysis and reporting

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Routine analysis is regular, systematic, and performed in every reporting period Routine analysis procedures should be repeatable, documented, and decentralized Ad hoc analysis is detailed, diagnostic testing Graphical representation enhances ability to interpret data Histograms, run charts, scatter plots and control charts are four versatile graphical tools Reports should be generated appropriate to the level for which they are intended
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Assessing satisfaction

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Effect of market and customer changes on satisfaction

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A service that meets the design standards does not automatically satisfy customers Changes in the performance of competitors and in customers needs affect satisfaction Changes in competitors performance shift the performance satisfaction function Changes in the relative importance of needs affect the slope of the function
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Defining customer satisfaction discomfirmation model

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The disconfirmation model is a commonly used paradigm of satisfaction Satisfaction is the result of a comparison between expected and perceived performance Positive disconfirmation (performance exceeds expectations) results in satisfaction Negative disconfirmation (performance falls short of expectations) results in dissatisfaction
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Expectations
39

Many different types of expectations are defined in literature

Ideal expectations Desired expectations Acceptable expectations Predicted expectations Comparative expectations Normative expectations Value-based expectations

Selecting the appropriate expectations model depends on the nature of the service and on the expectations of the firm
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Individual and group satisfaction

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Satisfaction data for groups of customers is needed for managing a service Groups should be segmented to represent customers with homogeneous expectations Satisfaction of members of each group should be measured relative to these expectations

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Transaction-specific and cumulative satisfaction

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Transaction-specific satisfaction is the satisfaction with each service encounter A customers long-term attitude about the service is cumulative satisfaction The cumulative satisfaction of key customers should be measured

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User and decision-maker satisfaction

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Decision makers select service providers for an organization Decision makers may not have direct experience with the service Perceived service performance may be used as a proxy for decision maker satisfaction Regular users of the service have maintained a longterm association with the firm Cumulative satisfaction of regular users is a good index of attitudes Detailed data about specific incidents should be collected from complaining customers
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Satisfaction and value

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Value is the trade-off between what is received and what is given Value can be defined as the ratio of perceived quality to price Both quality and price components should be considered in the design of the service

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Measuring satisfaction
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Different measurement approaches have different properties and applications Absolute scales are not designed to measure performance that exceeds expectations Absolute scales are useful for measuring stable services The performance relative to expectations scale measures changes in customers expectations These measurements are useful for designing new services
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Measuring satisfaction
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Ratings relative to competition can measure either satisfaction or performance Both absolute and relative ratings may be used to measure competitors performance These measurements are useful for the development of improvement plans for the current market

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Improving performance

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Steps for selecting an optimal service improvement strategy

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Estimate the relationship between financial objectives and overall satisfaction Determine the overall satisfaction improvement to meet strategic financial objectives Estimate the relationship between overall satisfaction and attribute performance Select one or more attributes for improvement, and set their improvement targets Estimate the relationship between the performance of service-level and process-level attributes Select candidate processes for improvement Determine the optimal amount of improvement needed for each process that produces the greatest returns
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Evaluating financial impact of customer satisfactionstep 1

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Develop a regression model linking the profitability measure to overall satisfaction Use relative satisfaction, performance, or value measures for the independent variable Use shareholder value, revenue, or customer behaviour measures for the dependent variable Incorporate the time lag between change in attitude and change in behaviour in the model Incorporate the effect of cumulative history by a lagged dependent variable specification Estimate the model using ordinary least squares or another appropriate technique
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Setting strategic improvement targetsstep 2

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Identify the strategic financial objectives to be met by the service Set satisfaction targets required to meet these objectives

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Evaluating impact of service attribute performance on satisfactionstep 3

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Specify the relationship between overall satisfaction and attribute performance Measure attribute performance relative to expectations for developing new services Measure attribute performance relative to competitors for short-term improvements Estimate parameters using ridge regression or equity estimators if multicollinearity is present
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Selecting attributes for improvement step 4

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Use the R2 statistic to determine the fit of the overall model to data Re-examine the specification of models with poor fit Use the t-statistics to determine significant parameters Calculate the impact of each independent variable from the magnitude of estimated values

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Specifying service level improvement targets

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Use elasticities to measure impacts if independent variables are measured on different scales Use performance/importance map to select attributes for immediate and future improvement Partition overall satisfaction targets into attributelevel targets

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Specifying improvements at the process levelstep 5 and 6

53

Specify the regression equation linking service-level attributes to process-level performance Select key processes that need to be improved and their improvement targets Estimated integrated model system linking processlevel performance to financial objectives

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Developing an optimal service improvement strategystep 7

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Identify process improvement options to meet the targets Compute the benefits resulting from increased customer satisfaction Compute the benefits resulting from increased operating efficiency Calculate the one-time implementation costs Calculate the ongoing operating costs Perform sensitivity analysis to evaluate the net benefits of partial implementation of the selected approaches Select the approach and the amount of effort that maximizes the returns
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