Service 4.0: Transforming Customer Interactions

Service operations are fundamentally challenged by new technologies and digital innovations, which have reset the benchmarks for customer experience and efficiency. Service 4.0 represents a transformation that helps companies meet consumer needs.

Customers today expect service interactions that are simple and intuitive and happen in real time. The advances in technology that constitute Service 4.0 make it possible for companies across industries to meet this demand. Successful implementation provides the basis for a step change in performance beyond traditional lean improvement levers.

Some key benefits are greater flexibility, faster speed, higher productivity, and better quality. Service 4.0 champions can see a range of performance improvements, including a 60-percentage-point increase in customer satisfaction scores and a 40% reduction in costs.

By using advances in technology to enhance everyday offerings, leading digital players meet—and often exceed—customer expectations. Nine game-changing technologies enable the transformation to Service 4.0 and promote greater efficiency throughout the value chain.

  1. Big Data and Analytics. Develop deeper insight into customer behavior, preferences, and pathways.
  2. Bionic Computing. Interact naturally with virtual agents, digital devices, and services.
  3. Ubiquitous Connectivity and the Internet of Things. Create an ongoing connection in areas such as on-the-spot service provision and remote monitoring.
  4. Cloud Computing. Manage large data volumes in open systems and provide services on demand.
  5. Cognitive Computing. Simulate human thought processes and provide intelligent virtual assistance.
  6. Smart Devices. Develop an ecosystem of apps and cloud services that utilize high-performance devices.
  7. Robotic Process Automation. Replace humans in work processes that are entirely rule-based.
  8. Virtualization. Free services from relying on specific hardware and software to ensure flexibility and robustness.
  9. Augmented Reality. Provide the necessary information when needed in areas such as manuals, pricing, and alerts.

How to Evolve to Service 4.0

Evolving to Service 4.0 is not easy. A transformation must address each of the major elements of a service provider’s operating model: the organization, the people, and IT.

To succeed, companies will need to do more than retrain their current employees. Successful transformations require attracting and hiring new talent with capabilities in digital technologies such as big data and the cloud. Legacy IT systems present a major bottleneck to achieving Service 4.0 transformations. Therefore companies should start with pilots in order to rapidly create new features—best done in an agile development in short sprints. Companies must determine the right sequence for the transformation efforts. Issues to consider include which business units and countries to begin with, whether to focus on customer-facing or enabling processes, and which transformation initiatives to implement at the start.

The first companies to successfully transform to Service 4.0 will gain a sustainable competitive advantage. They will attract the best talent to design and implement new offerings and establish themselves as the leaders in providing services enabled by advanced technologies. As a result, these companies will benefit from strong ties with skilled employees and customers that will make it difficult for the laggards to catch up.

Meet BCG's Experts in Service 4.0

  • Lean advantage
  • Enablement and lean academy building
  • Lean and productivity in telecommunications
  • Lean and productivity in administration
  • Technology industries
  • Telecommunications
  • Change management
  • Operations
  • Customer Service 4.0
  • Operational excellence and continuous improvement
  • Digital process redesign
  • Customer journey redesign
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