ITIL® & Consumerization: B2C business model

B2B vs. B2C business model?

How does the B2C business model differ from B2B model and what’s the ITIL® and ITSM point of view?

I’ll focus on two new (post-2000 era) phenomenons which are often mentioned in connection with B2C business model (later on BM): On-Demand and Pay-as-you-dosomething

On-Demand

The idea behind On-Demand services is that you basically can have your needs fulfilled whatever they are, whenever you want it, regardless of where you are. Exactly the right amount and just in time. In practice there are naturally many obstacles on the way, but that’s the basic idea.

You can now have your food delivered, you can exchange small services with your neighbours, get your car parked and see loads of your favourite movies  as you wish.

I’d still call this phase an On-Demand v1.0. You have a variety of different services available, but you

  • a) still need to use them by yourself,
  • b) one after another. There is
  • c) no integration nor
  • d) a common platform where all those different services could
  • e) provide interoperability to the users among themselves.

So at the moment you can not have your house cleaned automatically every time while going to the movies etc. unless you order the services by yourself.

I’d still call this phase an On-Demand v1.0. 

On the other hand a lot of consumers might also resist that kind of automation at least in the beginning, because it would take away the control – or feeling of it – of those little things in their everyday lives.

Pay-as-you-dosomething

I have paid for a continuous travel insurance for a few years. I used to pay for it even though I only travelled abroad for around 3-5 times a year. I stopped paying for the continuous insurance when I realized that I was actually paying for it unnecessarily; you see, I always use my credit card when paying for flights or reserving hotel accommodation and the travel insurance is a built-in feature in my credit card.

But even if I hadn’t got my credit card, I wouldn’t like to pay for a travel insurance for 24/7/365 when only traveling around ~25-35 days a year. And that IS changing rapidly thanks to those pay-as-you.. services.

I wouldn’t like to pay for a travel insurance for 24/7/365 when only traveling around ~25-35 days a year.

So now you can i.e. have your car insured with a pay-as-you-go-car-insurance. Cool! You can also have your pay-as-you-go-mobile-phone and pay-as-you-go-cloud-computing.

The main idea behind the pay-as-you-dosomething is simply put: charges are based on usage.

Payment model

In many cases, paying for On-Demand or Pay-as-you-dosomething services seems very fair: no need to pay for a three years licence if you only are using the item for a couple of months.

In reality it can also backfire you: it’s very easy to buy a number of these services, since the one-time payment is usually quite low. The downside is, that you can easily end up paying for those bills i.e. every month. For instance I have made a one-time investment and bought an Adobe Photoshop Elements 11 software + licence around three years ago for my iMac, and I can use the software as long as I want to (or can, depending on the requirements of Mac OS X operating system). I’m not interested in paying for a monthly fee for the software I only use a few times per year, neither do I need all the new features there are in the newest version(s). It’s obvious, that some people do.

The downside is, that you can easily end up paying for those bills i.e. every month.

But that’s also an example, that in many cases, pay-as-you-dosometing and on-demand services are still not minute-usage-based services but rather monthly usage based services.

ITIL & ITSM perspective in B2C business model?

While in my earlier blog texts here and here I have listed a number of reasons why ITIL should pay much more attention to the consumerization as it does nowadays, I would say that the ITSM perspective is actually not so different in B2C BM compared to the B2B BM.

Some differences surely do exist: In B2C one might have much more (end) users and thus one shall implement enough ways for the end users to communicate with the service desk (self-service tools, chat, phone numbers etc.). Also some other things are done very differently: there are no meetings on regular basis  with the customers, where different metrics would be shown and/or a prearranged agenda would be gone through. Instead, the metrics and developmental issues would most likely be available in the internet. Then on the other hand, customer feedback is just as necessary in B2C BM as in B2B BM and one should maybe put even more effort in expounding it, since there are no filters in between the end users and the service provider, and the end users are not so limited amount of people but are more like whoever.

customer feedback is just as necessary in B2C BM as in B2B BM and one should maybe put even more effort in expounding it

But from the service providers’ point of view the ITIL life cycles are there no matter if the BM is B2B or B2C: Service Strategy, Service Design, Service Transition, Service Operation and CSI – they are there. Perhaps the biggest differences happen in the Service Operation life cycle. It’s totally another thing to serve customers with devices and applications running in a standardised environment than serving end users all around the world using pretty much every single possible equipment, operating system, version, configuration etc.

It’s totally another thing to serve customers with devices and applications running in a standardised environment than serving end users all around the world using pretty much every single possible equipment, operating system, version, configuration etc. 

All in all, in B2C BM all kinds of Continual Service Improvement and Managing Over Life Cycle -related processes and functions are run primarily by the service provider itself. In B2B BM, customer tends to have at least something to say about how the supplier manages the services even they’d have totally outsourced the services. But in the B2C BM end users are usually quite scattered group of people and they lack the forum to present their ideas and requirements. Of course people can always send feedback, but that’s not the same thing as meeting the customers’ IT and/or business representatives on regular basis. And if the end users are not happy, they can always express their feelings in a social media, as was discussed in the previous blogtext..

Consumerization is shown also in the sense, that the BYOD (here: Bring Your Own Devices) is getting more and more popular, and also some previously strictly standardised environments are getting more heterogenous. That brings some elements from B2C business model to the B2B as well.

ITIL® is a Registered Trade Mark of AXELOS Limited.

