The Infosys Labs research blog tracks trends in technology with a focus on applied research in Information and Communication Technology (ICT)

« How to eat a trillion dollar pie ? | Main | Key Challenges in Shared Services »

Influence of Service Experience on Long-tail of Shared Services

 

Shared Services

Shared services are about the consolidation of common services from various units in an organization and offering those to legitimate users. Commonly used services are pooled from their respective units and consolidated under a shared services center. These services are attached with service level agreements and then provided within or outside of the organization.  

Though, shared service isn't a new concept it wasn't accepted till a few years back. However, when economies stared slowing down, suddenly it became important for decision makers. Many organizations including governments have initiated the implementation of shared services. The main motivation for adoption of shared services is to control the cost because of consolidation of resources and avoiding duplicate efforts.

Practically, shared services can be implemented in any business including government organizations when decision makers think of consolidating services under a single umbrella.

Adoption Stages of Shared Services

The stages in shared services project are: (1) Strategy, (2) Design, (3) Implementation, (4) Transformation, and (5) Maintenance.

Strategy has to be decided for successful implementation and use of shared services. The adopted strategy has to be incorporated in design and needs to be implemented by modifying processes and systems. One of the key points of strategy has to be maximizing the use of new technologies. Along with the implementation, it is necessary to do an organization wide transformation so that shared services can be embraced by users and desired success can be achieved. Transformation stage is very crucial as it is requires changing the attitude of users towards the effective use of shared services. Maintenance stage is about modification in offerings of services as per requirements.

Service Experience

Service experience is an event during consumption of a service. It also includes a mental stage before and after usage of service. Experience is usually intangible and is the perception of a user. It depends on the presentation and the way it is delivered by the service provider.

Unlike products service can't be manufactured hence, they are always exposed to variability which is dependent upon the skills of the service provider. Therefore, service should have a certain zone of acceptance. If service is offered within this zone then user receives it positively otherwise negative sentiment is created in the user's mind. Positive sentiment creates loyalty in the user whereas negative sentiment removes the user from further usage of the service. Therefore, creating a good service experience is very essential for effective usage of a service.

Long-tail of Shared Services

Shared service is a long-tail commercial model of cost savings where maximum savings comes from long-tail because of regular usage of shared services.

Huge savings can be achieved in very short span of implementation phase of shared services (Figure 1) because of reduced usage of resources, systems, and processes. However, during operations stage rate of savings will reduce or become stagnant (Figure 1-B). But, it is most likely that after certain period, operations cost of shared services will start increasing (Figure 1-A). This stage shows that shared services are unsuccessful. It is essential to understand the reasons of failure.

It can be easily observed that in the shared service, implementation stage is mostly one-time activity. Savings achieved in this stage are tangible and only one time. Whereas operations of shared services are the regular activities and savings are on regular basis. These savings are mainly intangible, and in form of improved productivity or reduced service delivery time. Thus, a delivery of service during regular operation state plays a vital role is controlling the cost on regular basis.

When users are unhappy with the shared services then they will turn away from services or may become reluctant to use it. This will reduce the productivity of user. Users will find other means to get their work done by bypassing shared services. Thus, it will strain other resources to provide services to users which otherwise shared services should have provided. The key reason for unhappiness of users is the experience of shared services.  

If user experience is rich then the acceptance of shared services is easier otherwise rejection happens. How service is delivered matters a lot to develop loyalty of consumer. Therefore, more savings don't come by simply implementing shared services rather they will be achieved by providing better consumer experience of service during regular delivery.

Longtail_of_Shared_Services.pngFigure 1: Long-tail of Shared Services

Conclusion

First time implementation of shared services will show immediate effect on the reduction of cost within very short time. However, cost advantage may become stagnant or may reduce after certain days of implementation if it isn't implemented well. It is quite possible that cost may increase after some time this is the point of failure of shared services. To achieve cost benefits of shared services for longer term or to get long-tail of savings in shared services, service experience is the key as it increases loyalty of the user.

 

(Authors: Dr. Manish Godse & Dr. Indranil Roy Chowdhury)

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Please key in the two words you see in the box to validate your identity as an authentic user and reduce spam.

Subscribe to this blog's feed

Follow us on