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Tapping into the
Transformative Power
of Service 4.0

The Boston Consulting Group (BCG) is a global
anage ent onsulting r an the orl s

lea ing a isor on business strateg e partner
ith lients ro the pri ate publi an not or

pro t se tors in all regions to i enti their
highest alue opportunities a ress their ost
riti al hallenges an trans or their enterprises
ur usto i e approa h o bines eep in sight

into the na i s o o panies an ar ets ith
lose ollaboration at all le els o the lient

organi ation This ensures that our lients a hie e
sustainable o pet iti e a antage buil ore
apable organi ations an se ure lasting results
oun e in BCG is a pri ate o pan ith

o es in ountries or ore in or ation
please isit b g o

Tapping into the
Transformative Power
of Service 4.0

The a an es in te hnolog that onstitute er i e a e it possible or o pa
nies in an in ustries to trans or the a the o er an eli er ser i es er i e
o panies ho e er ha e been slo to a opt this a e o inno ation to i pro e

their operational e ien an enhan e usto er satis a tion

Co panies that o ta e a antage o a an e te hnolog an bene t ro ne
opportunities su h as substantial ost sa ings an i pro e usto er satis a tion

p to o a t pi al ser i e o pan s operating osts all ithin the s ope o
er i e an the o erall sa ings potential an rea h up to o those osts

The in rease a option o er i e ill ha e a or i pli ations or the or
or e too n Ger an an ustria or e a ple up to illion obs ill be at ris

o er the ne t e to ten ears

To eter ine the best trans or ation path a o pan ust a e ell in or e
hoi es along a ontinuu o options in arious i ensions e hallenges

in lu e attra ting an retaining highl s ille or ers an o er o ing the li ita
tions o tra itional go ernan e o es an lega T s ste s

D

Customers Have Dramatically Higher Expectations

– –


– –

TELCO BANKING INSURANCE GOVERNMENT HEALTHCAREENERGY

Unnecessary use of expensive systems and resources (for example, unneeded system complexity)

SOURCES OF WASTE

OVERPROCESSING

OVERPRODUCTION

TRANSPORT

MOTION

INVENTORY

DEFECTS AND REWORK

WAITING

IMPROPER UTILIZATION
OF SKILLS

Excessive service and output levels, which have an insufficient link to customer value

Too many unnecessary physical activities and processes (for example, multiple data entries)

Manual work that can be automated or eliminated (for example, data lookups or validations)

Large stockpiles of physical goods (for example, telco devices) or a backlog of troubleshooting tickets

Quality problems that hinder downstream processes or necessitate rework

Inefficiencies that result from waiting for resources or slow processing

Use of overqualified employees for simple tasks or underqualified employees for complex tasks

ACROSS SERVICE INDUSTRIES, THE TYPICAL WASTE LEVEL IS 40% TO 50% OF THE ADDRESSABLE COST BASE

BCG anal sis

Service 4.0 Represents a Fundamental Transformation

FROM

OFFERING

DELIVERY

SERVICE 2.0 OR 3.0 TO SERVICE 4.0

Reactive Proactive

Integrated, bundledIndustry-specific, separated

Customized, human-centeredStandardized, modular

Data-drivenExperience-based

Implicit, virtual interfacesExplicit, manual interfaces

Seamless, omnichannelRemote service centers

Dynamic, real-time pathsPredefined paths

Shared, open infrastructuresHeterogeneous, separated systems

BCG anal sis

Nine Technologies Enable Service 4.0

Big ata an nal ti s

bi uitous Conne ti it an the nternet o Things

Develop deeper
insight into
customer
behavior,
preferences,
and pathways

BIG DATA AND ANALYTICS

Manage huge
data volume in
open systems and
provide services
on demand

CLOUD COMPUTING

Replace humans in
work processes
that are entirely
rule based

ROBOTIC PROCESS
AUTOMATION

Interact
naturally with
virtual agents,
digital devices,
and services

BIONIC COMPUTING COGNITIVE COMPUTING
Free services from
reliance on specific
soî…”ware and
hardware and
ensure flexibility,
adaptability, and
robustness

VIRTUALIZATION

Simulate human
thought processes
and provide
intelligent, virtual
assistance

Create an ongoing
connection in areas as
varied as on-the-spot
service provision and
remote monitoring

UBIQUITOUS CONNECTIVITY
AND THE INTERNET

OF THINGS Develop an ecosystem of apps
and cloud services
that utilize
high-performance
devices

