CEN‟s Horizontal European Services Standardization Strategy
In response to Mandate M/371 (CHESSS)
Modules 4 & 5 The customer satisfaction continuum - Customer Satisfaction Assessment, Responding to Complaints, Redress Provision and Dispute Resolution
Final Report
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ...... 3 2. INTRODUCTION ...... 5 3. METHODOLOGY ...... 7 Table 1: CHESSS MODULES 4 & 5 – CONCEPT LINKS ...... 8 4. FINDINGS ...... 9 5. CONLUSIONS ...... 42 7. BIBLIOGRAPHY ...... 66 8. ANNEXES ...... 75 ANNEX A: Service Lifecycle Model ...... 75 ANNEX B: Questionnaire ...... 85 ANNEX C: World Café Discussions ...... 93 ANNEX D: The CHESSS – Key Concepts survey ...... 98 ANNEX E: Complimentary service life cycle material ...... 104 ANNEX F: Taking an outcomes approach in service development ...... 109 ANNEX G: DIRECTIVE 2006/123/EC- Articles 21 and 22 ...... 116
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1. EXECUTIVE SUMMARY
A significant factor during the period of the CHESSS Initiative has been the emergence into the public domain of several new standards relating to service provision. These include the ISO Quality management, customer satisfaction series, which has added guidelines for external dispute resolution (ISO 10003), and a code of practice for achieving customer satisfaction (ISO 10001) to the previously published guideline for handling complaints (ISO 10002). In addition, further work on monitoring customer satisfaction (ISO TC 10004) is underway.
This suite of standards, for the first time, incorporates recognition that customer expectations play as large a part in determining customer satisfaction with a service as do the expressed needs that are likely to have occasioned the commissioning of the service in the first place and their availability has, to some extent, changed the context of the module 4 and 5 feasibility study.
Notwithstanding this welcome and potentially very valuable body of guidance, the module 4 and 5 studies have identified several areas where further standards input has the potential to enhance the quality of service provision, raise customer confidence in services and improve the movement of services across national borders.
The service aspects for which recommendations for further work are made include:
Facilitating the adoption of a customer centric approach to service provision Harnessing technology to enhance communication and interaction between service provider and customer; Enhancing customer awareness and engagement through improved information exchange; Providing benchmark Standards for complaint and redress provision; Further investigation in relation to dispute resolution; The development of a standard for customer satisfaction indices (CSI) to facilitate the development of a pan-European CSI; Standard to facilitate demonstration of quality in service provision.
Development of European Standards to provide benchmark methods for complaints handling, redress provision and potentially dispute resolution, together with the development of a standard to underpin a pan-European Customer Satisfaction Index, will assist in promoting a uniformity of approach to service provision across the EU that in turn, will make engagement by customers in cross-border sourcing more likely. It is suggested that the involvement of the already established European Consumer Centre network would offers additional options for the implementation of a pan-European approach to complaint handling and redress and the possibility of subsequently
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including the provision of alternative dispute resolution procedures, based on a set of standard principles.
Promotion of a generic, outcomes focused approach to services standardization will assist in the creation of a customer centric service provision culture across the EU, based on sound universal principles of customer engagement, open interaction, and service partnership.
It is acknowledged that standards for service deliverables, providing specification for the particular service to be delivered (e.g. a haircut or domestic cleaning), will be needed in many instances. It will therefore be necessary that these be developed on a service by service basis, by the experts in each field. Where such ‗service specifications‘ are developed it will be possible for the generic service provision standard to be incorporated by cross-reference. Equally it could be decided that the service specification be applied in tandem with the generic service provision standards but either way, together they will constitute a comprehensive specification, capable of underpinning service provision likely to meet the expectations of all but the most fastidious of customers. This combination will have the added benefit that the use of service provision standards embodying principles that have been tried and tested in the service sector generally, should make their use more attractive to services and their customers, who have not previously had the opportunity or incentive to do so.
Placing customer centricity at the heart of service management thinking will be the key to success in improving levels of customer satisfaction with service provision in Europe. However, given the business pressures that bear on service provider decisions in the modern world, both in the boardroom and for SME service providers, this will not be an easy task.
An added benefit derived from the wider adoption of customer centric service provision strategies will be their impact on vulnerability. A concern expressed by those seeking to promote inclusivity in services has been the difficulty of doing so without labeling people as vulnerable. The customer centric service model, has the benefit of being inherently inclusive and therefore capable of addressing the needs of vulnerable people without requiring that vulnerabilities be specifically identified.
It is a conclusion of this study that applied together, these recommendations have the potential to increase customer confidence in service providers in a manner that could help to overcome reluctance to source services across national borders. It is suggested that this, together with the greater service provider confidence that should come from having access to acknowledged good practice, will encourage providers to actively consider making their services available at new locations.
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2. INTRODUCTION
Although recognized as being complimentary, modules 4 and 5 were conceived as separate research projects with the following objectives:
For Module 4 Customer satisfaction assessment: • Identify a range of methods capable of contributing to assessment of service beneficiary satisfaction with regard to the content and delivery of services; • Assess the relevance of the methods identified to specific service sectors and identify any considered to be applicable cross-sectorially; • Select any methods for service beneficiary satisfaction assessment considered to be appropriate for use as benchmark methods in future services standardization.
For Module 5 Complaint, redress and dispute resolution (CRDR): • Examine the difficulty of lodging complaints and obtaining redress for inadequately delivered services; • Establish whether national differences in regulation and approach could make pan-European procedures inoperable; • Identify proven systems and procedures that have the potential to deliver viable, cost effective handling of customer complaints and provisions for redress; • Recommend options with the potential to overcome customers‘ concerns and improve comparability between competing service offerings.
They had the particular brief of identifying whether there were general difficulties or inadequacies (real or perceived) associated with these aspects of service provision, that might be depressing the customer view of service quality and as a result impeding the take up of services across national borders. They aimed to determine whether or not a future programme of standardization or standards related activity might be able to assist in improving the situation.
With much of the research undertaken in the two modules leading to shared conclusions and recognition that all aspects of ‗information transferring (including billing) between service provider and customer are critical to the service process and therefore to ‗customer satisfaction‘, it was decided to look for a service lifecycle model that would assist our identification and understanding of the relationships between the common aspects of service provision. In the event, we were unable to identify an appropriate model and it was found helpful to develop a model that incorporated the stages common to all service provision
This model, the need for which was identified initially to serve the interests of modules 4 and 5, was constructed with the assistance of the leaders of
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modules 1 and 7 but has since proved to be of assistance to the project as a whole.
The CHESSS Services Lifecycle Model (Annex A) is therefore referred to in this report but it is important to recognize that it is not an end in itself. It is rather, a graphical representation of the common elements essential to service provision that acts as a tool to assist us in focusing on specific aspects of service provision in the context of overall customer satisfaction.
Conclusions emerging as part of the process of building the model, lead to the realization that along with the other critical provider/ customer interaction points on the lifecycle (e.g. billing) the entirety of the complaints, redress, dispute resolution (CRDR) cycle was germane to the issue of customer satisfaction and that any separation of these aspects was academic and of benefit to the research activity only. It was apparent that ‗customer satisfaction‘ was in fact all embracing and that the various elements accepted as constituting customer service all had the potential to impact significantly on the customer view of service quality. It was therefore decided that as far as practicable the customer satisfaction continuum should be considered holistically and the output of modules 4 & 5 presented in a single report.
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3. METHODOLOGY
Notwithstanding the proposed ‗separate module‘ approach, the close relationship between modules 4 and 5 gave rise to an early decision to research them in close cooperation to avoid overlap or areas of non-coverage. In particular, this took the form of a joint questionnaire relating to customer satisfaction assessment, complaint handling and redress provision. (See Annex B). Although primarily focused on the European Union, the research in modules 4 and 5 has also sought to identify exemplary practice in other regions.
The outcomes of the survey, together with the product of the early desk research, confirmed our view that the many instances of existing and current research, should provide an accurate picture of customer views and issues of concern. Review of the methodologies used by those various sources suggested that they were sound and that there was little to be added by investment in additional surveys, other than as a means of seeking opinion on particular conclusions.
The desk research program has therefore been used to:
1. contribute to the database of CHESSS stakeholders. 2. gather information from currently existing: Formal standards (ISO; EN; NSBs) Industry or private standards and professional codes Commercially available assessment schemes National/ local government procurement specifications Literature (Text books, Manuals etc) 3. review relevant research studies and assess their significance to the project objectives, undertaking in-depth examination of items judged significant 4. review legislation existing in Member States potentially creating barriers to the delivery of services across national borders
An initial review of the material gathered identified several themes which were identified for further research (see Table 1): Customer centricity and customer interface Service provision embraces all aspects of provider/ customer interaction Customer choice and service comparison Demonstration of quality in service provision
These were incorporated into the discussions at the World Café events in October and November (see Annex C) and the themes further developed, taking account of the views expressed in those discussions into more detailed proposals which were in turn the subject of inquiry in a ‗key concepts‘ questionnaire (see Annex D) and presented for consideration at the CHESSS Seminar in Brussels on 2nd April 2008 .
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Table 1: CHESSS MODULES 4 & 5 – CONCEPT LINKS 4. FINDINGS 5. CONCLUSIONS 6. RECOMMENDATIONS 4.2 Service tradition and the 21st Century 5.0 Planning for customer satisfaction – An 6.1.1 Customer centricity – The importance overarching conclusion of the interface 4.3 Achieving customer satisfaction 5.1Service tradition and the 21st Century – Bridging requires customer centricity the gap 4.3.1 It‟s about wanting to! 5.2 Customer centricity – The importance of the interface 4.3.2 Service provision, customer centricity and evolving business models 4.3.3 Customer awareness and information 5.3 Awareness and information exchange – for 6.1.2 Getting the best out of service providers exchange customers – Customer guidance
4.4 Complaints, redress and dispute 5.0 Planning for customer satisfaction 6.1.3 Complaints, redress and dispute resolution (CRDR) 5.4 Complaints, redress and dispute resolution resolution (CRDR) (CRDR) 4.4.1 Complaint Handling 5.4.1 A role for European Standards in complaint and 6.1.3.1 A role for European Standards in redress complaints and redress 4.4.2 Redress provision 4.4.3 Alternative dispute resolution (ADR) 5.4.2 A role for European Standards in dispute 6.1.3.2 A role for European Standards in resolution dispute resolution 5.4.3 Liaison with the European Customer Contact 6.1.3.3 Liaison with ECC-Net Network ECC-Net)
4.5 Customer choice and service 5.0 Planning for customer satisfaction 6.1.4 Customer choice and service comparison comparison – CSI Role 4.6 Customer satisfaction assessment 5.5 Customer choice and service comparison – CSI role
4.7 Demonstration of quality in service 5.0 Planning for customer satisfaction 6.1.5 Demonstration of quality in service provision provision - Options 5.6 Demonstration of quality in service provision
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4. FINDINGS
4.1 General
The significance of services in the European economy has become a feature of any analysis of current trends and changes to living in the European Community. This is not only in respect of their value (over 70% in advanced economies and in excess of 50% in developing and Eastern European countries) but also relates to their relationship with primary societal concerns such as education, health care and financial security.
Currently we do not have a commonly accepted definition of what constitutes a service 1 although service attributes are usually differentiated from those of physical product (goods) in that they are considered to be intangible, transient and requiring simultaneous provision and consumption.
In today‘s service provision model however this distinction is much less clear- cut, in that although many services remain as being used at the same location as they are provided (e.g. a massage) there are increasingly, examples of services that can be provided over considerable distances, facilitated by advances in communication and information management technologies.
These developments have radically changed the nature of service provision for some services and introduced significant new demands on traditional service provision skills.
4.2 Service tradition and the 21st Century2
Formerly, services were provided locally, directly and by people who in all probability had been resident in the immediate vicinity of the customer, for many years. This situation provided every opportunity for customers to form a clear opinion of what they could expect in terms of service provision and for service providers not only to acquire prior knowledge of the preferences and predilections of their customers but also to observe and respond to changes in mood or attitude on the part of their customers, during provision of the service.
Today, as a result of greater personal mobility and the development of previously unimagined technology, we are frequently attempting to deliver the same personal service, remotely. This situation, although it has delivered the benefits of larger markets, increased customer choice and price reduction driven by competition, has also made exchange of information between providers and customers more difficult. Of potentially greater concern is the
1 CHESSS Module 2 – Requirement for a Services Glossary 2 For conclusions and recommendations, please see 5.1 and 6.1.1
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realization that the sensing of any growing dissatisfaction in customers, by service providers, during the course of service provision has become all but impossible although neither aspect of service provision has diminished in its importance to achieving service excellence.
Service providers are therefore increasingly looking to developments in communication technology to overcome the physical and psychological ‗distance‘ between provider and customer and this is radically changing the way people in service roles interface with customers and undertake their jobs3. The available technology may or may not be capable of meeting the needs of this situation at the present time but given the evidence of several recent surveys4, the strategies and methodologies through which the available technology is being deployed are clearly not delivering to expectations. The gap between customer expectation and the reality of customer service provision, is not yet being adequately bridged.
The point at issue here is the extent of the opportunity for „information exchange‟ at any and all points of interaction between service provider and customer.
Offshoring, the provision of certain services from locations remote from that of the intended customer, although not yet a mature approach to service provision, is growing rapidly5 and does represent the current trend towards a restructuring of the traditional view of the service employee. Driven by the ability of modern information communication technology (ICT) to transfer huge quantities of data around the world with minimal cost and almost instant availability, a new attitude towards the sharing of roles has emerged that recognises that not all service processes necessarily have to be undertaken at the same location.
The outstanding embodiment of this new approach is the contact centre, that ubiquitous activity that has been so readily embraced by service providers, invested heavily in by many astute entrepreneurs and yet remains the cause of much dissatisfaction for customers. The contact centre occupies an almost unique position in the spectrum of services in that it simultaneously provides a service to customers by providing a service to other business for which it can also become the public face, in the minds of those customers.
From observation and survey, contact-centre representative bodies and indeed individual contact-centre management would seem to be focused on the objectives that should achieve improved customer satisfaction, but the results for the majority of customers, do not yet indicate anything approaching success.
Key findings of the Oracle 2008 Pan-Europe Report on customer expectations and contact centre performance. include:
3 Jeffrey F. Rayport & Bernard J. Jaworski: 2004. 4 Oracle. (2008). Pan-Europe Report on customer expectations and contact centre performance. 5 UNCTAD World Investment Report (2004) The Shift Towards Services
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More than half of European customers do not judge customer service operations to be effective; Principle complaints include long call queues and having to repeat queries to successive members of staff and receiving inconsistent responses.
Notwithstanding the evidence that contact centre management do in fact recognize that better quality information exchange and staff training are prime requirements to bring about improvement in customer services and that they are working hard to implement policies that will bring about improvement.
Interestingly, although the Oracle survey is specifically directed towards customer contact centers, the negativity of the responses reflects on ‗customer service‘ generally and reinforces the view that contact centres are not only providers of services in their own right but are also commissioned by other service providers, to act on their behalf. In this situation, with the contact centre becoming the public face of the service provider in the customer‘s mind and the performance of the contact centre being attributed to the commissioning service provider, the nature of the commissioning will inevitably have direct effect on contact centre performance. This signals the importance of the objectives of service providers in commissioning contact centres to act on their behalf, and the concern that some may be viewing the facility at least in part, as a buffer rather than as an aid to improved communication.
Customer contact centres are not per se a subject for this report and indeed their activities are already the subject of a standardization project undertaken by CEN/ BT/ Task Force 182, under a separate Mandate from the European Commission. Contact centres are however in the forefront of current efforts to improve service provider/ customer interface and to perhaps restore some of the immediacy of direct personal service to remote service provision.
In a recent white paper, Future Technology: Customer Contact in the years to 2012, produced for the Contact Centre Association (CCA) Industry Council6, the authors express the view that “in recent years, organisations have made considerable investments to embrace the opportunities that technological advances offer. Developments in customer contact technology have historically been driven by cost savings, but too often these cost savings have come at the expense of reduced customer service. With the growth of the internet and the power it has transferred to consumers, much more than in the pre-internet era, poor service means poor business.
Customer contact agents‟ needs also warrant attention. Introducing a technology which also offers benefits to the agent (such as more flexible working practices) and which, applied effectively is likely to result in better
6 Emes, C. and Di Lena, L. (Ipsos MORI). Future Technology: Customer Contact in the years to 2012, produced for the Contact Centre Association (CCA) Industry Council
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employee engagement and retention, resulting in gains for both customers and the business.
Consequently, over the next five years, the most successful organisations will develop technologies which align cost savings with the needs of customers and employees creating a fairer exchange of value. Technology still has to be managed, however, and businesses will have to ensure that they integrate technologies in order to provide a seamless service. They also need to bear in mind that many customers still prefer „classic‟ channels of communication”.
In their study „Interfaces As the Next Frontier of Competitive Advantage‟ , Jeffrey F. Rayport & Bernard J. Jaworski conclude that it is insufficient to automate company operations [interfaces] without also reorienting the people involved and redesigning the processes underpinning such interface.
The authors explore the ways in which ‗front-office‘ (customer interface) technology can be deployed in combination with human involvement to provide satisfactory interaction between service provider and customer.
This examination, highlights four key ideas:
Companies compete more than ever on the quality of their service interfaces with customers. The dominance of the service sector in the European economy is already established but the dominance of service-related roles in all sectors of the economy is a potentially more significant factor. It is suggested that a majority of today‘s workforce, whether white or blue collar, managerial or operational, find that a substantial part of their focus is required to be on managing the interactions and relationships with customers. As a result, this is where the greatest potential for competition exists.
Nearly all companies already rely on a variety of human and machine interfaces to connect to customers and markets. Many service providers have acquired new customer communication resources in recent years but few have succeeded in managing the proliferation and coordinating their interaction strategically and few manage this interaction as a single system.
Customer experience is the result of interactions and relationships that customers have with companies. Service providers cannot control or determine their customers experience of interface with them. They can however directly control the service interface mechanisms that mediate customers‘ relationships with and experiences of, their services. They need therefore to ensure that those interface mechanisms are customer centric.
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After years of investment in IT within corporations around the world, there is growing evidence that such capital expenditure is beginning to pay off7. There is a growing perception that notwithstanding the high levels of investment over time, only now is this combination of parallel investment beginning to provide potentially effective solutions. The value of this investment will not be fully realized however if service providers do not focus their organizational systems and employee competencies on the core area of customer interface.
In its report, Customer service delivering on the promise, Accenture makes recommendations for next steps by governments in delivering high performance through leadership in customer service.8 These recommendations are derived not only from eight years‘ of in-depth research into customer service by government departments but also from the experience that Accenture has gained working with hundreds of government clients around the globe. Their recommendations, which are stated to be based on what they consider to be the distinctive capabilities of an effective government, customer service program i.e. a citizen-centric vision, an enabling business and technology infrastructure and a high-performing workforce have a close synergy with the conclusions and recommendations of this report. Accenture maintain that these building blocks should link together in an iterative process; suggesting that as governments progress, the cycle will repeat multiple times. They stress that it is far better for governments to pilot approaches, learn from the results and then scale the resulting processes and solutions, than it is to wait too long to start the process at all. They confirm their view as being that governments should put a reasonable amount of effort into developing a vision, but that they should also set parameters around the time it takes to do it. Rather than spending endless cycles striving for perfection, governments should not be uncomfortable starting with a ―good enough‖ vision and refining as they go. A tentative ―wait and see‖ attitude will manifest itself very quickly in citizens‘ disappointment, with their expectations accelerating, and no progress being made is akin to falling behind. Over time, Accenture believes the right balance and alignment of these building blocks will lead to superior results for governments seeking to use customer service as a lever for delivering greater public service value and, ultimately, high performance.
In previous reports, Accenture have referred to the common perception that the public sector trails the private sector in terms of innovation in service provision and have provided numerous examples to highlight that this perception is not always accurate. In their most recent report they suggest that the pressure for better service is forcing governments to become ever more entrepreneurial and that by the very fact that they are government organizations (with a mandate to serve and influence on legislation and funding models, for example) they have the ability to innovate in some ways the private sector cannot. They conclude that in the 2007 citizen survey, there is yet more evidence that the public sector, at least when compared with certain major private-sector industries, can hold its
7 Liberty media Annual Report:2003 and InterActive Corp. Annual Report: 2003 8 Accenture. (2007). Leadership in Customer Service: Delivering on the Promise.
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own in terms of providing customer service. The Accenture conclusions do not include recommendation with regard to possible standards in support of services but the close parallels as to areas of focus can only be regarded as evidence as to the way forward for service provision in both government and private service industries.
4.3 Customer satisfaction requires customer centricity9
4.3.1 It‟s about wanting to!
There are many reasons why organizations don‘t develop a sufficiently customer centric approach to managing their customer relationships. Some are straight forward management issues — they don‘t have the right tools, they don‘t know the appropriate techniques or they haven‘t established information exchange systems and processes appropriate to interacting with their customers throughout the period of service provision. In such cases, business managers may perhaps be forgiven if they don‘t know how to become more customer oriented.
The root cause of much inadequate customer service however, goes deeper than not knowing. It has to do with will.
Many managers don‘t focus on their customers sufficiently, either because they don‘t see the need, or because they are too busy managing the systems they have been responsible for introducing or have been tasked with looking after; forgetting or perhaps never recognizing that those systems should have the primary purpose of enabling their business to meet its customer‘s needs, in line with their expectations. Such managers have become focused to a great extent, on the efficiency of their management systems and the technology that facilitates them.
In the modern world in which we undertake to provide service from a distance, disciplined management systems and leading edge technologies are essential, if outstanding service is to be anything but a dream. But those involved sometimes appear to be driven by a belief that management systems and technology inherently exist to serve people. This is in fact a huge assumption and unless the connection is deliberately and positively made, such systems may never ‗serve‘ anything except themselves.
It is necessary then, that in establishing management systems and introducing related technologies that may have an impact on their customer interface, service providers seek to focus on the outcomes that those customers could reasonably expect from such interface10.(see also Annex F) Further than that, it is necessary that the outcomes identified be incorporated in any recorded objectives for the systems themselves, that they be communicated and periodically reiterated to those responsible for operating and managing the
9 For conclusions and recommendations, please see 5.1 and 6.1.1 10 UK Cabinet Office. (2008). Customer Service Excellence.
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systems and that they be revisited from time to time, to establish their continued relevance. Finally, it should not be assumed that service providers know best what their customers want. It is always preferable to ask.
This recognizes a fundamental principle of effective service provision that success can only come through serving others11.
In their paper, Customer Focus in UK e-Government, James Cornford and Paul Richter12 examine the IT enabled services reform process, in the UK and the experience that in spite of the apparent high degree of customer focus in e-based reformation of service provision, there has been only modest take-up of the resulting services by customers and relatively little improvement in customer satisfaction levels. In attempting to understand this phenomenon, the authors point out that service providers do not in fact focus on customers but rather on some representation of the customer developed from gathered data. Their point here being that because of this wholesale focus on this customer representation or ‗avatar‘ built on the acquired data-base, any issues and areas not represented in the data become invisible, inaudible or incomprehensible to the service providing organization.
In this situation, customer service to any particular customer can only work to the extent that the service provider‘s customer avatar is truly representative of and meaningful to, that customer. When the avatar is not meaningful, they suggest that this creates dissonance. The service provider can only see and assess the effect of their service in the terms provided for by their gathered data and the customer avatar developed from it. Customer responses that fall outside of those parameters become meaningless. This would account for the „they‟re not listening to me‟ effect so often reported in surveys.
