Evaluate the role of IT in service operation

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Contents

Sections                                                                                Page

  1. INTRODUCTION                                                        ....        1        

1.1        From Manufacturing to Service Operations                        ....         1-2

1.2        Evolution of IT in Service Operations                         .....         3

1.3        Key Principles in Operations Strategy                        ......        4-5

                                                                        

  1. IT’s ROLE IN BANKING SERVICE OPERATIONS                .....        6

2.1        Strengths                                                         .....        6-9

2.2        Weaknesses                                                        .....         9

2.3        Opportunities                                                         .....        9-10

2.4        Threats/Challenges                                                ......        10-11

  1. IT’s ROLE IN BANKING SERVICE OPERATIONS                 ......        12                                

3.1        Strengths                                                        .....         13-18

3.2        Weaknesses                                                        .....         18

3.3        Opportunities                                                         .....         19-20

3.4        Threats/Challenges                                                ......        20

  1. FINDINGS AND CONCLUSIONS

4.1        Impact of Globalisation and Deregulation on the Industries        .....        21-22

4.2        Analysis and Evaluation                                         .....        22-25

4.3        The present and future needs of IT in Service Operations         .....        26

REFERENCES & BIBLIOGRAPHY                                ......        30-35

TABLES AND DIAGRAMS

Diagram 1                                                                .......        13

Diagram 2                                                                .......        15

Diagram 3                                                                .......        16

Table 1                                                                ......        2

Table 2                                                                ......        17

Table 3                                                                .......        22

Table 4                                                                .......        24

Table 5                                                                .......        25

                                

                         

EVALUATE THE ROLE OF IT IN SERVICE OPERATIONS

  1. INTRODUCTION

“Service...does not have a physical dimension” (Vonderembse and White 2004). Yet, one of the most profound realities in life today is the fact that services are the fastest growing component in international trade (Mathe and Dagi 1996).

 

  1. From manufacturing to service operations

Manufacturing organisations produce standardised products which are physical products that are sold to other businesses. The process involves production, manufacturing and operations management (Slack et al., 2006). The increasing intricacies of industrial manufacturing and the demand for “higher efficiency, greater flexibility, better product quality and lower cost” have altered “the face of manufacturing practice” (Rao et al., 1993 cited by Meziane et al., 2000). It was further argued that the manufacturing sector today use IT applications such as computer science, management, marketing and control systems in the organisation.

Reid and Sanders (2005) classified service organisations into 3 main areas:-

  1. Quasi-manufacturing

Services involving warehousing and distribution centers.

  1. Mixed services

Services offered by banks and insurance firms.

  1. Pure services

Services with customer contact and are labour intensive, such as restaurants, universities and beauty salons.

Additionally, Cook et al. (1999) and Fitzsimmons and Fitzsimmons (2004) cited by Olorunniwo, Hsu and Udo (2006) endeavoured to introduce 2 types of “service dimensions”:-

  1. Marketing-oriented

Includes “intangibility, differentiation, object of transformation, type of customer and commitment”

  1. Operations-oriented

Includes “customer contact, customer involvement, labor intensity, degree of customization, degree of employee discretion and production process”

On the other hand, Schmenner (1986) cited by Olorunniwo, Hsu and Udo (2006), divided services into 4 “quadrants”, framed by “labor intensity” on one side and “customer contact/customization” on the other, as illustrated in this diagram which we adapted below in

Table 1:-

  1. Evolution of IT in Service Operations Industries

According to Mathe and Dagi (1996) service operations are types of operations that give “value through information, save time” and provide value to “changes in physical attributes”.  For a service organisation to produce optimum value, it has to exert “control over the entire delivery chain” which includes suppliers and customers.

At the outset, just as Adam Smith recognised in The Wealth of Nations in 1776, that the industrial revolution’s technology at that time had spawned enormous opportunities for manufacturers by increasing productivity and reducing costs by automation and mechanisation, the same can be said of Information Technology (IT)’s profound impact on every aspect of our lives, especially service operations. The combination of IT and manufacturing’s automation is called “Computer-Integrated-Manufacturing”  and when properly combined can produce “synergistic results” to respond to customer demands and preferences by offering high quality at low costs, thus giving the organisation a competitive advantage (Vonderembse and White 2004).

Significantly, IT’s role becomes intertwined with the Input → Conversion/Transformation→ Output systems/equation to produce products and services.

However, IT is incapable of being a useful tool unless it can be utilised, harnessed and integrated effectively into operations. Take for instance, the banking industry, which will be examined in detail in the subsequent paragraphs. With the advent of Automatic Teller Machines (ATMs) providing 24/7 services to customers, brick and mortar banking has been “replaced but no less inefficient rather more effective since it is not subject to any time horizon” (Mathe & Dagi 1996). Similarly, Back Office (BO) operations also provide hidden preparations necessary for the success of the front office operations. IT enables this seamless integration of functions in real time and helps the bank’s different departments to synergise operations (Mathe & Dagi 1996).

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  1. Key Principles in Operations Strategy

The dynamic and rapidly changing nature of IT means that organisations cannot rely on technology alone to stay ahead of competition (Sohal, Moss and Ng 2001). Powell and Dent-Micallef (1997) cited by Sohal, Moss and Ng (2001) assessed IT’s impact in the retail industry and revealed that IT on its own didn’t produce “sustainable performance advantages....but a number of organisations have achieved competitive advantage by utilising IT to influence “intangible, complementary human and business resources such as flexible culture, strategic planning-IT integration and supplier relationships”.

It was demonstrated that “leveraging ...

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