Communications of the ACM
E-services
Marketing + Mis = E-Service
As marketing and MIS meet on the field of e-commerce, new business models have been developed that do not specifically cleave to either discipline. It appears that e-services are just such a case. E-services are services, in the sense they fall within the traditional service descriptors of deeds, efforts, and/or performances. However, e-services are also very "good-like," in the sense they are deliverable, have channels, and are far less intangible, inseparable, heterogeneous, and perishable than other types of services. This article explores the marketing implications of the e-service revolution.
Specifically defined, e-services are "electronic offerings for rent" made available via the Net that complete tasks, solve problems, or conduct transactions. E-services can be used by both consumers and businesses, and can be accessed via a wide range of information appliances [10]. E-service offerings can use personal data to simplify aspects of consumers' lives that involve information [1], or they can simply serve as "functionality for hire" [5] for the corporate IT department. This allows us to define e-services in two ways: As online functionality provided for rent to consumers, in the marketing sense of services as "bits of usefulness" that help people solve problems and meet their needs. Or, as in the IT sense of the machine-to-machine provision of software functionality, potentially provided outside of human interaction or perception.
For customers, e-services can greatly reduce the cost of IT operations and allow them to more closely focus on their own core competencies [7]. On the business side, offering e-services as providers/sellers is considered very useful, as much for improving intra/interorganizational relationships as for generating new revenue streams [2, 9].
The E-Services Strategic Advantage
Traditionally, high-tech firms protected their e-services from outsiders in a manner analogous to locking these services within their own castle walls and then constructing a moat for extra protection. Sharing was not an innate instinct. In contrast, today's e-service business models offer a number of strategic advantages including mobility, flexibility, interactivity, and interchangeability (see www.hp.com).
E-services are mobile. One of the drawbacks of using the Internet has been its lack of mobility. Until recently, if you wanted to use the Internet you were chained to your PC. Today, and even more so in the future, e-services can be accessed by pushing a button in your automobile, speaking into a PDA or cell phone, or by using the TV remote control [10]. The purpose of e-services is to do the work for you and some of it may be done automatically. As venture capitalist Stewart Alsop [1] points out in one hypothetical scenario, a traveler driving to the airport to catch a plane can be automatically rerouted, rescheduled for a later flight, and have the next day's slate of appointments rebooked when interlinked e-services based on GPS systems identify a traffic jam en route to the airport. These actions occur on behalf of the traveler, outside of his/her awareness of the impending traffic jam. The potential uses of e-services are limitless.
E-services are flexible. E-services are purposely designed to function as building blocks [6], which is the basis of Microsoft's emerging .NET e-services (see Gerry Miller's commentary in this section). This characteristic enables e-services to be readily customizable, which allows for mass customization capabilities that marketers have sought to develop ever since the implications of Internet-based marketing were fully explored. For example, an international travel service may bring together a variety of e-services from a number of different vendors such as airline reservations, hotel reservations, translation, car rentals, and weather e-services. Not inconsequentially, an e-service's customer data and personal information application would also be stored on an application server, providing immense capabilities not only for more expedient services provision, but also the generation of microtargeting profiles in the manner of Amazon.com's customer profiling. This ability to simultaneously customize market offerings for the masses on a one-to-one basis has been a futuristic vision of marketing practice that e-services now allows us to realize.
Similarly, a manufacturer may employ the assistance of an e-service that streamlines its employees' travel arrangements, another e-service that bills its customers, an e-service for procurement, and an e-service for enterprise resource planning (ERP). In fact, an a la carte collection of business utilities in the e-services format can obviate the need for monolithic enterprise systems and the subsequent extensive internal infrastructure development they require. As such, the Application Service Provider (ASP) business model is considered the "counterculture to ERP" [3], since the functionality of an ERP package can be duplicated piecemeal with apps-on-tap. Ironically, ERP vendors seem to be headed toward an application service model to provide their functionality, as well.
E-services are interactive. Since e-services are modular by design, ones that join together form a sort of ecosystem where individual e-services must be able to communicate with one another, such as in our example of the delayed traveler. By speaking to one another, each e-service can clearly communicate its own capabilities to other e-services. For example, a translation e-service can communicate what languages it can translate to a travel-reservation e-service. Microsoft's .Net ASP model, based on Extensible Markup Language (XML), promises to provide this sort of modular plug-and-play interoperability [5].
E-services are interchangeable. Experts forecast that entire ecosystems of e-services will be built around specific industries (for example, [10]), providing specific processes, to solve specific problems, for specific types of customers, through specific transaction chains. When forming ecosystem relationships, these relationships will not necessarily be permanent. For example, a travel e-service may submit a customer's travel request to four or five different airline reservation e-services who compete (or bid) for the customer's business. By providing a host of options as opposed to forming a single (more permanent) relationship, customers will have many more choices and e-service firms will be much more able to provide customized solutions to customer requests if the ecosystems of e-services remain dynamic.
Managing Traditional Problems Faced by Service Marketers
One of the many intriguing aspects of e-services is they are apparently not subject to, or can potentially overcome, many of the traditional challenges faced by service marketersnamely, intangibility, inseparability, heterogeneity, and perishability [8, 11].