The authors conclusion is that service provides cannot resolve this problem through better marketing but only by rethinking the construction of their customer avatar. This, the authors suggest, has to include engaging with customers and encouraging them to play a meaningful role in determining the way in which their service providers view them.
4.3.2 Service provision, customer centricity and new business models
A paper presented to the European Consortium for Political Research (ECPR) Standing group on International relations,13 presents the preliminary results of a major research project that is examining the most important international institutions involved in services standards. The standards referred to here are voluntary technical specifications used by organizations in producing and exchanging goods and services. Such standards sit between organizational, internal procedures and legislative rules and impact almost every aspect of
11 Weiser C., ―Championing the Customer‖. Harvard Business Review, November-December 1995, pp. 13-16. 12 Cornford, J. and Richter, P. Customer Focus in UK e-government, the International journal of Business Science and Applied Management Volume 2, Issue 1, 2007 13 Graz J-C; Hartrmann E; Heires M; Niang N; Sutlianj A The emerging power of services standards in the global political economy (2007)
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daily life. There are however, relatively few applicable to services although they are expected to increase exponentially, in the next few years14 The authors of the ECPR paper, suggest that the extension of service activity to include provision at a distance (e.g. offshoring) is not just a matter of technology and economic logic but also of being able to analyse and deconstruct complex service activities into sequences of more simple tasks that will enable the application of the technology in the most beneficial manner. They draw attention to the fact that most conventional literature on services addresses supply side and demand side studies in different terms, suggesting that by addressing the two in concert we may be able to obtain a picture of how this more fragmented process could benefit from codification (i.e. standardization for services) They make reference to Blind15, as one of the few scholars specifically researching on service standards, who has stated that it is ―because of the intangible nature of services and the information asymmetries thus caused between management and service provider [that] the need to introduce quality standards for each stage of the service production is especially high‖
Graz et al, also make reference to the fact that service rationalisation may well be different to that followed by products in that instead of focusing on the introduction of technology to achieve productivity improvement, standardization and economies of scale, services will seek to address more reflexive practices, work routines and with technology supporting human resources rather than replacing them. They draw attention to the view that there are two conflicting approaches to the rationalisation of service provision in respect of quality of services and response to competition. On the one hand there is that of reducing the time required for establishing a service relationship and on the other the perhaps more progressive approach of moving towards greater involvement of service provider and customer alike, in responding to increasing doubts around the misuse of a wide range of services.
In fact, many manufacturing companies have in recent years been re- examining the structure of their businesses in relation to services, to the extent that some are shifting the focus of their activity towards selling services or functionality instead of the products on which their business previously relied. Termed a product-service system (PSS) such a strategy has great impact on customers, product life cycle and company objectives. The design of a PSS is a complex problem, and must meet the many challenges occasioned by such a radical change in business models.
Often given an environmental focus, PSS have been defined as:
system of products, services, supporting infrastructures and necessary networks that enable a customer to satisfy specified needs with a smaller environmental impact than would be achievable through the acquisition of product and services separately, with the same, intended function fulfillment objectives.
14 ISO Focus: (2006) 15 Blind K The economics of Standards, Theory, Evidence Policy (2004)
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Although benefit to the environment through reduced material consumption and improved material recovery opportunities is frequently cited as the reason for introducing PSS, they can also be instrumental in delivering business growth in situations where more traditional product centric business models cannot cope with ever reducing product lifecycles, supply outstripping demand and dwindling margins.
The concept that today‘s business model should to be service centric rather than goods centric, is not new. Product Service Systems have been emerging for a number of years but there are signs that the concepts may be appropriate for wider application. At least, the authors of the book The Service-dominant logic of marketing – Dialogue, debate and directions16 present a very compelling case for believing so.
Known as Service Dominant Logic (SDL) the essence of this concept is that it is ‗service exchange‘ that is the fundamental purpose of economic activity, with goods, money, organizations and networks all being intermediaries in the process. The authors do not deny that they are important parts of the market- based economy but suggest that they can be viewed as collateral to service exchange.
Traditional market economics has hitherto been focused on the distribution and exchange of commodities and manufactured products. Marketing mix is a term used to identify a combination of marketing tools employed to try and satisfy both customer‘s and company objectives (Druckerb1954; Kotler 1967; Levitt 1960; McKitterick 1957). Sometimes identified as "the offering", the mix is characterised by four variables often referred to as the 4Ps:
Product; Price; Place (Distribution); Promotion.
With the nature and relationship of these variables determined in relation to the target market segment, by the product manufacture. By using variations in the mix of these components, product marketers have the ability to reach multiple consumers within a range of target markets but always retaining absolute discretion over the product itself.
The difference is primarily a matter of tangibility and relationship, with the goods-dominant view characterized by tangible output and discreet transaction, whilst the service dominant view is characterized by intangible output, ongoing exchange processes and periodic or continuous relationships.
Embracing SDL requires acceptance that services are not just something offered to add value to goods but have evolved to become the primary focus of market exchange. Formerly, ownership of resources (e.g. land, minerals)
16 Lusch, R.F. and Vargo, S.L. The Service-dominant logic of marketing – Dialogue, debate and directions. New York: M.E. Sharpe Inc., and based on articles published in the Journal of Marketing, during 2004.
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was key and identification and share of an appropriate marketplace critical, to successful economic activity. Recognition that other resources are also important in that they are neither static nor finite and are therefore potentially flexible in application and can be employed to produce effects and multiply the value of natural resources and to create new resources.
In the goods centric business model:
1. The purpose of economic activity is to make and distribute things that can be sold; 2. To be sold, those things must be embedded with utility and value during production and/ or distribution and must offer superior value in relation to competitors‘ offerings, to the customer; 3. The selling entity needs to set all decision variables at a level that enables it to maximize the profit from the sale of output (or stocks); 4. For both maximum production control and efficiency, the things to be sold should be standardized and produced away from the marketplace; 5. The things to be sold can then be inventoried until demanded and delivered to customers at optimized profit.
This model is founded on the transfer of ownership of goods (things sold) and any reference to services is usually as aids to the production and ownership transfer (marketing) of those goods. In it, industry is concerned with the application of motion to matter to change its form and location. The change of form is ‗production‘ and the change of location ‗distribution‘. Relationships in this model are predominantly either finite or periodic.
The service-centric model can be characterized as:
1. Identifying or developing core competencies, the fundamental knowledge and skills of an economic entity that represent potential competitive advantage; 2. Identifying other entities (potential customers) that could benefit from those competencies; 3. Cultivating relationships that involve those customers in the development of customized competitively compelling value propositions to meet specific needs; 4. Gauging marketplace feedback by analyzing financial performance resulting from the exchange relationship to learn how to improve the core competencies offered to customers and the economic performance.
In the service centric model, tangible goods17 serve as appliances for service provision rather than as ends in themselves. As a result of focusing on the provision of benefit, the model may or may not include a transfer of ownership of these related goods. The model operates just as effectively around the provision of goods essential to that benefit provision, through loan or lease
17 Reddy, A.C., Buskirk, B.D., Kaicker, A. Tangibilizing the intangibles: some strategies for services marketing. Journal of Services Marketing, 1993, Vol. 7, No. 3.and Rushton, A.M., Carson, D.J. The Marketing of Services: Managing the Intangibles. European Journal of Marketing, 1989, Vol. 23, No 8, pp. 23 – 44.
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(Lusch and Vargo 2004; Rifkin 2000; Hawken, Lovins and Lovins 1999) as it does through ownership transfer and indeed may not involve goods at all. In this model relationships may be periodic but are frequently continuous.
It is this change in the nature of the relationship that has such a dramatic impact on the significance of customer satisfaction and the relative roles of the various service characteristics, in influencing that satisfaction.
If the provider has invested in the development of a tangible product to ‗perfection‘, the intention is clearly that the customer will not need or be expected, to have frequent interaction with the provider. Levels of satisfaction will therefore relate to the performance of the tangible product and service aspects (and customer centricity) may well be of relatively little importance.
On the other hand, if the objective is service provision, whether built around goods or otherwise, then more or less frequent (if not ongoing) interaction will not only be expected but may also be actually necessary (e.g. through periodic billing). In this situation the valence of the associated goods in the satisfaction mix, may well be less clear cut.
The SDL business model therefore places a huge focus on customer relationships and effective customer interaction as a result of which the „marketing role‟ for services could be seen as one of customer relationship management rather than selling.
4.3.3 Customer awareness and information exchange18
Knowing who your customers are and what their needs and expectations are with respect to your service, is a fundamental requirement for any service provider19. It is apparent however that this is not always adequately recognized by providers or indeed by customers.
Service provision is inherently the product of a relationship between provider and customer and the nature of that relationship is fundamental to the outcome of the service. Where the relationship is distant and conducted with minimal consideration, the service can only be perfunctory. For service excellence, something approaching partnership is necessary.
By definition, any partnership requires input from both parties.20 Almost inevitably in relation to service provision, it will be necessary for the service provider to be pro-active in facilitating and encouraging customer participation but customers need to accept that they have a real role to play. That role is essentially to make information helpful to provision of the service, available to the service provider. That information may relate not only to the customers specific needs of the particular service to be provided, but also to related
18 For conclusions and recommendations, please see 5.3 and 6.1.2 19 Hannukainen, T. Nickiforow, R. Human interaction as an enabler for breakthrough in quality. EFQM Leadership Gym 2007, and Coldwell, J. (2008). Good suppliers don‘t assume - they ask their customers questions. Infoquest Business Process Review. 20 See www.ostep.eu
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circumstances applying at the time of provision, to their general expectations about appearance and attitudes of staff actually involved in the service provision or any of another of the numerous influences on their ultimate satisfaction with the service.
Customer satisfaction assessment is widely recognized as a vital input to any strategy for customer focused service provision and a variety of methods are employed to assist in this assessment. These include:
In service enquiry; Post delivery enquiry – face to face interview; telephone interview; e-mail or e-questionnaire; Mystery shopper surveys; Use of specialist satisfaction assessment surveys; Customer for a or focus groups; Complaints monitoring; Use of customer satisfaction index (CSI).
All of these can make a real contribution to the service providers understanding of how customers view the service(s) provided their output is actually used to generate improvement. It should be born in mind, however, that the information delivered can be quite variable in relevance to particular service experience, may well vary over time and with the exception of ‗in-service enquiry‘ will always be retrospective to the service events on which the reports are founded.
The retrospective nature of this information is of particular significance if we take into account reports that a large number of instances of customer dissatisfaction with services, do not become the subject of formal complaint to the service provider and that a significant number of dissatisfied customers will change service provider without notification of their intention or giving a reason for doing so (see 4.4).
In this situation retrospective information with regard to customers views of service adequacy will leave the provider trying to deal with problems after the event and constantly needing new customers to maintain levels of business.
For all service providers, overall success will be derived from satisfying the needs and meeting the expectations not just of customers but of all stakeholders (customers, shareholders, employees, suppliers and the community in which the service is provided). It is undeniably the case however that the most pressing are those of customers and that success in this area will underpin satisfaction for other stakeholders. Without satisfied customers, satisfaction for other stakeholders is unlikely to be achievable, at least in the longer term.
This fact is recognized in the widely applied models for business excellence developed for example by the European Federation for Quality Management (EFQM) and the Customer Service Institute in the UK.
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Achievement of customer satisfaction should therefore be a major competitive driver, an engine for growth and provide assurance of continuity.
Throughout this report, we have concentrated on the need to focus on the provider/ customer interactions that are important to the customer and on the role of technology in making those interactions possible. We also need to focus on the role of customer facing employees in ensuring the successful conclusion of those interactions and the retention of customer loyalty. An article in the McKinsey Quarterly, the ‗moment of truth‘ in customer service21, refers to the investment made by many service providers in recent years, in endeavoring to retain their existing customers. The authors imply that this is in recognition of the many academic studies that have highlighted the cost of attracting new customers as being far higher than that of retaining existing ones. They also go on to conclude that the success of this strategy ultimately depends on broadening and deepening customer relationships and translating the resulting, increased customer loyalty into additional business and a healthier bottom line. They suggest that many businesses are falling short in this respect.
They conclude that what is missing in such interfaces is what they refer to as ‗the spark between the customer and frontline staff members. In this they refer to the intuitive response of frontline employees to moments of customer crisis. This depends on their ability to differentiate between the routine and the extraordinary and their empowerment to act accordingly. Applying procedures and allowing technology driven processes to hold sway to deal with the former unobtrusively and providing an instinctive response to the latter that puts the customers needs ahead of the company‘s and their own. They stress that it is in dealing expertly and sympathetically with these ‗moments of truth‘ that great customer service companies earn trust and loyalty.
The authors acknowledge that achieving this is difficult. They recognise that technology, standard procedures and responses together with formal customer relationship management techniques can make valuable contribution to dealing with the routine. However, when these fall short of what is required, as inevitably they occasionally will especially in moments of customer crisis where requirements are abnormal, having staff with the right skills and competencies as well as the ability to provide an appropriate range of deep-seated, emotional and psychological assumptions, can provide the solution.
Employing emotionally intelligent frontline staff is of course the ultimate solution but given that this is unlikely to be practicable in all cases and recruitment is therefore only part of the story. Appropriate training is an essential requirement and the article goes on to identify several areas where this can be effective. These are highlighted as:
21 Beaujean M; Davidson J; Madge S The ‗moment of truth‘ in customer service The McKinsey Quarterly (2006)
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Creating meaning and clarity of purpose for frontline employees by addressing their thoughts, feelings, values, beliefs and emotional needs. Improving employee capabilities – influencing mind sets to the extent that they acquire the required emotional skills Installing structures, reward systems and processes to bak up these developments Providing frontline leaders to impart emotionally intelligent behaviour and act as role models.
Overall this approach can be summarized as doing the routine, well and handling the „moment of truth‟ superbly
4.4 Complaints, redress and dispute resolution (CRDR)22
4.4.1 Complaint Handling Our research and that of countless others, shows that service provider complaints data should not be assumed to reflect actual customer dissatisfaction. It is widely recognized that for services particularly, complaining rates significantly under represent the level of dissatisfaction in customers. Service providers, even those operating sophisticated complaint handling procedures, typically understate levels of customer dissatisfaction, by a considerable margin.
Customers then, frequently choose not to complain. They may perceive that doing so takes too much time or effort. Sometimes this may be because the particular service is not important or expensive enough to justify the effort or it may be because the complaints handling mechanism operated by the provider is not sufficiently accessible or user friendly to encourage its use. Studies show that approximately 96% of customer complaints are never openly voiced and that for every customer complaint that service providers become aware of, there will be, on average 26 others that are never formally lodged. Typically a dissatisfied customer will tell 8-10 people about their problem and of those customers who switch provider, 68% identify perceived indifference on the part of the service provider as a primary reason. Finally, It is estimated to cost 6-10 times more to gain a new customer than it does to keep an existing one.
Even when customers believe their complaints to be justified, they often feel intimidated, anxious, guilty or uncomfortable in lodging them. Not infrequently therefore, complaints when they are made become a sort of revenge action in response to perceived injustice or significant financial loss and as such, they are effected at a much higher profile than might otherwise have been the case and therefore offer little practical opportunity of enabling the service provider to
22 For conclusions and recommendations, please see 5.4 and 6.1.3
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retain the customer or to introduce measured improvement to the underperforming service.
Given this background, It should be recognized that once dissatisfaction with a particular service takes root, many customers simply do not go back to that provider for future service. The damage done by dissatisfied customers who do not complain has been well documented. It is generally acknowledged that dissatisfied customers once migrated to dissatisfaction are likely to reverse their views only slowly, if at all and when they do it is often only in response to considerable investment of resources by the service provider. This, together with the costs associated with attracting a new (replacement) customer, will have immediate negative impact on the service provider‘s bottom line.
It is clear that customer satisfaction should be a significant issue for all service providers and that their concerns should extend through any difficulties or disagreements in order to try and retain as many customers as possible23. For this reason, this report promotes the view that complaint, redress and dispute resolution should be considered as integral parts of the service lifecycle and not as systems apart. Undertaken appropriately and with sensitivity they can contribute to customer retention and potentially even to customer satisfaction.
Notwithstanding the fact that in the main, service providers intend not to make mistakes, things will inevitably go wrong with service provision, occasionally. In view of this it is preferable that the service provider has a system prepared to deal efficiently and effectively with a complaint, should one be received. More than this, it is clearly beneficial for both customer and service provider that the provider make a virtue out of the existence of the scheme by making it readily available and publicizing its existence.
Complaint handling, redress and dispute resolution are, not infrequently, discussed as separate elements of the service provider/ customer interaction process. This may be convenient from a service provision planning/ staff training perspective but for most customers they are all stages of a single interaction process that they expect to be undertaken and concluded with as little intrusion into their lives as possible. If there is to be complaint there has, inevitably, to be a mechanism for providing correction or compensation (redress) in the event that the complaint is justified. At the very least, complaint and redress should therefore be addressed as a single process. What happens in the event that customer and service provider cannot reach a mutually acceptable conclusion (dispute resolution), does merit a slightly separated approach although clearly there needs to be direct connection between the two. This separation is necessary because by its very nature, dispute resolution is only going to be fully effective if it is undertaken through a credible third party, independent of either customer or service provider24.
23 George, M. Graham, C. Lennard, L. 2007. Complaints Handling Principles and Best Practice. Centre for Utility consumer Law, University of Leicester for energywatch. 24 Doyle M., Ritters K. and Brooker S. (2004). Seeking resolution. The availability and usage of consumer-to-business alternative dispute resolution in the United Kingdom, published by the DTI, and Industry Canada. Consumer Complaints Management. A Guide for Canadian Business.
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The availability of such a resource is likely to vary for different types and sizes of service provider and due allowance has therefore to be made for this. Resort to the courts is of course always the ultimate option but it is generally accepted today, that an alternative means of resolution, outside of litigation, is preferable and generally less costly.
A recently concluded survey by IPSOS/ MORI for the UK Government, shows that customers have greatest confidence in service providers and their complaint handling systems when, from the outset, they have readily available information as to:
Availability of process and ease of access (how to complain and who to contact); Process structure (number of steps and escalations); Anticipated timescales (acknowledgement, intervals between stages, maximum resolution); Availability and applicability of redress options; Related appeals process or ombudsman service (if not happy with outcome); Choice and convenience of contact methods (phone/ free-phone, email, live-chat, post); Commitment to report on progress.
Apart from the nature of the final outcome, the qualitative aspects that appear to contribute most to a satisfactory encounter with a complaints/ redress system are:
Not being kept waiting (at initiation and between stages); Quality and completeness of responses; Expertise/ knowledge of staff; Customer awareness (how well staff appear to know detail of case); Pooled information (not having to repeat things to successive staff contacts); Staff empowerment (can take decisions without referral to others); Attitude of staff (e.g. Politeness and interest).
All of which have their effect at the interface between service provider and customer and although affected by the efficiency and capability of the system are not inherently system based.
The interactive and qualitative nature of these characteristics makes it all but impossible to separate and prioritise these lists and it is therefore necessary that service providers give close attention to them all.
Where cross border service provision is involved, the importance of these inherent human preferences and the significance of differences in the way they are addressed by service providers can be heightened by the insecurity
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engendered by differences in language and culture. In this situation the familiarity of a standard system could contribute to
The European Union has sought to assist EU citizens in matters related to cross-border shopping in general (not just in relation to services). In 2005 the European Consumers Network (ECC-NET) was launched and consists of 29 European Consumer Centres (including Norway) which work in partnership to provide information to customers and to assist in the resolution of cross- border complaints and disputes. In the year ended 31/12/2007, the ECC Network received some 22,000 enquiries and assisted in the resolution of over 24,000 complaints and disputes.
The ECC-Net seeks to inform consumers about the opportunities offered by the European Internal Market through providing information on the various EU and National rules that may apply. In addition, It provides advice and support to individuals with a complaint or a dispute to resolve. Where appropriate the ECC-Net helps consumers who have a complaint to reach an agreement via Alternative Dispute Resolution (ADR).
4.4.2 Redress provision
If it is appropriate and beneficial to provide customers with access to a process for making complaint, it is no less important that the process should extend to the provision of redress in situations where the circumstances of the particular case support a claim that the service provided was less than the customer was entitled to expect or where some damage or injustice has resulted from it25.
The systems currently used to provide redress for service customers when things go wrong have developed over time, for a variety of different purposes and with very little consideration of what others might be doing in the same field. Inevitably, this has resulted in unnecessary complexity and variation in the approach taken.
Notwithstanding these differences, detailed examination of the schemes in operation does reveal strong similarities. The main mechanisms for redress, review and provision, currently are:
Stage extension to customer complaints procedures; appeals and tribunals systems (possibly state run); references to independent complaints management organizations; ombudsmen; resort to judicial review (or other forms of legal action).
25 The Secretary of State for Constitutional Affairs and Lord Chancellor (July 2004). Transforming Public Services: Complaints, Redress and Tribunals. and Tribunals: and UK Government Cabinet Office, Better regulation task Force. Better Rules to redress 2004 and Citizen Redress, What Citizens Can Do If Things Go Wrong with Public Services. House of Commons Papers 2004-05, 21
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In cases where something is found to have gone wrong, one important outcome of any of these mechanisms may be the payment of compensation. This is not necessarily so however, and frequently the most appropriate action for putting things right is ‗an apology‘ coupled with evidence that the incident has served to persuade the service provider that something in their system requires correction.
From the customers‘ point of view they are no more than a range of options for trying to achieve very similar outcomes and should reach a fair conclusion (preferably in their favour) in the shortest practicable time and with the minimum cost and intrusion to daily life.
From the service providers‘ view, the criteria for an efficient redress procedure will not be so very different. They will seek to ensure a fair conclusion (which they would no doubt prefer to be in their favour) in the shortest practicable time and with no more cost or intrusion to normal business activity than is essential.
That other, less pure motives impact on the synergy of these two points of view is regrettable.
The first of these is the commonly held perception that Europe is in the grip of a ‗compensation culture‘ not dissimilar to that which is seen to exist in the United States. One cannot but accept that some customers do indeed attempt to make ‗complaining for reward‘ an income stream but research undertaken for the UK Government in 2004 (Better routes to redress – Better Regulation Task force – May 200426) supports the contention that this is nowhere near as commonplace as the media and urban myth would make it appear (see Figure 1) and that the systems in use do have the ability to filter out at least some of this unreasonable behaviour.
International tort costs as percentage of GDP in 2000 Country % Country % Australia 1.1 Italy 1.7 Belgium 1.1 Japan 0.8 Canada 0.8 Spain 1.0 Denmark 0.4 Switzerland 0.9 France 0.8 United Kingdom 0.6 Germany 1.3 United States of America 1.9
Figure 1 Relatively low incidence of „compensation culture‟ in Europe For the provider, there must inevitably be a preference not to have to reduce the bottom line by having to make payment by way of redress. For most
26 Teresa Graham OBE (Chair) Senior Adviser to Baker Tilly, Chartered Accountants Deirdre Hutton CBE Chair of the National Consumer Council. Janet Russell Director of Environment and Transport at Kirklees Metropolitan Council Victoria Younghusband Partner in the Corporate department at the law firm Lawrence Graham
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however, this is tempered by recognition that if they have failed to deliver in some manner or extent and they are to stand any chance of retaining the customer, then some form of redress may be essential and that this may need to be financial. The complication is that from the fear of the compensation culture‘ comes from the perception that by being seen to be too willing to make redress, they may be implying a level of liability that is not appropriate and that they may be allowing circumstances to force them into making a payment that is not justified.
