Key Characteristics and Management Challenges
of On-Demand Services
Master thesis report
G. J. T. (GUIDO) VELEMA S2375192
Faculty of Economics and Business University of Groningen
06 51936232
g.j.t.velema@student.rug.nl
Supervisor and examiner / University
Prof Dr Ir J.C. Wortmann / University of Groningen
&
Co-assessor / University
Ing. R.H. van der Burg MSc. / University of Groningen
&
Co-examiner / University
Key Characteristics and Management Challenges
of On-Demand Services
ABSTRACT
More and more services are nowadays available on demand. However, a sound conceptualization and definition of on demand (OD) services does not exist yet in current literature. This is remarkable, because this particular kind of service comes with several challenges. OD services guarantee the availability of the provided service, whenever requested by the customer. In order to guarantee this availability, sufficient capacity management is needed. This – among others – elements require a deeper understanding of those OD services. In this paper a case study is conducted with three cases, including five in-depth interviews in order to find the defining and different characteristics of OD services. Also the accompanying challenges and management practices that come with managing OD services are revealed.
TABLE OF CONTENTS
1. INTRODUCTION ...4
2. THEORETICAL BACKGROUND ...6
2.1 Services ...6
2.1.1 Definition of services ...6
2.1.2 Service delivery (service package) ...6
2.1.3 Service characteristics ...7
2.1.4 Challenges in Services ...8
2.1.5 Service Operations Management practices and activities ...9
2.2 On-Demand services ... 10
2.2.1 Definition of OD service ... 10
2.2.2 OD service characteristics ... 10
2.2.3 Management challenges of OD services ... 12
2.3 Summary ... 12 3. METHODOLOGY ... 14 3.1 Sampling ... 14 3.2 Data collection ... 14 3.3 Data Analysis ... 16 4. RESULTS ... 17 4.1 Case description... 17 4.1.1 Handyman service ... 17 4.1.2 Energy service ... 18
4.1.3 Fire brigade service ... 18
4.2 Analysis ... 19
4.2.1 Characteristics of OD services ... 19
4.2.2 Challenges of OD services ... 21
4.2.3 SOM practices in OD services ... 22
5. DISCUSSION ... 23
5.1 Definition of in OD services ... 23
5.2 Characteristics of OD services ... 24
5.3 Challenges of OD services ... 25
5.4 SOM practices in OD services ... 25
6. CONCLUSION ... 27
6.2 Contribution of this research ... 27
6.3 Limitations of this research ... 28
6.4 Suggestions for further research OM practices in OD services ... 28
ACKNOWLEDGMENTS... 28
APPENDICES ... 33
APPENDIX A: Mail to approach companies (English) ... 33
APPENDIX B: Mail to approach companies (Dutch) ... 34
APPENDIX C: Interview Protocol multiple case study OD services (English) ... 35
APPENDIX D: Interview Protocol multiple case study OD services (Dutch) ... 39
APPENDIX E: Description of coding strategy ... 43
APPENDIX F: Extent of different service characteristics in the cases ... 44
1. INTRODUCTION
Since 70% of the employable workforce is currently engaged in service-type activities (Sabolo, 1973; Fuchs, 1968; Sasser et. al., 1980), sufficient understanding of what services are, is necessary. Effectively developing and managing services requires a thorough understanding of its service characteristics (Schurmann, et. al., 2012). This understanding can be obtained by observing particular kind of services.
The focus of this paper will be on on-demand (OD) services, a particular kind of service. Whereas services in general are characterized by the transaction that is made between user and provider of the service, an OD service has the additional feature – among others – that the availability is guaranteed. Thereby OD services are always ready to use (Tortorella, 2015). In this paper, OD services are defined as: ‘services with an agreement for a pre-specified guaranteed service delivery, whenever the service is requested’ (van der Burg et. al., 2017). Examples of OD services are well known; whether you want to watch a movie (Netlfix), listen to music (Spotify), need medical care immediately (ambulances) or road-assistance immediately (ANWB). These examples have in common that the demand of the service is unpredictable and fluctuates. However, OD service-providers guarantee the availability of their services, whenever requested.
According to OD services, three issues arise. Firstly, as can be seen from abovementioned examples of OD services, OD services are rather diverse. Therefore, defining management practices that hold generally for OD services is difficult (Chase and Apte, 2006). Secondly, due to the rapid growth of the internet and the progress in telecommunication technologies, more and more services are nowadays available on-demand (van der Burg, et. al., 2017; Ma & Seidman, 2015). Finally, offering such an on demand service is also a challenging task for service managers. When the demand for the service is not known but the availability is guaranteed, capacity must be available. One may wonder what is done with unused capacity to remain cost effective and what is done when capacity seems to run out. It is also challenging to deliver the service at the right time and place for the customer. This is less challenging for companies like Spotify: via the internet network they can deliver the service wherever you want. How different is it with ambulances: consider being wounded in the middle of the woods and in need of emergency care. How do they accomplish to being on time to save your life?
So, more and more (diverse) services are available on demand and these services are challenging to manage. Unfortunately, a sound conceptualization and definition of OD services is not available. This is remarkable, because more and more is written in literature about OD services. This lack of a consistent definition in literature (despite the growing amount of literature of OD services) can be explained by the fact that the majority of this papers discuss a specific service that is offered on-demand (e.g.: cloud computing, discussed by Arpaci, 2016; Yang et. al., 2015).
in current literature. This paper wants to address this. Also a comprehensive overview of service characteristics and management practices of OD services is still missing.
The purpose of this study is to determine the key-characteristics of (different) OD services and the challenges that commonly arise in different OD services and their implications on management practices. The determining (and understanding) of characteristics, challenges and management practices of OD services can help to conceptualize the overall concept of OD services. To scope the research, there is aimed to find an answer on the following research questions:
1. What are the defining and differentiating characteristics of an on-demand service? 2a. What are the managerial challenges associated with OD services?
