Impact of
Service Management and Marketing on Business
Case Study of Siemens and Habib Bank
Humaan Siddiqui
Impact of E-Commerce a Service Management and
Marketing on Business Performance
Case Study of Siemens and Habib Bank Limited (HBL)
Business Administration Master’s Thesis
15 ECTS
Term: Spring 2012
Supervisor: Lars Haglund
Page | 1
Commerce and Service Management and
Marketing on Business
Case Study of Siemens and Habib Bank
Spring 2012 Lars Haglund
Page | 2 Acknowledgements
Initially I am extremely thankful and bent down my head with great regard in front of Almighty Allah who gave me the strength and spirit to complete this thesis. After that I would like to thank my family who is always been the constant source of inspiration and admiration for me in every endeavour of my life.
Now most importantly, I would like to give very special thank to my supervisor Mr Lars Haglund, Mr Arne Fagerstrom and the examiner Miss Gunnel Kardemark who kept proper check and balance on my submitted work. Along with that they are the only ones who constantly guide me on how to furnish my thesis according to the right guidelines and international standards. So thank you so much for all your advices and useful instructions that proofed fruitful to finish this thesis.
Lastly I would like to thank all the interviewees for giving me their precious time for the interview to develop the case study.
Page | 3 ABSTRACT
World Business has been changed drastically in the previous two decades because of the immense spread of the E-Commerce- different information systems. So that no one can deny the enormous and sheer power of the information technology. Because those information engines adhere responsibly and gigantically for the effective establishment of the service management and marketing function at its entirety. And at the end of the day everything becomes organized, systematic, controlled and clear for the ease of human species. And that I think is very important to watchdog the direction of the whole business enterprise that where it becomes headed towards.
Purpose of the paper is to explore the industrious advantages that how E-Commerce and service management and marketing affect the business performance of the enterprises in a productive manner. Because IT strategy enables the business strategy to create competitive edge through the right required adaptation of necessary information systems and also seek innovation in services. And there is also a need to recognize that how it works for the severe benefits of the stakeholders.
Paper presents the empirical investigation of two companies. One is multinational Company- Siemens and second is Pakistan’s largest Government Bank named- Habib Bank Limited (HBL). The use of E-Commerce and services management and marketing functions of these two businesses are analysed in detail with respect to the relevant literature discussed in the theoretical framework. Qualitative Research approach has been adapted and Case study of Siemens (SAP project) and HBL also been included from its stakeholder’s perspective. Both cases project and reflect upon the strong impact of the crispier and spicy impact that those information systems create, to sharpen and poise the built of the stakeholders in the business.
Conclusion is presented at the end to describe the giant power of these systems. That how the role of E-Commerce-information systems used by these businesses for the benefit of its stakeholders. It is concluded that E-Commerce has the positive impact on the service management and marketing of both Habib Bank Limited and Siemens. And Further more the use of E-Commerce works effectively for the service quality of the banking sector in terms of security, access, communication, reliability, responsiveness and perceived customer services.
Page | 4 TABLE OF CONTENTS
Page No:
1. INTRODUCTION...7-12
1.1. Background...8-12
1.1.1. E-Commerce……….………8
1.1.2. Service Management and Marketing……….…..9
1.1.3. Service Quality………9, 10
1.1.4 Service Quality in E-Banking………..10
1.1.5. Problem Discussion………...10, 11
1.1.6. Research Purpose……….11
1.1.7. Reason Why I choose this Topic?.……….12
2. METHODOLOGY...13-17
2.1. Reasons of selecting a methodology...13-14
2.1.1. Research Approach………..13
2.1.2. Research Purpose………13, 14
2.1.3. Deductive and Inductive Research………..14
2.1.4. Research Strategy……….…14
2.2. How the job is done?……….…15-17
2.2.1. Case study……….15
Page | 5
2.2.2. Data collection methods………15
2.2.3. Choice of companies………16
2.2.4. Choice of respondents………..16
2.2.5. Data analysis……….16
2.2.6. Validity and reliability………..…17
3. THEORETICAL FRAMEWORK-LITERATURE REVIEW………....18-27 3.1. Approaches and service management and marketing related issues and topics apparent in the literature and articles...18-27 3.1.1. Service concept, service perspectives and service logic………...18
3.1.2. Service dominant logic (SDL)………..18, 19 3.1.3. The development and emergence of service marketing thought………….…20, 21 3.1.4. Evolving to a new dominant logic for marketing………..22
3.1.4. Value co-production- Intellectual origins and implication for practice and research...23
3.1.5. Whither service marketing? In search of a new paradigm and fresh perspectives………23, 24, 25 3.1.6. Service innovation………..26
3.1.7. Service innovation in financial industry………...…26, 27 4. EMPIRICAL FINDINGS...28-35 4.1 SIEMENS- Company Introduction...28-33 4.1.1. Managing today’s business challenges ………...29
4.1.2. SAP ECC 6.0 solution software for every business and process………29, 30
4.1.3. SAP ERP functionality for business process excellence………..30, 31, 32
4.1.4. Foundation of innovation………..………32, 33
Page | 6 4.2. HABIB BANK LIMITED (HBL)- Company Introduction……….34-35
4.2.1. HBL online banking service……….34
4.2.2. HBL internet and mobile banking……….34
4.2.3. HBL ATM card and phone banking……….35
5. ANALYSIS………36-46
5.1. Case study of Siemens- SAP World Bank project in Pakistan………..36, 37
5.2 Case study of Habib Bank Limitd (HBL)……….………..37-42
5.3. Personal reflection, ideas and suggestions on the main results, models and concepts developed………...42-46
6. DISCUSSION………..47-48
6.1. Identification of some problems………...47, 48
6.2. Recommendations and further scope of Research……….48
7. CONCLUSION………..49
REFERENCES………...50-55
Page | 7 1. INTRODUCTION
Chapter will provide the deeper and essential glance on the selected research area. At first description of background is elaborated by later headed towards problem discussion, research purpose and the reason that why I choose this topic. Background will provide a reader the strong basis and antecedents of the research concepts. Afterwards, major impact of E- Commerce and the service management and marketing on the business performance will be found out.