There is clearly a dichotomy here that can reduce the willingness of service providers to provide easy access to their complaints and redress schemes. As a result, the accessibility of such schemes is on occasion not as apparent as might be hoped and number and timing of scheme stages are perhaps more by way of deterrent than speedy resolution. A state of affairs that is not reasonable for their interface with the majority of their customers.
One solution to this problem would perhaps be the use of coordinated complaints/ redress schemes that conform to or have been benchmarked against an established standard scheme, prepared by acknowledged experts and accepted on a broad basis as meeting the requirements of being fair, transparent, speedy and non intrusive.
The CHESSS Key concepts survey, undertaken during the feasibility study recorded that 67% of respondents, were positive towards the idea that a uniform system for complaint, redress and dispute resolution, applicable across all service sectors, would make it easier for customers‟ to understand the process (see Annex D)
4.4.3 Alternative dispute resolution (ADR)
There is increasing evidence that where efforts to resolve disputes directly between service providers and customers fail, alternative dispute resolution (ADR) can offer customers a remedy without the expense and effort of taking formal legal action.
ADR comes in a variety of forms including mediation, conciliation, assisted negotiation, and arbitration, although to date there has been no formal agreement as to the precise definitions of these terms27. Mediation, conciliation, and assisted negotiation are processes in which a neutral third party facilitates communication between service provider and customer to assist in their reaching agreement. Arbitration on the other hand is a process that involves a neutral third party making a judgement based on information gathered from both parties. Whether or not such judgement is to be considered as legally binding is frequently a matter for agreement between the parties involved.
27 Special Eurobarometer “European Union Citizens and Access to Justice”, published in October 2004. Available at
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At the present time there appears to be no consensus as to which form of ADR is to be preferred, if indeed there is a clear candidate for preference.
It is quite clear however that whatever form of ADR is used and whatever the relationship between ADR and the complaints and redress stages that precede it, customer information is the key. It is imperative that customers know what procedures are in place and how they can be accessed if they are to have confidence in service providers, particularly when those providers are sourced from a country other than their own.
Review of CRDR procedures currently in place identify considerable similarity in approach, although with some notable differences in certain areas of activity.
In March 2005, the UK National Audit Office published report of a survey on ‗Citizen Redress‟ 28 which was focussed on activity in public services. This reported that in UK public services the hierarchy of actions in respect of complaint broadly consists of:
customer complaints procedures (handled internally); appeals and tribunals systems; references to independent complaints handlers or ombudsmen; resort to judicial review (or other forms of legal action).
This differs from that generally applied in the private sector in that the appeals and tribunals stage does not feature in private schemes. The British and Irish Ombudman Association has however recommended integration in complaints and appeals handling processes within government departments and agencies, with the various steps and procedures made much clearer for citizens. It is suggested that this, together with measures to promote better awareness of the role of ombudsmen and other independent arbiters, and of the means of access to them, would mean that citizens would have a clearer and more coherent picture of the different redress options available to them.
An example of a scheme that does not insist that a complaint first be raised with the service provider, can be found in the Netherlands The National Ombudsman is a strongly branded and pro-active force for handling citizen complaints against government departments. One fifth of the Ombudsman's 130 staff field correspondence and enquiries from the public (4 staff deal with around 22,000 calls a year to the free phone number). In 2003, over 10,000 formal complaints were received, with two thirds being within the Ombudsman‘s remit. Complaints are submitted directly to the Ombudsman via a 'petition'; a proforma for personal details and a description of the complaint. This is a standardized form for all complaints, which is provided at the back of Ombudsman brochures, and on the website for e-submission. In 2003, 18% (and rising quickly) of complaints came in this web-based form, with another 7% on the pro forma by post – but still around three quarters come through by
28 UK NAO Comptroller and Auditor General. (2005) Citizen Redress: What citizens can do if things go wrong with public services.
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open-ended letter. The Ombudsman places a high priority on raising public awareness and has written a weekly column in a best-selling Dutch newspaper for 18 years. The office also runs an advertisement on national TV and the Ombudsman staff evaluate the impact of their public awareness campaigns every year, with surveys before and after. It is claimed that 20% of respondents refer to the Ombudsman's office when asked 'If you had a problem with the government where would you go?
A similar approach to first contact has more recently been adopted in the UK by the General Dental Council for its newly introduced Dental Complaints Service (for Private Dental Treatment). This too accepts submission of complaint from the customer (patient) without requiring that they be first raised with the dental practice concerned. The results from the first year of operation are impressive. With three-quarters of complaints closed within three working days and more importantly, with the majority of customers being prepared to return to the dental practice for further treatment.
In 2006, the OECD published a comprehensive report on Consumer dispute resolution and redress in the global market place29 which included a valuable section on alternative dispute resolution and included the following statement.
While there has been no comprehensive assessment of the availability, usage and suitability of ADR schemes (public and private) for business to consumer disputes in OECD member countries, a number of surveys of more limited scope have been conducted which indicate that ADR has not yet fulfilled its potential as a low cost and efficient mechanism for the resolution of business to consumer disputes.
The report cited a number of recent studies including:
UK National Consumer Council (2004) Survey The provision and use of ADR in business to consumer cases. The survey found that the provision of ADR services for consumer problems is ―ad hoc and presents a lottery for the consumer, depending either on the type of problem faced or where the problem arises, and sometimes depending on the ability of the consumer to afford the fees.‖ With regard to usage, the survey found that a ―microscopically small fraction‖ of consumer complaints are referred to an ADR service.30
Irish European Consumer Centre found that a shortage of ADR bodies and a lack of business participation were creating barriers to ADR use in Ireland and preventing the Centre from operating to its full potential within the EEJ-Net system.31 European Commission review (2003). Operation of the EEJ-Net. This review identified ―important gaps‖ in ADR services in member countries. Finding that in some countries key sectors were still not
29 OECD (2006) Consumer dispute resolution and redress in the global market place 30 Doyle, Ritter and Brooker, 2004. 31 Reilly, 2004
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covered and that in all countries there was a need for further development of ADR services with cross-border competence (EC, 2003a, p17).
Eurobarometer Survey on access to justice (2004) reported that 38% of respondents had never heard of bodies, such as arbitrators, ombudsmen, arbitration or conciliation bodies, that could offer an alternative to court action.
Consumers International survey of twenty nine online ADR schemes (2001 examined 29 business to consumer disputes, of which only thirteen were deemed ―useful to consumers‖.
A research project: “An analysis and evaluation of alternative means of consumer redress other than redress through ordinary judicial proceedings, in the twenty-five Member States of the European Union, as well as in Australia, Canada and the United States of America‖, commissioned by the European Commission, DG Sanco32, provides extensive comparison between the approached to ADR in the various Member States.
The scope of the study is restricted to ―alternative means of consumer redress‖, defined as means of consumer redress other than redress through ordinary judicial proceedings. The research is further limited to redress obtained by consumers but the authors indicate that, in this context the interests of (good faith) consumers and (good faith) business are in most cases aligned. Consequently, many conclusions of the report will also apply to redress obtained by businesses.
Amongst those conclusions, the report identifies key aspects of ADR as:
Access to justice The policy implication is that, from a user-oriented perspective, what really matters is the gap, if any, between a consumer (or business) deliberately deciding not to take any action and a consumer (or business) wishing to take action but refraining from doing so because of the perceived disadvantages of an ordinary court procedure. Generally, the larger the gap between no action and ordinary court action, the more remote private enforcement of consumer claims is. In other words, mechanisms of ADR that bridge this gap have the unique capability of increasing access to justice. Consumers (or businesses) who otherwise might decide not to take any action, are now able to access intermediate methods of having their claims examined and, if proven true, enforced. In this way, the accessibility of ADR directly
32 Stuyck, J., Terryn, E. , Colaert, V., Van Dyck, T., Peretz, N., Hoekx, N., and Tereszkiewicz, P. (17.01.2007) An analysis and evaluation of alternative means of consumer redress other than redress through ordinary judicial proceedings - Final Report. A Study for the European Commission, Health and Consumer Protection Directorate-General Directorate B – Consumer Affairs. Leuven: The Study Centre for Consumer Law – Centre for European Economic Law Katholieke Universiteit Leuven.
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relates to the sort of society Europe prefers. For example, does Europe prefer a society where consumer claims are enforced privately, by individual consumers or collective groups of consumers – or publicly, by State consumer protection bodies? Does Europe want – let alone questions of Community competence – a uniform approach in this respect throughout the European Union, or does it prefer to leave the basic choice, between private and/or public enforcement, to the Member States?
Alignment between customers and business interests In most circumstances the interests of a (good faith) consumer are identical or at least very similar to the interests of a (good faith) business. Given the existence of a competitive market economy, for most goods and services, a merchant has a lot to lose when unhappy consumers do not return anymore, and go instead to their competitors and may even hurt the reputation of the business in general. If a dispute can be avoided, merchants often choose to avoid such disputes, even if that involves a certain cost in the short term. Market forces may even be strong enough to stimulate a “no questions asked” return policies, which can be perceived by consumers as a reason to choose a merchant offering such a policy above others. Moreover, once it is clear that the dispute cannot be avoided or resolved by direct negotiation, both parties generally have the same interests, i.e. resolving the dispute in a quick, cheap, efficient, fair manner, provided of course, that both parties are acting in good faith. Regulation therefore should not be paternalistic by assuming that the interests of businesses and consumers are necessarily adversarial, or worse, by assuming that the business is on the bad side and the consumer is on the good side. To the contrary, businesses should also be seen as users of ADR mechanisms. Where regulation is necessary, it should focus on improving, making available, stimulating, facilitating or obligating certain ADR mechanisms, with the aim of enabling all good faith users of such mechanisms the best possible means of dispute resolution.
Unique approach to ADR in individual Member States The report shows a multitude of ADR methods used in twenty eight jurisdictions. States effectively put in place a “cocktail” of various possible ADR processes and techniques. Every State has its unique mix. Such a mix is moreover directly intertwined with civil procedure laws, court systems, rules of evidence and bar regulations. The resulting divergence indicates that it is far from self-evident to come up with one “ideal ADR”-system. In addition, the relationships, overlaps and gaps among the different kinds of procedures within the ADR continuum, reflect a complex tangled web that also varies from jurisdiction to jurisdiction.
The visibility of ADR The way alternative procedures have developed in the Member States – as well as in Australia, Canada and the USA – depends on numerous
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factors. It cannot be seen in isolation from the organization nor from the effectiveness of the ordinary judicial proceedings, nor from the way business is structured and consumers are organized in a particular jurisdiction, nor from the effectiveness and the organization of market surveillance and not even from the way the administration operates both at a local and at a more general level. There exists a multitude of other factors, including historic, legal, political, socio-economic, educational and cultural ones. Moreover, as is shown in the report, personal factors often have an important impact on the success of certain schemes. The reasons why the need to develop one or another “alternative” form of dispute resolution was more directly felt in specific jurisdictions or why certain forms appear to work better in certain jurisdictions than in others are addressed in the report.
The report concludes that no particular method or mix of ADR processes or techniques can be presented as the preferred choice from a customer perspective. It also concludes that it is neither possible nor appropriate – to propose a ranking of the various techniques. The implication of this is that whether a dispute resolution mechanism is appropriate in a particular situation or not, will depend on a series of variables, including the circumstances of the dispute, the nature of the complaint or claim, the amounts of money involved, as well as the experience, personality, resources, knowledge and understanding, skills, confidence and attitudes of the consumers and businesses in question. These variables might differ from Member State to Member State so that the processes that function appropriately in one, will not necessarily be effective in another.
However, the report not only concludes that an ―ideal‖ mix cannot be proposed, but also highlights the variety of ADR schemes that currently exist in the European Union, suggesting that even though, at first view, some commonalities could be observed, a more thorough examination of the procedural details often reveals striking differences.
The report acknowledges that this variety may seem attractive to Member States for various theoretic reasons – the States retain freedom to experiment, can learn from each other‘s successes and mistakes, and can even compete with each other in offering customers the best possible procedure. However, in practice this heterogeneity creates fundamental problems.
1. Gaps or deficiencies will be different for each Member State, which results in different levels of access to justice for both consumers and businesses, potentially hindering cross-border trade.
2. No Member State currently has single point at which customers or businesses can file any complaint and be channeled to the most appropriate dispute resolution level. As a result it is difficult if not impossible for customers and businesses from one Member State
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operating on a cross-border basis, to know for sure, the means of obtaining redress in another Member State.
The report suggests that the partial ―single desks‖ existing in certain Member States (e.g. France and Malta) and the EEC Network seem not sufficient to remedy these problems. It also reports that solid statistical data on the use of dispute resolution mechanisms throughout the European Union is not readily available. The suggestion being that statistical data on disputes in general and on consumer disputes specifically, if processed in a way that takes account of the causes and circumstances of each dispute, may reveal important insights which could then be used to reduce the incidence of future disputes. Notwithstanding the costs, time and resources required, the report concludes that this seems not only a useful but also a necessary tool to identify and remedy the shortcomings that may exist in certain Member States, therefore increasing over-all access to justice for both consumers and businesses.
Our findings confirm that that although the need for and benefit of, alternative dispute resolution (ADR) is well founded, there is still considerable room for improvement in the development, promotion and use of fair and effective ADR schemes for business to customer disputes generally, including those relating to services and service provision. However, for the reasons identified, the feasibility of developing a methodology for pan-European application, is far from proven.
4.5 Customer choice and service comparison33
A potentially significant finding has been the increase in interest in the use of the Customer Satisfaction Index (CSI) in several Member States. This cross- service measurement of customer satisfaction is currently operated on a more or less national level although a cross border index has been attempted. Sweden34 was a pioneer in the development of such a method, with the United States35 adopting the principle about ten years ago but quickly customizing it to the requirements of their own specific market. Various countries have followed in creating CSIs, with the most recent examples being in the United Kingdom and Ireland. Attempt is also being made to introduce a pan-European approach and the fact that these various indices share common roots and conceptual approaches, could be seen as a sound basis for future standardization36.
The work to establish a Pan-European Performance Satisfaction Index (EPSI) Rating has been in progress for some five years, in up to 11 European Countries, principally of the Nordic and Eastern European regions. Reporting on this is undertaken by an editorial team coordinated by EPSI37 Rating and
33 For conclusions and recommendations, please see 5.5 and 6.1.4 34 Fornell, C. A national customer satisfaction barometer: The Swedish experience. Journal of Marketing, 1992, Vol.56, pp. 6-21. 35 Anderson, E. W. & Fornell, C. (2000). Foundations of the American Customer Satisfaction Index (special issue). In K. Kristensen & A. Westlund, (Eds.). Customer Satisfaction - Theory and Measurement. Total Quality Management, Vol.11, No.7), pp.869-882. 36 Feciková, I. An index method for measurement of customer satisfaction. The TQM magazine, 2004, Vol.16, No. 1, pp. 57-66. 37 ESPI Rating Editorial Board. 2007. Pan European Customer Satisfaction, and European CSI Editorial Board (2002 - 2007) Pan European CSI Report „Customer Satisfaction in Europe‘ International Foundation for Customer Focus (IFCF)
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supported by the two European Quality Organizations EFQM (European Foundation for Quality Management) and EOQ (European Organization for Quality) together with IFCF (International Foundation for Customer Focus.
The UK index (UKCSI), managed by the Institute for Customer Service (ICS)38 was launched in April 2007. The index is based on the results of an online questionnaire that is completed by a representative sample of adults resident in the UK. As customers, they are asked to rate organizations across various sectors on each of the hierarchy of factors determined by survey to be most important. They are also asked about any complaints that they have made and how the organization handled them.
The roots of the UKCSI lie in the experience of the USA during the previous 10 years but have been confirmed as relevant to the UK in a UK wide survey to establish the top 20 UK customer priorities. The ICS research found that the top ten from these priorities are:
Overall quality of the product or service; Being treated as a valued customer; Speed of service; Friendliness of staff; Handling of problems and complaints; Handling of enquiries; Competence of staff; Ease of doing business; Being kept informed; Helpfulness of staff. and that these can be grouped into 5 service attributes:
Professionalism; Problem solving; Timeliness; Quality/ efficiency; Ease of doing business.
Satisfaction scores relating to these, are collected every six months when the survey is repeated, while importance scores are scheduled for review every two to three years. UKCSI results are published on a free to access public web-site, twice yearly, in January and July with data collection taking place in April/ May and October November respectively.
Although only in operation for two years, the UK scheme has shown significant growth, in terms of both individuals accessing the information and wanting to take part in assessment panels and organizations seeking assessment.
38 Crawford R. (2007) The UK Customer Service Index. Institute of Customer Service.
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In 2005, Report was published of a project undertaken for the European Commission Directorate General on Health and Consumer Protection, by Inra/ Deloitte. Titled Development of indicators on consumer satisfaction and Pilot survey39. This project carried out an in-depth examination of the possibilities and options for developing a methodology for the construction of ‗consumer‘ satisfaction indicators in the EU and to conduct a pilot survey, based on the proposed methodology. It was acknowledged that these objectives were interlinked in that the analysis of the outcomes of the pilot survey was likely to indicate some adaptations to the methodology developed in the first stage.
The scope of the project stressed the Commission‘s interest in indicators that covered a relatively small number of sectors in a rigorous and in-depth way. The sectors included were:
utilities (gas, water, electricity); postal services; mobile telephone; fixed telephone; urban transport (within town/cities: tram, bus, underground, rail/RER); extra-urban transport (between town/cities: rail, bus); air transport; retail banking (retail financial services for individual consumers); insurance.
The research, although originally targeted at the first 15 countries of the EU, was extended during the project to ensure that the proposed consumer satisfaction indicators would still apply to new EU members.
The consumer satisfaction model developed during this Inra/ Deloitte project is shown in Figure 2, and lead to the presentation of guidelines for the implementation of a representative (continuous or not) consumer satisfaction survey, based on it.
39 European Commission Directorate General on Health and Consumer Protection, by Inra/ Deloitte. Development of indicators on consumer satisfaction and Pilot survey.
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Figure 2 – Consumer satisfaction model – inra/ Deloitte
Given the comprehensive nature and direct relevance of this project to the objectives of the CHESSS study, it is suggested that it provides support for a proposal to develop a standard for a Pan-European CSI.
In addition, A discussion group, meeting during the period of the CHESSS Initiative, discussed the value and merits of customer satisfaction indices.
This group consisting of some 20 representatives from: Academe; Customer representative bodies; Regulatory bodies; Standards enforcement bodies and Service provider associations was stimulated in its discussion by a short presentation about the Retailer Survey,40 undertaken by WHICH in the United Kingdom and after detailed discussion lasting over an hour, concluded that CSIs can be applied across a range of services and have the potential to make a real contribution to improvement in the levels of trust and confidence that customers have in their service providers. Key points that emerged from the discussions were:
1. Consumer input to selection of the criteria used in a CSI is vital 2. Including a range of criteria (not just overall satisfaction) is essential 3. Performance trends and service comparability are useful tools for service providers. 4. Bringing customer focus to the boardroom is difficult to achieve but wholly necessary if customer centricity is to be achieved. 5. Wide publication of survey results (both good and bad) will be an essential element in achieving broad acceptance of customer centricity. .
40 The scores on the stores – Report of the Which Retailer Survey 2008 www.which.co.uk
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The CHESSS Key concepts survey, undertaken during the feasibility study recorded that 72% of respondents, were positive towards the idea that CSIs would be helpful to customers in the selection of services and 67% viewed a single pan European CSI favourably. (see Annex D)
4.6 Customer satisfaction assessment41
Satisfied customers are essential for the successful continuity of a service provider. There are monopoly supply situations (e.g. services provided by the state) where customers may have no choice in the service provider that they are obliged to use but these are generally in a minority. For most services, in most situations, failure to achieve a reasonable level of customer satisfaction is likely to lead to inefficient operation and ultimately involuntary closure. To be wholly effective, services need a percentage of repeat business. Any business that relies entirely on new customers will be under considerable strain since ongoing demand must inevitably be unknown and winning new customers will almost always be more expensive than retaining existing ones. For the service provider however, this situation is aggravated by the need to take account of often unexpressed service quality characteristics that can only be accessed through repeat interaction.
The broad characteristics defining any service are:
The service provider (particularly the personnel actually involved in the delivery of the service) [Who] The customer (particularly the individuals directly receiving the service) [whom] The service product, the core objective of the service, provision of which is the primary reason for the service being commissioned [What] The location at which the service product is to be provided [Where] The time the service product is to be provided [When] The manner of provision of the overall service outcome [How]
For any given service type, the relative significance of these characteristics can vary from service event to service event, in line with the varying expectations of the customer and it is the extent to which the service provider is able to bring the characteristics into combination to align with the expectations of the customer, that determines the service „outcome‟.
These characteristics are not dissimilar to the characteristics pertaining to product delivery but when the service product is a physical item, the „what‟ characteristic has traditionally been so dominant that the remaining characteristics have tended to assume a separate identity for which a separate and possibly different outcome is discernable, e.g. When purchasing a car, the customer could be extremely satisfied with the car and prepared to purchase again but wholly dissatisfied with the after sales service.
41 For conclusions and recommendations, please see 5.5 and 6.1.4
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For a physical item, the object of a purchase will therefor be predefined as the product itself (accepting that some degree of customization may be possible for more complex products) and although the aspects of availability, delivery time, after sales support etc are likely to play a part, the product itself is almost always the dominant characteristic, by a significant margin.
For services, the relationship between these characteristics can be much more variable and in some instances the significance of particular characteristics may well not just vary but actually change hierarchical sequence, from service event to service event42. By way of example, the primary objective for a particular customer‘s visits to a restaurant could usually be to consume a well prepared meal. There may however be occasion when the ambience of the restaurant and the attention provided by the waiting staff assumes greater or at least equivalent significance and although the food provided may well be to the usual standard a failure of either of the other two elements, on that particular occasion, could engender a sense of dissatisfaction in the customer. It is evident therefore that a satisfactory outcome for services is likely to be achieved by a combination of characteristics, in variable relationship and that the relative influence of the deliverable (be it product or service) in the mix, will be significant to customer satisfaction.
For any or all of these characteristics, there may well be identifiable customer „needs‟ that can be clearly communicated to the service provider. In addition, customers are likely to have less clearly definable „expectations‟ with regard to the same characteristics or the overall ‗outcome‘ of the service, that they may not make known to their chosen provider.
There is sound reason to believe that whilst it is customer needs that drive the decision to purchase a service, customer expectations will additionally inform the criterion against which delivery of the service will be judged. From this it is reasonable to assume that if needs are likely to be more closely defined than expectations it is a failure to meet needs that will be the more likely to lead to complaint. Failure to meet unspecified expectations, on the other hand, may well be the trigger for decision to switch to another service provider, on the next occasion that the service is required.
It is this intangible, variability, frequently not articulated in any formal manner by the customer that lies at the heart of the difficulty in achieving consistent customer satisfaction.
Services will most likely be selected and provision arranged, wholly on the basis of the customers expressed needs and these will more often than not, relate specifically to the defined objective of the service, e.g. a domestic plumbing repair. The customers satisfaction with the service provided however is likely to be influenced by the whole range of relevant characteristics and an uncooperative demeanour on the part of the artisan actually carrying out the work perhaps coupled with late arrival at the repair site, may take precedence
42 Brady, M. K., Voorhees, C. M., Cronin, J. J. Jr, Bourdeau, B. L. The good guys don't always win: the effect of valence on service perceptions and consequences. Journal of Services Marketing, 2006, Vol. 20, No. 2, pp. 83 – 91.
