IMS 6485: Services on the Web 1 Dr. Lawrence West, MIS Dept., University of Central Florida 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 2 Dr. Lawrence West, MIS Dept., University of Central Florida Where are Services on the Value Chain?

IMS 6485: Services on the Web 3 Dr. Lawrence West, MIS Dept., University of Central Florida Services

IMS 6485: Services on the Web 4 Dr. Lawrence West, MIS Dept., University of Central Florida 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 5 Dr. Lawrence West, MIS Dept., University of Central Florida 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 6 Dr. Lawrence West, MIS Dept., University of Central Florida 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 7 Dr. Lawrence West, MIS Dept., University of Central Florida 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 8 Dr. Lawrence West, MIS Dept., University of Central Florida 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 9 Dr. Lawrence West, MIS Dept., University of Central Florida 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 10 Dr. Lawrence West, MIS Dept., University of Central Florida 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 11 Dr. Lawrence West, MIS Dept., University of Central Florida 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 12 Dr. Lawrence West, MIS Dept., University of Central Florida 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 13 Dr. Lawrence West, MIS Dept., University of Central Florida 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 14 Dr. Lawrence West, MIS Dept., University of Central Florida 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 15 Dr. Lawrence West, MIS Dept., University of Central Florida 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 –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 16 Dr. Lawrence West, MIS Dept., University of Central Florida 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 –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 17 Dr. Lawrence West, MIS Dept., University of Central Florida 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 18 Dr. Lawrence West, MIS Dept., University of Central Florida Classifying Services Let's classify services along three dimensions –Frequency of transactions for typical users –Importance of each transaction –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 19 Dr. Lawrence West, MIS Dept., University of Central Florida 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 20 Dr. Lawrence West, MIS Dept., University of Central Florida Let's Invent a Service