With the advancement of Information Technology, today in the Global era customers required higher and better services in this information age which in turn saves their time and convenient as well (Kotler & Keller 2006). Because of the Competitive environment in the marketplace, knowing customer is the important issue of marketing to better understand the customer needs and wants or to generate the kind of services that become their desired wants.
Today businesses moved their focus from products and sales to customer oriented marketing (Lin 2003).
It is important for businesses to design their action plan in a way that improves customer services by offering them what their needs and wants. Today term customer service emerged as a strong competitive weapon for companies to gain competitive edge and also for their survival motive (Hanson 2000). So with all this importance of customer Service it is also important for businesses to focus on the service quality (Eppinette & Inman 1997).
To understand customer is very important method of marketing and good service marketing headed towards profitability. So as a student of business administration I want to explore the ways to improve the service quality of the businesses. And E-Commerce has done enormous role and change the way the corporation work with their stakeholders through the use of information systems and outside by creating innovative products and services. The paper is made to understand that how E-Commerce affects the service quality at Siemens and Habib Bank Limited.
Information Systems immensely improve several factors in service quality and service marketing and management that includes communication, responsiveness, accuracy of information etc.
Page | 8 1.1.Background
This section incorporates the background of the research undertaken. Section contains the general ideas regarding e-commerce, service management and marketing, and service quality along with the service quality in E-Banking and customer satisfaction from stakeholder’s perspectives. These all concepts are integrated together like a mixture of strong fragrances that we can’t separate from each other. So it’s important to have the strong influx of these concepts to answer the research question. Because if I detach and not describe one part then the whole perfume will not give it’s enticing, alluring or tempting effect.
1.1.1. E-Commerce
Advanced studies in the field of Electric Commerce are becoming attractive with the increasing development of information technology. So now companies can better take care of their customers by offering better solutions that they have never before (Wigand 1997). There are different definitions of E-Commerce. According to Zwass (1996) it’s the information sharing, relationship enhancing and transactions handling through the internet based technology.
E-Commerce can also be defined from different perspectives such as commercial, communication, business process and service perspective. Like from the service perspective it’s a tool that adheres responsibly according to the desires of the Government, consumers, firms, institutions and management that fastens the speed of service delivery via improving customer’s service. And most important it reduces the cost of the service and makes it more convenient for the customers (Turban et al. 2004). According to Lin (2003), it includes information exchange about the products and services and the use of internet for electronic communications. It also includes business transactions for ordering and payment over the internet.
E-Commerce brings enormous advantages for customers and suppliers. Like benefits for suppliers includes low cost, efficiency, 24-hours services, extended market covering, influence customer purchases, adjustments to market requirement and improved customer services. Its benefits towards customers include streamlined process, convenience, low procurement costs, instant private shopping and transactions etc (Kotler 2003). Turban et al.
(2004) also enlist several E-Commerce benefits to business organizations and customers. For Business organization it first leads to the reduction of cost then customization, extended
Page | 9 hours, supply chain management, lower organization cost, improved customer relations, efficient procurement and rapid time to market etc. Customer benefits include cheaper products and services, availability of information, fast delivery, auctions participation, fewer hassles etc.
1.1.2. Service Management and Marketing
Since 2000 there is an immense growth of internet technology users, because it is quick and saves time and convenient as well. And Service Management and Marketing is continuously growing drastically in emerging and developing countries constantly day by day. And increasing trend of service industry is the reason of growing this field in those countries. And today most of the companies are becoming more and more service oriented (Lovelock &
Witz 2007). Companies are not only offering the goods but the services that these goods are generating and these companies started associated them as service companies (Edvardsson &
Echeverri 2002). To define service there has been number of definitions and the early definitions based on the differences between goods and services. These differences most of the times states that the services are difficult to visualize, understand than the inventory (Lovelock & Witz 2007). Another difference is related to the process like customer is the part of the process and they are involved in co-production (Lovelock & Witz 2007; Edvardsson &
Echeverri 2002). But with more research we have seen that these differences are not applicable to all types of services. Services are the economic activities that are offered by the businesses to its customers which are performed in real time to bring out the outcomes that satisfy customer’s desire and expectation (Lovelock & Witz 2007).
1.1.3. Service Quality
Service Quality is the determinant of the competitiveness for developing and sustaining strong relationships with customers (Johnston 1997). There are different perspectives on service quality. European perspective states that service quality should include three dimensions that include functional and technical quality with corporate image (Gronroos 1983; Lethinen & Lethinen 1982). American perspective states that service quality evaluated on the functional quality dimension that described through five components that include reliability, responsibility, tangibility, empathy and assurance (Kang & James 2004).
According to Parasuraman et al (1985) Service Quality is the customer’s comparison between service expectation and service performance. Because of the increasing growth of the E- service Quality on the web, it makes businesses more appealing and effective by helping
Page | 10 them to gain higher levels of customer retention. So the E-Service Quality is the extent to which website facilitates effective shopping and delivery of products and services.
Service quality remains one of the important aspects of the services marketing literature (Johnston 1997). Main challenge of managing service quality lies on the great importance to customer satisfaction. So service managers exactly need to know their customers desired wants because service quality revolves around exceeding and meeting desired customer’s expectations. Academics are concerned to measure service quality to better understand its consequences and antecedents, in order to built new ways of improving service quality to achieve customer satisfaction and gain competitive advantage. (Palmer & Cole 1995)
1.1.4. Service Quality In E-Banking
Development of the internet completely changed the way banks operate their businesses with their valuable customers. And Service quality besides mainly used to evaluate the operations of the banking services via using information systems. So now bank has channels that provide 24 hours services to their customers. Customers are also provided with the access to more financial information with broad range of services. According to the previous research it is found that banks competitive advantage over internet based on the services provided through E-Commerce and not only the attraction of Internet (Furst et al. 2002).
E-banking is the use of internet as the transactions channel for banking services. So through that way bank innovate their offerings. This includes traditional services like deposit account opening, transfer of funds among different accounts along with new services like E-Bills payments etc (Jun & Cai 2001).