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over a perfectly adequately undertaken repair in influencing the customer not to make use of that particular plumbing service again. It is also quite possible that the true reasons for not doing so will never be communicated to the service provider.
We have identified that only ‗in service enquiry‘ provides the opportunity for real time information but how best to obtain this in a manner that will enable service providers to improve their responsiveness.
As has been previously referred to, traditionally, before development of the almost universal mobility of today‘s society, almost all services were provided locally, by local people (see 4.1). In today‘s society in which many people change location several times in a lifetime and where services may well be provided from a distance such opportunities are more difficult to engineer and although not impossible, the gathering of information around a customers personal preferences and expectations has required significant investment in resource which, frequently has been beyond the means of the service provider.
This need to improve responsiveness whilst at the same time control the cost of obtaining the information necessary to its provision is perhaps what is focusing leading service providers attention on internal business functions such as information technology (IT).
With the relatively recent advances in communication technology and certainly in the huge growth in its use by ordinary people, the ability to restore something of the directness of traditional communication may well be restored.
A new directness and immediacy of communication through the use of computers, high capacity wireless communication, mobile telephony and the availability of low cost memory is enabling the introduction of more sophisticated programming, that may well provide the key to the incorporation of customer satisfaction monitoring) into ordinary service related interactions.
Formal customer satisfaction assessment is just one element of the overall process of understanding customers and their needs and expectations43. All parts of the service providers organization have a role to play in facilitating that understanding. All elements of the service supply chain should have concern for: who their customers are; what they expect from the service; whether their needs are being met and their expectations fulfilled; How they feel about the service that is being provided.
43 UK Government Cabinet Office. (2007). How to measure Customer Satisfaction.
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4.7 Demonstration of quality in service provision44
At various points during the CHESSS Feasibility Study (see modules 3 and 7, in addition to this report) participants have raised the question of how customers considering the sourcing of services from a Member State other than their own, might make an informed judgment as to the quality of service provision that they might receive. This also identifies the converse problem of how service providers can effectively demonstrate that their service provision is to a quality that will satisfy potential customers who may not have any personal point of reference against which to make a judgment i.e. located remotely from the service provider as in another Member State.
Given the role that ISO 9000 concepts have played in the promotion of a quality management culture in product manufacture and supply, it is a not unreasonable expectation that something similar might be available for services. Indeed ISO 9001 is claimed to be applicable to service provision. As noted in CHESSS Module 2, however, the approach adopted in EN ISO 9001: 2005 is to consider services as a sub-set of product45 and to apply product focused, quality management principles to products and services, uniformly.46
Other standards, specifically applicable to services have been published more recently by ISO47, 48, 49 and a companion standard ISO TS 10004 - Quality management - Customer satisfaction – Guidelines for monitoring and measuring, is in preparation.
Notwithstanding the fact that all of these more recent standards are genuinely service focussed and contain pertinent guidance for service providers on their specific subject areas, none is appropriate for claims of compliance. Indeed the documents contain the following statement:
0.4 Statements regarding conformity.
This International Standard is designed to be used solely as a guidance document. Where all applicable guidance provided in this International Standard has been implemented, statements that a customer satisfaction code of conduct is planned, designed, developed, implemented, maintained and improved based on that guidance can be made
However, any statements claiming or implying conformity to this International Standard are inconsistent with this International Standard, and it is therefore inappropriate to make such statements.
44 For conclusions and recommendations, please see 5.6 and 6.1.5 45 EN ISO 9000: 2005 Quality management systems – Fundamentals and vocabulary:- clause 3.4.2 and CHESSS Module 2 Report page xx) 46 EN ISO 9001: 2000 Quality management systems - Requirements 47 ISO 10001: 2007 Quality management customer satisfaction – Guidelines for codes of conduct for organizations 48 ISO 10002: 2004 Quality management customer satisfaction – Guide;linesfor complaints handling in organizations 49 ISO 10003: 2007 Quality management customer satisfaction – Guidelines for dispute resolution external to organizations:
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NOTE Statements claiming or implying conformity to this International Standard are thus inappropriate in any promotional and communication material, such as press releases, advertisements, marketing brochures, videos, staff announcements, logos, slogans and catch lines for diverse media, ranging from print and broadcasting to Internet and multi- media applications, to product labels, signs and banners.
Other service related standards perhaps more appropriate for making claims of compliance have been published but these are relatively few in number. Others (e.g. that addressing requirements for customer contact centres referred to in section 4.2) are in preparation, and all are intentionally service specific.
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5. CONLUSIONS
5.0 Planning for customer satisfaction – An overarching conclusion
The conclusions and recommendations that follow are based on what our research finds to be the pre-requisites for an effective, service oriented business model, namely customer-centric policies and effective information exchange, with the latter being constituted of trained, empathetic people and the technology infrastructures that support them.
Each of the recommendations made, fits into one or other of these categories (see figure 2) and will assist service provision through the development and application of standards or standards related guidance for service providers, with some additional guidance for customers.
Customer centric Plan chest 5.1
5.2
5.5
Customer-centric policies 5.3
5.4.1
5.4.2 Information exchange -
Trained, empathetic people 5.0
5.6
Information exchange –
technology and infrastructure
Figure 2 The Customer Centric Plan Chest
Developing customer-centric policies, first requires the acquisition of an in- depth understanding of your customers, constructing an accurate and relevant customer model and then ensuring that your service provision is organized in a manner that permits customization to meet individual service needs, and service preferences both expressed and implied.
Clearly the application of business efficient methods will still be essential for good business performance but the principle of customer centricity should
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never be subordinated to the achievement of such efficiency. For example, using customer knowledge to develop customer groupings to which service provision is then tailored can make a valuable contribution, but not to the extent that customers are squeezed into a group to which they do not rightly belong. Excellence in service provision will always require recognition of minority preferences and expectations.
The concept of Service Dominant Logic (SDL - see findings page 17) has implications for both product and service activity in as much as there is no pre-ordained relationship between a product or service and the extent to which potential customers need to be involved in its delivery or provision.
A conclusion arising from consideration of SDL application together with the concept of ‗service attribute valence (see findings page 19) is that it is possible to differentiate business strategies on the basis of the dominance of the ‗deliverable‘ (whether product or service), the extent of customer centricity adopted by the service provider and the nature and quality of the service provider/ customer interface.
Identified as Deliverable-Dominance, Figure 3 models a service provided with commitment to customer centricity (centricity arrow shaded yellow to denote customer focus and points towards service), as a result of which customers can expect the service provider to seek to involve them in many (if not all) of the aspects of service provision.
PROVIDER CUSTOMER
Centricity
RETROSPECTIVE INTERFACE REAL-TIME
Figure 3. Deliverable-Dominance Model – Customer-Centric Service Provision
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In this business model service providers will be seeking to maximise their knowledge of customer needs and expectations and their awareness of customer reactions during service provision, in order to assist them in trying to ensure customer satisfaction with the service and the manner of its provision.
It is conceivable however that a customer may not need or wish for involvement to this extent but even in this situation customer centricity will still prove beneficial, because if providers manage the interaction between themselves and their customers with care, sensitivity and in real-time, this wish for minimum involvement should become apparent at an early stage of interaction, allowing the service provider to proceed accordingly whilst looking for further interaction only to the extent necessary and acceptable to the customer.
Of course there needs to be a minimum level of customer response, if the customer centric approach is to be successful. Customers need to be aware that they too have a role to play and that without their contribution to the partnership, successful service outcomes will be achieved more by luck than judgement. It is for this reason that recommendation, relating to the provision of guidance in respect of the customers necessary contribution to the service partnership, is included as an outcome of this study (see 6.1.2)
In this model, all interaction between provider and customer is assumed to be direct (including where an intermediary such as a customer contact centre is employed to facilitate the process), essentially in real-time and an intention to maintain ongoing provider/ customer relationship, is assumed.
Deliverable-Dominance Modeling This Product Dominant Model illustrates the absence of customer focus other than that needed to design/ specify a product fit for purpose (centricity arrow, shaded blue for provider focus and points towards product).
Product made available for sale, often through unassociated retail outlets through whom, presale enquiry or after-sales service will usually be provided.
Provider/ customer contact only in the event of complaint not resolvable by retailer (i.e. always retrospective). No ongoing customer relationship is expected (finite relationship).
Figure 4: Deliverable-Dominance Model – Mass produced goods
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Model illustrates product dominant system but with significant customer centricity to meet bespoke rquirements, requiring real-time provider/ customer interface, throughout (centricity arrow shaded yellow (customer focus) but points towards product). Interface timeline shows real-time, throughout.
In this model, all interaction between provider and customer is assumed to be direct and whilst there is no assumption of ongoing provider/ customer relationship, repeat business would probably be looked for by both parties.
Figure 5: Deliverable-Dominance Model – Bespoke tangible product
Model illustrates product service system (PSS) with customer centricity to suite the aspirations of the PSS provider. This will require a mix of real-time and retrospective, provider/ customer interface. (centricity arrow shaded blue fading to yellow, points towards product service).
In this model, all interaction between provider and customer is assumed to be direct and there is likely to be greater customer centricity than would have been the case before the migration to PSS. The extent of this will be determined initially by the provider but is likely to increase over time.
There will be expectation of ongoing provider/ customer relationship, either continuous or renewable, periodic.
Figure 6: Deliverable-Dominance Model – Product service system (PSS)
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Model illustrates service with no strong bias towards either the service deliverable or service provision. Centricity, shows strong but not total, inclination towards the customer This will require predominantly real-time provider/ customer interface. (centricity arrow shaded yellow to blue, points towards service product).
In this model, all interaction between provider and customer is assumed to be direct.
There will be expectation of ongoing provider/ customer relationship, either continuous or renewable, periodic.
Figure 7: Deliverable-Dominance Model – Service product
Customer centric vision begins with wanting to develop true ‗customer insight‘ and in the recognition that this presents both a tremendous challenge and unparalleled benefit. The picture of 21st Century, remote service provision presented in the findings of this report lies at the heart of the challenge since as the service customer catchment area widens (to provide a larger customer base) it is the resulting distance between service provider and customer that inhibits the building of customer knowledge.
As a result of communication advances, the potential customer base for many services today is not just the locality from which the service is provided nor yet the country in which the business is registered. It can, potentially, include a large number from outside national borders. It is therefore essential that effective channels for information exchange with customers are developed, to deliver knowledge and understanding with regard to views on what constitutes ‗good service‘, on a global basis. A model that includes demographic factors in addition to an understanding of customers‘ needs and expectations is required and an input of real time, accurate information is the key to service providers truly understanding their customers and to making timely assessment of customer reaction to particular service situations.
To develop a business model capable of balancing customer experience with the cost of service provision, it is necessary that carefully targeted information collection and management be undertaken so as to give service providers the ability to group their customers in a manner that will allow them to create a more manageable picture of customers‘ preferences. Then, by aligning their
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service activity with this more accurate picture of customer needs and expectations they will be able to introduce effective business changes based on their customer‘s priorities that will have the potential to actually deliver customer satisfaction. Properly managed, action taken to improve the customer‘s service experience will often be found to reduce the overall cost of provision, particularly when the bottom line impact of lost custom, is taken into account.
This will be the win, win situation but cannot be guaranteed and therefore in seeking to deliver improved customer service experience, providers must retain a focus on the cost of sustainability and business continuity. It is acknowledged that at some stage, the cost of maintaining a particular service level for some customers, may become impracticable if the business is to be sustained but this should be dealt with at a strategic level, not by simply allowing service to be downgraded. The parameters for assessing good value can be different for different customers and the important element in achieving customer satisfaction is always to meet or exceed expectations and not to meet some arbitrary yardstick.
Customer centricity is about being aware of and understanding customer expectations, interaction with them to agree that which is practicable to achieve, providing service to meet or exceed that which is agreed and still having the skills and flexibility, in reserve, to deal with the unexpected.
Well trained, empathetic people will always be an essential element of service provision because ultimately it is service provider‘s employees (albeit supported by sympathetic technology) that actually deliver excellence in customer service. The best service providers have always recognized the need to recruit, train and retain the right people with the right skills and employ them in the most appropriate roles in order to deliver excellence in service provision. Currently technology-based solutions have increasingly automated straight forward interactions with customers and perhaps reduced the requirement for people involvement in those areas but, the more complex problems remain for people to solve. What that means is that as the capability of the technology advances to take on more of the routine of customer interface, the role for the human agent is changing. In future it will focus almost exclusively on the more complex and difficult situations which in turn, means that for customer service agents to be able to deliver excellent service, they will increasingly need customer relationship management skills at a level that, to date has probably been the preserve of customer service management.
This has implications for personnel strategies in the service provision field of the future. At a time when recruitment is made more difficult by diminishing population and a rapidly ageing workforce and business continuity is threatened by hitherto unheard of forces, there is a need to invest in people development and knowledge retention like never before and it is through the sympathetic interaction of highly trained, service employees and technology, that this can best be achieved. Services will be most effectively delivered in situations where the benefits that technology can deliver are harnessed and channeled for use by competent, informed and empathetic, people.
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The methods used will be required to address the needs of both service employees and customers. Employee development alone will not be sufficient to ensure success and customers too will benefit from some guidance and assistance as to how to obtain the best services from providers, in the new situation.
The embracing of customer centricity by service providers will not be sufficient without wholehearted participation by all employees, not just those in customer facing roles, and by customer participation. The necessary culture change can only be delivered through:
strong and effective leadership; setting realistic customer centric objectives; installing customer centric structures, processes and infrastructure; instilling a customer centric mind-set in employees; developing skills, competencies, enablement and reward programs to ensure continuity of service provision.
To understand future staffing needs, from the perspectives of both service provider and customer, it is essential that the provider undertake a comprehensive examination of available competence and a review of what might be required to meet customer expectations, recognizing the trend towards increasing complexity‘ that will result from the automation of simpler customer interaction. Customer skills at this level are not inherent—they require training and often some element of practical experience in monitored or controlled environments.
Here again, standards could have a role in setting out peer group agreement as to what constitutes good practice in service provision and providing performance benchmark standards that will provide a sound basis for training and a foundation for the development of service excellence and potential competitive edge. The availability of service provision standards that support excellence in service provision on a generic basis, rather than as a view tied to a particular service, will facilitate the development of training approaches. Such training approaches will incorporate learning content based on widely researched and accepted customer attitudes to what constitutes good service together with the input from the service providers own service specific research. Together this can provide a more comprehensive curriculum at all levels through a combination of e-learning and instructor training. This combined approach allows greater flexibility for individual employees to receive appropriately tailored programmes to address their specific needs and lead to the delivery of the outcomes established in the service providers ‗customer centric‘ strategy.
Introducing technology based infrastructures for information exchange that do not become intrusive, requires awareness of the most recent advances in communication and data management technology, the astuteness to recognize the benefits they can bring and the willingness to change to incorporate them into service provision.
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For many years now, service providers have been engaged in trying to overcome the difficulty of remote service provision through the application of technology but in spite of the effort and resource invested, the outcomes have not been wholly satisfactory for customers. In part this may have been because the emerging technologies were not yet capable of adequately bridging the communications gap created by service provision at a distance but there has also been the fact that the services themselves, sought not to change to any significant extent and certainly have not migrated to a wholly customer centric strategy.
One result of this has been that the technology has been applied more for business efficiency than for improved customer experience and the gap between actual service provision and customer expectation has in many cases, widened.
For many service providers, commitment to ‗customer service‘ has been made publicly and investment often made in service infrastructure and methods (e.g. call centres) but without truly embracing the concept of customer centricity. They were then unable to deliver, to meet the expectations they had themselves, created
Meeting the promise of customer centric service requires that service providers first invest in information exchange in order to better understand their customers (particularly their needs and expectation). Then, using that understanding to determine overall strategy and plan the end-to-end business communications, processes and workflows needed to enable them to deliver to those strategies, before specifying and installing the technological infrastructure (particularly in respect of customer interaction) capable of underpinning them.
Recent developments in communications technology e.g. broadband, 3G, wireless connectivity, faster processing and vastly increased memory resource have opened up a range of possibilities that have the potential to bridge the service communications gap. Many of the processes and workflows necessary for effective service provision e.g. contact recording and assignment, record sharing, call routing, tracking and follow up, detail analysis and reporting, will require an optimized, coordinated infrastructure focused on the customer if they are to be fully effective. This will inevitably require time and resource to bring to fruition, a situation that can lead to uncertainty on the part of many stakeholders for whom risk of redundancy is a serious inhibitor to making early investment, even though they may recognize that over time, the efficiencies gained could deliver additional value and excellence in service provision.
It is here that the early introduction of „standards‟ can have a beneficial role to play. Capturing a consensus view amongst stakeholders, as to the objectives and outcomes to be delivered (not the mechanisms for delivery) could eliminate some of the false starts and blind alleys that so often plague development of this sort. It could also speed up the overall process and above all ensure that „customer centricity‟ remains at the heart of the development process.
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5.1 Service tradition and the 21st Century – Bridging the gap50
Remote service provision clearly presents certain difficulties that require significant attention, resources and effort if they are to be overcome. Service providers have therefore to understand the benefits and really want to provide excellent customer service before they are likely to make the necessary investment.
Our conclusion in this respect is that it would be beneficial if the harnessing of new technology and the development of new methods to assist service providers to engage more fully with their customers could be speeded up. The potential benefits of service providers being able to gain greater understanding of their customer‘s needs, expectations and views on the services they are seeking or are being supplied with, could be significant. Given the impact on the bottom line of constantly seeking new customers, if this could be provided at a stage in the service lifecycle early enough to permit corrective action before a decision not to make future use of a service is reached such investment would be really worth while.
As noted in the findings, the issue in focus here is ‗information exchange‘ at any and all points of interaction between service provider and customer. A process that is as fundamental to good service provision as the existence of providers and customers, themselves. To be effective, this exchange needs to be as non intrusive as may be achievable, an aspect that is particularly true for customer information being sought by the service provider. Although the provider will most likely need to initiate and facilitate such enquiry, it will be beneficial if any interruption of the customers‘ regular activity can be minimal.
We conclude that information management programmes for use by service providers should have the capacity to facilitate the gathering of such information at any and all stages of interaction between the service provider and a customer (whether actual or prospective), and then to systematically coordinate it into a single body of information for ready understanding, making it available to all, for use when required. By such methods, any member of the service provider team could be in possession of the accumulated knowledge relating to a particular customer on any occasion where communication is looked for or needs to take place. Evidence of growing dissatisfaction could be passed on and the need to take corrective action proactively signaled providing some chance that it would be in time to prevent the customer switching provider. The reverse would be equally true in that knowledge of what was pleasing to that customer would enable further action to reinforce the customers‘ positive experience and secure future loyalty.
With understanding of customer‘s key satisfaction issues comes greater opportunity for corrective or reinforcing action which in turn is likely to lead to further opportunities to provide service, further interaction and further
50 Drawn from 4.1. Please see 6.1.1 for recommendations
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information gathering activity. All of which effectively ceases the day the customer decides to move on to another supplier.
The right to switch supplier at will and without penalty, should of course be afforded to all service customers but frequent switching is rarely in their or their service providers best interests since it impedes this valuable accumulation of customer knowledge and understanding.
Whilst facility to change provider should be available at all times, a switching regime should not be encouraged
Once customer identities have been established and the nature of their needs and expectations more fully understood, service providers will be in a better position to focus on the hard (does the service provided conform to the customers expressed needs?) and soft (do we know whether delivery time is important, is the appearance of a service provider staff member likely to cause unease) satisfaction issues. As a result, any retrospective surveys that they then choose to undertake to confirm service performance can be made more effective by better recognition of the key service issues and asking the right questions.
Even in this enlightened situation, asking the right series of questions will clearly not be sufficient on its own. Responses will need to be collated and reviewed and must lead to corrective action where those responses indicate need. Unless such action is to be the outcome, there is no point in asking the questions.
The logic of the above argument, would seem to support the contention that investment made in the gathering, collation and availability of information relating to customers needs and expectations with regard to services will not only improve the service providers chances of delivering a satisfactory experience to the customer but will also improve the potential for satisfaction assessment procedures to deliver meaningful data.
5.2 Customer centricity – The importance of the interface51
To assist in the development of customer centric business models, it is suggested that service providers could benefit from the development of a Guide to achieving customer centricity.
This could be presented in one or two parts and be expected to contain guidance in respect of:
How service providers can best acquire information from customers (real-time and retrospective) as to their:
Needs and expectations in respect of the service to be provided;
51 Drawn from 4.2 Please see 6.1.2 for recommendations.
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Service experience and satisfaction. The importance of the provider/ customer interface in delivering competitive edge;
Selecting, implementing, coordinating and managing customer interface systems. These fall into three main categories:
People supported by people People supported by technology Technology supported by people
The redirection, reorientation, training and retraining of customer facing staff in order to maximize the contribution of human resources working alongside and in combination with technology based solutions.
5.3 Awareness and information exchange – for customers52
Helping customers to derive maximum benefit from the services they use
This report is very much focused on the things service providers should be doing to improve their customer centricity and their quality of service provision. It has been noted, elsewhere in the report that service is essentially a partnership between provider and customer and that both should accept responsibility if the outcome is to be wholly satisfactory to both parties.
Whilst it will inevitably fall to the provider to initiate the sort of customer focus and interface mechanisms that will facilitate the provision of good service, customers need to accept that they share in this interaction in as much as they will need to respond to requests for information and be prepared to be proactive in its provision on occasions, if they are to derive optimum benefit from the services they commission.
Preparation of a standard for service customers is not considered a viable option but making advice available to customers with regard to how to derive maximum benefit from the services they use, might well have the same effect.
How best to make this advice available, in the absence of a dedicated standard document on the subject is a matter of conjecture at this stage but two options would be: a) to include the advice in an annex in the proposed service provision standard and to recommend that service providers make it available to their customers, in service related literature etc.
52 Drawn from 4.3. Please see 6.1.3 for recommendations
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b) To make use of the proposed terminology website (see report module 2) to make this advice available online.53
The CHESSS Key concepts survey, undertaken during the feasibility study recorded that 84% of respondents, were positive towards the concept of service providers becoming more customer centric. (see Annex D)
5.4 Complaints, redress and dispute resolution (CRDR)54
5.4.1 A role for European Standards in complaint and redress
Service providers, whatever their size and field of service are going to receive complaints, at least occasionally. Management of those complaints is vital to creating and maintaining relationships with their customers and therefore to the future continuity of their business.
Notwithstanding the recommendation elsewhere in this report, that service providers seek to forestall the onset of dissatisfaction and complaint through close monitoring of customer attitudes and corrective action during service interaction, all service providers should establish a procedure for receiving and dealing with complaints. This is not in any way an admission of failure. Service provision can be a complex process and there will inevitably be occasions when all has not gone according to plan.
We conclude from this study that the detail of a system set up by service providers to handle and redress complaints, is only of significance to customers to the extent that knowledge of it provides assurance that the system exists and can be relied upon in the event of need. From the customer's point of view, only three things matter if something goes wrong. They need to know where and how to complain and they need feel confident that their complaint will be dealt with fairly and without undue intrusion into their lives.
From this we conclude that the use of a system complying with a recognized standard (or founded on a recognized benchmark system) would be as effective as a service provider‘s bespoke system in giving confidence to customers, if not more so.