ITIL® & Consumerization: what next?

In my first blogtext I wrote about ITIL® and Consumerization in general, and a friend of mine asked me to be a bit more specific and tell how exactly ITIL could take consumerization into account in the future.

While my crystal ball is currently under repair, I’m afraid I can’t make exact definitions. But I’d like to discuss about the matter anyway.

Consumer power

Most of people would probably share the opinion, that nowadays consumers have more power than ever before. Just think about the reactions from consumers regarding issues like manufacturing products by using child labor or sweatshops etc. and the companies that have had to face the accusations for those issues, i.e. Wal-Mart .

You might ask, what on Earth does ITIL have to do with this stuff?

Good question. The answer is: pretty much nothing, yet.

But than might be changing; regarding business implications “The primary impact of consumerization is that it is forcing businesses, especially large enterprises, to rethink the way they procure and manage IT equipment and services.” For more information, Click here.

B2B: Yes! B2C: ??

In ITIL there are a lot of processes, from Event Management to Problem Management and Financial Management to Supplier Management. There is also Business Relationship Management. But all the processes are more or less ideal for B2B purposes, not B2C. B2C business model is currently close to non-existent in ITIL.

B2C business model is currently close to non-existent in ITIL.

In other words, End Customer Management or Consumer Management processes don’t exist. Just for an example: Let’s say somebody just blew a major shit storm in a social media with faulty accusations causing bad publicity on you and your organization? Of course you might call your lawyer and sue the party in charge. But the damage is already done! After a few years fighting in a court of law, it’s hard to find an average consumer who still recalls the case in detail. Instead, the overall feeling (“there must’ve been something wrong with this company”) is what rules in people’s mind.

 

So how about introducing Publicity Management in ITIL? (I don’t know if that’s even possible to do in a real world, but one might give it a try and perhaps manage to minimise the damage.) My point is, that at this very moment ITIL lacks the very basic processes to take the consumers and their influence (good or bad) into account. That’s odd, because companies using ITIL are facing the need for that: “large enterprises have become increasingly dependent upon consumerized services as search, mapping, and social media”. Link: Wikipedia

My point is, that at this very moment ITIL lacks the very basic processes to take the consumers and their influence (good or bad) into account.

Summary

So, to summarize and clarify: in my opinion, ITIL still has the best guidelines and practices, and it is the best framework on how to organize things on a factory level. But there are lot of signs that consumerization is indeed an emerging megatrend and thus to keep up with everchanging world around us, ITIL needs to start pay far more attention to the end users and consumers. The way to pay more attention might be introducing new processes (Consumer Management, Publicity Management, B2C Management etc).

If that doesn’t happen, at some point there will be a new <name-it-like-you-wish>ism that does it.

 

 

ITIL® is a Registered Trade Mark of AXELOS Limited.

ITIL® & Consumerization

ITIL® describes the best practices, fancy processes, neat functions etc. But have you ever been wondering why do we actually run the IT Service Management? To our customers of course, you might say. And you’re right! But then again..

..who are the customers?

ITIL defines the following:

a Customer is someone who buys IT services

a Customer of an IT service provider is the person or group who defines and agrees the service level targets.

(Link)

 

But there’s more than that.

 

Let’s say you are a CIO of a worldwide multi-billion dollar company, which produces machinery, tools & equipment to the oil industry. Now, you want to get to know your customer better in order to be able to serve them better – and perhaps to gain some more revenue? Now, is your customer

  • the business department of your company?
  • a buyer or maybe a CEO of your customer company (i.e. oil pumping corporation) – or something in between the two?
  • someone at a customer’s customer company (i.e. crude oil refinery company)?
  • an average-Joe/Mary who fills the tank of his/her car and thus consumes the oil that’s drilled by using the equipment your company has produced, thanks to the ICT-systems your department is responsible of?

Think about this for just a second and then compare your opinion with the definitions of ITIL. What’s the outcome?

 

I was talking to my colleague the other day and she was addressing this dilemma. But why would this be important? ITIL was never meant to be the holy book for consumers but the Information Technology Infrastructure Library.

Manufacturing different kind of gadgets and devices, producing whatever services to various organizations, managing supply chains and all that stuff has become more and more transparent in this modern era of consumerization.

Take any Fortune Global 500 company and discuss with their IT department. My claim is that you won’t find any company on that list where the IT department would merely be serving the business operations without giving a thought to the end customer, or customer’s customer.

The IT department must provide value to the business and continually keep looking for the combination of A-1 and cost-effective solutions. Knowing and understanding the customer’s (and end customers’) domain is essential in that endeavor. Let’s turn the idea upside down: if you don’t know your industry, your customers, the common legal statuses etc., how are you going to be able to provide excellent ICT-services to the business?

My claim is that you won’t find any company on that list where the IT department would merely be serving the business operations without giving a thought to the end customer, or customer’s customer.

So even though the ITIL is not going to be competing with the most popular paperbacks in the iBookstore any time soon, I wouldn’t be too surprised if the ITIL would face the need to somehow take consumerization into account in a foreseeable future. Whether we like it or not, consumerization as a phenomenon is here, and it’s changing the rules for its part.

Now, if you still remember what you thought about who was the customer in the example, you see what I mean. ITIL has not much to do with the consumers. Yet.

ITIL® is a Registered Trade Mark of AXELOS Limited.