Customer Expectation and perception of the internet service will change over time. Quality remains is the important issue and banking industry is no exception. Introduction and customer acceptance of the E-Banking bring drastic change in the way banks maintain their strong relations with their customers these days (Jun & Cai 2001).
1.1.5. Problem Discussion
Businesses try to seek differentiation in services because they think it’s difficult to compete on physical products these days, so through that way companies are in the position to better respond to the customers through giving accurate information, quality services with quicker information channels, developing human resources in a manner that are able to cope with the
Page | 11 customer problems. Today services gain much more attention for researchers and business executives, because of the increasing competition in the market, and delivery of the quality services also headed towards greater profitability (Kotler 2003).
A good customer quality service is the major issue for the businesses who are operating in E- Commerce, because their success and failure depends on this channel. So maintaining good customer relations through providing effective services is the key towards success in the E- Commerce and in Services marketing (Kotler 2003).
Because of the internet Banks offer and market their services to their valuable customers who are able to access their accounts 24/7 and do transactions via sitting anywhere anytime. So this new customer services channel involves non-human interactions with the customer and banks online information systems (Furst et al. 2002).
Problem statement or basic research questions for the study are:
What is the role of organizations Service IT Strategies on the well-being of its stakeholders to gain competitive edge?
What is the impact of E-Commerce on the Service Quality of an enterprise?
How does Service Management and Marketing and E-Commerce affect the way do companies work?
1.1.6. Research Purpose
The main purpose of IT strategy is to enable the business strategy to create competitive edge through the use of IT and seek innovation in services because companies are moving from product centric to customer centric. According to (Turban et al. 2004) E-Commerce is the whole process of buying, selling, exchanging and transferring information, products, services and business transaction via computing networks through internet technology.
Purpose of the paper is to find out that how E-Commerce and services management and marketing effects the business performance both inside (from employees perspective) and outside (from customers perspectives). Inside Stakeholders include the employees of both companies and how they get benefited by reducing the workload of their jobs. So because of E-Commerce it is possible for having a quick look and tracks of the required available information though just one click. Outside stakeholders include the banks customers and the
Page | 12 employees at the district account offices of Pakistan. So it will be found out that how E- Commerce and Service management and marketing works for the utility of its stakeholders at Habib Bank Limited and Siemens.
1.1.7. Reason Why I Choose This Topic?
My personal motivation and reason of choosing this topic is that I studied and grasped so many wonderful service and management related courses in Karlstad University. So I really wanted to incorporate my understanding of that knowledge in to my thesis. Plus I added the concept of E-Commerce in relation with the Service management and marketing. Because I think that today in this modern business world everything is systemized on to the interrelated networks with computers. Lastly I also discussed this topic with my supervisor Mr Lars Haglund in detail because I really wanted to work on something that is current and fresh that works all the times in the future. And I also wanted to work something that will fit in my future career.
According to Venkatraman (2000), today in this Global era with the industrious spread of the internet, Businesses step towards adoption of Information Technology has been grown immensely day by day. So IT entirely changed the way corporations think and conduct their businesses. So the biggest advantage of the internet for the companies is that they have new ways to offer and market their services to keep up with the competing arena against their competitors. So in that way businesses practices through the use of IT and Information Systems is becoming an important subject for studies to measure the impact of E-Commerce on the Services marketing and management of the business performance. One of the best advantages of the internet is that it provides advanced options to the organizations in exploring new ways of conducting businesses to compete effectively with its competitors. So in that regard businesses practice via E-Commerce today becoming the important subject for studies, for evaluating the impact of E-Commerce and service management and marketing on the business performance.
Page | 13 2. METHODOLOGY
Research process will be described in this chapter in detail. The methods will be used and why they were selected will also be discussed.
2.1. Reason of Selecting a Methodology 2.1.1. Research Approach
To conduct scientific research there are two approaches to choose Qualitative or Quantitative Research (Yin 1994). So the decision of the approach depends upon the characteristics of the gathered information. And one important difference between the approaches is that how do we used the numbers and statistics. Quantitative approach mainly relies on numbers and statistical data that at the end finally crunched into figures. While Qualitative approach uses method of deep description of facts that are based on theoretical words and language (Marshall & Roseman 1999). So the use of an approach depends on the research problem.
Qualitaitve approach provides better understanding of the phenomena under investigation (Marshall & Roseman 1999). So based on the research question qualitative research approach is the most appropriate to develop an understanding on how E-Commerce affect the service management, marketing and innovation in the service quality of a business under investigation. And it is also Qualitative in a way because it gives the consumers evaluation of the information systems. And it is also not possible to convert the data into statistics and numbers because it is more about the feelings and attitudes of the people.
2.1.2. Research Purpose
There are three different research strategies to choose from descriptive, exploratory and explanatory depending upon the research problem. Exploratory research has been used to investigate some phenomenon with the aim to develop suggestive ideas and also to clarify ambiguous problems. Descriptive approach is used to describe various phenomena that is related to individuals, situations or events that occur and also used when developing empirical generalizations that requires explanation to further theory development.
Explanatory Research is used to develop more precise theory to develop empirical generalizations and for that researcher need to develop hypothesis which are then tested empirically through having those generalizations as a major foundation (Zikmund 2000).
Purpose of this research is to find that how E-Commerce affects the services management and marketing of the Business. So in this way this research is partly exploratory and partly
Page | 14 descriptive. According to Saunders et al. (2003) exploratory studies are valuable means of finding out what is happening to explore new insights and new questions to assess the theories or phenomenon in the new light. And there are three ways to conduct exploratory research. Those were focus groups interviews, talk to expert in a subject and a search of literature. So in that way it’s possible to find out new insights on the service quality and the impact of E-Commerce on the customer side in both of these companies. Moreover the study is also descriptive because it describes phenomena and situations that are connected to individuals and also empirical generalization are developed. More Specifically characteristics of the systems will be explained, its user friendliness approach etc by answering questions at the end.