During the study, service providers have suggested that the use of a standard system denies them an opportunity to develop competitive edge in the market, through the uniqueness and business focus of their in-house complaint handling procedures. This policy of wanting to establish a system unique to themselves is potentially flawed in that it ignores the fact that any given
53 See www.ostep.eu for example of ‗optimum service‘ advice for customers. 54 Drawn from 3.4. Please see 5.1.4 for recommendations
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customer will likely have need to interact with the systems operated by many different suppliers over time and that being faced with differences in approach, perhaps with no apparent reason, can be more of an annoyance than an encouragement. In addition, in a cross-border service transaction where differences in language and culture may well contribute to misunderstanding and perhaps lack of trust around complaint resolution, familiarity with the system employed (because it follows substantially the same structure as that used by providers in the customers own country) could play a significant role in overcoming concerns and facilitating a successful outcome.
The clear conclusion here is that service providers would better serve their proper desire to demonstrate that they are better than their competitors, through developing or enhancing their interface excellence, than through trying to develop a singularly, clever system. Their energies and resources will be more effectively applied to how readily and efficiently they can get their customers into, through and out of the complaint process and back to a state of satisfaction than to seeking to distinguish themselves through the details of the system used. In practice, the differences are rarely substantial (e.g. perhaps the introduction of an additional stage to demonstrate more care and attention) and there is little evidence that they are appreciated by customers. An additional benefit accruing to service providers from employing a generally accepted good practice procedure will be to make it possible to shift resource to the interface with customers where it will do most good.
It is not for this study to specify how such a standard system should be constructed indeed relevant guidance e.g. ISO 10002 or BS 8600 already exists, but it is clear that it should be as readily accessible as is practicable, transparent, concise and inclusive of redress provision. In addition, it is essential that any associated dispute resolution scheme should be seen to be independent and even handed in its decisions.
It is our conclusion, however, that the development of a European Standard to extend guidance into the provision of a benchmark scheme for complaints handling and redress provision, would help to promote uniformity of approach across the EU. Not for the sake of uniformity but because it will make engagement by customers more consistent and potentially less confusing.
The establishment of the European Consumer Centre network to provide assistance to customers experiencing difficulty in resolving problems arising from cross-border transactions, is indication of the significance of such problems. Its existence, offers a possible route to the introduction of a pan- European approach to complaint handling and redress, including the provision of alternative dispute resolution procedures, based on a set of standard procedures. To this end, it would be beneficial if ECC-Net were to have input to the development of the standards.
The statistics reported in 4.4, underline the importance of service providers including provision for CRDR in their service design and recognizing that any such system should be:
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Welcoming, easy to access and accessible for all (including vulnerable consumers, and those acting on their behalf); Able to provide decisions in a timely, fair and transparent manner - (requiring front end empowerment of employees responsible); Proactive in developing links with consumer advice agencies to facilitate referral of cases from such third-parties; Aligned with credible redress and dispute resolution capability, with the potential for access through the NCC Network and other consumer facing bodies; Compliant with existing standards, founded on accepted good practice and applying rules and processes in a consistent manner and in line with other schemes, in order to assist consumer understanding; Channeled into improved service delivery by service providers possibly supported by enforcement action where necessary.
5.4.2 A role for European Standards in dispute resolution
Findings indicate that there is still considerable room for improvement in the development, promotion and use of fair and effective ADR schemes for business to customer disputes generally, including those relating to services and service provision.
However, in view of the uncertainty surrounding the feasibility of producing an acceptable pan-European procedure, that has emerged from recent studies, it is concluded that the possibility of attempting a CWA agreement on Alternative Dispute Resolution (ADR), taking account of outcome of the current CWA on Online Dispute Resolution (ODR) and the Guidance provided by ISO 10003 Guidelines for dispute resolution external to organizations, should be pursued first.
5.4.3 Liaison with the European Customer Contact Network (ECC- Network)
Given the role of the European Consumer Centres Network (ECC-Net) in the resolution of customers problems arising out of cross border trading in goods and services, it is concluded that CEN should seek to establish liaison with ECC-Net with a view to securing their participation in the development of benchmark standards for complaints, redress and the proposed CWA for Alternative Dispute Resolution.
5.5 Customer choice and service comparison – CSI role55
The need to provide customers with the means of making a rational, informed judgment between competing services and service providers, whether locally sourced or provided from a distance suggests that a pan-European Customer
55 Drawn from 4.5. Please see 6.1.5 for recommendations
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Satisfaction Index (CSI), or a coordinated network of National CSIs, would provide for performance benchmarking and assessment of the standard of new service delivery etc. Such a development could also provide helpful cross-reference for the Points of Single Contact (PSC), required by the Services Directive and provide valuable reference points for the operation of the European Consumer Centers Network but preferably as a single scheme.
Although there have been suggestions that cultural differences could make the determination of a single hierarchy of service attributes impracticable, there is reason to believe that the attributes themselves would translate from member state to member state even if their preferred ranking might vary. Accepted mechanisms exist for handling comparisons on this basis and it is therefore concluded that a project to develop a single CSI applicable to the whole of the European Union, would be worth undertaking.
Figure 8 illustrates a list of attributes that might be appropriate for this purpose, without any attempt to rank them by their importance to customers.
Figure 8. Customer Service Attributes.
The current growth in interest in performance comparison, made possible by the ready availability and increasing use of the internet, not only provides encouragement for such development but also gives cause for concern that without some attempt to provide direction, a proliferation of competing CSIs could be counter productive. Quite clearly, to have different CSIs publishing results in which particular service providers are identified as delivering
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different levels of service, will do nothing for the confidence of prospective customers
The conclusion of this report in this respect, is that the development of a European Standard to establish the key criteria for customer satisfaction assessment and the principles and methodology for its operation, using the outcomes of the Inra/ Deloitte survey, taking account of the CSI currently in operation and developed with support and input from a majority of Member States would:
reduce the likelihood of a proliferation of competing Customer Satisfaction Indices that could potentially undermine the future credibility of a CSI process;
potentially provide for a single credible, neutral source of satisfaction assessment and comparison criteria, matched to the service expectations of customers which would: o be of assistance to customers in comparing levels of service performance across a range of services in different Member States. o facilitate performance benchmarking by service providers which, amongst other benefits, would assist them in making the decision as to whether offering a service in another Member State would be viable.
Given the concerns already identified, about the potential risks arising from a proliferation of indices, it will be preferable if a single European index, applying uniformly across the European Union, can be developed. However, should this prove not to be achievable and the pre-existence of CSIs already makes this a possibility, then provided all CSIs are operated in compliance with the European Standard the outcome should be manageable. Indeed, even if the final picture were to be one of 27 national CSIs, their adoption and application of the CEN Standard should ensure that assessment outcomes are directly comparable.
5.6 Demonstration of quality in service provision – options56
In the World Café discussions and particularly those in relation to module 5, participants representing both service providers and customers identified standardization for terminology and complaint procedures and the creation of a specific label to demonstrate that service providers are trustworthy as being contributive to greater customer confidence in service providers. From this we conclude that to have a single, credible, easily recognizable means of identifying quality services would be beneficial to service providers and customers alike and as with products, claims of conformance with established standards could provide the foundation for this.
56 Drawn from 4.6. Please see 6.1.6 for recommendations
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Thank you for providing me with information on the purpose and progress of the CHESSS Initiative. It sounds very exciting and I am particularly impressed with the proposal to adopt a generic approach to standardising. Having worked in the field of management of quality for over thirty years I do agree and strongly support the approach to first develop a strong, robust generic standard or series of standards for the delivery of services, and then build sector specific standards based on the generic form. Developing a generic standard would invariably subject it to a very robust review and challenge during it's development. The outcome of this process should be a strong standard that incorporates sound universal principles of measuring, delivering and managing services. Application of this standard across the service sector would create transparency and consistency in approach. Parallel with this, the application of universal principals, that have been tried and tested in the service sector, should be more attractive and transparent to new sectors. Finally, this approach certainly removes the danger of creating a square wheel, just to be different. Chrissie Keane, National Standards Authority of Ireland,
At this time very few services have formal standards, appropriate to this purpose, available to them and it would inevitably take many years for a comprehensive range of service specific standards to be developed and published.
In the existing standards portfolio, the ISO 9000 series and particularly EN ISO 9001: 2000 probably comes closest to providing for a demonstration of quality for service provision but it is the conclusion of this report that its product dominant terminology and structure is far from ideal for the purpose of instilling confidence in customers in business to consumer transactions, although it might well have a role to play in relation to business to business activity.
As has been identified in the findings section of this report, the recently published series of ISO Guides in the Quality Management – Customer satisfaction, series (ISO 10001; ISO 10002 and ISO 10003) although directly relevant and helpful to service provision, are specifically not appropriate for claims of conformance.
Recognising the generic nature of these ISO services related projects and noting the interest being expressed in their use by stakeholders, it is concluded that to pursue the development of generic, services standards has the potential to deliver a practical solution to the needs of service providers and customers in demonstrating and identifying quality in service provision
Following the development of the CHESSS Services Lifecycle Model (see Annex A) and the resulting identification of a finite range of common service provider/ customer interfaces around which a set of performance requirements could usefully be established, it is concluded that taking a generic approach to
Information provision (see recommendation 6.1.6 and Annex G) Billing and payment (see module 6 report)
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Complaint, redress and dispute resolution would be both feasible and beneficial. Support for these particular interface processes being addressed on a generic rather than sector specific basis also emerged from Module 7.
It is suggested that if a mechanism for bringing such generic requirements together into a single overall service specification, could be achieved then the objective of providing a single, credible, easily recognizable means of identifying quality services, could be ,met.
Based on the CHESSS definition of a service (the entirety of a set of (predetermined) action(s) undertaken to bring benefit to recipients) and applying it in conjunction with the concept of separating that service into service deliverable57 and service provision 58 with the resulting opportunity for the adoption of a generic approach to standards for service provision (see above) and a service specific approach to standards for each service deliverable, would appear to offer a practicable and time efficient way forward.
It is accepted that this will not provide quality assurance for the entire service but it will address a substantial number of the service elements that all too frequently constitute the core of customer complaint and it is suggested that concerns with regard to ambiguous claims of conformance and any resulting misunderstanding can be overcome through the inclusion of specification for unambiguous declaration.
At the same time, it will be open to specific services to develop such service specific standards, each setting out the requirements for a particular service, as service providers and their customers see the need for.
Following from this, it is concluded that the development of a specification for service provision (applicable to the broad range of service activity) against which compliance could be claimed and performance objectively verified, is achievable and will be beneficial.
A conclusion to be drawn from the current trend towards service dominant business models, is that this is a development that is likely to further increase the application potential for new ‗standards for service provision‘ particularly if those standards can be developed to generic principles and therefore be of potential use in a wide range of services.
57 service deliverable - the benefit(s), delivery of which is the primary reason for contracting a service 58 service provision - actions undertaken in making a service deliverable available to its intended recipient(s), other than those intrinsic to that service deliverable
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6. RECOMMENDATIONS AND NEXT STEPS 6.1 Recommendations
6.1.1 Customer centricity – The importance of the interface
We recommend that CEN – CMC initiate a project to provide Guidance on achieving customer centricity in service provision including the application of new technology in providing effective service provider/ customer interface.
This could be presented in one or two parts and be expected to contain guidance in respect of:
1. Placing customers at the heart of service provision to the extent that implication for customers is a consideration in all decision making. 2. The importance of the provider/ customer interface in delivering competitive edge 3. How service providers can best acquire information from customers (real- time and retrospective) as to their: o Needs and expectations in respect of the service to be provided o Service experience and satisfaction. 4. Engagement of Service Provision employees in customer centricity – including the redirection, reorientation, training and retraining of customer facing staff in order to maximize the contribution of human resources working alongside and in combination with technology based solutions. 5 Selecting, implementing, coordinating and managing customer interface systems. These fall into three main categories: o People supported by people o People supported by technology o Technology supported by people
In recognition of the key role likely to be played by new technology in providing effective interface, it is strongly recommended that CEN seek to engage communications technology providers in addition to service providers and customers in this project.
In this latter respect, it may be necessary to create a sub-group for technology systems and methodologies that will best assist service providers to improve their interaction with customers and particularly to facilitate the gathering of information relating to customer‘s expectations of and experience with, the service to be provided. It is viewed as being particularly important that attention be given to ensuring that improvement in the quality of customer service is a significant objective and that this is not subordinated to the achievement of improvement in business efficiency.
It is further recommended that attention be paid to including ‗data mining‘, systems and methodology for information gathering, recording and collation into a coordinated body of information to underpin consistent, coordinated
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interaction between the customer and any member of the service provision team likely to be in customer contact.
6.1.2 Getting the best out of service providers – Customer Guidance59
We recommend that in parallel with the project on customer centricity (6.1.1) CEN-CMC engage with service providers and consumer representative bodies in the provision of guidance to customers with regard to how best to facilitate the provision of services likely to meet their expectations.
It is essential that this be undertaken in close liaison with the group working on customer centricity for service providers and that the customer guidance be prepared by a group comprised of nominees from service providers operating demonstrably customer centric policies and customer representative bodies, on an equitable basis. It is suggested that this guidance be made available without charge, possibly in conjunction with the proposed web-based Services Glossary as well as in printed form. It could be included as an annex in the customer centricity guide with recommendation that service providers make the content available to their customers.
6.1.3 Complaints, redress and dispute resolution (CRDR)60 6.1.3.1 A role for European Standards in complaints and redress
We recommend that CEN-CMC, through BT/ WG/ 163, initiate a project designed to deliver a coordinated set of specifications for complaints handling and redress provision.
These should be drafted so as to be capable of:
direct application by service providers and independent bodies seeking to provide dispute resolution facilities; use as reference schemes in the event that the validity of other schemes is challenged; application for benchmarking purposes by service providers ( to confirm the validity of their own schemes) and by service customers, to assess the efficiency and suitability of provider operated schemes for comparison and selection purposes.
It is further recommended that the specifications be based on the guidance provided in ISO 10002: 2004 and ISO 10003: 2007 and that the specifications contain requirements relating to:
59 Founded on the conclusions drawn in 5.3 60 Founded on the conclusions drawn in 5.4
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Availability and transparency Accessibility Confidentiality Cost (if not free to customer, requirement for identification of potential costs) Objectivity Responsiveness and Timeliness
The specification should require providers to make available a description of the complaint and redress framework together with the anticipated duration of its stages and their outcomes. The relationship to any available dispute resolution procedure should also be identified.
Methods of compliance declaration will need to be specified and it may also be appropriate to include Annexes providing guidance with regard to implementation (for service providers) and assessment (for certification bodies).
6.1.3.2 A role for European Standards in dispute resolution
We recommend that CEN-CMC, through BT/ WG/ 163, initiate a CEN Workshop Agreement (CWA) setting out the requirements for Alternative Dispute Resolution (ADR), maintaining as much synergy as possible between ADR and ODR. to review the work undertaken in respect of On-line Dispute Resolution (ODR) to establish to what extent the recommendations for providing online dispute resolution would be appropriate for application in general dispute resolution, prior to development of a parallel document See footnote for reference to CWA61
6.1.3.3 Liaison with European Consumer Centres Network
We recommend that CEN-CMC seek to establish liaison with the European Consumer Centres Network in projects relating to Customer Satisfaction Indices, complaints handling, redress and alternative dispute resolution with the intention of participation by representatives of ECC in development of the standards and CWA to promote their possible application in relation to ECC activity.
61 CWA. An open process bridging the gap between industrial consortia that produce de facto standards with the limited participation of interested parties, and the formal European standardization process which produces standards through consensus under the authority of CEN member bodies. The CEN Workshop offers an approach to standardization that enables clients to develop their standardization and specification requirements in an environment 'tailor-made' for their needs. The Workshop provides an opportunity for stakeholders to work together to develop standards related solutions to common problems by consensus, validated in an open arena.
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6.1.4 Customer choice and service comparison – CSI Role62
We recommend that CEN-CMC, through BT/ WG/ 163, initiate a project for the development of a Customer Satisfaction Index (CSI) „benchmark‟ standard, setting out the salient requirements and defining principles of CSIs in a manner appropriate for the provision of a CSI and against which, existing and any future CSIs could be compared.
It is anticipated that the standard will take account of the content of ISO 10004, (should it becomes available) and also recommend tools to assist service providers in undertaking their own customer satisfaction monitoring – e.g. example surveys, survey procedures, Interview techniques and assessments, in a manner compatible with the approach taken in the European-CSI.
6.1.5 Demonstration of quality in service provision - Options63.
Although considered to be outside of the direct remit of modules 4 and 5, the conclusion that there is requirement to provide a means for customers to easily and reliably recognise quality in service provision and to make available an effective and commercially viable means of doing so, to service providers, prompts us to recommend that the CHESSS overall report should include recommendation that CEN-CMC should initiate a project for the development of a single generic European service provision specification capable of supporting claims of conformity that can be objectively verified. It is further recommended that the content of that specification recognise the recommendations made in this and other CHESSS modules, by including:
Requirements for the provision and timing of information relating to: Service provider (identification, location and contact* Description of the deliverable Any applicable restrictions or limitations. Terms and conditions including those relating to customer acceptance of the service* Application of any relevant Professional or Industry codes* Commitment to notification of service deviation or difficulty Insurance/ guarantees* Notification of price/ price changes* Payment periods and methods Availability/ accessibility of complaint, redress & dispute resolution Provision for vulnerable groups Customer centricity policies – e,g, use of CSI, availability for general contact, provision of customer guidance etc
62 Founded on the conclusions drawn in 5.5 63 Founded on the conclusions drawn in 5.6
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Environmental commitment? Note: items marked * will be compulsory others recommended.
Requirements relating to: Safety of service provision (see module 3) Billing, Payment periods and methods (see Module 6) Complaint, redress and dispute resolution
Other subjects that might be addressed are: Attitude/ competence/ appearance of service provider workforce Condition/ appearance of service premises – (where applicable) Ethical considerations? Environmental considerations? Service continuity?
It is noted that other recommendations from this and other CHESSS Module reports, whilst not being dependent upon any decision to proceed with the development of a generic service provision specification, will be appropriate for use in conjunction with it to form a suite of generic service provision standards.
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6.2 Next Steps
From Action By Start Duration page Include recommendation for the development of 57; a generic European service provision CHESSS 2008-07-01 1 month 63 specification, in the CHESSS main report.
Initiate drive to engage service providers and customers from all service types, along with customer relationship management (CRM) experts, communications technology developers and services training providers, in the planned CEN earliest ongoing programme of standards development.
Review progress of CWA on ODR as reported at CEN/BT WG next meeting. 163 2008-10-20 3 weeks Prepare proposal and business case for a CWA 55; on ADR, identified in recommendation 6.1.3.2 CEN/BT WG 2008-11-06 4 months 62 and consider funding requirements 163 Launch CWA for ADR TBA 2009-04 12 to 18 months
Liaise with European Consumer Center (ECC) 55; Network with a view to securing participation of 62 ECC Network representatives in future standards projects for complaints handling, CEN 2008-10 4 months redress, ADR and CSI
Prepare proposal, business case and outline draft for a standard providing guidance on 2008-06 3 to 4 months achieving customer centricity in service provision. 50; Establish a subgroup to the group developing 60 the single generic European service provision CEN Group specification, to prepare a customer centricity formed to draft guide. This group should consist of members of the generic 2008-10 12 to 18 months the parent group, service providers & customers European from a range of service types as well as service Customer Relationship Management (CRM) provision technology experts. specification Engage with service providers and consumer 52; representative bodies to prepare guidance with 61 regard to customer attitudes and behaviour 2008-10 6 to 8 months beneficial to the provision of services capable of meeting their expectations.
Prepare proposal, business case and outline draft for a coordinated set of specifications for 2008-11-06 3 to 4 months complaints handling and redress (CHR) 53; provision. CEN/BT WG 61 Establish group to develop CHR standards 163 involving service providers & customers of a 2009-03 12 to 24 months range of service types, as well as providers of existing CHRDR services and ECC network
Prepare proposal, business case and outline draft for a European Customer Satisfaction Index 2008-11-06 3 to 4 months 55; (CSI) bench mark specification. 63 Establish group to develop CSI spec. involving CEN/BT WG service providers & customers from a range of 163 2009-03 12 to 24 months service types, as well as providers of existing CSIs and ECC network
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7. BIBLIOGRAPHY
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Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
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Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees.
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8. ANNEXES
ANNEX A: Service Lifecycle Model
Commentary:
Introduction. As a feasibility study, it is expected that the CHESSS Initiative will ultimately make recommendations for possible future standards related activity that will enhance the quality and acceptability of services and their delivery across national borders.
Review of the research relating to Module 4, The assessment of customer satisfaction, highlighted a requirement that we be sure that the entire life cycle of a service had been taken into account in the study and therefore the research into activity in the Services Sector was extended to include identification of current thinking around ‗the modeling of the life-cycle of a service‘.
For the purposes of the CHESSS Initiative, a service is defined as: predetermined action(s) undertaken to deliver benefit to particular recipients
The primary characteristics defining such a service are:
The service provider (particularly the personnel actually involved in the delivery of the service) [Who] The customer (particularly the individuals directly receiving the service) [whom] The service product, the core objective of the service, provision of which is the primary reason for the service being commissioned [What] The location at which the service product is to be provided [Where] The time the service product is to be provided [When] The manner of provision of the overall service outcome [How]
For any given service type, the relative significance of these characteristics can vary from service event to service event, in accordance with the varying expectations of the customer. There is sound reason to believe that whilst it is customer needs that drive the decision to purchase a service it will be customer expectations that will inform the criterion against which delivery of the service will be judged. Furthermore, it may well be that the nature and extent of customer‘s expectations are not always conveyed to the service provider, due either to a reticence on the part of the customer, lack of awareness or interest on the part of the provider or more likely a combination of the two.
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It appears that whilst there is a significant quantity of material addressing the life-cycle of IT related services there has been relatively little attempt at the formalization of a general services lifecycle model. Much of the excellent work that has been undertaken in this area has been born out of familiarity with the principles and concepts of models constructed in relation to the lifecycles of products and as a result the end to end requirements of a service have not always been fully accommodated.
Work of particular interest in this context is: The Kano model ( an attribute ranking methodology) Professor Noriaki Kano ( See annex E1) The SERVQUAL Model (Gap Model) Valarie A Zeithaml; A. Parasuraman; Leonard L. Berry (See annex E2) But they do not individually or collectively fulfil the perceived requirements for visualising an entire service provision.
Although not inapplicable to services, these pre-existing models have not therefore proved to be wholly satisfactory for the purposes of CHESSS Modules 4 & 5 (M/ 371-1-4 & M/ 371-1-5). The facility that such a model is required to provide in this context is to provide a means of visualising and cross referencing the elements of service provision, their sequence and influence on service outcomes. It has been found that the model (Figure A1) does indeed provide this and it is suggested that it may well have wider application, not only across the CHESSS Initiative but also for services stakeholders generally.