Intangibility issues. Regular services are said to be "intangible" because they are performances rather than objects. They cannot be touched, seen, or evaluated. Rather, they are experienced, and consumers' judgments about them tend to be more subjective. Perhaps the most pressing problem associated with intangibility is that service marketers have nothing tangible to show the customer. E-services are able to overcome some of the challenges provided by intangibility by using Web-based delivery channels to provide evidence of service. For example, creative businesses such as ski resorts have used Web cams to provide tangible evidence of current snow conditions (for example, vail.snow.com/m.mtncams.asp). E-services also make tangible the intangible by providing additional evidence of service delivery such as the appearance of the Web site, frequency of information updates, accuracy of information, speed of the server, ease of navigation, and automated order and shipping confirmations.
Inseparability issues. In general, inseparability reflects the simultaneity of service production and consumption where services are described as a shared experiencethe producer and the consumer must both be present in order for the transaction to be completed and other customers often share the consumption experience. Although some e-services are provided machine-to-machine, and don't always require direct customer involvement, e-services that do involve customers allow the management of inseparability through the provision of customized service solutions. Due to the modularity of e-services, individual customer solutions can be easily customized; given server-side delivery of e-services, mass customization capabilities are readily available for numerous individual customer-tailored solutions. A powerful marketing advantage related to customer relationships exists in the potential for each consumer to becomes an active participant in the process to the point the customer becomes a partial employee of the organization [4].
In contrast to customized solutions, the negative effects of inseparability can also be tempered via the standardization (or industrialization) of the service. Once again, e-services can be very effective. Since e-services are accessed at a distance (for example, Web, cell phone, PDA), customer involvement in the actual production process is minimized. Moreover, customers are often purposely led step-by-step to control the flow of the process, which standardizes the process and increases the efficiency of the transaction.
Heterogeneity issues. Heterogeneity reflects the variability in quality of service provided from one transaction to the next. When services are provided by people, variations are going to occur and mistakes will happen in real time. Since e-services are electronically based, and are often provided on a machine-to-machine basis, variations in quality provided from one customer to the next should be minimal. In addition, other e-services purposely monitor customer-service conversations to assist customer service training initiatives as typical problems are identified, resolved, and appropriate responses to customer complaints and inquiries are formalized. Finally, e-services can be thoroughly tested before they are introduced into the marketplace to minimize the occurrence of mistakes in real time.
Perishability issues. Perishability reflects the challenges faced by service marketers due to our inability to inventory traditional servicesto hold them in reserve for future delivery. Services not consumed at their appointed time cease to exist. Hotel rooms not sold on Thursday night cannot be added to the supply of rooms available on Friday night. E-services are not faced with these same problems. E-services are available 24/7. Applications not purchased one day are for sale the next. Moreover, e-services such as online auctions can help traditional service providers such as airlines fill unused capacity, thus acting as a metaservice. On the demand side, if 100 customers want to rent the same e-service application on the same day, demand can be met more easily. Although not perfect, e-services can handle supply and demand fluctuations with much greater ease than most other types of services such as restaurants, hospitals, and hotels. The capability of e-services to overcome traditional perishability issues is a genuine boon to marketers who, until now, have had few solutions to this services-related problem.
Future Implications
Overall, e-services have much to offer in overcoming previous obstacles faced by traditional service marketers. Future opportunities for revenue lie in creating alternatives to traditional service operations in the form of e-services. Obviously, some services are more easily converted than others. Furthermore, businesses will need to broaden their focus and carefully examine their motivations for automating their processes. It is one task to automate the delivery of an application in the form of e-services to reduce operating costs and increase profits; it's another to provide e-services that achieve these same objectives while truly enhancing the customer experience.
The successful e-services of tomorrow will play a critical role in transforming the customer experience from a basic functional experience to emotionally enhanced exchange environments where customers progress through stages of intimacy and internalization and eventually to evangelistic behaviors [6]. In order to accomplish this transition, e-services providers will need to address rational and irrational customer concerns regarding the adoption of new e-services that replace traditional processes; continue to develop modular as opposed to monolithic applications; and improve customer support for customers who wish to customize e-service applications.
To date, the benefits of MIS and marketing working together are clear. The relationship between these two functional areas represents a bond between the identification of customer needs and the technological resources available to provide unprecedented solutions.
References
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4. Kelley, S.W., Donnelly, J.H., and Skinner, S.J. Customer participation in service production and delivery. J. Retailing. 66 (Fall 1990), 315335.
5. LaMonica, M. Filling in the picture on Web services. Infoworld 23 (Mar. 19, 2001), 5.
6. Mohammed, R.A., Fisher, R.J., Jaworski, B.J., and Cahill, A. Internet Marketing: Building Advantage in a Networked Economy. McGraw-Hill Irwin, Boston, MA, 2002.
7. Morency, J. Ready to shift to an ASP? Communications News 37, 6 (2000), 8890.
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10. Vetter, R. The wireless Web. Commun. ACM 44, 3 (Mar. 2001), 6061.
11. Zeithaml, V.A., Parasuraman, A., and Berry, L.L. Problems and strategies in services marketing. J. Marketing 49 (Spring 1985), 3346.
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