2b. Which practices can be used to manage the challenges associated OD services? These questions raises opportunities for a multiple case study, because case studies allow for the identification of key variables and their relationship, so they are suitable and used for the study of this emergent phenomena in depth (Gibbert et. al., 2008). A multiple case study can help with defining OD services and determine its key-characteristics, and the influence of those characteristics on service management practices.
By addressing the above mentioned research questions, this research will contribute to current literature in two ways. Firstly, the theoretical contribution of this paper is to explain and understand the concept of OD services in more detail by describing the key-characteristics of OD services and the accompanying management challenges. The lack of a clear vision of the concept of OD service in literature will thereby be addressed. Secondly, the knowledge developed in this paper supports managers of OD service-organizations, since this paper addresses the question of how to cope with challenges of different types of OD services and which practices should be performed, according to those challenges.
2. THEORETICAL BACKGROUND
In order to address the abovementioned research questions, firstly a theoretical background is presented below. In this theoretical background we want to find out what is already known in current literature about OD services and what is not. In order to do that, the following approach is used: firstly we determined which subjects we were interested in (i.e.: services, OD services, (OD) service characteristics, (OD) service challenges and practices). Then, we looked for experts in the field of those specific subjects and used their literature (e.g.: Grönroos when it comes to knowledge about services. If there was no specific expert, the most relevant literature for this paper was used. By most relevant we mean literature which tries to describe and explain OD services. We build thereby further on the work of van der Burg et. al., (2017). In their paper a literature review about OD services is conducted.
Before the actual research is explained and the results are presented, some question needs to be answered. What do we mean with defining and differentiating characterises of OD services? Which defining and differentiating characteristics of OD services are known and which are not? The same questions could be asked for challenges and managerial practices of OD services: How do we define challenges and practices of OD services and what is known in current literature about them? At the end of this chapter we hope to answers these questions. But, before we narrow the scope towards OD services in specific, services in general are described.
2.1 Services
2.1.1 Definition of services
The definition of services is widely discussed in service literature (e.g.: Jones, 2005). In this research, we draw upon the definition proposed by Grönroos (1988). Despite the fact that services are rather different from each other (e.g.: compare getting a haircut and flying from an airport to another airport), there are some common characteristics described by Grönroos (1988). These common characteristics combined deliver the following definition: Services are [more or less] intangible activities, or a series of activities [rather than things], [at least in some extent] produced and consumed simultaneously with production and there is [at least to some extent] customer participation in the production process (Grönroos, 1988). This definition shows that: services in general are rather different and therefore have diverse (differentiating) characteristics. Still, there are some common (defining) characteristics. We argue that this also applies for OD services. The aim of this paper is to analyse and unscramble the defining and differentiating characteristics of OD services.
2.1.2 Service delivery (service package)
(enabling) facilitating service, because it enables the use of the core service. If this facilitating service is lacking, the core service cannot be produced and/or delivered. Note that this enabling facilitating service can also be an enabling good, for example a delivery van for delivery services (with the core service: delivery). Another additional service is an (enhancing or) supporting service. Contrary to facilitating services, this auxiliary service does not facilitate the consumption or use of the core service, but is used to increase the (experienced) value of the service and/or to differentiate the services from those of competitors. A hotel-restaurant and free use of WIFI in the barber shop are examples of supporting services.
Describing a service based on the abovementioned service package gives the ability to differentiate services in more detail. This can be clarified with an example: when someone wants to listen to music, he or she can either turn on the radio or use Spotify. Note that both parties deliver the same service: whether you turn on the radio or put on music using Spotify you will listen to music. However, there is actually a difference. In case of the radio you have to listen to a pre-composed list of music, whereas in Spotify you are free to choose every music you want. The core service of the radio is the production of music all day. Controversially, Spotify delivers you music on demand. With this example we want to show that it is rather difficult to determine whether a service is delivered on demand or not. With the use of the terminology of Grönroos (i.e.: the service package, consisting of a core service, facilitating service and supporting service) the distinction can be made easier.
The distinction can be made easier, because once a service package is unravelled and the core-, facilitating- and supporting service are determined, one can compare the different kind of services. We argue that some core service are more suitable to be an OD service than others. Examples are the delivery of energy and video on demand. Besides, also the facilitating service and supporting service of the service package can determine the extent of which an service is delivered on demand or not. If the supporting service of a service package has characteristics of an OD service, this tells us that a service can also be delivered not on demand. As mentioned above, a supporting service can increase the value of a service experienced by the customer. With or without this supporting service, the core service can still be delivered. If, on the other hand, the facilitating service has characteristic of an OD service, the service cannot be delivered without this features.
So, in this paper, the distinction between the core-, facilitating- and supporting services is important to consider when describing OD services. For these three aspects (i.e.: the core-, the facilitating and the supporting service), we aim to find the defining and differentiating characteristics of OD services.
2.1.3 Service characteristics
As defined in the paper of van der Burg et. al. (2017, p. 5), a service characteristic is ‘a feature or property of a specific service (typology) that identifies and differentiates it from other services.’ In this paper, service characteristics are divided into three different levels based on the paper of van der Burg et. al. (2017).
TABLE 1 Examples of service characteristics as mentioned by Lovelock (1983)
Parasuraman et. al., 1985). In this paper, we do not aim to describe services in general and off-set them from products.
2. On a deeper level, some characteristics describe a specific kind of service, different from other services. In this paper, these characteristic describe OD services in general and distinguish OD services from other services. In this paper, these descriptive service characteristics are called defining characteristic of OD services, because they describe OD services in general. An example is the characteristic that a OD service is guaranteed available.
3. Another level deeper, some service characteristics describe differences within a specific service typology (3). In this paper, this third type of service characteristics are called differentiating characteristics of OD services.
In table 1 some examples are given of service characteristics. The table is based on the article of Lovelock (1983) which provided insight about different service characteristics.