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CHESSS
CUSTOMERS MARKETING & AWARENESS SERVICE DELIVERABLE
DESIGN AGREEMENT
CONCEPTION
Primary External Influences
SERVICE BILLING & PROVIDER Society PAYMENT Legislation
Competition Prepayment Technology Periodic Interim Final
INNOVATION
•Service: whole model SERVICE PROVIDER CUSTOMER (PERIOD) •Service provision: REVIEW DECISION REVIEW Thanks Suggestion SERVICE CUSTOMER Complaint TERMINATION LOSS Redress Dispute 77
CHESSS
CHESSS – Service Lifecycle Model – Commentary Note: Reference numbers in the left hand column relate to the numbers in the lifecycle element identification boxes, in the figure. Section 1. Actions and engagements Service Element Commentary 1.0 Primary external These are the influences that broadly define the minimum service that can acceptably be influences provided at a particular time and in any given community. These include the primary driver of reward, without which, services are unlikely to be provided. The service actually provided is likely to exceed the minimum to an extent determined by the service provider but the core influences will continue to act to ensure that the minimum is at least maintained or the provider is likely to cease to function.
01.1 Reward is at the heart of all offered services, whether that offering is done commercially, socially on a not for profit basis or as a voluntary act. The reward for service provision can therefore range from financial benefit, through political/ social support to the satisfaction of providing a helping hand.
01.2 Legislation Will influence provider decision from conception through to delivery and have some bearing on customer expectation.
01.3 Competition Where competition exists it will also have influence on provider decision making, from conception through to delivery. The presence or otherwise of competition can have a significant impact on complaint levels. Competition will also be a significant driver for innovation to improve/ enhance the service.
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01.4 Society The pressures exerted on a service by the expectations of the society in which it operate, will vary from country to country, both in extent and nature (e.g. influenced by how much legislation is enacted and the social awareness/ maturity of the population) there will however almost inevitably be aspects of service provision that a majority of service providers will feel bound to address, in response to those societal expectations. Can also be a driver for the introduction of innovative practice..
01.5 Technology This includes both the influence that technology can have for the initiation of new services to bring the benefits of the technology itself to a new customer base and the effect that technology can have on existing services, in facilitating innovation and improved service provision.
02 Service initiation The two identified stages, conception and design (including market research) are fundamental to the initiation of any service although their relative influence and significance may well vary with the nature of the service. It is acknowledged that once the service is launched they are unlikely to be an ongoing part of the activity related to provision of the service but they do continue to influence it until decision is taken to introduce changes and for this reason, it is suggested that they be recognise as having ongoing presence in the service lifecycle.
02.1 Conception Original thinking by a service provider leading to the decision to develop and provide a service
02.3 Design Process of establishing the nature and extent of service elements to be provided, the methodology of their provision and the envisaged needs that they will be intended to meet. This activity will include market research and especially provision to accommodate the specifics of the primary external influences, identified by that market research (e.g. service safety requirements). NB: The Guide to developing a Service Standard that is the subject of module 1 of the CHESSS Initiative, refers to this lifecycle model as being of value in assisting potential service providers to design their services.
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03 Marketing and Covers all aspects of making potential customers aware of the nature, extent and availability of awareness any particular service with a view to influencing the customer‘s decision with regard to service take-up, to meet their own perceived and actual needs. NB: This is the stage at which service providers begin to directly influence customers expectations and is the first interactive lifecycle stage at which service providers should start to gather customer feedback.
04 New Customers Likely to become interested in a particular service at a time determined by themselves or dictated by their particular circumstances. Service provision will be initiated by a decision made by the customer, in relation to their perceived and actual needs. It is suggested that this is more likely to be true, for a service related decision than for a parallel decision related to a product purchase. Although promotional activity will have an impact on both decision types, it is suggested that the ‗sales‘ effect is likely to have a more direct influence in respect of a product related decision Direct relationship with the marketing and awareness stage should not be assumed but should be regularly monitored by service providers. . 05 Service Deliverable This is the WHAT of the service characteristics. The concept represents the primary objective of the service, delivery of which constitutes the main reason for contracting the service. 06 Agreement Agreement to proceed with provision of the required service should be made jointly by providers and customers on the basis of known capability and in the knowledge of the need that the service is required to meet. By this stage at the latest, service providers need to be trying to establish and understand the extent to which any ‗unspecified expectations‘ may play a part in the customers assessment of the service actually provided and therefore in influencing the nature and extent of customer satisfaction (e.g. a delivery date is likely to be agreed but the service provider should be clear with regard to the implications of that date. Was the date chosen because one was required but with no collateral implications or are there related customer circumstances that make meeting the date imperative).
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07 Billing and payment Whilst direct payment is not necessarily required for all service provision, billing is likely to be an intrinsic part of the lifecycle of the majority of services. It is essential to recognise that the billing process, which is complimentary to the primary service, can itself be the cause of considerable dissatisfaction on the part of the customer. It should be born in mind that good service can become unsatisfactory in the mind of the customer for no other reason than as a result of poor billing practice.
07.1 Billing Includes the format, presentation and content of the billing document(s) and the processes by which billing information is prepared and processed
07.2 Payment As for billing, the range and quality of payment methods made available by the service provider can be the cause of both satisfaction and dissatisfaction for customers, irrespective of the performance of the service itself. It should be noted that inadequate or inappropriate payment facilities can cause dissatisfaction to a degree that can eliminate all the good will engendered by a well provided service whereas even the best payment facilities will not overcome the dissatisfaction caused by inadequate service provision. 07.2.1 Pre-payment: May be required in full or as a part-payment deposit before the initiation of some service events.
07.2.2 Periodic payment can be required for many services provided on a more or less continuous basis (e.g. energy supply). It is in relation to this that much of the billing dissatisfaction emerges. . 07.2.4 Interim payment can be required at agreed stages during service provision.
07.2.4 Final payment: Will frequently be the only payment stage and as the least complex of the payment processes has the least potential for causing dissatisfaction. However, timing of final (sole) bills can be critical and will be the cause of complaint on occasion.
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08 Service (period) All service provision will stimulate some process of performance review (formally or informally) by Review the customer in order to take a view on such things as Overall value for money Quality of the service deliverable and whether it meets description (specification) etc Quality of the elements of service provision (various stages of the lifecycle) and whether they meet any pre-commitment made by the service provider and the expectations of the customer. The review which may be undertaken at a single point towards the end of service provision or at various during provision, may well stimulate customer feedback in the form of thanks; suggestion; complaint etc. Feedback of all kinds is of paramount importance to successful service provision and should be encouraged and facilitated at all stages of interaction
08.1 Thanks: From simple acknowledgement of service delivery through expression of satisfaction to provision of a communication appropriate for use as a testimonial. 08.2 Suggestion The gathering of customers suggestions as to how a service might be modified (for whatever reason) should be taken seriously. Suggestions should be recorded and reviewed and acted upon where appropriate. It should be born in mind that at one extreme, such suggestion could be made on the basis of a customer being satisfied with the service but wishing to assist in making it even better. At the other extreme, a suggestion could be the customer‘s way of making a complaint in a manner acceptable to them. 08.3 Complaint Effective complaint handling will usually be a matter of procedure coupled with appropriate allocation of responsibility and the provision of training to develop in the individual, skills and understanding commensurate with that responsibility. The service provider‘s objective should always be receive, respond, process and correct as appropriate, in as short a time as may be practicable and with minimum customer disruption. The ultimate measure of success being that the customer remains a customer. The establishment of an effective complaint handling procedure will therefore require an integrated redress policy and ideally should also connect to a (preferably independent) dispute resolution option. 82
All Feedback in respect of the customers reaction to the service (or particular elements of it) should be encouraged and facilitated by service providers at all stages of the service and should be responded to immediately with follow up, retrospective to completion. It is imperative that customer facing, service provider staff be trained to recognise and respond to any signs of impending dissatisfaction that may emerge during such feedback processes.
This sub- cycle of the service life cycle model is intended to include any processes whereby a service provider actually receives and responds to customer feedback with regard to the satisfaction or otherwise engendered as a result of or in relation to, service provision.
The importance of both provider and customer, viewing the process positively cannot be over emphasized.
Note: In practice, the absence of feedback should not be assumed to be positive. Any collection of complaints data does not necessarily reflect actual customer dissatisfaction. It is widely recognized that for services particularly, complaining rates significantly misrepresent the level of customer dissatisfaction. Even service providers operating a sophisticated complaint handling procedure, typically understate levels of consumer dissatisfaction.
10 Customer decision Directly related to Service (period) review, this is the point at which the customer‘s ongoing relationship with the service provider will be determined, either as a result of deliberate decision or by default. Note: This is separated from the stage of review, in the lifecycle, to recognise that service provider action in response to complaint, for example, could result in the reversal of a decision not to use the service again. Equally, inadequate response could convert what began as a mild expression of dissatisfaction into a decision to take custom elsewhere.
11 Service provider Whatever the nature and strength of the drivers/ objectives for improvement the decision to take review relevant action will always be the prerogative of service providers although they may well feel themselves to be under considerable pressure to make such change. The outcome of the review will be either, continue with the service (unchanged), introduce improvement, withdraw the service.
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12 Innovation Action taken to improve/ enhance the service in response to a variety of external and internal incentives. The competing pressures of these various sometimes conflicting incentives can, lead to the development of innovative solutions. Whatever the nature of the pressures experienced, decision to innovate will always remain within the remit of the service provider although the process of innovation could be interactive
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ANNEX B: Questionnaire DELIVERY of SERVICES – Service evaluation and addressing dissatisfaction.
Services Stakeholder Survey
This survey is designed to provide the CHESSS team with a clearer picture of current attitudes towards service delivery, the priorities given to achieving service beneficiary satisfaction and the responses to expression of dissatisfaction from those beneficiaries.
Your cooperation in its completion is very much appreciated and the information provided will be used in the strictest confidence. No report on the findings of the initiative will be attributed to particular stakeholders, unless specific prior permission has been obtained.
Introduction
Standing for CEN Horizontal European Services Standardization Strategy, CHESSS has been structured as a means of examining the feasibility of taking a generic approach to service standardization. It is the largest element of an EU Mandated (M/371) feasibility study that also incorporates detailed examination of 10 specific service areas.
Introduced in the context of the Services Directive, although not directly related to it, the 18 month study is expected to report on the current situation with regard to the delivery of services across national borders and to make proposals for a programme of future standardization and related activity, that will maximize the influence that European Standardization can have in facilitating the unrestricted movement of services across the European Community.
Full information on the background, objectives and progress of the CHESSS INITIATIVE can be obtained from the dedicated CHESSS website – www.chesss.eu
NOTES:
General note 1: Information is being sought in all Member States of the European Union, your own responses should therefore relate only to service activity in the country in which you are based.
General note 2: In the following questionnaire, particular meanings are ascribed to certain terms. A list of these terms and definitions is provided at the end of the questionnaire
Please be sure to complete the Respondent Contact Details form on page 8 and to indicate whether or not you would be interested in taking part in one of the (no charge) CHESSS workshops in October/ November of 2007.
All submitted questionnaires will be acknowledged.
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1SERVICE BENEFICIARY SATISFACTION EVALUATION
1.1 Does your organization operate in a competitive environment(i.e. not being in a nationalized or monopolistic position)?
1.2 Does your organization systematically evaluate levels of beneficiary satisfaction in relation to the services that you deliver? Yes No If no, please jump to question 1.7
1.3 Is there a code of conduct or standard for the evaluation of satisfaction that your organization works to? Yes No
YES No Please identify, if yes a Published National Standard b Published International Standard c1.4 Professional Is the scheme code of conduct for assessment of satisfaction employed by your organization, operated in-house or outsourced? If both, please tick yes dfor National each legislation e Other
1.4 Is the scheme for assessment of satisfaction employed by your organization, operated in-house or outsourced? If both, please tick yes for each
Yes No Please identify, if outsourced a In-house b Outsourced
1.5 Which methods of satisfaction evaluation are preferred by your organization? Yes No Please indicate why methods used a Telephone survey b Web-based questionnaire c Letter mail questionnaire d e-mail survey e In service survey f Other
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1.6 What Objective benefits have your Yes organization No derivedPlease provide from undertaking detail of benefits or a commissioningImproved business service efficiency beneficiary satisfaction evaluation? B Improved customer service c Retention of customer base d Increased revenue e Other
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1.7 In your opinion, could a European standard for satisfaction assessment assist your organization in this process? Yes No
2. AWARENESS AND RESPONSE TO, SERVICE BENEFICIARY DISSATISFACTION 2.1 Does your organization operate a formal complaints management system? Yes No If no, please jump to Question 3
2.2 Is there any legislative requirement for your organization to operate a formal complaints management system?
Yes No
2.3 Does your organization follow some general code of conduct or standards for dealing with complaints? Yes No Please identify, if yes a IsNational the complaints Standard management system operated by your organization b Professional/ Trade body code of conduct c Other (please indicate type or source) d Other (please indicate type or source)
2.4 Is the complaints management system operated by your organisation
a 2.6devel In handlingoped in-house? complaints, does yourPlease organization? identify source below, if bought in: b custom designed for you? c commercially available?
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2.5 Do you outsource the operation of your complaints handling system?
Yes No
2.6 In handling complaints, does your organisation?
always often sometimes never a Maintain records of complaints received? b Review reports of complaints registered?
c Empower contact staff to determine redress?
d Provide for management intervention?
e Follow up to review outcome satisfaction?
2.7 In your opinion, could a European standard for complaint handling assist your organization in this process ? Yes No
3 Facilitating service beneficiary contact How does your organization provide for service beneficiary contact?
Method(s) used Yes No a Dedicated telephone number(s)/ e-mail, publicized in all literature b Dedicated help/ contact/ complaint information, available at outlets c Outline of procedures and possible outcomes available always d Outline of procedures and possible outcomes provided on request e Pre-prepared formats provided for service beneficiary use f Other g Other
Terminology
Please note: In this questionnaire, particular meanings are ascribed to certain terms, as follows:
Service: set of predetermined actions taken to satisfy the individual, corporate or communal needs and/ or expectations of others on a commercial, charitable or not-for-profit basis
Service Beneficiary: individual assumed to be deriving benefit from the delivery of a service
Service Provider: entity undertaking the delivery of a service
(Service) Evaluation: procedure/ process designed to facilitate comparison between services or between a service and an accepted benchmark by assessment or measurement of levels of service beneficiary satisfaction with regard to the delivery of that service
Service Sector: group of services and service providers for identification, analysis or similar purpose
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Respondent Contact details: Responding organization:
Service sector
Contact name
Position/ role in organization
Telephone e-mail
Mailing address
I would be interested in attending the CHESSS Workshop in
______*
I would be interested to provide comment on the draft CHESSS report
Please return to: Jenny Leung Project Administrator The CHESSS Initiative C/o British Standards Institution 4th Floor West, BSI House, 389, Chiswick High Road, London, W4 4AL e-mail: [email protected]
* Please enter location of preferred workshop (London, Copenhagen, Tallinn or Madrid)
Twenty-eight (28) responses to the survey, were returned. Of these, one had not been completed at all, one has just answers to the second and third parts and two are duplicates i.e. 24 effective responses.
The questionnaire is divided in three main areas that investigate: customer satisfaction evaluation awareness and response to customer dissatisfaction
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facilitating customer contact with particular reference to complaints
The questions are not open questions but do allow for some additional information. Moreover some questions allow for a simple yes/no answer while others provide for a multiple-choice answer.
Part 1: The evaluation of customer satisfaction.
The majority (18) of the respondents who took part in the survey operate in a competitive environment. The other six (6) operate in a nationalised or monopolistic position. Eighteen (18) systematically evaluate the levels of beneficiary satisfaction in relation to the services delivered, six (6) do not.
Companies provided varied answers when asked whether a code of conduct or standard for evaluating satisfaction was used. Five (5) companies did not answer the question. Five (5) affirmed that they do not refer to any code of conduct or standard. The remaining companies show that no uniform behaviour exists. Three (3) follow internal codes and one (1) a recommendation from the European Commission. One (1) refers to a code of conduct from a professional body. The others refer equally to national legislation, national standards and international standards, which attract four (4) selections each. At international level, the most cited document is ISO 9001:2000. The national documents referred to include the Postal Service Act, the arrangement of the Minister NoC 28/2004 and RP 47.01 Normas UNE.
When asked whether the scheme for satisfaction assessment is of in-house origin or outsourced, twelve (12) companies claim in-house application whilst four (4) claim to use facilities of both in-house and outsourced origin, two (2) outsource only and six (6) do not answer. When outsourcing, the companies rely on consultancies. However, they are reluctant to provide information about their selected outsourcing partners.
With regard to the method of satisfaction evaluation preferred, the responders were free to identify more than one choice. Hence, the results show clusters of preferences. It emerges that: 1. Surveys, (both telephone and in service), attracts a strong following. The telephone survey has eight (8) selections and the in service survey has seven (7) 2. Letter mail questionnaire had five (5) selections 3. Email survey had six (6) 4. Other methods had four (4) 5. Web-based questionnaire also had four (4)
Eight (8) respondents did not answer.
Few interviewees list the reasons for using the method chosen. Nevertheless, the answers highlight the importance of reaching the client efficiently, of employing a time-effective process and of gaining a closer contact with customers. The other answers provide further details on the kind of methods
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used, namely market research, customer satisfaction, claims and suggestions, questionnaires, personal interviews, user group meetings and road shows.
Improving customer service is the single most selected benefit to be derived from customer satisfaction assessment, with eighteen (18) selections. The reasons include finding out customer‘s needs, increasing customer satisfaction, improving satisfaction‘s survey results. Improved business efficiency is the second most selected benefit [thirteen votes (13)] as it allows for analysis and improvement of the process as well as for application of continual improvement. The retention of customers [ten (10) selections] is also recognised as a benefit whilst increased revenue ranks last. Finally it is stated that evaluating satisfaction can provide a means of demonstrating compliance with standards. Five (5) did not answer.
The majority of the respondents (18) state that a European standard for satisfaction assessment could assist a company in the organisation of this process. Three (3) answer negatively, one (1) answer that potentially it could but it depends upon scope and two (2) do not answer.
The second part assesses the awareness and response to customer dissatisfaction. Eighteen (18) companies have a formal complaints management system and seven (7) do not. Answering positively to this question allows answering also to the subsequent questions in part two.
Ten (10) companies are legally required to operate a formal complaints management system, eight (8) are not.
When asked about the code of conduct or standards for dealing with complaints, the interviewees could express more than one preference hence the following results show clusters of preferences. Six (6) companies follow a national standard. Six (6) indicate other sources such as internal procedures. However, those companies who answered ‗others‘ also list documents that could fit into the other categories, such as ISO 9001:2001 and ISO17025. Three (3) companies follow a professional/ trade body code of conduct. Three (3) answer negatively. Two (2) do not answer and one (1) answers yes without expressing any preference.
Sixteen (16) companies have an in-house developed complaint system. One (1) answered yes but it does not specify whether its complaints systems is developed in-house, custom designed or commercially available. The remaining one (1) did not respond to this question.
Fifteen (15) companies do not outsource the operation of their complaints handling system. Two (2) do and one (1) did not respond.
Companies were asked to assess their complaint handling procedure. As more than one options can be chosen, the answers again show clusters of frequency. With regard to keeping a record of complaints received, all companies (18) affirm that they always maintain a record. In respect of collating and reviewing reports of complaints, fifteen companies (15) claim to
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always do so, two (2) often do and one (1) never. As far as empowering staff to determine redress is concerned, seven (7) claim to always do so, four (4) often do so, two (2) sometimes and four (4) never. As far as providing for management intervention, nine (9) companies always do, five (5) often do, two (2) sometimes and one (1) never. Finally as far as following up to review outcome satisfaction, ten (10) always do, five (5) often do and two (2) sometimes do. One (1) company did not answer.
According to fourteen (14) companies, a European standard could assist them in handling their complaints. Two (2) answered negatively and two (2) did not answer. One stated that the benefits of a European standard should be investigated in a deeper analysis.
The third part investigates how a company facilitates contact from their customers The most used method [eleven (11) selections] for customer contact is a dedicated telephone number and/or e-mail, publicised in all literature. Pre-prepared formats provided for customer use is the second most used method with eight (8) selections. Dedicated help / contact / complaint information, available at outlets ranks third with seven (7) selections. Outline of procedures and possible outcomes always available attracts six (6) preferences while outline of procedures and possible outcomes provided on request receives five (5) selections. Other sources were acknowledged but their nature was not provided, except for one comment that reports the use of web-based comments from customers.
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ANNEX C: World Café Discussions C1. Module 4 discussions This brief report aims at analysing in a coherent and useful manner the outcomes of World Cafés relating to Module 4 – Good Practice in the assessment of customer satisfaction. The analysis is structured as follows:
1. Description of the methodology used during the World Cafés 2. Identification of clusters of preference
1. Description of the methodology used during the World Cafés
During the World Cafés the attendees were asked to answer two questions relating to Module 4. The questions aimed at encouraging the attendees to express their view on two crucial issues. They were formulated as not to prejudice or influence the answers so that the outcome would be as original and non-biased as possible.
The questions were:
How can Service Providers detect early signs of growing dissatisfaction and encourage to participate in a positive manner?
What would enable us to overcome customers‘ concerns that services delivered cross-border are likely to be unsatisfactory?
Furthermore, the participants were asked to indicate what element they thought to be the most important by sticking a dot on it. The dot was either yellow or blue. The former indicated the service consumer, the latter the service provider. The following analysis takes into consideration both the frequency of dots and the recurrence in the use of terms in order to establish the most important elements.
For a more complete description of the World Cafés‘ methodology, please see the main report (section 2 - methodology).
2. Identification of clusters of preference
For the first question, it was possible to identify two broad areas that were addressed more often by the respondents: Process Communication
As far as the process is concerned, the participants expressed their views in relation to the general features but they also focused on some specific elements. As far as the former is concerned, they stated that the process has
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to be open, non-confrontational, clear and easy. Moreover it has to be customer focused and should encourage the customer to contact the service provider in case of dissatisfaction.
As far as the specific elements are concerned, the attendees identified staff as the most important in the process of interacting with customers. They expressed the view that staff has to be friendly, involved, motivated, responsible and empowered.
It seems reasonable to assume that such emphasis was put on staff because it is frequently the main liaison between service providers and customers. This is confirmed by the fact that interaction between provider and customer was given much attention by the participants who stressed the need for it to be two way process. On the one hand, the service providers should provide information about their company. On the other hand, customers should provide information about their expectations. Furthermore, it was argued that communication has to be clear. Internal process, such as a checklist that addresses customer satisfaction, may be beneficial as much as inputs from other associations.
In relation to communication, feedback was identified as the second most important element. Different channels can be used to obtain this (e.g.: online questionnaire, traditional questionnaire, personal interviews). It was added that all feedback should be recorded and responded to at all times. Feedback was understood as both customers‘ feedback and staff‘s.
For the second question, three main areas were identified: Legal regulation and standards Process Communication and cultural differences
As far as the legal regulation is concerned, the attendees stated that there should be harmonisation between European legal frameworks, to this end the Service Directive could be helpful. Standards were also said to be useful in the harmonisation process. Service providers should refer to both national and international legislation. They should also be aware of consumers‘ rights and put into place redress systems.
The process could be eased by providing a clear and simple procedure (i.e.: clear contract conditions, easy access to information and clear contact points). Inspection, audits and 3rd party assessment should also be reinforced. Communication is also very important: service providers should enhance their contacts with the customers in order to provide information about the service and to understand their requirements. To this end, cultural differences should also be addressed. In particular, different business cultures and markets should be analysed. However, language is the main issue affecting communication. Translations and common terms and definitions are the areas most likely to be acted upon to resolve the potential problems.
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C2. Module 5 discussions As D1 provided report in relation to Module 4 World Café discussions, D2 provides report in relation to Module 5 Recommendations for complaints and redress systems. The analysis is structured in the same manner as D1 and the methodology used in the World Café was identical.
