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.

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