Service characteristic Distinction
Nature of the service act Tangible actions/ physical quality Intangible actions
Service direction Recipient people
Recipient things (goods/ software)
Nature of service delivery Continuous delivery Discrete Transactions
Type of relations ship between service provider and customer
‘Membership relationship’ No formal relationship
Extend to which service characteristics are customized
High (customization) Low (standardization)
Extent to which supply is constrained Peak demand can be met
Peak demand regularly exceed capacity
Extent of Demand Fluctuations over time Wide (unpredictable) Narrow (predictable)
Nature customer contact Customer goes to service organization Service organization goes to customer
Parties transact at Arm’s Length (e.g.: electronic communication)
Availability of service outlet Single site Multiple site
2.1.4 Challenges in Services
TABLE 2 Examples of SOM practices and activities
context, the conclusions were considered as generally valid for service organizations. She described the following service challenges:
- Marketing challenge: services requires motivating the customer to the service co-production.
- Communication challenge: customers of services providers need support on a continuous basis.
- Product-design challenge: services need to be designed to support customer goals and practices; therefore, knowing the demand and need of the customer is fundamental. Also Schmenner (1986) recognized managerial challenges for service providers, based on the service process matrix he proposed in his article (Schmenner, 1986). One of his conclusion was that due to the rather different nature of various types of services, different challenges were found. Since every service has its own specificities, particular requirements for the management of those service is needed (Lewis and Browne, 2012). In order to address this problem, specific challenges which are often related to OD services need to be found.
2.1.5 Service Operations Management practices and activities
Service Operations Management (SOM) is the term that is used for activities, decisions and responsibilities of operations managers in service organizations (Johnston & Clark, 2008). The overall aim – although it is hard to identify which activities should be implemented - of SOM practices is to optimize operating performance related to quality, time, efficiency, flexibility and innovation (van der Burg et. al., 2017; Belverere, 2014). In this research we want to elaborate the SOM practices which are used in OD services. Especially the practices that are executed to deliver the service with OD service-features, like the guaranteed availability of the service. In table 2 some examples of SOM practices can be found. Of course, with the purpose of obtaining an in-depth understanding of OD service, we will not limit ourselves to only the SOM practices which are described in literature. If other relevant not described practices occur during the study, they will be used.
# SOM practices Discussed by
1 Capacity Management Sasser et. al., (1972), Sasser et. al., (1973), Sasser (1976), Sasser et. al., (1980), Heskett (1983).
2 Service Pricing Lovelock (1974)
3 Service contracting Crawford et. al., (2005) 4 Customer relationship
management
Scheidner & Bowen (1995), Heskett et. al., (1997) Iqbal et. al., (2003) [customer experience]
5 Purchasing and outsourcing Ellram et. al. (2004)
6 Quality Management Wyckoff, (1984), Hart, (1988), Hart et. al., (1990), Parasuraman et. al., (1990), Reichheld & Sasser (1990)
7 IT and information management
Ellram et. al. (2004), Lee & Billington (1995), Davis (1993) 8 Demand management and
forecasting
2.2 On-Demand services
After services are defined and service characteristics, service challenges and SOM practices are displayed, we want to scope further towards OD services. What is already known about OD services in terms of characteristics and challenges? Before this question is addressed, we first want to make clear what we define as OD services.
2.2.1 Definition of OD service
In literature the concept of OD services is not defined in a clear way. After a couple of weeks reading articles in the field of OD services, a consistent definition was not found. This can be confirmed by the working paper of van der Burg et. al., (2017). In their paper, a systematic literature review is conducted in order to find relevant papers about OD services. Nevertheless, the literature review resulted in the following definition: ‘services with an agreement for a pre-specified guaranteed service delivery, whenever the service is requested.’ In addition, Tortorella (2015) mentioned that OD service have in their nature that they are always ready to use. Also Weinmann (2012) adds that an OD service implies that customer can be allocated the ‘right quantity of resources at the right time, for the right amount of time at any given time.
The definitions mention different elements that in our opinion are all applicable to OD services. We used those elements in order to select the cases that are conducted in this case study. Ultimately, the purpose is to understand OD services more deeply. Once the defining and differentiating characterises are found, we might be able to deliver a consistent definition, or confirm the definition as stated by van der Burg et. al., (2017).
2.2.2 OD service characteristics
One of the purposes of this paper is to determine the defining and differentiating characteristics of OD services. In order to determine those characteristics, firstly a list is comprehended, based on the literature study of van der Burg et. al., (2017). In their paper, a literature review is conducted. A total of 18 papers gave input for the list of OD service characteristics as mentioned below. In order to stay within the scope of this paper, the list is adopted. For instance service characteristics that are considered as generally descriptive (describing a service in general) are not taken into consideration. The service characteristics that are often related with OD services are summed up and explained briefly as follows:
High degree of variable costs relative to fixed costs
An often used price method in OD services is pay-per-use (Chen & Wu, 2003; Lambrecht & Skiera, 2016). However, with for example a mobile phone service one could imagine that an OD service also could be delivered with a contractual relationship based on a weekly or monthly subscription, which is an example of fixed service pricing (Weinmann, 2011). A mobile phone service is considered as being an OD service because their core service is to give customers the possibility to call whoever they want, whenever they want.
A fast setup time
prepare resources is often small and therefore a fast setup time can be achieved (Yang et. al., 2015; Yao et. al., 2005).
The removal of capacity constraints
In OD services capacity constraints can be removed due to shared resources (Ma & Seidmann, 2015) However, those shared resourced seems to be more available in OD services that deliver their service explicitly online (like Netflix).
High degree of scalability
The degree of scalability can be defined as the ability to absorb significant fluctuations and overloads in workload without affecting admission latency (Ma & Shin, 2002). The quality of the OD service should not met influenced when there is more demand (Chen & Wu, 2003). High degree of granularity of quantity and time
The degree of granularity refers to the extent that system, service or material can be divided into distinguishable pieces. In order to satisfy the demand of the customers of OD services, a high degree of granularity is needed (Weinmann, 2012).
High degree of standardization
When a process has to be delivered at any given time, standardization of processes is needed (Weinmann, 2012). This standardization possibly implies a lack of fit between the needs of the customer and the delivered service (Ma & Seidmann, 2015).