For Module 5, the questions were:
How can Service Providers make complaints procedures user friendly and encourage customers to use them?
What can we do to overcome customers‘ fears that it coil be very difficult to resolve problems with a service purchased in another country?
Furthermore, the participants were asked to indicate what element they thought to be the most important by sticking a dot on it. The dot was either yellow or blue. The former indicated the service consumer, the latter the service provider. The following analysis takes into consideration both the frequency of dots and the recurrence in the use of terms in order to establish the most important elements.
For a more complete description of the World Cafés‘ methodology, please see the main report (section 2 - methodology).
3. Identification of clusters of preference
For the first question, it was possible to identify four broad areas that were addressed more often by the respondents: Complaint Basic characteristics Procedure Staff
The participants expressed their views about the nature of complaint itself. They stated that complaint has a negative connotation hence customers hesitate to complain. There should be a change in culture so that complaint becomes positive (i.e.: change name from complaint to feedback). Customers are shown the benefits of their feedback so that they will be encouraged to complain. Service providers should ensure that complaints procedures are fast and allow for different ways to complain. They should also make sure that customers are informed on how to complain. It was also hypothesised that service providers could benefit from switching from complaint system to continuous evaluation.
Secondly, it emerged that attention should be paid to the basic characteristics of the complaint procedures. Complaint procedures should be easy to
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understand, user-friendly, simple, open and transparent. Information should be easily accessible. This leads to the third element: procedure. Complaint procedures should be clear, transparent and simple. Service providers should make information available to customers, track number of complaints and demonstrate their willingness to address the complaint and to solve it.
Bearing in mind this last objective, staff becomes a crucial element of the complaint procedure. In fact, participants stated that staff should be well- trained, competent, educated and motivated. They should also be given direct responsibility (i.e.: the right to solve problems).
For the second question, three main areas were identified: Legal regulation and standards Process Communication
As far as the legal regulation is concerned, the attendees stated that transparency is important. The need for independent Alternative Dispute Resolution (ADR) and the implication of the Service Directive were identified as well as the fact that service providers should be aware of what legislation applies.
The participants also stressed the importance of standards and codes in the harmonisation process at international level. They proposed: - Service standardisation, - A European standard for complaint procedure (i.e.: concerning accessibility, traceability of complaints, answering time), - The creation of a specific label to demonstrate that the company is trustable internationally, - Professional bodies to make a code of good practice to increase confidence
The comments on the process focused on three areas: - Service providers and customers. - Complaints - Language
Service providers and customers can ease their relationship by some simple actions. The former should be informed about the customers‘ rights in the country where they operate. They should also provide documentation about the service and about the company‘s background in more than one language. They should also use complaints positively to prove the business and to innovate and improve the offer. The customers should be informed about their rights. Complaints should be widely understood and simple. The complaint procedure should be advertised and open. A multi language support should be provided. Communication is the last area of action to overcome customers‘ fears linked to cross-border purchase of a service. As it emerged above, participants
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stressed the fact that information needs to be available, easy to find through the use of agile and simple channels of communication. Service providers should communicate with their customers throughout the length of the service provision. The communication should concern raising customers‘ awareness about their rights and updating customers on the status of their complaints.
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ANNEX D: The CHESSS – Key Concepts survey Report on the responses to a short opinion seeking questionnaire aimed at all those having an interest in the outcome of the CHESSS Initiative (see end of annex for questionnaire)
352 previously engaged stakeholders were requested to complete the questionnaire of whom 39 (11%) responded.
Responses were provided as from: Service Providers: 17 (43%) Service Customers: 10 (26%) Service Intermediaries (e.g. government/ local government) 12 (31%) with 24 of the 39 providing name/ contact details
Of the 39 respondents, 16 (41%) had attended one or more days of the CHESSS World Cafés.
Notwithstanding a generally positive attitude towards the key concepts, there were some broadly negative submissions (defined as more than 50% of responses at neutral or negative) and analysis shows that these were submitted either by service providers or not attributable.
Negative Neutral Positive
Fig: 1 Overall response
Given this tendency towards negativity on the part of service providers, a short programme of telephone interviews focusing on ‗Service Providers‘, will be undertaken during April 2008 in order to better understand the nature and extent of any concerns.
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Responses were registered as follows
1. Many of the service aspects (e.g. politeness, punctuality etc) that contribute to satisfaction for customers, are the same, no matter what service they are purchasing.
Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 0 3 (8%) 5 (13%) 19 (50%) 11 (29%)
2. Service providers should not just set out to meet their customers stated needs, they also need to work towards understanding and fulfilling their expectations. Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 0 0 4 (10%) 20 (51%) 15 (39%)
Negative
Neutral
Positive
Fig: 2 Needs & Expectations Q 1&2
3. A Customer Satisfaction Index (CSI) would be helpful to customers in their choice of a service provider
Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 1 (3%) 4 (10%) 6 (15%) 23 (59%) 5 (13%)
4. A single pan-European index would increase customers‘ confidence that their expectations would be met when purchasing services from another Member State Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 1 (3%) 5 (13%) 7 (18%) 19 (49%) 7 (18%)
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Negative Neutral Positive
Fig: 3 Customer Satisfaction Indices Q3&Q4
5. Service providers should make it as easy as possible for their customers to make a complaint.
Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 0 0 3 (8%) 17 (43%) 19 (49%)
6. In general terms, service providers should view customers complaints as feedback that can help to improve their service.
Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 0 0 4 (10%) 16 (41%) 19 (49%)
7. U uniform system for complaint, redress and dispute resolution, applicable across all service sectors, would make it easier for customers‘ to understand the process
Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 1 (3%) 6 (15%) 6 (15%) 19 (49%) 7 (18%)
Negative Neutral Positive
Fig:4 Complaints and redress Q5, Q6 & Q7
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8. Customers would understand their bills better if broadly uniform layout and information content were used for all bills across all sectors. Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 2 (5%) 6 (15%) 10 (25.5%) 11 (29%) 10 (25.5%)
Negative Neutral Positive
Fig: 5 Uniform Billing Format Q8
9. Service providers should use common terms with the same meanings to describe their various services, across all service sectors. Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 3 (8%) 5 (13%) 7 (!8%) 16 (41%) 8 (20%)
Negative Neutral Positive
Fig: 6 Generic services terminology Q9
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Other comments were provided, as follows:
1 Questions 9, 10, and 11 could be modified to test the case for seeking pan- European solutions in individual sectors. Your questions about pan- European solutions applicable across all sectors, which may lead to confusion.
2 Thank you for CHESSS project. We need rules and standards common for all European Union members as much as possible in every field of activity and service. Really this helps to better understand business and life, to better distribute European values and principles, to be stronger as EU all together, to go positively to development direction, to use achievements of each country for other and so on. Common European standards are so useful for all European countries and for all fields of life and business. Thank you for this possibility to participate in CHESSS project. Please send me any new information concerning this subject in future also. I am interested in this. I hope, that our communication is continued. Thank you for your intensive work. Olga Wolf, ESTONIA
3 I am afraid the idea of a generic approach to an unlimited number of service sectors is unrealistic and fails to appreciate the complexity of the industries concerned. As to CSI, there are already a profliferation of consumer feedback websites which highlight the advantages and disadvantages of this method. There is no point in expending resources on yet another system.
4 Many of these areas of service provision are now covered for thew water sector by the ISO standards ISO24510, ISO24511 and ISO24512.
5 "Services" is such a wide term. It does not appear useful to pile them all on one heap. It might be useful, for a start, to separate intellectual services from other services.
6 Comment 1: I also think Servcie providers should use common and standard terms and conditions towards their customers.
7 Comment 2: its a pitty that no comments could be given on why a certain Agree/Disagree level was marked above
8 In some ways, I would strongly agree with all these statements, however, my concern is that it may not be possible to develop a system with sufficient flexibility to cover some providers, especially those that are providing niche or difficult to categorise services. Billing, in particular, needs the flexibility to handle different styles of contract, working relationships and delivery .
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9 Service is two-sided process:service provider v/s client.In this connection it should be mutual understanding between them; service provider should meet customer's expectations. But speaking of service sector at all, we should not forget that every service subsector has its specific features and it might be difficult to reach a common horisontal standardisation approach for service sector. On the other hand ISO 9000 and 9001 series might be used as a basis, but taking into account specific requirements conserning each service sector. In regard to CSI, in general it is a good idea, but is there a country where this index has already been used? AS I remember during the meeting in Madrid this issue was not clarified... 10 It seems to me important to include in the generic service standardisation a provision for customer comment on the service, either in term of improvement or satisfaction. To limit the interaction with a customer only for complaining is too restricted to my point of view. This is particularly true with all the new services which are developed in the numeric age of business (e-commerce, internet services, ..). I find your Chess initiative very interesting. 11 It was really helpful for me to participate in the "The CHESSS -World Cafe" in Madrid. My proposal is if there are such Initiative for the future, to be planned some more workshops in different countries, etc.
12 I work as assistant professor, Marketing of publishing in State University for Library Studies and Information Technologies, Sofia, Bulgaria Sofia, Bulgaria more than 10 years. Please keep me informed of the future activities for services. 13 For my opinion the old ISO EN 9004 T2 from 1992 is so far the best approach managing services of all branches.
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ANNEX E: Complimentary service life cycle material
E1. Professor Noriaki Kano Kano model The Kano model is a theory of product development developed in the 80's which classifies customer preferences into five categories:
Attractive One-Dimensional Must-Be Indifferent Reverse These categories have been translated into English using various different names (delighters/exciters, satisfiers, dissatisfiers, etc.), but all refer to the original articles written by Kano.
Satisfaction drivers terminology[1]
Driver Driver type Author(s) Driver type 1 Driver type 4 type 2 3
Herzberg et al. Hygiene Motivator (1959)[2]
One- Kano (1984)[3] Must-be Attractive Indifferent dimensional
Cadotte and Dissatisfier Satisfier Critical Neutral Turgeon (1988)[4]
Minimum Value Unimportant as Brandt (1988)[5] Hybrid requirement enhancing determinant
Venkitaraman and Flat Value- Key Low
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Jaworski (1993)[6] added
Brandt and One- Basic Attractive Low impact Scharioth (1998)[7] dimensional
Llosa (1997[8], Basic Plus Key Secondary 1999[9])
The Kano model offers some insight into the product attributes which are perceived to be important to customers. The purpose of the tool is to support product specification and discussion through better development team understanding. Kano's model focuses on differentiating product features, as opposed to focusing initially on customer needs (as used in the Klein grid model). Kano also produced a methodology for mapping consumer responses to questionnaires onto his
Quality Function Deployment (QFD) makes use of the Kano model in terms of the structuring of the Comprehensive QFD matrices. Mixing Kano types in QFD matrices can lead to distortions in the customer weighting of product characteristics. For instance, mixing Must-Be product characteristics --such as cost, reliability, workmanship, safety, and technologies used in the product- -in the initial House of Quality will usually result is completely filled rows and columns with high correlation values. Other Comprehensive QFD techniques using additional matrices are used to avoid such issues. Kano's model provides the insights into the dynamics of customer preferences to understand these methodology dynamics. Check out an effective 8 minute animated tutorial which describes the Kano Model with examples.
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E2. The SERVQUAL Model (The Gap Model Valarie A Zeithaml; A. Parasuraman; Leonard L. Berry
Fig: The SERVQUAL Model (The Gap Model)
The SERVQUAL method from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry is a technique that can be used for performing a gap analysis of an organization's service quality performance against customer service quality needs.
SERVQUAL is an empirically derived method that may be used by a services organization to improve service quality. The method involves the development of an understanding of the perceived service needs of target customers. These measured perceptions of service quality for the organization in question, are then compared against an organization that is
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"excellent". The resulting gap analysis may then be used as a driver for service quality improvement.
SERVQUAL takes into account the perceptions of customers of the relative importance of service attributes. This allows an organization to prioritize. And to use its resources to improve the most critical service attributes.
The data are collected via surveys of a sample of customers. In these surveys, these customers respond to a series of questions based around a number of key service dimensions.
The SERVQUAL methodology was originally based around 5 key dimensions:
Tangibles: appearance of physical facilities, equipment, personnel, promotion materials Reliability: ability to perform the promised service reliably and accurately
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Responsiveness: willingness to help customers and provide prompt service Asurance: knowledge and courtesy of employees and their ability to convey trust and confidence Empathy: the service provider provides care and individualized attention to its customers
Although this was adapted subsequently, to include:
Tangibles: appearance of physical facilities, equipment, personnel, promotion materials Reliability: ability to perform the promised service reliably and accurately Responsiveness: willingness to help customers and provide prompt service Competence: possession of required skill and knowledge to perform service Courtesy: politeness, respect, consideration and friendliness of contact personnel Credibility: trustworthiness, believability and honesty of the service provider Feel secure: freedom from danger, risk or doubt Access: approachability and ease of contact Communication: listens to customers, acknowledges their comments and keeps them informed in language that they can understand. Understanding the customer: making the effort to know customers and their needs.
The Servqual model has been widely used by service providers to assist them in understanding the perceptions of their target customers with regard to their service needs and to provide assessment of their service quality.
Quite clearly similar gaps can and will exist between the identified elements of the CHESSS Services Life cycle model and therefore the Servqual principals may be applied with equal effectiveness.
Servqual Gap Model CHESSS Service Lifecycle Model Gap 1 Difference 2.1 to 7.0 Gap 2 Difference 2.1 to 2.3 Gap 3 Difference 2.3 to 7.0 Gap 4 Difference 2.3 to 3.0 Gap 5 Difference 7.0 to 12.0 Potential additional „gaps‟ can be identified on the lifecycle model, as follows: Gap 6 Difference between provider and customer perceptions at 6 Gap 7 Difference between provider and customer perceptions at 7
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ANNEX F: Taking an outcomes approach in service development
F1 Introduction In comparison with the standardization of products, Services Standardization is in its infancy and is still trying to establish it‘s most appropriate and effective route forward.
On the evidence of the work in progress, current thinking is promoting a highly prescriptive, procedural approach which effectively attempts to determine how a service provider shall operate its business. As such the service standards in preparation appear to have little to separate them from existing management systems standards. Indeed this may be why some members of the standards community are questioning whether the current focus on Services Standardization is necessary when management systems standards could do the job just as well. It is suggested that this question is being asked because the proposals that are emerging are in fact addressing the wrong point in the process. My view is that specifying ‗how something is to be achieved‘ is not what a service standard should be setting out to do. Rather, the role of the standard should be to unambiguously specify what the expected outcomes shall be and how delivery off those outcomes can be objectively verified, leaving service provider management to determine the most effective way of actually delivering outcomes to that specification.
Given the likelihood that service beneficiary perception will be, that management systems standards are developed by business for business, it will be beneficial for the identity and role of the service standard to be clearly differentiated from that of other standards types. This is not to imply that services standardization requires a dedicated environment in which to operate. It is far too early in the process to make such a claim and the chances are that the rules that govern the preparation and operation of product standards will be found to be just as effective for services standardization. Creation of a unique identity with inherent connotations of equitability between all stakeholders however, will assist in promoting greater acceptance amongst service users that services standards are being prepared as much in their interest as in that of service providers and that with their participation, such standards will have the potential to facilitate the delivery of services that will meet their expectations.
F2 Meeting needs in the context of realistic expectation – The role of information provision Although the meeting of predetermined ‗need‘ is the objective for any service recognition of the significance of ‗expectation‘ in determining the customers view of a delivered service is key to ensuring satisfaction and ultimately the successful delivery of the service. Service providers will derive considerable benefit from understanding and accepting that it is how close they come to meeting the ‗expectations‘ of potential customers that will determine the level of satisfaction with them and
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their service. Difficult though it may be, it is essential that service providers seeking to develop a reputation for excellence, take steps to understand the relationship between the expectations and needs of potential beneficiaries so as to identify the nature of any differences between them.
Expectations which can be positive or negative, are likely to be informed by the customer‘s view of their rights, prior experience, non experiential information (e.g. advertising and word-of-mouth) and knowledge of any charge to be made by the service provider.
The service related information provided by the service provider will therefore play a part in forming those expectations. Unrealistic claims made in relation to a service, whether through lack of care or perhaps with the objective of securing new business, will be potentially detrimental to the fulfillment of the heightened expectations that may result. Such action with regard to information provision may therefore have the potential to actually loose business since access to the information is unlikely to be restricted to new service beneficiaries.
Not only is it desirable that service information be accurate and unambiguous however but should the level of expectation be judged as unattainably high, service providers may well find it beneficial (perhaps collectively on a sectoral basis) to take action designed to modify potential service beneficiary expectations to a more realistic level through a sustained, measured educational programme. It should also be recognised that in some situations (e.g. where services are being provided into an area for the first time) expectations can be inherently depressed, in which situation targeting and meeting such uninformed expectations will not necessarily be a measure of good service. Again service providers may find it beneficial to provide information with regard to achievable outcomes that will place service beneficiary expectations at the levels actually achieved in more generally informed service areas.
The provision of appropriately pitched information is therefore a critical factor in generating service beneficiary satisfaction.
F3 Designing services – the use of standards to accommodate the „expectations‟ concept
Appropriately configured standards can be a useful tool for the service provider when planning or restructuring service delivery, provided they are prepared in a sympathetic manner. Rigid, procedures based systems standards may be relatively straightforward to understand and oversee but they can be anathema to the service provider seeking to establish a service in a new area or attempting to restructure an existing service to better deliver satisfaction. Such standards have the potential to predetermine the manner of service delivery in a way that will not necessarily deliver satisfaction to potential customers. This is because, although prepared with the honest intent of delivering services that will meet customers perceived needs those
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standards are unlikely to have taken ‗expectation‘ into account in a way that is pertinent to the service provider‘s specific area of activity.
It is suggested that service standards should essentially be ‗outcomes‘ driven and try to avoid being procedural/ prescriptive in nature. It is preferable that their objective should be to specify the ‗what‘ not the ‗how to‘ of service delivery.
Taking a generic ‗outcomes‘ focused approach, requires that we seek to specify/ define the expected outcomes at the highest level possible, commensurate with that specification being unambiguous and presented in sufficient detail to permit objective verification.
With this in mind, the following outline is proposed as a possible starting framework for services design and therefore the structural basis for any standards that might support them:
1. Identify the primary needs, satisfaction of which is the object of the intended service 2. Ensure needs clearly defined (including clarification of any terms that may be misinterpreted) 3. Create the broadest practicable scope (avoiding unnecessary exclusivity) 4. Identify/ prepare high level procedure for delivering service to meet defined need 5. Review procedure Identifying the customers expectations (not just needs) of the service Identifying the providers intended outcomes for the service 6. Review these lists for synergy (accepting that complete synergy may not be appropriate) 7. Identify definitive list of expected outcomes (satisfying essential beneficiary and provider items) 8. Specify each of the identified outcomes at the highest level possible (see 4) 9. Confirming that delivery of specified outcome is capable of being objectively verified. (providing reference verification methods)
F4 The use of customer expectations analysis in the development of service standards Were this approach to be adopted the standards development process would not actually be so very different from that currently being applied. It would still be necessary to identify the stages of the delivery process, although possibly not to the same level of detail, in order to establish a series of outcome influencing stages that will themselves generate expectations. It is at this point that it is suggested the standards development process should change, Instead of concentrating on filling out the process in an increasingly procedural (and potentially restricting) way we should be asking what the (average) customer expectation would be of that stage and then seeking to
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define it and determine how the meeting of it could be objectively verified. In effect we would undertake an analysis of customer expectations relating to service delivery systems/ procedures (general or specific), in order to establish a set of outcomes most likely to contribute to the meeting of customer expectations and needs, the outcomes for which should be included in the standard.
The standard would then be prepared in a manner that specifies those outcomes and how their delivery can be verified. In addition, if thought appropriate, the procedure or system that was prepared as the means to identify the elements of customer expectation could be provided (in one or more annexes) as example of a system capable of delivering the specified outcomes
By way of example, Figure D1 shows such an expectations analysis undertaken in respect of incoming telephone contact from service beneficiary to service provider.
If such an approach were to be generally adopted, it is likely that much of the mistrust engendered in service providers potentially impacted by a new standard, would be neutralized by the fact that it was not necessarily requiring them to change their existing procedures. In addition, the prescriptive material currently included in many early drafts would become the essential building blocks for the new type of standard and could be readily converted to examples or guidance material, usefully supporting this alternative approach..
F5 Conclusion It is suggested that for the reasons outlined on the previous pages, the adoption of ‗an outcomes‘ focused approach to services standardization is likely to prove more effective in assisting service providers attain the objective of providing satisfaction to their customers. This in turn, will enhance the confidence that customers have in the potential of the standardization process to underpin the services sector of the future.
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Informed Figure F1 Example of outcomes expectations development applied to Expectations exceeded incoming customer contact exceeded
Informed Expectations expectations Performance target met met
Minimum performance target
X-7-1-5 X-8 Satisfaction Conclusion enquiry clearly defined
X-7-1- X-9Access to X-7-2-2 Available X 7-2-1 X-7-2 4Decisions complaints/ outcomes Navigable with Automated promptly appeal sufficient for default to Agent enacted procedures range of needs
X-7-1-3 X-7-1-2 Procedural X-7-1-1Nature X-7-1Agent X-6. Choice of Empowered to and contact subject and manner of contact type awareness make decisions response
Need for X-1. Availability X-2. Acceptable X-3. Prompt X-4. Clarity of X-5. Accurate contact of contact cost connection initial subject/ needs, information information focus
113 Annex A Figure 1. Service beneficiary expectations analysis – Example addressing incoming customer contact
ANNEX F: Figure F1 – Example of drafting using the outcomes approach. Example clauses drafted to specify outcomes identified by the survey in Figure 1.
The following material is presented in order to illustrate the manner of the approach and is not necessarily definitive, or appropriate for inclusion in any particular standard)
(Clause) X Provision for handling incoming telephone calls
The Service Provider shall: X.1) make information accessible to all service users that identifies the methods by which communication with the service provider can be effected and is sufficient to enable the customer to make contact, using the methods identified.X.2) avoid recommending contact methods the use of which will incur cost to the customer in excess of standard rates X.3) provide call answering capacity sufficient to meet the response times given in table 1 (table content requires expert input64) X.4) provide response to first contact that clearly and unambiguously confirms the identity and responsibilities of the contact point together with early indication of the type of contact that it is empowered to address. (where no option as to the nature of ongoing contact is available skip to X.7-1 Agent or X.7-2 Automated, as appropriate) X.5) introduce enquiry response procedures that are capable of identifying/clarifying the subject of the specific subject of the call to facilitate channeling to the most appropriate ongoing response method X.6) Where more than one response method is available (e.g. automated or agent), to provide information as to the options open to the caller, sufficient to enable the caller to make informed choice as to the most appropriate route or where choice of route is system determined, to understand why a particular option has been selected. X.7) provide clear indication of the route initiated, at the point of split e.g. Agent (follow X.7-1), Automate (follow X.7-2)
X.7.1 Agent operated calls X.7-1-1 require agents interfacing directly with incoming calls to do so in a manner sympathetic to the status/ expectations of the caller, using the information gathered at X.5 and such other information as may already be available X.7-1-2 inform agents fully, as to he procedures/ options available for dealing with the various subjects of incoming calls and of any limitations applying to their scope for making decisions. X.7-1-3 empower agents to make decision to the highest practicable level X.7-1-4 establish procedures/ systems that provide for implementation of decisions agreed,, at the earliest practicable time and require agents
64 This expert input will take account of the views of both service providers and service beneficiaries
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to inform callers as to the expected timing of that implementation. Provide access to complaint/ appeal procedures in the event that outcomes cannot be agreed between agent and caller. X.7-1-5 require agents to summarize the outcomes agreed before concluding the contact
X.7.2 Automated calls X.7-2-1 operate automated systems that provide for default to an agent where callers find themselves discomfited or blocked by the automated process X.7-2-2 operate automated systems that provide for sufficient outcomes to meet the range of caller needs/ expectations that are directed to the automated system
X.8) include a caller satisfaction enquiry before the conclusion of all calls, with redirection to complaint/ appeal procedures (X.9) when required X.9) provide complaint/ appeal procedure that may be accessed by the customer at any stage of the contact process.
