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IMS 6485: Services on the Web
1Dr. Lawrence West, MIS Dept., University of Central [email protected]
Topics
• Services in the Economy
• Themes
• Personalization and Customization—Limits
• Financial Services—The Glass-Steagall Act of 1934
• Online Banking, Brokerage, Mortgage, Insurance
• Real Estate Services
• Travel Services
• Career Services
• Classifying Services
• Product Based Services
IMS 6485: Services on the Web
2Dr. Lawrence West, MIS Dept., University of Central [email protected]
Where are Services on the Value Chain?
TRANS-PORTATIONCOMPANY
BROKER
INFORMATION FLOWS(SELLERS TO BUYERS)
FLOW OF GOODS
ADVERTISING .
INVOICE .
ORDER INFORMATION .
INFORMATION FLOWS(BUYERS TO SELLERS)
REQUEST INFORMATION .
PLACE ORDER .
MAKE PAYMENTS .
Animal
Vegetable
Mineral
INVENTORY
INVENTORY
INVENTORY
FACTORYWHOLE-SALER
INTERMEDIATE
GOODS
WHOLE-SALER
RETAILER
IMS 6485: Services on the Web
3Dr. Lawrence West, MIS Dept., University of Central [email protected]
Services
FIRM
- ACCOUNTING
- ADVERTISING
- HR
- BANKING
- INVESTING
- CONSULTING
- IT
- TELECOM
- COORDINATION
SERVICES
IMS 6485: Services on the Web
4Dr. Lawrence West, MIS Dept., University of Central [email protected]
Services in the Economy
• Services employ 76% of the US Labor Force
• $7.7 Trillion (58%) of the US economy
• What are the difference between services and products?
– Name some consumer-oriented services
• That can be delivered online?
• That cannot be delivered online?
– Can any of these be supported online?
– Same for business-oriented services
IMS 6485: Services on the Web
5Dr. Lawrence West, MIS Dept., University of Central [email protected]
Services and Productivity
• With 76% of the labor force and 58% of the GDP in services what are the implications of the situation described above?
• Why do we have this state of affairs?
• What can be done about it?
On the other hand, productivity [growth??] in the service sector has lagged far behind productivity in factories and on farms. Productivity in the service sector over the last decade has averaged about 1%, while farm and factory productivity has averaged about 5%. (page 587)
What this means for e-commerce is that the service sector offers extraordinary opportunities insofar as e-commerce sites can deliver information, knowledge, and transaction efficiencies. (page 587)
IMS 6485: Services on the Web
6Dr. Lawrence West, MIS Dept., University of Central [email protected]
Services in the Economy (cont.)
• As with retail, we want to slice and dice the world of services
– Find out which are succeeding online
– Find out which are struggling
– Find out why for each
• Be able to:
– Predict the reception for a new online service opportunity
– Find new opportunities
IMS 6485: Services on the Web
7Dr. Lawrence West, MIS Dept., University of Central [email protected]
Some Themes
• Watch for the effect of customer preference (taste) on the viability of online services
– Trust as a determinant of service delivery preference
• Watch for pure information or knowledge-based services vs. services coupled to a physical good or asset
• Watch for the importance of scale as a determinant of profitability
• Watch for similarities (including one huge one) between successful online service sectors and successful online retailing establishments
• Look for political or regulatory limitations on service delivery
IMS 6485: Services on the Web
8Dr. Lawrence West, MIS Dept., University of Central [email protected]
Personalization & Customization of Services
• Name some (traditional) services that are
– Extremely personalized
– Extremely commodity-like
– Composite
• Are there any patterns in the answers above in the services offered online?
• What constraints apply to extremely personalized services online?
IMS 6485: Services on the Web
9Dr. Lawrence West, MIS Dept., University of Central [email protected]
Personalization & Customization of Services (cont.)
• What tools and capabilities do human service providers apply to their professions
– Programmers? Physicians? Accountants? Attorneys?
• Can these skills be mimicked by technologies?
• Can these skills by supported by technologies?
• What may be the role of consumer preference (taste) in determining service delivery?
IMS 6485: Services on the Web
10Dr. Lawrence West, MIS Dept., University of Central [email protected]
The Glass-Steagall Act of 1934
• This Act is most important now for what was repealed in 1998
– Interstate banking
– Multiple lines of business in the financial industry
• Banking
• Brokerage
• Insurance
• Why was the repeal of these provisions, coupled with the wide use of information technologies in the 1990s, so important?
– And important for eCommerce?
IMS 6485: Services on the Web
11Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Banking
• A traditional bank spends $1.07 to process a transaction, whereas an online bank can perform the transaction for 1 cent (L&T 3d Edition, p. 619)
– So the motivation for banks is there
• What is the motivation for customers to use online banking?
• Who is succeeding in online banking? Why?
• What advantage did E*Trade's online banking have over other internet-only online banks?
IMS 6485: Services on the Web
12Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Brokerage
• What market space(s) do the online brokerage services serve?
• Hint: How did stock investing work prior to the Internet brokerages?
– What were the fee structures?
– How were trades executed?
• How have the online brokers affected the traditional part of the industry?
IMS 6485: Services on the Web
13Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Mortgage Lending Services
• Why have online mortgage lending services been very slow to take hold?
– Compare to online brokerage
– What does the book say?
– What do you think?
IMS 6485: Services on the Web
14Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Insurance Services
• The success of online insurance sales have been mixed by sector
• Which are succeeding and which are struggling?
• What has been determining the successes and struggles?
• How are insurance agents paid?
– Why?
– How are insurance companies disintermediating their own agents through online offerings?
IMS 6485: Services on the Web
15Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Real Estate Services
• There is a lot going on here
• What is the role of the National Association of Realtors?
• What is the importance of the NAR ownership of the Multiple Listing Service (MLS)?
– Read the descriptions of online consumer behavior in the paragraph beginning at the end of p. 600.
– What techniques does NAR use to retain its monopoly position?
• Go to Realtor.Com and find your dream house—then report on the site's business model
IMS 6485: Services on the Web
16Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Travel Services
• What business models do we see here?
• Look at the historical market structure/value chain described in Figure 9.7 and also on pp 609-613
– Why did this market structure make sense prior to the Internet?
• What changes have Internet technologies introduced to the market structure?
– Who has benefited?
– Who lost?
– Why?
IMS 6485: Services on the Web
17Dr. Lawrence West, MIS Dept., University of Central [email protected]
Online Career Services
• What revenue models do these sites use?
• "It's Just Information: The Ideal Web Business" p. 619
– Do you agree?
• Look at the market segmentation
– Large general sites
– "… explosion in specialty niche employment sites"
– Does this sound familiar?
• What have your personal experiences been?
IMS 6485: Services on the Web
18Dr. Lawrence West, MIS Dept., University of Central [email protected]
Classifying Services
• Let's classify services alongthree dimensions
– Frequency of transactionsfor typical users
– Importance of eachtransaction
– Tie to physical resources(or information intensity)
• Are there any trends to be seen by position, regardless of the nature of the transaction?
IMS 6485: Services on the Web
19Dr. Lawrence West, MIS Dept., University of Central [email protected]
Product-Based Services
• Chapter 9 mentioned product-based services
– What are these?
– How are they similar to the services we have been discussing?
– How are they different?
IMS 6485: Services on the Web
20Dr. Lawrence West, MIS Dept., University of Central [email protected]
Let's Invent a Service