High degree of location independence.
High degree of location independence means that the OD service should be available everywhere, despite of the location of the customer (Weinmann, 2012).
Rather unpredictable and fluctuating nature of service demand.
Due to the always availability feature of OD services (Tortorella, 2015), the demand is rather unpredictable and fluctuating. This OD service provider does not know actually when a customer demands the provided service (van der Burg et. al., 2017).
High degree of certainty and criticalness of availability.
The degree of certainty and criticalness of availability in OD services should be high. As stated by Künsemöller and Karl (2014), the amount of times that customer demand is not met due to unavailability of resources are more expensive than the capacity that is need to guarantee the availability of the service.
Always available (i.e.: delivered when requested).
A particular characteristic of OD services is that they are always available. The OD service can be delivered whenever needed (Torterella, 2015).
independence for example seems to be applicable for online OD services. However, one may wonder if OD services are also location independent if they are not explicitly delivered on demand. A case study may reveal how abovementioned service characteristics are coming forward in OD services which are not explicitly delivered online. An example of offline OD services are medical emergency services. A real person in an ambulance (instead of for example a video or storage space) comes as soon as possible when requested.
To address the aim of this paper to find and (if possible) distinguish defining and differentiating characteristics of OD services, the abovementioned characteristic are validated. We did this in terms of mentioning them to the interviewees and let them explain how the service characteristic play a role in their OD service. Of course, we did not limit ourselves to only the characteristics as mentioned by literature. If relevant characteristics come up during the case study, they will be discussed. We are aware that ‘only’ three cases were conducted and that it is therefore difficult to determine whether a service characteristic is a defining or a differentiating one. Nevertheless some interpretations were made and can be found in chapter 5 of this paper (Discussion).
2.2.3 Management challenges of OD services
A couple of challenges especially for OD services are found in literature. For the online OD service which is described as cloud computing it is a challenge to manage security issues. There is for example a worry about cloud computing, because one of the risks is that providers have to manage potentially millions of customers and this presents a challenge (Ohlman et. al., 2009). In cloud computing it is a challenge to store personal or sensitive information because the exact way and infrastructure of how this information is stored is not always understood. Also – and this may be also applicable to other OD services – OD service providers may not be able to cope with the large scale of customers or the infrastructure will not be able to scale properly with large amount of usage (Carlin & Curran, 2011).
2.3 Summary
Here we want to make clear what is known and what is not known in literature about OD services. Definitions of services and service characteristics are given. Furthermore, the concept of the service package is explained: a service consist of a core service (reason of existence), a facilitating service (which enhance the core service) and a supporting service (which adds value to the customer experience, in comparison to similar service offered by competitors). We explained why the service package is important, in order to distinguish different OD services. Also, managerial challenges and SOM practices are displayed.
TABLE 3Service characteristics
Service characteristics which are often related to OD services 1.
2
High degree of variable costs relative to fixed costs 2. A fast setup time
3. The removal of capacity constraints 4. High degree of scalability
5. High degree of granularity of quantity and time 6. High degree of standardization
7. High degree of location independence 8. Rather unpredictable and fluctuating demand
3. METHODOLOGY
In this paper we investigate which services can be described as OD services, what characteristics are often related to OD services and how managers of OD services perform their activities. Thereby we intend to develop an in-depth understanding of how OD services can be described and distinguished, and which accompanying activates are involved. Since the nature the research question in exploratory and involves investigating a rather unknown phenomenon, an inductive case study approach is used (Eisenhardt and Graebner, 2007; Meredith, 1998; Yin, 2003). Conducting case studies for theory building purposes through an inductive analysis of data has been endorsed by scholars of Operations Management disciplines (Barratt et. al., 2011; Meredith, 1998). Typically, an inductive case study involves several within-case analysis, and also cross-case analysis (Miles and Huberman, 1994; Yin, 2003). Case studies allow for the identification of key variables and their relationship, so they are suitable and used for the study of this emergent phenomena in depth (Gibbert et. al., 2008). In this study, the same approach is used. Because our interest is in OD service-features in particular, we used organizations (or part of an organizations) which is offering (what seems to be) an OD services to customers as the unit of analysis.
3.1 Sampling
Because the purpose of this research is to get an in-depth understanding of the concept of OD services, we wanted to have different kind of services. Whereas comprehensive understanding occurs only when many relevant perspectives have been discovered (Gioia & Pitre, 1990). We experienced difficulties with selecting cases. Firstly, because OD services are a relatively new concept in literature and therefore not all services which actually do have features of OD services profile themselves as an OD service. Secondly, for this research we wanted OD services which were not explicitly available online (like Netflix), because (as mentioned in chapter 1); some literature is available about Cloud computing (online OD service), but controversially, about offline OD service is not so much known yet. These offline OD services were (also because of the abovementioned first difficulty) hard to find.
Given that services with OD service-characteristics do not always profile themselves as such the general case selection was based on the following criteria: The service provided should at least to some extent be always available, whenever the customer is requesting to make use of the service. In order to have many relevant perspectives about this service, we also based our case selection on the following criteria: We wanted to have services which seemed based on pre-specified agreements and services which not seemed based on pre-pre-specified agreements. An example of a predetermined condition could be the pricing of the OD service. Chen & Wu (2003) made the distinction between pay-per-use pricing of OD services and fixed pricing. We used this distinction to select different cases.
3.2 Data collection
TABLE 4 overview of the organization profiles
study. After a series of communication (see for example Appendix A&B), a handyman service provider, electricity service provider and the fire brigade service provider agreed to participate in this study. Table 4 provides details of the organizations participating in this study. All of the service providers are located in the Netherlands.
Organization Employees Core service OD-service context Number of
interviewees & Function
Handyman service
20 The service provider acts
like a mediator between craftsman and customer: A customer can indicate that he wants issues in and around the house resolved.