2.1.3. Deductive and Inductive Research
When researcher used already established literature and theories as a basis of their research and also finished the work with the observations compared with the literature and the existing theories is called Deductive Research. And in Inductive Research, researchers draws their conclusions from empirical findings and usually used when there are few established theories in the field of research and the researchers aim is to create new theories (Zikmund 2000).
I have written this thesis with the deductive-inductive approach. How- by first studying the available literature and theories that are previously written by some authors in these areas to build strong foundation for the research. And the research is deductive indeed because the research question is theoretical. However I have been adding my own theories that are based on the findings of my analysis. So in that way it’s a bit inductive as well.
2.1.4. Research Strategy
It is the general plan that how to carry out the research by answering the research questions set by the researchers that include clear objectives from the research question and also specify the sources in which researchers needs to collect data. Yin (1994) identified five research strategies that are based on three conditions. Those are type of research questions, the control the investigator has on the behavioural events and the focus on contemporary historical phenomenon. Experiments, Surveys, archival analysis, histories and case studies are five research strategies. Important thing is to choose the research strategy that identify the type of research question being asked. For this thesis the companies are supposed to be investigated in depth, so case study is more appropriate for this qualitative study.
Page | 15 2.2. How the Job is Done?
2.2.1. Case Study
Case Study is suitable when the research is focusing on few objects and when a researcher wishes to gain a rich understanding of the context. Case study investigates an empirical enquiry of the contemporary phenomenon in real life context. And a case may be an individual and some entity or event that are not properly defined than the single individual (Yin 1994). Case study is also appropriate to observe the inaccessible phenomena and also include the things like present situation analysis of the things and systems like how it’s going on.Then finding some problems by observing the phenomena in an good light. After that decision can be taken by properly grasping the situation and problems in a meaningful manner. And then proposed solution can be given after analysing all the things in a deeper manner.
Yin (1994) explained that through multiple case studies conclusions deliberating from two companies cases will become more powerful rather than one single case, so multiple case study has been used in this study so the findings will become automatically more powerful by analysing and comparing the results among two cases and that in turn also gives the opportunity to better understand the findings and detect the similarities among the cases.
2.2.2. Data Collection Methods
There are six different ways to collect data for the case studies that includes documentation, interviews, archival records, direct observation, participant observation and physical artefact (Yin 1994). So from these six I used three ways to collect data that includes documentation, interviews and direct observation.
Primary Data will be included by interviewing the managers at Siemens and Habib Bank Limited and my own direct observation because I have been working for these two companies previously. For this thesis I conduct Telephonic interviews and I send the questionnaire to the respondents some days before calling them so they can think more about the answers of the questions. I conduct the interviews with more open ended questions so they can answer freely about the user interface, service facilitating systems they want to talk about in detail. Secondary Data is included in the theoretical part by including some scientific journals and will be compared with the empirical part and in the analysis by reviewing company’s information systems and its online documentation regarding their information
Page | 16 systems. I have also used literature in the Karlstad University library databases by using general databases, Emerald, Ebrary and other sources.
2.2.3. Choice Of Companies
The companies that I have selected for the empirical investigation are Siemens and Habib Bank Limited. Siemens is the Multinational Company operating in Pakistan on several projects. And Habib Bank Limited (HBL) is the Government Bank operating in Pakistan.
This thesis contains the study of information systems at Siemens and Habib Bank Limited.
And how these information systems and services management and marketing of these companies affects the business performance in a better way.
2.2.4. Choice Of Respondents
Respondents include the people and managers at Siemens and Habib Bank Limited because they are the ones who are familiar with the functionality and usability of the systems. And they also know that what benefits it provides in terms of the service management and marketing of the companies. At Siemens I choose to interview both with the manager and employees at district account offices, who are in turn the users and customers of those information systems in order to get better understanding of the impact of E-Commerce on the service management and marketing of these companies. At HBL I choose to interview service and operations manager along with two customers at HBL.
2.2.5. Data Analysis
All the data collected needs to be interpreted in a meaningful and fair manner to produce compelling conclusion. For case study there are two analytical strategies to analyse data. One is developing a case description and second is relying on theoretical proposition. Relying on theoretical proposition is normally the commonly used strategy in which the result is the collection of data based on research question. And after that, finding will then compared with the results from previously conducted studies. Developing a case description is used when a little research is done previously. There are three phases of data collection and analysis that are open, axial and theoretical coding. In open coding I did preliminary phase of analysis from the interviews and other information collected. Secondly in axial coding I saw if there is any connection between the interviewees answers and how these connections could be
Page | 17 explained. Finally in theoretical coding that is the evolution of the paradigm, in which I compared the analysis with the theory for further verification or rejection (Zikmund 2000).
2.2.6. Validity And Reliability
According to Saunders et al (2003) there is a need to pay attention on the validity and reliability of the data collected in order to minimize the tendencies of getting incorrect information.
Validity is concerned with the findings collected that are appeared to be true or not. It is regarding the data collection methods that it should specifically measure what they truly intent to measure. Different steps can be taken to ensure the validity of the study like information was collected from the senior managers of the companies who know the systems.
And open ended questions have been included to take rich response from them. Furthermore interview question being made according to the theoretical framework to maintain the validity of the findings (Saunders et al. 2003).
Reliability means that all the data collection methods must needs to produce consistant results and there must needs to be good sense that one can clearly saw that there is a clear transparency reached in conclusion drawn from the collected data. Reliability is assessed by looking at the measures needs to produce the same results in other occasions, similar observations are related to other observers, taking of notes during the interview to note important points and cross check etc (Saunders et al. 2003).
Two companies have been used to conclude the results more authentic and effective to ensure that the findings are same. Selected theories for the study are described clearly and data is drawn from the theories in the theoretical framework.
Page | 18 3. THEORETICAL FRAMEWORK-LITERATURE REVIEW
So based on the research problem, it is needed to explore that how E-Commerce and service management and marketing impacts the reliability, communication, security, access and responsiveness at Siemens and Habib Bank Limited. So theories in the study will be presented to build the theoretical framework.
