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Service Management Mantra

May 18, 2008

Service management is understanding how to manage a business in service competition; that is, in a competitive situation where services, defined in a broad sense, are the key to success in the marketplace, regardless of whether the core of the offering is a service or a manufactured product.

Service management can be described as follows:

  1. Understanding the value that emerges for customers by consuming or using the offerings of an organization and knowing how services alone or together with information, physical goods or other kinds of tangibles contribute to this value.

  2. Understanding how total quality is perceived in customer relationships to facilitate such value and how it changes over time.

  3. Understanding how an organization (people, technology and physical resources, systems and customers) will be able to produce and deliver this perceived quality and support customers’ value-creation.

  4. Understanding how an organization should be developed and managed so that the intended perceived quality and value are achieved.

  5. Making an organization function so that this perceived quality and value are achieved and the objectives of the parties involved (the organization, the customers, other parties, etc.) are met.

This means that the firm has to understand the following:

  1. The perceived quality and value in their everyday activities and processes customers are looking for in service competition.

  2. How to create that value support for customers.

  3. How to manage the resources available to the organization to achieve such service-based value creation.

This is an exhaustive description of service management. Shorter definitions lose some of the information content, but may still be clear to readers, and they are easier to remember. According to another definition in the literature, ‘service management is a total organizational approach that makes quality of service, as perceived by the customer, the number one driving force for the operation of the business’. Applying service management principles means that service is considered the organizational imperative.

‘Organization’ in these contexts, of course, refers to the bundle of quality-generating resources involved in producing the service, that is, people (personnel and customers alike) as well as technology and physical resources and operating systems, information management and administration. As organizations increasingly move towards being network organizations, many of these resources are outside the boundaries of traditional organizational constructs. It is also important to observe that the definition of service management requires a dynamic approach to management. It is not enough to understand which values or benefits customers are seeking; one must also understand that the benefits customers are looking for will change over time, and that the customer perceived quality and value which is produced has to change accordingly.

A service management perspective changes the general focus of management in service firms as well as in manufacturing firms in the following ways:

  1. From product-based value (‘value-in-exchange’) to total value emerging in customers’ processes (‘value-in-use’).

  2. From short-term transactions to long-term relationships.

  3. From core product (goods or services) quality (the technical quality of the outcome) to total customer perceived quality in customer relationships.

  4. From production of the technical solution (or technical quality of a product or service) as the key process in the organization to developing total perceived quality and supporting customer value as the key process.

The expression value-in-exchange refers to the view that value for a customer is embedded in a preproduced product. Value-in-use means that value for a customer emerges in the customer’s activities and processes. Physical products and service concepts, like people, systems and information are resources that customers can capture value from, provided of course that they indeed function in a way that supports their activities and processes.

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