This service is considered as an (partly) OD service, because the customer has the option to choose for a service delivery right away. 2 Operational Managers, respectively responsible for performance and recruitment (former Head of Customer Service) Electricity service
6,839 (2012) Production and sales of electricity.
OD because electricity is always available for customers, in different amounts, whenever requested. 1 Product Developer Fire brigade service 150 and 750 volunteers (this region)
Remaining public order and safety by acting in case of particular crisis: distinguishing fire.
OD because, whenever a person in need calls the emergency number, the person is helped immediately. 2 General Adviser Incidents and Head of Incident Engagement
In order to remain anonymous, the organisations as well as the interviewees were not mentioned by their name. To obtain the desired data, a semi-structured interview protocol is designed to guide the data collection process and enhance the internal and construct validity of the study (Yin, 2013). The detailed interview protocol is available in Appendix C&D. Each interview lasted between one and two hours. All interviews were recorded and transcribed. To the first and the third case, repeated visits were made so that all relevant informants were interviewed. We tried to interview the employees which had sufficient insight in the OD service features of the provided service and their managerial implications. Interviewing more interviewees per case enabled us to strengthen the external validity of our findings (Yin, 2003). Besides the interviews additional data like service contracts and information from websites is used. For example on the website of the service provider could be found how the services were priced. Also the service contracts gave us valuable information on how predetermined availability was arranged.
FIGURE 1 Visualisation of analysis process
3.3 Data Analysis
All the interviews were transcribed, which gave us 121 pages of transcripts. The analysing strategy is adopted from Runeson and Host (2009) and can be seen in figure 1. There is chosen to use this strategy because it fits this research: we are seeking for a deeper understanding of OD services. The strategy from Runeson and Host (2009) helps to describe this rather unexplained phenomenon. To structure the data, a coding strategy is used, adopted from Corley and Gioia (2004). Firstly the data was reduced in order to remain the most relevant data. The quotes were categorized as first order concepts. Secondly, those quotes were divided into different categories and interpreted with labels. Those labels combined different quotes. This process was described as second order categories. Finally, also those labels were combined into aggregate dimensions. This steps can be respectively be compared with the ‘grouped quotes’ and ‘conclusions’ as displayed in the figure. An example can be found in Appendix E.
4. RESULTS
In order to show the results of this paper as organized as possible, this chapter is structured as follows: Firstly, a case description is presented based on the terminology of Grönroos (2007). The case descriptions are products of the within-case analysis. Our aim was to understand the cases as deeply as possible, to determine which defining and differentiating characteristics of OD services were to distinguish. Secondly, the cases were analysed and the findings are briefly described in the second part of this chapter. In the following chapter (5: Discussion) results and findings will be interpreted and discussed.
4.1 Case description
As mentioned by Shostack (1977) there are four risks of attempting to describe services in words. They are oversimplification, incompleteness, subjectivity (based on personal experience and exposure) and biased interpretation (Rao & Perry, 2002). We were aware of those risks and tried to address this by delivering descriptions as complete as possible. Besides, the interviewees reviewed the case description in order to eliminate biased description of the author. Our aim is to describe the cases in a way that is clearly understood which services are delivered. This is done by describing the core service, the facilitating service and the supporting service which is delivered by the service providers. Besides, the case descriptions will reveal why they are considered as being an OD service. In table 4 (chapter 3) the cases were already very briefly descripted. Now a more detailed description will be provided.
4.1.1 Handyman service
The first case is about a service provider who delivers the following core service: the handyman service arranges that a craftsman helps customers with their chores in and around the house. The actual service that is experienced by the customer is that a craftsman (e.g.: plumber, handyman or electrician) come and visits the customer and help them. However, this is not the core service provided by this handyman service. So, the service provider is matching the demand and supply of chores. The strength of this service provider is that they have both the knowledge of the existence of the available craftsman and a communication system that can reach all the craftsmen at the same them. Thereby they fill a gap for customers, because although they are able to arrange a craftsman for themselves, they do not have the knowledge of existence of the craftsman and not the communication system to reach them all at the same time.
This case can be compared with a multi sided platform, as mentioned by Hagiu and Wright, (2017). In their article they illustrate this kind of companies as a multi-sided platform that affiliates with both side A and side B. In this case, side A would be the craftsman and side B would the customers. For every individual service delivery, direct interactions find place between the customer and the craftsman, but not necessarily with the service provider (Hagiu & Wright, 2017). The following activities can be seen as the facilitating services of this service provider: order taking before the service delivery and the providing of information during the service delivery (i.e. the exact timeslot which craftsmen will come, with his mobile phone number). Finally, also the billing after the service delivery can be seen as a facilitating service here.
want to get the chore resolved now (urgently), tomorrow, or another time (then today or tomorrow). In this paper, the ability to choose for a service delivery right now is considered as the supporting service. The service can be delivered without this guaranteed availability of the service, because the service can possibly also be delivered at another time (later in the future). However, the ability to get a chore resolved urgently can be seen as value-adding from a perspective of a customer. The guaranteed availability of the service differentiates this provider with other handyman services in the field. Especially because the service provider has this on demand feature (i.e.: guaranteed availability of the service), this company is chosen to be one of the cases. Although the service is not completely delivered on demand, we think that we can still get useful insights about OD characteristics.
4.1.2 Energy service
The core service of the second case is to produce and sell electricity to customers. The customer and the energy provider have a predetermined agreement about the delivery of electricity. The costs are partly fixed, but mostly variable, based on the consumption of electricity per month. The transportation of electricity goes through an infrastructure of cables (i.e.: the grid), which are connected to both the producer of energy and the consumer. The maintenance of this network infrastructure is not the responsibility of the energy provider, but is outsourced to the Distribution System Operator. In order to make the core service available, guaranteed availability of the supply of electricity is considered as the facilitating service of the energy provider. Without this guaranteed availability the core service (production and selling of electricity) cannot be delivered. It is a challenge to deliver the facilitating service for a couple of reasons: firstly the grid should be balanced: the supply and demand of energy have to be the same in order to keep functioning. If it is not, disruption of the grid will occur. This is even harder when electricity is both consumed and generated (by renewable energy sources like solar panels) by consumers. Renewable energy sources are potentially problematic for grid stability and reliability due to congestion and voltage issues (Eftekharnejad, 2012; Walling, 2008).