3.1.Approaches and Service Management and Marketing Related Issues and Topics apparent in the Literature and Articles
3.1.1. Service Concept, Service Perspectives and Service Logic
Generally, services are different. Services are intangible created at the point of use. They consumed at the moment of creation- cannot be stockpiled or owned. Services nature sparks a glimpse of continuous research in the future. Its contents mainly focus on: History of service management and marketing. The service concept and service logic include: Production, delivery and consumption that are overlapping processes and customers as co-producer.
Services are intangible and therefore, difficult to explain and assess. And they are closely tied to the employees (inseparable) of the service provider. Some authors define service as a perspective on value-creation focusing on value in use of customer.
Service perspectives and service concept; the difference put special demands on marketing and development of service. Service perspectives are the foundation for service management and marketing. Service management and marketing itself focuses on understanding the main perspectives on service and on the central concepts within the field. The concept of service has been defined in different ways. Gronroos (2001) and many other scholars stress the process nature of services. He defines the service concept “as an activity or series of activities of a more or less intangible nature that normally, but not necessarily, take place in the interaction between the customer and the service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems”. Here, there are core dimensions in this definition activities; Interactions- which could be said the ones that separate services from physical products and solutions to customer problems.
3.1.2. Service Dominant Logic(SDL)
Service Dominant Logic claims that service forms the basis of all economic exchange. SDL distinguishes service from the provision of services by defining service singularly as the
Page | 19 application of competences for the benefit of another party (Vargo & Lusch 2008) and is therefore not intrinsically linked to a service context as distinct from a manufactured product or goods context. Indeed, as Vargo and Lusch point out, the services versus product dichotomy is an economic one, not driven by customer value and therefore ‘binds us to the fundamental nature of exchange and, thus, to opportunities in innovation’. It is therefore appropriate to consider the relevance and appropriateness of the propositions embedded within SDL for the consumer services marketing context.
Three aspects of SDL are of particular interest to the consumer services context. First, that value is co-created with customers. Secondly, that value occurs at the time of use, consumption or experience and is therefore value in use. Like for this first and second aspect value is co-created and consumed when customer used the online Habib Bank innovative services. Thirdly, those operant resources are the fundamental source of competitive advantage (Vargo & Lusch 2008). It is important to distinguish between co-creation and co- production because the terms are not interchangeable within SDL. Co-creation relates to the value received by the customer through usage, consumption or experience. Co-production relates to specific tasks undertaken by customers which may occur prior to or during usage, consumption or experience.
Operant resources are defined as the knowledge, skills, expertise, capacity and time of people and in the context of SDL relate to both co-creation parties: customers as well as the service organization. It is the combination of the reliance on the operant resources of customers in order to co-create value that warrants further consideration. Brown (2007) notes that SDL requires empirical testing to build our knowledge of how customers participate in co-creating value or make sense of any role they play in co-creation value or how they evaluate the respective roles within the value creation process or whether increasing or decreasing their role influences, their overall perception of value gained from use, consumption or experience.
Considering consumers to be partial employees is not a new idea in services marketing as a result of the inseparability characteristic and the frequent need for a proactive co-production input to receive the services (Bitner et al, 1997; Kelly et al. 1990).
The discussion above suggests there is a need to ensure that the customer perspective does not get lost as service organizations fall over them to apply scientific understanding to advance their ability to design, improve, and scale service systems (Maglio & Spohrer 2008).
Practitioners involved with the provision of consumer services may need to act with caution
Page | 20 when using the language and adopting the principles of SDL. These, particularly the role of operant resources to co-create value in use, may actually provide a more effective way of bringing the customer into sharper focus within a product manufacturing or physical goods context than within a consumer services environment. This appears apparent viability of the provision of consumer services with balancing the need to understand how consumers make sense of service experience where co-creation requires greater co-production (Vargo & Lusch 2008).
3.1.3. The Development And Emergence of Service Marketing Thought
Service marketing began to emerge in 60s and this article focuses upon the evolution of the services marketing literature that tracked across three metaphorical evolutionary stages from its early beginnings in the Crawling out Stage to the most recent publications in the Walking Erect stage. As with human evolution, the outcomes at each of the three stages would have been difficult to predict precisely at an earlier stage (Fisk et al. 1994).
This article has speculated on future literature, it could not give a precise label or time frame for the next phase of the evolution. The face of the literature at each stage, the ideas that emerged, and even the contributors who chose to write in the field truly evolved and were shaped by a variety of forces (Berry & Parasuraman 1993). So the Crawling Out era is from the 1953 to 27 years. During this era lots of author discussed about the issue of service marketing and the outcome of this discussion had a large impact on the future of the services marketing and its development (Fisk et al. 1994). Risk taking of services marketing researchers particularly in the Crawling Out phase was a key element shaping the literature.
However, as the debate over whether service marketing is distinct eventually died out, it became somewhat less risky for academics to enter the field. During the Scurrying About phase, specific problems faced by business practitioners in service industries influenced the large numbers of topics that were researched.
The problems first identifies in Scurrying About phase were carried forward in the Walking Erect stage, and in fact the roots of all the major topic areas such as service quality, service encounters, internal marketing can be tracked to this phase. As the term Walking Erect implies, the literature published during the most recent evolutionary phase stands on its own and is a solid contribution to management practice and academic theories of marketing in a variety of topic areas. In the Walking Erect stage, scholars achieved a respected stance as service marketing became an established field within the marketing discipline. The
Page | 21 publication on many of the primary topics matured considerably. As with human evolution, evidence of past stages is always apparent in later evolutionary stages. The entrepreneurial spirit of the early services marketing researchers in the Crawling Out stage was still evident in the topics selected for research and in the excitement and enthusiasm with which they are pursued. So, this article tells us stressing how the service marketing is increased form different eras and how it is developed (Fisk et al. 1994).
According to this article, service marketing is quite old topic of discussion and has been emerging with the passage of time. As its history is not old than 1950s but now it is fully grown research field. The article clearly depicted the three eras of development of service management so as to show how service marketing is evolved. It majored topics (service quality and service encounters/experiences) that have gained substantial attention which rooted in relatively isolated pieces of research published during the preceding periods.
