In contrast to durable goods, E-Services including SaaS are intangible (they are performances rather than an objects), perishable (they cannot be inventoried, paused or corrected after construction), heterogeneous (no two services or service encounters are exactly the same), and inseparable (services are created on demand and thus simultaneously produced and consumed).
These unique service characteristics (intangible, perishable, heterogeneous, and inseparable) combine to present special management problems for the e-service provider as well as e-service customers. Unfortunately, none of these characteristics can be measured using traditional quality assurance methods since these methods are for products that are tangible, homogeneous and separable from their production and consumption.
It is only at the moment of consumption (i.e., during the service encounter) that the e-service delivers value to the customer, and it is during the service encounter that customer decisions are reinforced or broken. E-service providers cannot avoid the basic requirements of achieving customer expectations; e.g., if the customer desires Internet hosted file storage, then the e-service provider must offer Internet hosted file storage and customer files must be available when and where required. It is the performance of the service during the service encounter that matters most to the customer; knowing files are stored is one thing, being able to access those files precisely when needed is another. Thus, the characteristics of services become the predominate constraints to their success and failure in a marketplace.
E-services are perishable in that the service provider cannot capture, store, reuse, inventory, pause, or correct the service after its construction perishability also extends the value of the service and that failure to provide adequate service capacity, availability, or continuity can result in lost opportunities for both customers and providers.
Finally, e-service production and consumption is inseparable: simultaneously produced and consumed, e-services deliver the value provided upon demand. There is no e-service if there are no customers.
Intangibility is described as the most important of e-service characteristics. Fundamentally it is the basis for separating services from durable goods. Intangibility is often cited as the source of the other characteristics.
Intangible means lacking material qualities, and so not able to be touched or seen and services literature emphasizes intangibility as a defining service characteristic. Services are intangible because their values are realized through activities, benefits or satisfactions. E-services are intangible in that they do not exist until the very moment of consumption, i.e., the service encounter.
E-services are intangible performances, not durable objects or goods. After the interaction with the provider the customer does not have ownership due to its intangibility - quite literally there is nothing to own. Intangibility extends not only to the service itself, but many times to the actual value or outcome the service delivers. In other words, in many instances there is nothing physical after using a service. By way of example simply consider taking a telephone call. You pick up the phone, dial a number, talk to somebody, and hang up. You have no physical artifact that you ever placed the call.
Because e-services are intangible customers look for signs or evidence of service quality. They will draw inferences about the quality of a service from the place, people, equipment, communication, material, symbols and prices that they see. The service provider has to manage these abstract elements to make the service more concrete.
This intangible nature makes e-services difficult to measure, control, or validate – not only for the service provider, but also for the service customer. From the point of view of the e-service customer, an e-service is a means to an end; the value of the service is indirect and only appears when the customer is able to accomplish or realize the outcome the service facilitates.
The constraint of intangibility places upon provider management significant extra requirements in order to transcend it. Effort in understanding customer sentiment and satisfaction with the performance of the e-services is paramount as customer expectations and interactions can be the dominant factor in determining perceived utility and warranty. Since the provider systems management influences the nature of those interactions, selection of an appropriate quality measurement can make the difference between success and failure for an e-service provider.
E-services including SaaS are highly variable, as the service performance depends heavily on who provides it and when and where it is provided. Very closely related to inconsistency or variability, heterogeneousity is the extent to which variations of something are possible or that all occurrences are identical to each other.
Services are heterogeneous in that performance may vary across providers, across employees from the same provider, and even with the same service employee. Also, the combination of human, electrical, mechanical, and situational factors is potentially infinite for every e-service. Thus, no two e-services are identical, and no two service encounters are the same.
This is a particular problem for services with high labor content, as different people deliver the service performance and the performance of people can vary from day to day. For example, a help desk or service desk where agents assist service customers with issues they may have.
Heterogeneousity originates from the professionalism and capability of service personnel for services without labor content. It originates from the availability and capacity of the infrastructure for those services with little labor content. It is a crime influence over service quality.