The supporting service of the electricity provider is that customers can have a device, which provide them with information about the consumption (and possibly generation) of their household. Such a device can increase the value of the service experienced by the customer. It differentiates this energy delivery service from its competitors. This case is considered as an OD service, because as mentioned above, availability of electricity for their customers is guaranteed. Based on the before-mentioned (chapter 2) definition of van der Burg et. al., (2017), this case should be considered as an OD service. Two reasons therefore are the guaranteed availability and the predetermined agreements which are mentioned in the definition.
4.1.3 Fire brigade service
Without this delivery of information, the core service can still be provided. It is however, difficult to determine the supporting service of this service provider, because the value-adding elements of this service are hard to compare with competitors. This case is also considered as an OD service, because of the guaranteed availability. Note, that this availability is only used, when the fire brigade considers an emergency as urgent enough. An example can clarify this: the fire brigade is available, but not to save a cat out of a three. Only matters that violate public order and safety, or matters that put people into danger (like fire) are addressed by the fire brigade service. I.e.: the fire brigade will also come to save the cat out of the tree, but, on their own time (which is not on demand).
4.2 Analysis
One can imagine that there is some extent (higher or lower) to which a service can be profiled as an OD service or not. Therefore, analysis of the gathered data was needed. Below one can find the results of this analysis. Firstly, the characteristics are analysed among the three cases. Secondly challenges which are related to OD services are analysed and presented. Finally, several SOM practices are analysed among the cases.
4.2.1 Characteristics of OD services
As described in the theoretical background (section 2.2.2: OD Service Characteristics) some service characteristics are often related to OD services. In this research, we want to determine whether these characteristics can be assigned to a defining characteristic of OD services (i.e.: level 2 service characteristics; describing a specific kind of service) or a differentiating characteristics of OD services (i.e.: level 3 service characteristics (i.e.: describing differences within a specific service typology). The reasons behind this are twofold. Firstly, effectively developing and managing services requires a thorough understanding of its characteristics (Schumann et. al., 2015). As mentioned in the introduction of this paper (chapter 1) our aim is to understand what OD services are. Therefore the defining characteristics of OD services are important. Secondly, our aim is also to emphasise that also OD services (just like services in general) are rather different and therefore require particular management of such services (Lewis & Browne, 2015). To address the aim of showing that OD services are different, especially the differentiating characteristics are important in this paper.
TABLE 5 Overview of differentiating and distinctive service characteristics Service characteristics which
are often related to OD services
Explanation:
Defining or differentiation character and in which extent 1. High degree of variable
costs relative to fixed costs
Differentiation. The degree of variable costs differs among the cases. The costs
can paid by pay-per-use, fixed pricing (which means paid beforehand), but also a combination of both. It is not always the case that agreements are made beforehand, this is different than we expected.
2. A fast setup time Defining. The time of preparing the necessary resources are considered as being
low. Of course ‘fast’ is a rather unmeasurable term. In case of the fire brigade for example, it will take more time to deliver the service than the delivery of electricity. We propose to measure the setup time in terms of satisfying in perspective of a predetermined timeslot.
3. The removal of capacity constraints
Defining. Capacity constraints are removed in terms of: when capacity is not
satisfying, other resources are invoked. One could say that the shared resources as mentioned in chapter 2 of this paper are also applicable in the conducted case study. The extent however, differs among the cases. For the electricity service it is easier to remove capacity constraints.
4. High degree of scalability Defining. The cases had a high degree of scalability, which means they have
flexible output. This is to somewhat lower extent applicable to the fire brigade service case. They operate in teams with a minimum occupation of six firemen. So, no matter of the needs of the crisis on hand, six firemen enters the scene. Nevertheless, they still can easily scale up, by just invoke firemen in the neighborhood.
5. High degree of
granularity of quantity and time
Defining. In line with abovementioned degree of scalability, this OD service
characteristic was also applicable to the cases. The handyman case could for example granulate time if it comes to capacity allocation of craftsman. 6. High degree of
standardization
Defining. In order to satisfy demand as quickly as possible (whenever
requested) the service has to be standardized. All interviewees mentioned that every request is heterogeneous on an individual level (e.g.: leakage from a specific place in the house, specific amount of electricity requested and specific emergency fire). However, the process of how a request is being handled is approximately the same for every customer.
7. High degree of location independence
Differentiation. Here some differences were determined. For the electricity
service, the location of the customer was not important, approximately everywhere electricity can be provided. That was not the case with the handyman service and the fire brigade service, they very much are dependable of the location (consider rural areas).
8. Rather unpredictable and fluctuating demand
Defining. All interviewees confirmed that demand was rather unpredictable and
fluctuating. However, if the aggregated demand was taken into consideration, demand was far more predictable.
9. High degree of certainty and criticalness of availability
Differentiation. This OD service characteristic differs between the conducted
TABLE 6 Challenges in OD services 10. Always available (i.e.:
delivered when requested).
Defining. For all cases, this characteristic was leading. They all guaranteed there
customer to some extent that they were available, whenever the service was requested. Some limitations however, constrained this availability. The handy service for example depends on the availability of the craftsman. One could imagine that there are less craftsmen available at night or during the holidays.
4.2.2 Challenges of OD services
In order to determine the challenges which are experienced by managers of organizations which deliver an (partly) OD service, we asked the interviewees to identify challenges they experience. To stay within the scope of this research, only the challenges originating from the OD aspect of the service are displayed in table 6. If there were more interviewees per case, they are numbered [1 or 2]. The possible solutions, given by the interviewees can categorized into different kind of SOM practices. Those practices can be found in the fourth column of the table.