SMART DEVICES
Provide the
necessary
information when
needed in areas as
varied as manuals,
pricing, and alerts

AUGMENTED REALITY

BCG anal sis

D

Cogniti e Co puting

ug ente ealit

Companies Can Benefit in a Wide Variety of Ways

an e el er i e

Marketing
campaigns

Real-time customer microsegmentation providing fast, tailored targeting
Data-driven advertising, customer experience analytics, and measurement5 ~30

End-to-end purchasing via digital channels, including selection, configuration,
and contracting
Machine learning to assess fraud and default risk and to predict account overruns

20 ~30

Big data and cloud-based field-force management and optimization
Remote product and service upgrades based on next-generation soî…”ware
and hardware

10 ~60

Virtual agents, real-time decision support, and proactive fault repair
Resolution of a full range of issues and requests via self-service channels15 ~65

Proactive identification or retention of customers with high propensity to churn
by applying big data analytics or cognitive computing to client interactions10 ~40

Virtual interfaces for simultaneous, cross-functional product development and
paperwork elimination
Predictive modeling to simulate demand and performance of new services

5 ~30

Lead
generation
and sales

Order
fulfillment

Customer
serviceC

U
ST

O
M

ER
-F

AC
IN

G
EN

A
B

LI
N

G

Retain and
win back

Product
management
and innovation

Virtualization of network infrastructure to reduce reliance on hardware and soî…”ware
Remote monitoring and predictive maintenance to reduce downtime20 ~35

Technology
management

Replacement of legacy IT systems with scalable, adaptable cloud solutions
Virtual test environment enabling fast and inexpensive feedback loops10 ~40

IT
management

Robotic process automation of high-volume, low-complexity tasks
Cloud-based outsourcing of support services to external service providers5 ~35

~40

Support
functions

Total 100

ADDRESSABLE
COST BASE

%

SAVINGS
POTENTIAL

%
EXAMPLES OF USE CASES THAT PROMOTE EFFICIENCYCORE PROCESSES

BCG anal sis
The sa ings potential is a per entage o the total a ressable ost base or a sa ple tel o

Targete ar eting

roa ti e aintenan e

nhan e lanning

How Will Service 4.0 Affect the Workforce and Competition?

GROSS JOB IMPACT IN GERMAN AND AUSTRIAN INDUSTRIES

CURRENT WORKFORCE
(MILLIONS)

JOBS AT RISK
(MILLIONS) AND
PERCENTAGE OF
CURRENT WORKFORCE

PERCENTAGE OF JOBS
AT RISK PER INDUSTRY

Percentage of total jobs at risk

COMPANY SIZE

~20.0 ~9.5 ~17.0 Total ~46.5

2.5–3.0 15–18 Total 4.5–6.0 10–13

Energy and utility

Financial services

ICT

Professional services

Outsourcing

Education

Health

Transport

Public administration

Commerce and leisure

Manufacturing and construction

Other

0 8040 1006020

Midsize LargeSmall

1.0–1.5 5–8 1.0–1.5 11–16

100

estatis BCG esti ates
Co pan si es are as ollo s s all T s i si e to T s large T s

D

How to Evolve to Service 4.0



CRITICAL DIMENSIONS

AMBITION

GOVERNANCE

ORGANIZATION

PEOPLE

PARTNERING

IT SCOPE

IT DELIVERY

SEQUENCING

ROLLOUT

CULTURAL CHANGE

Radical, game-changing solutions

Functional view and steering

Disruptive (for example, squad)

Attract and hire new talent

Open system, try before buying
or building

Fewer features sooner

Continuous delivery, two-speed IT

Enabling processes first

All initiatives and organizational
units simultaneously

Change the context (for example,
goals, resources, and constraints)

that drives behaviors

Rapid incremental changes

End-to-end process view

Traditional (for example,
divisional or matrix)

Retrain current workforce

Closed system, few partners

Big-bang solutions, replacement
of legacy systems

Traditional waterfall, releases

Customer-facing processes first

One-by-one, quick wins first

Address feelings and values

HIGH-LEVEL SELECTIONS

Hypothetical promising path

BCG anal sis

Add Service 4.0 to the C-Suite Agenda

Olaf Rehse –

efa a

h s h sa e –

le e s

he a

To n the latest BCG ontent an register to re ei e e alerts on this topi or others please isit b gperspe ti es o

ollo b g perspe ti es on a eboo an T itter

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