However, not until the Walking Erect period could a cohesive core of research be identified.
As mentioned earlier, the major specific topics in the article were Service Quality and experience. Service Quality is the most researched area in services marketing to date. The interest in service quality parallels the focus on quality, total quality management, and customer satisfaction in business during the last decade. The roots of the service quality research reside in early conceptual work from Europe (Lehtinen & Lehtinen 1982), and customer satisfaction theory (e.g, Oliver 1980). Most of the recent work on service quality in marketing can be credited to the pioneering and continuing contributions of A. Parasuraman, Leonard Berry and Valarie Zeithaml.
Another prominent stream of research relates to service encounters/experiences called
“moments of truth” (Carlzon 1987). The underlying assumption is that customer perceptions of service encounters are important elements of customer satisfaction, perceptions of quality, and long term loyalty. Service encounter research focuses on the interactions between customers and employees in service firms. Adding to it, the entire evolution of service can be inferred that it is brought up by risk-taking researchers who had both the lens to see service as distinct marketing discipline and/or marketing physical goods and the strength to challenge the existing pervasive marketing philosophy (Fisk et al. 1994).
Page | 22 3.1.4. Evolving to A New Dominant Logic For Marketing
Where did the IHIP characteristics come from? Analysis of numerous publications by service marketing and operations scholars during the 1970s and early 1980s reveals very few citations of references predating the 1960s. Nevertheless, the concepts of intangibility, inseparability, heterogeneity and perishability actually originated in classical and new classical economics. Origins of the Intangibility, Inseparability, and Perishability concepts are neither marketers nor operations specialists who can create the distinction between tangible goods and intangible services (Solomon & Stuart 2003).
This article states that in the era when there was too much focus on the production of goods and tangible products, the model related to economics and marketing developed to support this trend. In relation to this the most of the marketing models are suitable for the goods only as compare to the services. With the changing nature of economy and increasing of number of services the focus has shift towards the more intangibility. Now the knowledge, skills and relationship becomes more important. By seeking this marketing dominance has also shifted towards the exchange of intangibles as compare to the exchange of tangibles goods (Vargo &
Lusch 2004).
According to the authors the new perspectives is coverage to form a new dominant logic for marketing, one which service provision rather than goods is fundamental to economic exchange. In the article the author states that new perspective in world is converging to a new dominant logic for marketing where services are becoming fundamental of exchange rather than goods. The article has also discussed the marketing mix Ps and explain the situation where they are applicable or where they are not. The article has discussed the marketing theories during the year in early 1800 and provides some description related to developments in marketing theory (Vargo & Lusch 2004).
The services being a totally different in nature with goods also require the different type of strategies and techniques to market. Between goods and service centred view there have been lot of comparisons and these comparisons are based on six different attributes. Along with this there are eight different foundational premises which present the mix of the rising dominant logic and explain the differences between goods and services. The examples of the foundational premises are all economies are service economies- customer is always a co- producer and knowledge is the fundamental source of competitive advantage (Vargo & Lusch 2004).
Page | 23 3.1.5. Value Co-Production: Intellectual Origins And Implication For Practice and
Research
In this article the old view which was formulated in the industrial value creation has been compared. The old value creation states that consumers are destroying the value which producers had created for them. The author has proposed as alternative and new value creation view that he has called the value co-poduction. In this article the history relating to value creation has been presented along with that the developments related to alternative view of value creation has been discussed. The author has highlighted the history by taking into account different views like value, consumption by customers, service and value co- production. The author has given emphasis on how can value co-production can be utilized for describing and understanding of the business opportunities, organizational practices and management. The author claims that actors hold different roles in relation to different counterparts in value co-production. By underrating this role system the company can make the value creation process more efficient. According to author the co-produced value creation framework is a higher logical type then the industrial (Ramirez & Rafael 1999).
This article is very up-to-date about value production and it has given important information related to the area. The article has discusses about the different actors in the co-production process and their possible relationship with each other in this process. I completely agree with the author that the industrial view of value production could not cover the new aspects of the value production process. The value co-production view is much wider and takes into account all types of services (Ramirez & Rafael 1999).
3.1.6. Whither Service Marketing? In Search of A New Paradigm And Fresh Perspectives
In this article the authors have made discussion and evaluation relating to the IHIP if it really works for the generalization of the differences between services and goods.
Are IHIP Characteristics Generalizable?
Despite an undercurrent of skepticism about the component elements (Gronroos 2000;
Lovelock 1983, 2000) and a highly critical stance by (Gummesson 2002), the IHIP remains a unifying theme for services marketing. It continues to be the heart of services. I believe that IHIP is applicable to all services because it is basically a common ground for all service types. Yet, one might contend that services are uniquely different on the four specific IHIP
Page | 24 characteristics. No matter how services are unique, it could not be always supported by the evidence; it might be only true for certain types of services, as it was for some goods. Hence, the claim is even less valid now than when services marketing were in its infancy. My review of this section has surfaced me to a single conclusion, i.e., the communality of IHIP characteristics to all services is unquesionable which in turn encouraged me saying IHIP characteristics are Generalizable. Now, it would be better to delve in to each characteristic in turn.
Intangibility
Intangiblity emerges as an ambiguous and surprisingly limited concept. It appears to be primarily associated with pre-purchase activities where customers have no prior experience with the service in question- a situation that is equally valid for some goods. Many services involve tangible performance activities that users experience during delivery through one or more of their five senses. In fact, for services such as surgery, haircuts, health clubs, cleaning, repair, or land scalping, customer’s key goals are to obtain tangible changes in themselves or their possessions. The tangible outcomes of such changes- a feeling of physical well-being following a message, a clean office, a sporty new haircut, a newly mowed lawn, or restored mobility following hip replacement surgery-will range from ephemeral to permanent and irreversible. The degree of mental intangibility inherent in a service is not necessarily correlated with physical intangibility.