Case Challenges Possible solutions (as described by the
interviewees)
SOM Handyman
service [1]
Deliver the service in time; expand current available capacity. This is especially a challenge when the availability of capacity is location
dependent. In some areas there is less
capacity available then in other areas.
Analyze the problem and thereby determine the area where more capacity is needed. Try to arrange capacity by (in case that capacity is the availability of employees) recruiting employees. C apac it y M anage me nt Fire brigade service [1]
Guaranteeing availability of the services (especially with small villages in rural areas).
Experimenting with size of teams when they have to provide the service. Most of the time (85%) the emergency is not experienced that urgent, that six people (standard amount of people in a team) have to come. In such cases, a team of 4 is sufficient enough to solve the problem. Fire
brigade service [2]
Availability of a sufficient amount of qualified personnel. Because, due to social developments (e.g.: population moves away from rural area to the urban area) the availability of personnel decreases.
Analyze the social developments and their effects. Try to translate those effects towards the organization and anticipate in terms of taking action to deliver the same level of service in 5 or 10 years.
Electricity service
It is (more than earlier) a challenge to keep the infrastructure of the electricity network balanced, because consumers have become co-producers of
electricity due to solar panels. Because of this and the unpredictable supply of renewable electricity resources, the electricity producer experience difficulties in forecasting both supply and demand of electricity.
4.2.3 SOM practices in OD services
As can be seen from table 6 the SOM practices which are related to OD services are Capacity Management and Service Pricing. Other relevant practices – also besides those displayed in the theoretical background – were given by the handyman service and the fire brigade service. They respectively came up with Customer Expectation Management and Human resource Management. Expectation Management; because, even though an expectation of a customer is not met – which was that the customer had the service delivered on-demand – the customer can still be satisfied. For instance, when a new appointment is already made to deliver the service, customer tends to be more satisfied with the overall delivered service. Human resource management; in case of the fire brigade service, the always-being-available feature of the OD service, confiscates the personnel life of the employees (and volunteers). This should be taken into account as an external effect of the service.
To stay within the scope of this research, above only the management practices related to the OD feature of the service are given. For instance: Marketing came up as a management practice but that is considered as being too general, since Marketing is a management practices executed in several different services (and not especially due to the OD feature of a service).
Handyman service [2]
Matching supply and demand for the service. So, having the right craftsman
available at the right place in the right time.
The service provider could develop a system whereby the price is influencing the demand. When there is for example low capacity in a certain area (due to
5. DISCUSSION
In this chapter, the results are discussed and compared with the current literature about OD services. Also, interpretations are made about the conducted case study. Firstly we will discuss a proposed definition which is provided by the interviewees. Second, some of the defining and distinctive characteristics are discussed. Thirdly, a discussion is provided about the challenges related to OD services which came up during the data collection. Finally, several SOM practices related to OD services are discussed.
5.1 Definition of in OD services
As mentioned we firstly want to discuss a proposed definition. The interviewees of the cases were considered as experts on the field of OD services, since they deliver an OD service by themselves. We asked them all to provide their definition of an OD service. All the elements that came out of those descriptions were taken together and is displayed below. Explanation about he given definitions and the elements that were included can be found in Appendix G. If there were more interviewees per case, they are numbered [1 or 2]. The definitions combined leaded to the following result: An OD service is a service, which is directly available and delivered when asked – to some extent based on predetermined conditions - as soon as possible or a preferred timeslot (determined by the customer), by having capacity available.’
Some elements of this definition need some further explanation:
- A service which is directly available: directly indicates as soon as possible. One can imagine that some kind of services – especially when humans and their transportation are involved – cannot not be delivered within seconds.
- To some extent based on predetermined conditions: As can be seen in the conducted interviews, an OD service seems not necessarily be based on predetermined conditions (e.g.: fire brigade service). Nevertheless, in that particular case the national government has made to some extent predetermined conditions, because it is determined by law that the fire brigade should respond in case of disruption of public safety. Predetermined conditions means in this context that beforehand appointments are made about the delivery of the service and the price. An example of such an predetermined condition is a SLA, as mentioned by Ellram and Billington (2002).
- As soon as possible or at a preferred time (determined by customer): As the results of the handyman service shows, it is possible that a customer do not want the service delivered as soon as possible, but at a specific timeslot. In our opinion this feature could most certainly be labelled as on demand, because the service has to be delivered when requested (van der Burg et. al., 2017).
TABLE 7Defining and differentiating characteristics of OD services
definitions. Controversially, the element that an OD service should be based on predetermined conditions as mentioned by van der Burg et. al., (2017), is not necessarily found in the conducted case study.
Besides the definition, we would also want to look back at the terminology of Grönroos (2007). As mentioned in chapter 2 (theoretical background) the service package consist of a core service, a facilitating service and a supporting service. We argue that when the facilitating service is the delivery of the core service on demand, this determines whether a service is an OD service or not. The cases can clarify this. The handyman service has as supporting service that the service can be delivered on demand. Without this on demand feature, the core service (doing a chore) can still be delivered. Therefore, the handyman service is considered as not completely an OD service.
With the other two cases, the facilitating services were that the core service (i.e.: delivery of electricity or extinguishing fire) were delivered on demand. Without this on demand feature, the core service could not be delivered (on time). Therefore the service package as described by Gönroos (2007) was important in this paper. Because it determines the level of which the on demand features of a service are necessary to deliver the service.
5.2 Characteristics of OD services
Based on the list of OD service characteristics, as mentioned in chapter 2 and 4 of this paper (and again in table 7 below), some further explanation is needed for some of characteristics.
Defining characteristics of OD services Differentiating characteristics of OD services
A fast setup time High degree of variable costs relative to fixed costs The removal of capacity constraints High degree of location independence
High degree of scalability High degree of certainty and criticalness of availability
High degree of granularity of quantity and time High degree of standardization
Rather unpredictable and fluctuating demand Always available (i.e.: delivered when requested).
not. In the case of the fire brigade service, the fireman decides whether the need for help is urgent enough to allocate capacity to it.