The heterogeneous nature of e-services and service encounters creates a situation ripe for variability in quality that can quickly become untenable. The heterogeneous characteristics of services require strong process and management control in order to deliver consistent performance. These issues are tackled by service quality criteria like ensuring employees are friendly, respectful and considerate; and by proper engineering, operation and maintenance of systems.
Capability (i.e., the ability of a resource to perform an activity at a desired level consistently) is a primary contributor to variability. Therefore, provider organizational capability has a direct impact upon heterogeneous e-services by virtue of variability.
Understanding the tolerances for variability acceptable to the customer (i.e., the so-called “zone of tolerance”) is required to establish upper and lower boundaries of acceptability with regard to e-service performance. With an understanding of the zone of tolerance, managing the constraint of heterogeneousity in order to deliver e-service performance within it requires a thorough understanding of the e-service provider organizational capability as it relates to the four Ps: people, process, product and partners. Any effective provider management method must address this constraint at its origin in order to meet customer expectations.
Another characteristic of services is perishability. Perishable means something is subject to decay, spoilable, deterioration, destruction, or loss. In general, services cannot be stored and carried forward. Other services are “time dependent” and “time important.” E-services only have value when they are produced and consumed, so they are always perishable.
Perishability is often primarily the concern of the service provider because the consumer only becomes aware of the issue when there is insufficient supply and they have to wait for service. Essentially, this characteristic relates to capability (e.g., capacity, availability, continuity, and security) aspects of the resources of the system delivering the e-service.
Services cannot be stored. This is not a problem when demand is steady, because it is easy to staff the services in advance. When demand fluctuates, service firms have difficult problems -- any unused capacity is lost and cannot be stored or restored for a later use. This leads to difficulty in managing demand, capacity and scheduling in service operations.
The practical realization of this constraint is that e-services thus have very little margin for error. The intangible nature of an e-service and the fact that it exists only when consumed means that there is often very little buffer between the customer and provider. In other words, the provider organization cannot stop the flow of an e-service, analyze it, make improvements or repairs, and then present it to the consumer. This constraint places upon provider management the requirement for predictability. Effective provider management must be able to visualize or in some manner determine current e-service performance, and predict future performances.
Inseparability is related to the delivery perspective of an e-service. The realized service performance and thus the quality of the service is produced during the delivery process. E-services are simultaneously produced and consumed, and it is impossible to separate the production from the consumption.
Consumers produce demand and stimulate the production and requirement for e-services. For example, consider your e-mail service. If you're not logged on to your e-mail service then those aspects of the service that you interact with when you are logged on to not exist. Your e-mail client provides a tangible element that instantiates or allows the service to occur. In this example you cannot measure the quality of the e-mail service if you haven't actually used your e-mail client. Prior to service delivery quality can only be estimated or predicted.
When combined with the intangible nature of services, this demand becomes the primary point of service realization. Inseparability also refers to the physical and institutional distance between the provider and consumer of a good or service.
As such, the characteristics of perishability and inseparability move the role of e-service consumer to an equal level as the provider organization, making value judgments of consumers regarding e-services of high priority for e-service providers.
The service dimensions have implications for service quality. They make it more difficult for consumers to evaluate service quality than to evaluate product quality. They also mean that service quality evaluations include desired outcomes, but also the service delivery process.
The intangibility and heterogeneity of services make it difficult for the provider to consistently deliver the expected (or even the same) level of services.
The unique characteristics of e-services make customers and users equal players in e-service delivery. This fact makes managing e-service quality more difficult than measuring durable good quality because, quite literally, there is nothing to measure – except the satisfaction of the consumer with the service after they consume it.
Because of the unique nature of all services, including e-services, e-service management requires specialized organizational capabilities, activities, and attitudes. The constraints placed upon e-service providers by the characteristics of e-services means that e-service providers can no longer afford to focus primarily upon technology and internal organization. Instead they must now focus on the service consumer and consider the quality of the services they provide.
The performance of an e-service is bound first by the constraints of its characteristics, and then by the resources and capabilities of the provider systems it subsumes, then by the chosen management method, followed by the realized service delivery, and finally by the consumption of the e-service. One can consider these constraints as creating a bounding box surrounding a possible solution set. The efficacy of the management method selected will be inhibited by the specific boundaries.