Perishability
The generalization that inherent perishability makes services distinctively different from goods. Because services require significant qualification, for it is a multidimensional concept encompassing productive capacity, the producer’s output, the performance experienced by customers, and the output they obtain from the service. From the customers’ perspective, some service output is durable and may even be irreversible. An important exception to the generalization that all services are perishable is found among information based services in re-playable media for later re-sale and re-use. In these instances, the producers output is durable and replicable, and the customer can enjoy the performance again and again.
Variability
Although the reap pears to be a consensus that variability is an inherent characteristic of labor-intensive services, no such claim is made for machine-intensive service operations.
Page | 25 During the past two decades, there has been a significant trend toward replacing labor by automation to improve productivity and achieve standardization in service delivery, thus making variability less of a problem than previously. In manufacturing industries, despite efforts to improve physical product quality, variability is evidenced by consumer complaint data, product recalls, and negative product evaluations from testing organizations like the Consumers Union. Variability also remains an ongoing problem for food and other products subject to rapid physical deterioration.
Inseperability
Inseparability of production and consumption is linked to the concepts of interaction and the service encounter (Czepiel et al. 1985). In many separable services, there is an inevitable decoupling of production and consumption. Consider cleaning, repair, and maintenance services, where consumption of the benefits can only take place after the customer reclaims the item, typically sometime after production has been completed. In a few instances, consumption of benefits actually precedes production, as in banking when a customer pays a bill by writing a check that may not be processed until several days later. Simultaneity of production and consumption is a distinctive characteristic for inseparable services, with important implications for marketing and operations strategy, including the role played by customers. As such, it is a very important concept. However, there could be far too any separable services to justify the generalization that inseparability is a distinctive characteristic of all services.
Conclusion on the Generalizability of the IHIP Characteristics
Replacement of human inputs by automation and rigorous application of quality improvement procedures have substantially reduced variability (heterogeneity) of output in numerous service industries. Outsourcing by companies can greatly expand the incidence of separable services. And advances in information technology and telecommunications, notably the development of the Internet and digitization of text, graphics, video and audio, have made it possible to separate customers in both time and space from the production of numerous information based services, may seem destroying the twin constraints of both inseparability and perishability. As a paradigm, the notion that the four IHIP characteristics make services uniquely different from goods is deeply flawless.
Page | 26 IHIP Characteristics look plain but understanding of how intangibility, heterogeneity, and inseparability could affect many services that would lead a host of service researchers to recognize that knowledge about achieving quality in manufacturing. This looks sufficient to understand service quality; as a result, it might initiate a rich and productive research stream dedicated to service quality improvement (Berry 1990). Each of the four IHIP characteristics taken separately- and sometimes in partial combination-are relevant to specific service industries, categories, and situations.
3.1.7. Service Innovation
What I grasp and extract from the literature regarding Service Innovation is more about changing attitudes of society and foremost the role of Information Technology enforced into these sectors is enormous. Service innovation is a new or significantly improved service concept that is taken into practice. A service innovation benefits both the service producer and customers and it improves its developer’s competitive edge. A service innovation is a service product or service process that is based on some technology or systematic method. In services however, the innovation does not necessarily relate to the novelty of the technology itself but the innovation often lies in the non-technological areas, novel application of technology in the service process, new forms of operation with the supply chain or new ways to organize and manage services. Mr. Edvardsson summarized services in three dimensions as “in time and space linked activities and interactions provided as solutions to customer problems. The service is most often co-produced by the customer. Customers define service on the basis of value-in-use and the resulting customer experiences” (Edvardsson, B. 1997).
Service sector has dominated the world economy. In most countries, services nowadays contribute to more economic values than agriculture, raw materials and manufacturing all together. Service economies dominant position is more apparent in developed countries. Up to three-quarters of the wealth and 85% of employment are generated by services (Tidd &
Hull 2003), and most new job growth comes from services.
3.1.8. Service Innovation in Financial Industry
Financial services industry innovation is a very important ability of their company to meet short and long-term performance targets. Respondents, who represent public and private firms in retail banking, asset management, investment banking, insurance, and other financial
Page | 27 services, consider product innovation to be very important and view business model innovation as growing in importance.
Today E-Commerce and E-banking encompasses a broad area within financial services, from smart cards to internet banking and mobile banking, each providing a specific set of services to meet the business requirements of the end user. The cost of handling cash is being reduced by replacing cash-payment with E-Payments such as credit cards and smart cards. For example, Master cards with Pay pass and Visa with pay Wave are new contact-less technologies to pay for your small day to day items. It helps to reduce queue times as customers do not need to waste time looking for change or mess with PIN numbers. On the other hand, however, it can increase costs for the acquirer and card issuers. Mobile banking is making an impact on the financial services landscape; for example, anyone with access to a cell phone has a place to keep his or her savings without needing a traditional bank account.
So through this mobile banking- today we do everything at home and we don’t need to visit our banks, so life becomes easy and it saves time by having these kinds of service innovations. Other financial innovations include new Front office concept in which everything is available on the computer systems and by just one click you have all the figures available that you want rather than go back office calculations. Micro banks who gave loans to poor, ATMS, Buy now pay later and so on (Tidd & Hull 2003).
What I get, grasp and extract from the literature and service related articles is that service management and marketing is more about changing behaviours of people and role of information technology and E-Commerce that are enforced into these sectors are enormous.
Page | 28 4. EMPIRICAL
4.1.SIEMENS-Company Introduction
Siemens Information Technology Services (ITS) is the Pakistan’s biggest information services and solutions provider of the country. Their main focus is on offering innovative and quality infrastructure solutions for their customers. Siemens offer flexible software, hardware and networking solutions that adheres to the business needs of their valuable customers. ITS Siemens main priority is the customer’s success. Siemens addresses technological edge, reliability, scalability, performance and security as the major cornerstones for all the solution and services that they offer. Siemens serves their businesses operational needs by providing meaningful technological solutions (Siemens 2012a).
Siemens Information Technology Services includes:
SAP Center of Enterprise, SAP Authorized Training Center, IT Infrastructure Solutions, SAP Support Services, Networking Solutions (LAN, WAN, WLAN, MAN, SAN, IPT, VOIP) and Hardware Solutions that includes PCs, Servers, peripherals (Siemens 2012a).