- Setup time: It is proposed that the setup time is longer if humans are delivering the services. One can image that a computer or an Ethernet cable can provide services quicker and therefore respond in a smaller amount of time. In case of the fire brigade services, the customer have to wait at least the time it takes the fire truck to come from the barrack to the home of the customer.
Besides the proposed OD service characteristics, another characteristic came up during the case study. The degree of reliability of the service is discussed below.
- Degree of reliability of the service: Is dependable of the perspective taken into account. Besides, it is difficult to determine – and compare – the degree of reliability between the different OD services. Also because regulations decide whether a service reliable or not. Different response times are determined beforehand (e.g.: 15 minutes for fire brigade service, but direct delivery in case of electricity service). It is considered interesting whether the perceived reliability of an OD service by customers is of key importance in OD services, therefore further research is needed.
5.3 Challenges of OD services
The challenges which are experienced by the service manager of the OD service organization are now discussed in more detail. Most of the challenges described by the interviewees were about delivering the service on time and therefore have capacity available. For the fire truck brigade as well as the handyman service, guaranteeing availability seems more difficult at some particular location. This was the case when the location were not easy to reach by a vehicle (e.g.: between the rivers in the Netherlands) or in rural areas. Availability of the service seems therefore location dependent.
This is remarkable; because one of the characteristics of OD services found in literature was a high degree of location independence. Location independence means that a user or customer should be able to access the service responsively regardless of his location (Weinmann, 2012). In both cases, it can be said that the degree of location independence was low. Customer or users could not make use of the service, regardless of their location.
5.4 SOM practices in OD services
Now, the SOM practices with relevant outcomes for OD services will be discussed. Service Contracting
only have to accept the term and conditions. In case of the fire brigade service, there is no contract at all. One could say that there is some kind of contract between the government and their civilians, which guarantees safety for the civilians. The fire brigade is also financed by the government. The electricity service – which is considered to have the most OD service features – does have a contract with customers.
Purchasing and outsourcing
An interesting finding is the SOM practices of outsourcing. The handyman service is not performing the service which is experienced by the customer (i.e.: resolving issues in and around the house). Instead they outsource the service delivery to craftsman. The handyman service provider itself is only acting as a mediator between the customer and the craftsman. Without this concept, the service could not be delivered OD. A similar concept can be found by the electricity service. In order to deliver electricity, the net (electricity infrastructure) should be balanced. In order to do that, the electricity producer outsourced the maintenance and transportation of electricity to network operators. Without this maintenance and transportation of electricity, the service could not be delivered OD.
Demand Management and Forecasting
TABLE 8Defining and differentiating characteristics of OD services 6. CONCLUSION
6.1 Overall Conclusion
More and more services are nowadays available on demand (Ma and Seidman, 2015). Due to several features of OD services (like guaranteed availability), delivering such a service can be challenging. In order to address this challenge, we aimed in this research to firstly get an in-depth understanding of the concept of OD services by describing the differentiation and distinctive characteristics of OD services. Also the abovementioned management challenges which are often related with OD services (or not yet known relevant management challenges) are described and there is tried to describe how to deal with them. To describe this rather unknown phenomenon a case study is conducted to fulfil the purpose of this research. The following questions were asked: ‘[1] what are the defining and differentiating characteristics of an OD services?’ Besides, there is tried to find the answer to the question: ‘[2a] which challenges are associated with OD services and [2b] which practices can be used to manage the challenges associated OD services?’
The study resulted in – regarding to the first question – a list of defining and differentiating characteristics of OD services. The service characteristics can be found in table 8.
Defining characteristics of OD services Differentiating characteristics of OD services
A fast setup time High degree of variable costs relative to fixed costs
The removal of capacity constraints High degree of location independence
High degree of scalability High degree of certainty and criticalness of availability
High degree of granularity of quantity and time High degree of standardization
Rather unpredictable and fluctuating demand Always available (i.e.: delivered when requested).
Concerning the second question (Q2a) some challenges are found which are associated with OD services. Delivering the service at the right with the right amount of personnel was considered as one of the challenges. Different management issue were taken into account to address this challenges (Q2b). For example experiments with capacity management or changes in Service Pricing (which are both examples of SOM-practices).
6.2 Contribution of this research
given in the literature. Also OD service characteristics are validated by conducting this case study. In that way, defining characteristics could be divided from differentiating characteristics of OD services. Finally, some challenges and the accompanying SOM practices related to OD services are displayed and discussed. Thereby the aim of get a deeper understanding of OD services is addressed and partly accomplished.
Secondly, this research contributes to service managers. They can use the understanding of OD service in order to manage them in a sufficient way. Besides, knowledge of the challenges involved and the execution of the proper practices to deal with those challenges in OD services are displayed. Service managers can use the practices in order to address the mentioned challenges, related to OD service management.
6.3 Limitations of this research
Of course, this research has its limitation. For example, only three cases could be taken into consideration, due to time restrictions and availability of companies. Therefore the purpose to research in as much different kind of OD services was not totally achieved. Also, as mentioned in chapter 2, a lot is written about online OD services. In order to validate this literature, we hoped to include one OD service which delivers an OD service explicitly online in the case study. Unfortunately, due to time constraints and the fact that they were not willing to participate in this study made that this case study does not include such an online OD service case.
In order of the reliability of the research there was tried to achieve triangulation by interviewing at least two interviewees per case. Unfortunately, due to time restrictions and availability of employees, we did only perform one interview at the electricity service. Still, to a certain extent, triangulation is achieved by using additional data of the company. Also the case description was send to the interviewee in order to review.
6.4 Suggestions for further research OM practices in OD services
As mentioned above, to achieve in-depth understanding of OD services, more case studies should be conducted, involving more cases. As stated by Gioia and Pitre (1990): comprehensive understanding occurs only when many relevant perspectives have been taken into account. As can be understood this paper alone will not provide a complete and deep understanding of OD services. If more case studies are conducted, the result will be more generalizable. This would mainly be the case with the defining and differentiating characteristics of OD services.
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