Digitally modified service
A digitally modified service is a new service offering that emerges when an existing service is transformed so that all or part of it can be offered digitally.
Why consider it?
While services can boost the value offered to the customer, today’s market dynamics put the competitiveness of service businesses under increasing pressure, very often due to digital technology. This paves the way for international competition in local markets, futher eroding the often low margins (e.g. in product lifecycle support services: maintenance, repairs, certification and training). The challenge of finding qualified personnel to deliver complex services is becoming or remains hard for these service businesses to overcome.
At the same time, customer expectations are shifting towards service offerings that provide the most suitable answer to their problem. This in turn reinforces the need for service businesses to sustainably innovate in order to offer services that remain highly relevant to their customers. This is essential in a service business model in which customer retention is a key ingredient for profitability.
A digitally modified service can help address the following market-related challenges:
- The Service Scaling Problem: service businesses use a resource-intensive model in which there is often a linear dependency between the service that needs delivering and the number of people needed to deliver it. Service companies that interact with their clients by going to their premises are especially dependent on manpower to scale up their business. Digital technologies can alleviate this service scaling problem if the service has repetitive elements that can be automated or if the service can be partially offered from a distance.
- Reducing the need for face-to-face service interaction: service businesses providing specialist consultancy services often mainly interact through face-to-face visits (e.g. doctors, lawyers). These service providers are typically in short supply due to high demand and are often difficult for customers to access (e.g. because of the urgency of the request or mobility issues). Digital technologies can be used to offer the same service via an online platform if the service can be (partially) offered from a distance and when it involves a travel/accessibility problem for the customer.
- Differentiating a service offering: service businesses may opt to use digital technology to offer a new (digital) customer experience in addition to their current service offering.
What does it involve?
To successfully create a digitally modified service offering, companies need to consider the following challenges:
- Setting up (or integrating with) a digital platform: software capabilities are needed to ensure the robust and secure deployment of services in a digital model. However, service companies often do not have any or enough of these skills, which include: building apps and the corresponding backends, integrating social interaction tools (e.g. platforms for webinars, online consultation), implementing remote monitoring technologies and so on.
- Creating the proper legal and regulatory context in which the digital services can be delivered (e.g. privacy, data ownership, liabilities, SLAs). For many services, strict authentication is key for ensuring that the right user is consuming the service. Not dealing with customers face-to-face makes this more challenging.
- Investigating and exploiting the automation potential of existing services as much as possible helps to reduce dependency on human-intensive labour for delivering a service. This can lead to a new digital service offering. AI technologies can be used for this purpose.
- Collecting and mining information on how the service is being used can help you to stay relevant to your customers by integrating this knowledge into sustainable service innovations. Several software and data mining technologies provide this functionality.
Agoria can assist you with questions on legal aspects and standardisation https://www.agoria.be/nl/Digitisation-Rules-Standards
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