Siemesn Global Alliances with corporations include Systimax(Avaya), Cisco, Nortel, Panduit, Fujitsu, 3Com, Sun Microsystems, HP, Motorola and full back-end online support from Siemens AG (Siemens 2012a).
Systems Applications and Products (SAP) provides its targeted businesses with the enterprise resource planning (ERP) software that is mainly required to gain strategic insight, increase productivity, and respond flexibly according to changing market situations to compete effectively. SAP® ERP software proofed beneficial in enhancing employee productivity. And along with that it also enabled informed decisions that set businesses apart from their competition. SAP ERP software enables automation of end-to-end business processes that extend to the entire business value chain, including partners, suppliers, and customers (Siemens 2012a).
Reason that why I choose Siemens as a company for my thesis is because that Siemens is a good reputable multinational company. And I also choose Siemens because I previously worked for the Siemens as their financial consultant. So in that way I know the mechanism of their working operations that I include in the case study of SAP implementation in the District Account Offices of Pakistan.
Page | 29 4.1.1. Managing Today’s Business Challenges
Today’s business climate includes dust of increased customer expectations, era of globalization, compressed business cycles and businesses own demands for increased profitability. So to tackle these challenges businesses need to be able to respond flexibly without sacrificing profitability, transparency, or internal control (Siemens 2012b).
With the right ERP software, businesses can boost their performance by passing through the following major hurdles:
• Simplified reporting across complex corporate structures.
• Strong bondage with suppliers and customers to improve business processes.
• Acceleration of time to the market and value with more personalized products and services.
• Gain nimbleness and speed in operations to perfect the use of corporate resources and assets.
• And delivery of high chunks of services to enhance customer satisfaction (Siemens 2012b).
SAP Enterprise Resource Planning application has wide range of functionality that includes personalized information access and tailored reporting to help businesses in all these areas. It also scales to support business requirements of midsize and large organizations, whatever their industry or global reach. SAP ERP provides a ground foundation for growth, innovation, and process excellence with full support to integrate core business processes. That includes Supply Chain Management, Customer Relationship Management and product life-cycle management (Siemens 2012b).
4.1.2. SAP ECC 6.0 Solution Software for Every Business and Process
Large and small Businesses discovered that SAP ECC 6.0 is the world's most comprehensive adaptive business applications that provide best breed functionality for the enterprise. This software is built for complete application integration, unlimited scalability, and easy collaboration over the Internet to facilitate the stakeholders (Siemens 2012c).
Individually, SAP ECC 6.0 applications help businesses to manage critical business processes. And collectively they form a tightly integrated business application suite that adds
Page | 30 value to every facet of the organization and to the businesses external value chain. These SAP 6.0 applications are based on the SAP Net Weaver and integration and application platform.
This reduces total cost of ownership across the entire IT landscape and supports the evolution of SAP ECC 6.0 applications to a services-based architecture (Siemens 2012c).
Businesses can always improve their operations and strategies, enhance productivity and that’s the power that businesses get with the enterprise resource planning software from SAP to adapt flexibly with the changing industry requirements. SAP Net Weaver helps organizations to align IT effectively with their businesses. This is the perfect way for organizations to enhance and compose business applications instantly by using enterprise services. SAP Net Weaver allows businesses to evolve current IT landscapes into a strategic environment that drives drastic business change (Siemens 2012c).
4.1.3. SAP ERP Functionality For Businesses Process Excellence
SAP ERP provides businesses with the following functionality that is easy-to-use self- services and role-based access to information:
Financial management –SAP ERP provides wide variety of financial management solutions for complex businesses. It addresses critical financial functions: such as financial and management accounting and reporting, financial supply chain management, working capital management, treasury and risk management, regulatory compliance, risk and integration with SAP solutions for governance (Siemens 2012d).
SAP ERP helps to increase finance department value by automating labour-intensive transaction processing and reporting functions. Freeing skilled finance professionals from routine activities enables them to provide greater value to the organization. That is done through operational insight, strategic action, and better understanding of the drivers for value and improved performance (Siemens 2012d).
Human capital management –SAP ERP Human Capital Management solution offers integrated kit to businesses to manage important assets of the organization. Automation of core human resource processes includes: employee administration, payroll, and legal reporting that increases efficiency and supports compliance with changing global regulations.
For example, it is possible to create project teams based on skills and availability. And
Page | 31 monitoring of teams progress on specific projects, tracking of their spending time, and analysis of their previous results. Integrated talent management functions in SAP ERP give HR managers a good insight organizational talent to plan, align, acquire, educate and retain the talent more effectively to maximize the effectiveness of the organization. Identifying top performers and potential successor’s also helps organization to minimize disruption when executives and senior managers leave or retire (Siemens 2012d).
SAP ERP supports shared services and business process outsourcing (BPO), thereby reducing the cost and risk for deployment models. Whether businesses outsource some part or all HR operations, they have access to an ecosystem of partners whose BPO services are powered by SAP software (Siemens 2012d).
Procurement and logistics- Operations help businesses no matter whatever industry are they from, it quickly minimize cost savings.Among this integrated management solution businesses are able to manage end-to-end procure-to-pay and logistics business processes for complete business cycles. Solution also helps to optimize the physical flow of materials This is ranged from self-service requisitioning to flexible invoicing and payment altogether.
(Siemens 2012d).
Product development and manufacturing- Through using modernized new-product development and introduction processes, SAP ERP shorten the time to the market by providing high end products, quick respond to the demand changes and make sure the delivery of promised orders on time. Businesses improve transparency across shop floor processes through superior driven performance across both local and global plant operations (Siemens 2012d).
SAP ERP provides many benefits by streamlining entire manufacturing processes varying from planning and scheduling through sequencing and execution to monitoring and analysis.
This improves efficiency along entire value chain. This software supports customer oriented manufacturing approach and compatible with just-in-time methodologies. By using real-time tracking and analysis, businesses can identify and fix problems before they become customer issues (Siemens 2012d).