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ANNEX G: DIRECTIVE 2006/123/EC- Articles 21 and 22
G.1 DIRECTIVE 2006/123/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 12 December 2006 on services in the internal market Complaint and Redress References in Article 21 - Assistance for recipients
1. Member States shall ensure that recipients can obtain, in their Member State of residence, the following information:
(a) general information on the requirements applicable in other Member States relating to access to, and exercise of, service activities, in particular those relating to consumer protection; (b) general information on the means of redress available in the case of a dispute between a provider and a recipient; (c) the contact details of associations or organisations, including the centres of the European Consumer Centres Network, from which providers or recipients may obtain practical assistance. Where appropriate, advice from the competent authorities shall include a simple step-by-step guide. Information and assistance shall be provided in a clear and unambiguous manner, shall be easily accessible at a distance, including by electronic means, and shall be kept up to date.
2. Member States may confer responsibility for the task referred to in paragraph 1 on points of single contact or on any other body, such as the centres of the European Consumer Centres Network, consumer associations or Euro Info Centres. Member States shall communicate to the Commission the names and contact details of the designated bodies. The Commission shall transmit them to all Member States.
3. In fulfilment of the requirements set out in paragraphs 1 and 2, the body approached by the recipient shall, if necessary, contact the relevant body for the Member State concerned. The latter shall send the information requested as soon as possible to the requesting body which shall forward the information to the recipient. Member States shall ensure that those bodies give each other mutual assistance and shall put in place all possible measures for effective cooperation. Together with the Commission, Member States shall put in place practical arrangements necessary for the implementation of paragraph 1.
4. The Commission shall, in accordance with the procedure referred to in Article 40(2), adopt measures for the implementation of paragraphs 1, 2 and 3 of this Article, specifying the technical mechanisms for the exchange of information between the bodies of the various Member States and, in particular, the interoperability of information systems, taking into account common standards.
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G.2 DIRECTIVE 2006/123/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 12 December 2006 on services in the internal market CHAPTER V - QUALITY OF SERVICES Article 22 Information on providers and their services 1. Member States shall ensure that providers make the following information available to the recipient: (a) the name of the provider, his legal status and form, the geographic address at which he is established and details enabling him to be contacted rapidly and communicated with directly and, as the case may be, by electronic means; (b) where the provider is registered in a trade or other similar public register, the name of that register and the provider‘s registration number, or equivalent means of identification in that register; (c) where the activity is subject to an authorisation scheme, the particulars of the relevant competent authority or the single point of contact; (d) where the provider exercises an activity which is subject to VAT, the identification number referred to in Article 22(1) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (e) in the case of the regulated professions, any professional body or similar institution with which the provider is registered, the professional title and the Member State in which that title has been granted; (f) the general conditions and clauses, if any, used by the provider; (g) the existence of contractual clauses, if any, used by the provider concerning the law applicable to the contract and/or the competent courts; (h) the existence of an after-sales guarantee, if any, not imposed by law; (i) the price of the service, where a price is pre-determined by the provider for a given type of service; (j) the main features of the service, if not already apparent from the context; (k) the insurance or guarantees referred to in Article 23(1), and in particular the contact details of the insurer or guarantor and the territorial coverage.
2. Member States shall ensure that the information referred to in paragraph 1, according to the provider‘s preference: (a) is supplied by the provider on his own initiative; (b) is easily accessible to the recipient at the place where the service is provided or the contract concluded; (c) can be easily accessed by the recipient electronically by means of an address supplied by the provider; (d) appears in any information documents supplied to the recipient by the provider which set out a detailed description of the service he provides.
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3. Member States shall ensure that, at the recipient‘s request, providers supply the following additional information: (a) where the price is not pre-determined by the provider for a given type of service, the price of the service or, if an exact price cannot be given, the method for calculating the price so that it can be checked by the recipient, or a sufficiently detailed estimate; (b) as regards the regulated professions, a reference to the professional rules applicable in the Member State of establishment and how to access them; (c) information on their multidisciplinary activities and partnerships which are directly linked to the service in question and on the measures taken to avoid conflicts of interest. That information shall be included in any information document in which providers give a detailed description of their services; (d) any codes of conduct to which the provider is subject and the address at which these codes may be consulted by electronic means, specifying the language version available; (e) where a provider is subject to a code of conduct, or member of a trade association or professional body which provides for recourse to a non-judicial means of dispute settlement, information in this respect. The provider shall specify how to access detailed information on the characteristics of, and conditions for, the use of non-judicial means of dispute settlement.
4. Member States shall ensure that the information which a provider must supply in accordance with this Chapter is made available or communicated in a clear and unambiguous manner and in good time before conclusion of the contract or, where there is no written contract, before the service is provided.
5. The information requirements laid down in this Chapter are in addition to requirements already provided for in Community law and do not prevent Member States from imposing additional information requirements applicable to providers established in their territory.
6. The Commission may, in accordance with the procedure referred to in Article 40(2), specify the content of the information provided for in paragraphs 1 and 3 of this Article according to the specific nature of certain activities and may specify the practical means of implementing paragraph 2 of this Article.
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CEN‟s Horizontal European Services Standardization Strategy (CHESSS)
In response to Mandate M/371
Module 6 Billing & Metering Final Report
119 CHESSS
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ...... 121 2. INTRODUCTION ...... 124 3. METHODOLOGY ...... 125 4. FINDINGS ...... 126 5. CONLUSIONS ...... 146 6. RECOMMENDATIONS and NEXT STEPS...... 149 7. BIBLIOGRAPHY ...... 151 8. ANNEXES ...... 153 ANNEX A: CHESSS World Café ...... 153 ANNEX B: Extract from the Energy End Use Directive ...... 155 ANNEX C: Analysis of CAB Case records for evidence of billing related complaints ...... 156 ANNEX D: Outline content of existing standards relating to billing and smart metering ...... 158 ANNEX E: ISO Project – Network Services Billing Standard ...... 160 ANNEX F: The CHESSS Initiative – Key Concepts Survey ...... 172 ANNEX G: Proposal for a CENELEC Workshop Agreement (CWA) on interoperability of equipment and appliances in the home or work space. 173 ANNEX H: Smart metering – the real energy benefits ...... 177 ANNEX I: Interoperability - USA Example ...... 183
120 CHESSS
1. EXECUTIVE SUMMARY
Billing and metering Billing customers for services provided is an inevitable and significant step in the lifecycle of almost any service. Metering of use, in some form or other is equally inevitable. In the traditional world of usage metering, the connection between metering and subsequent billing processes has been perceived as almost cause and effect. In the world of the intelligent (smart) meter however, although this core relationship remains, the possible output from the smart meter could potentially relate to much more than just demands for payment for services used. In recognition of this, these two aspects of service provision are reviewed independently in this report, although the clear relationship between them is acknowledged.
Billing Billing processes currently in use can cause considerable dissatisfaction for customers and this can result in significant levels of complaint to service providers. This is clearly disruptive to the service provider/ customer relationship, highly unsatisfactory for customers and expensive for service providers.
Customers considering the use of a service originating from a country other than their own are likely to have concerns that billing associated with those services may be even more difficult to understand, payment more difficult and complaint resolution more time consuming. As a result customers may decide to source the required service nearer to home, even though there may be real benefits to be derived from using the cross-border service.
The implementation of the Payment Services Directive (PSD) in 2009 will address many of the payment related concerns but the questions and uncertainty relating to the clarity and readability of bills will remain.
Some of those residual concerns could be resolved by introducing a uniform billing format, ensuring that the layout of essential content (not the detail) would be essentially the same, on the page (or screen), observing a common set of basic presentational rules (e.g. minimum font size, percentage of white space). This would contribute to engendering familiarity in customers that, in turn, could be expected to increase confidence.
Although regulation related to billing does exist in Member States, this is not thought to present a barrier to the development of a uniform billing format. It is concluded that a CEN Standard would be both technically possible and beneficial in encouraging cross-border service delivery and use.
It is apparent from the evidence reviewed however, that there is little likelihood of support for such a standards project in the short term. Therefore, not withstanding the conclusion that a standard for periodic billing would be both technically feasible and potentially beneficial to cross-border service delivery,
121 CHESSS and the fact that the overall CHESSS proposal for a generic service provision standard will include billing related requirements, this module has concluded that such a project is unlikely to receive sufficient support to enable it to progress in the immediate future.
It has been noted however that a new project for Network Services Billing is just commencing in ISO and action to ensure CEN liaison on this is recommended with a view to implementation of any future ISO standard as a European Standard at an appropriate time (see 6.1).
Innovative (SMART) metering It is apparent that 'innovative (SMART) metering' is now viewed as a subject with the potential to deliver significant benefits but there is perhaps a lack of clarity as to what those benefits might be and how best to make them available.
It is clear that there can be efficiency/cost reduction gains for service providers in some service areas, in the introduction of a smart metering programme and some convenience benefits for service beneficiaries in participating in such schemes. However, it is their potential for informing and influencing service user behaviour patterns in the medium to longer term that the significant benefits to society as a whole are believed to lie.
There is evidence to suggest that smart meters could contribute significantly to the encouragement of energy-efficient behaviour on the part of service beneficiaries. Such changes in consumption patterns could help them to reduce their costs generally and also provide added assistance to vulnerable users such as the elderly. This same information would, in turn, enable service providers to manage demand allowing them to cut costs and improve the effectiveness of their businesses, as well as meeting ever more pressing environmental objectives.
The nature of the technology involved means that almost any information package could be made available. However some basic research as to what that information package should contain if it is to be effective in influencing service customer behaviour is required. Trials on intelligent (SMART) meters are currently underway in several Member States and it is recommended that the timing of any new work on standardization of smart meter functionality be coordinated with the availability of the results from these trials.
In addition, a standard protocol would be required to ensure that all meters provide a set of basic common functions as a minimum and that they would also be interoperable to avoid stranding in competitive markets. This aspect of interoperability develops even greater significance when we take into account the environment in which these meters will be used. In homes and workspaces, most devices and many services will be increasingly dependent on electronic systems for their function and provision. Smart meters will be only one of those devices. Interoperability and interworking between systems, networks, devices and appliances in places of residence and home offices is seen as a necessity for the successful efficient and cost effective delivery of
122 CHESSS many services (including energy management, health and telecare, home security and entertainment). Most services would benefit from being able to share information available on other devices and networks in the home, thereby avoiding duplication of effort and resource.
It has been concluded that a standard that provides a framework to enable systems in the Smart-House to interoperate, would be beneficial and it is recommended that a project to progress this be initiated in a manner that could provide a result in early 2010 (see 6.2 and 6.3).
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2. INTRODUCTION
Billing and metering had been identified as an area of combined study and contribution to the overall CHESSS objectives of:
1. identifying aspects of service provision that might be contributing to customer dissatisfaction with services and impeding the movement of services across national borders; 2. assessing the potential for European Standards to assist in relieving such impediments; and 3. establishing the feasibility of being able to develop effective standards and the likelihood of their being applied in practice.
Billing customers for services provided, is an inevitable and significant step in the lifecycle of almost any service65 and recording of use in some form or other, for billing purposes, is equally inevitable. Whist this relationship is inevitable when using mainly mechanical meters, the introduction of intelligent (smart) meters will break this direct link in that the meter will contribute information that is significantly more widely applicable.
For services that are delivered on a more or less continuous basis and for which billing on a periodic basis is appropriate, the potential for inadequate billing and related billing processes to cause dissatisfaction, can be considerable. It was therefore considered necessary that the impact of billing on customers‘ perception of service quality, be assessed.
In this context, the remit for CHESSS Initiative Module 6 has been to:
Examine existing periodic billing practices across the EC and the extent to which differing requirements could be harmonized; Identify the minimum generic requirements necessary for the uniform preparation and presentation of bills, across the EU; Assess the potential for development of a European Standard and the benefit of doing so; Examine the potential for innovative metering to: o improve the accuracy and efficiency of billing practice, o provide information to bring about change in customer behaviour and consumption patterns, and o seek to establish the nature, extent and preferred presentation form, of that information.
65 See, Services life cycle model developed as part of CHESSS Module 4.
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3. METHODOLOGY
The decision to report on billing and metering separately, was taken at the interim report stage. Consequently, the period of desk based research was common to both subjects and undertaken in a single process. Using remote contact (telephone, e-mail), potential stakeholders were contacted and their input sought. This was followed by internet searches for information on potential legislative barriers and current activity in smart metering. This information was then collated and reviewed to assist in the development of proposals for future consideration.
A half day at each of the World Cafés was allocated to discussion on ‗billing and metering‘ issues, with the two clearly separated (see Annex A). In addition, some face to face presentations and discussion on CHESSS objectives and methodology have been carried out with key individuals and representative bodies active in the services sector, including some engaged in utility supply.
Effort has been invested in trying to ensure that those organizations/individuals involved in any existing or potential standards related projects in the billing and metering field are aware of CHESSS and that module 6 findings and conclusions take their activity into account.
Focused primarily on the European Union, but also seeking to identify exemplary practice in other regions (particularly Australia and USA), the research has sought to gather information with regard to:
Billing: currently existing billing practice for services in respect of which ‗periodic billing‘ may be appropriate (e.g. energy, water, telecoms, internet access, business services; domestic services); currently preferred billing formats, meeting the requirements of specific service beneficiaries (e.g. large corporate National/ local, government procurement agencies, physically or mentally challenged consumers etc.); billing related legislation in EU Member States, with particular reference to any aspects that are actual or potential barriers to the delivery of services across national borders; levels of dissatisfaction/ complaint arising out of billing related issues in the various EU Member States.
Intelligent (smart) metering: existing definition/ specification for innovative (smart) meters with particular reference to attempts to identify/ define information fields likely to effect change in service beneficiary behaviour (including work in progress); previous research studies into the application of new metering technologies, particularly any that focus on identifying and prioritizing the nature, content and presentation of information most likely to bring about change in service beneficiary behaviour.
125 CHESSS
4. FINDINGS
4.1 The impact of market liberalization and underpinning EU Directives
Overall, the service sector in the EU appears still to be growing in significance in terms of competition and market size. The move towards liberalization of telecommunication and infrastructure services (postal, electricity, gas and water supply) has itself led to an increasing number of companies in these sectors. In spite of customer perception that much of this activity is vested in large, multinational service providers, a significant role is being played by small and medium size enterprises. For both small and large providers, national borders still appear to constitute an impediment to service provision.
Although a regulatory framework exists in Europe as a whole which is reflected and underpinned by Member States, EU policies frequently recognise a role for standards66 in support of that framework (e.g. recent focus on improving the new approach directive67) to provide the detailed specification of governmental directive.
Of particular relevance to billing and metering is that Europe is experiencing quite dramatic market developments in the area of utilities which are significant practitioners of periodic billing.
Directive 2003/54/EC 68of the European Parliament and Council (concerning common rules for the internal market in electricity) was adopted on 16 June 2003. It has impacted upon the information that suppliers have to provide to business customers and will have the effect of progressively liberalising the European energy market
Directive 2006/32/EC69 of the European Parliament and Council (concerning energy end-use efficiency and energy services) was adopted on 5th April 2006. Article 13 of this Directive places specific requirements on Member States with regard to metering and informative billing of energy consumption (see Annex B) and is expected to have direct impact on billing content.
With the exception of the United Kingdom, state ownership of utilities in the expanded European Union of 27 countries (combined population of 493 million people) has generally been the norm.
66 The European Standards Organizations recognized are CEN, CENELEC and ETSI. 67 European Commission. DG Enterprise. New Approach & Global Approach, conformity assessment, legislation & standardization. Available at
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In the UK a significant feature of the competition between providers in the liberalised energy market, has been a heightened awareness of service provider performance and particularly increased focus on billing related problems with a commensurate rise in the level of billing related complaint.
It remains to be seen whether this picture will be reflected in other Member States.
4.2 Billing 4.2.1 The case for common format and content
Periodic billing is applied in a number of service related fields, e.g.:
Utilities (e.g. gas, electricity, water); Telecoms; Local authority services (e.g. residential services); Residential and commercial rental; Insurance; Health-care. and these are subject to regulatory regimes which can include billing related aspects.
The Payment Services Directive (PSD), 2007/64/EC70, due to be implemented in all Member States by November 2009 is intended to ensure that electronic payments within the EU – in particular credit transfer, direct debit and card payments – become as easy, efficient, and secure as domestic payments within a Member State. This will be achieved by providing a legal foundation to make the Single Euro Payments Area (SEPA) possible. The resulting reinforcement of the rights and protection of all users of payment services should have a positive effect on the confidence of customers to take delivery of goods and services across national borders. It appears unlikely that this will have any direct impact on bill format and presentation, other than in respect of the need to include reference to available payment methods in billing documents.
The migration to electronic payment methods that is clearly the intention of this Directive should in turn ensure that electronic billing becomes more generally acceptable to business and private customers. This will constitute another significant step towards the wider knowledge and acceptance of electronic business methodologies and the efficiencies that they can bring.
E-billing represents a modern, reliable, secure, cost-efficient, and practically paperless method of handling and processing demands for payment for goods and services. E-billing is a solution which is appropriate for both large and small service providers, subject only to their business and private customers
70 European Commission. Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market. Available at
127 CHESSS being willing and able to receive billing documents in electronic format. The availability of a common standard that enables such documents to be sent and received reliably in a secure network is obviously a prerequisite for customer acceptance in this respect.
In broad terms, the availability and use of e-billing, whilst it needs to be procedurally recognised, need not have implications for proposals to undertake standardization to introduce some uniformity in format and content of billing documents, in the short term. Currently, it appears to be general practice that an e-invoice should be graphically presented on the computer screen in a manner that presents a similar appearance to that of an invoice printed on paper. This facilitates manual processing, billing document archiving and distribution as well as approval and payment, procedures where physical document support may be required.
However, whilst it is apparent that this synergy in presentation meets with the approval of customers at this time, it should be born in mind that we are in a transitional phase of applying new technology and service providers need to be proactive in developing presentation formats that will satisfy the expectations of the more computer literate customer of the future.
In an article for Electric Light and Power (March 2005) Paul Grey71 suggested that to capture the full potential of e-billing in order to reduce customer care costs and improve customer service in the North American utility industry, will require more evolved thinking about customer e-billing needs.
This process will need to be progressed with customer centricity and sensitivity if service providers are to obtain customer support for breaking with paper bill tradition and succeed in designing online good practice methodologies for e-billing, capable of delivering the full benefits of e-billing‘s potential.
For the present, research into activity in billing and payment mechanisms and particularly the migration to e-payment methods, indicates that:
Service providers are actively pursuing electronic bill presentment and payment options; Customers were initially slow to adopt electronic methods for bill presentment and payment but this situation is rapidly changing; Credit and Debit Cards are the most popular form of payment currently used on the Web and most providers accept these forms of payment; Recurring, Automated Clearing House (ACH) transfer is the most popular payment type for business service customers (excluding paper check); Many business service customers still prefer to receive bills and send payments by mail;
vii Grey, P. (March 2005). Electric Light and Power. Available at
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Service providers tend to rely on traditional approaches to promote their electronic billing and payment options, one of which is to use the bill itself to promote the benefits of alternative methods.
However, Carol Ellison, CRM Magazine – August 200772, reports that more and more customers are going to their keyboards instead of their mailboxes to collect and pay bills for their homes and businesses. In fact, a majority of customers who have Internet access at home now say they actually prefer electronic billing to the paper-based way of doing business, according to the April 2007 Consumer Bill Payment Survey, 73conducted on behalf of e-billing vendor CheckFree by Harris Interactive and the Marketing Workshop. This survey concludes that customers in Internet-connected households are paying more of their bills online than by paper cheque. Online payments are reported to make up 39% of the total volume of bill payments among online households, an increase of 4% over the previous December 2005 survey. In contrast, the volume of cheques sent through the mail fell 4% to 34% of the overall volume.
As has already been referred to, this move to e-billing does not change the reasons for seeking to establish a set of good practice billing principles addressing the core requirements for the format and content of periodic bills. Nor does it undermine the significance of the core characteristics of:
Reliability, acceptability and accuracy of data sources; Accuracy and clarity of calculation; Timeliness; Clarity of presentation; A voidance of overloading the billing space and potentially; obscuring essential information; Responsiveness to change.
Generally, these principles hold true for all services and delivery to their remit should prove even more effective using the advantages of new e-billing technology.
Discussions at the World Cafés (see Annex A) tended to confirm that a customer receiving any bill has the same basic information requirements:
What am I paying for? How much has to be paid? Is it the correct amount? Who do I pay? When do I pay? How can it be paid? How best to make contact to resolve a problem.
viii Ellison, C. (August 2007). CRM Magazine. Available at
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There was broad agreement that non-essential information included on the bill will potentially be a distraction unless clearly differentiated and preferably separated from the fundamental billing data.
The possible benefits identified by World Café participants of the application of uniform good practice in billing, are:
For customers:
Familiarity with the process would help to engender confidence in the provider, which could improve cross border acceptance; Understanding and paying bills can be achieved with a minimum of time and effort; Reduced need to raise query or register complaint.
For Providers:
Payment can be expected more promptly, improving cash flow; Costs of chasing up late payment reduced; Reduced number of complaints – reduced complaint management cost; Customer satisfaction rating raised; Improved customer retention.
Nevertheless, the World Cafés participants demonstrated little enthusiasm for the possibility of actually developing and implementing a billing standard.
Those representing customer views classified a standard billing format as ‗nice to have‘ but did not attribute particularly high priority to its provision.
Service provider views were, somewhat predictably, swayed by the perceived cost of introducing any changes to their procedures and processes, that might result from the introduction of such a standard.
Since the World Cafés, considerable time has been invested in trying to establish the level of dissatisfaction with current billing practice and formats across European Member States.
This proved relatively easy in the liberalised UK energy market where the consumer representative body ‗energywatch‘ has responsibility for facilitating, monitoring and trying to ensure corrective action in respect of all complaints related activity. Complaints relating to energy billing have had a very high profile in ‗energywatch‘ reporting in recent years and have been publicly available as a matter of course.
As a result, we know that during the year 2002/ 3 ‗energywatch‘ received 43,000 billing related complaints although it is also known that a substantial number of these were directly due to the widespread practice of ‗estimated billing‘. A practice that a standard for improved billing layout would have had
130 CHESSS little influence on. In their most recent annual report (2006/ 2007) energywatch 74 include the following statement:
“Billing complaints consistently top the heap at energywatch. Many are due to suppliers‟ failure to record information accurately or at all. Bills are often difficult to understand and to check for accuracy; in many instances customers who have not received a bill for years have then received a huge demand often followed in quick succession by a disconnection notice”.
Although the report shows an improving picture, with some 70% of customers using the main energy suppliers reporting satisfaction, this still leaves considerable room for improvement. In the context of the absolute number of consumers involved, this could run into millions of people who are confused or in some way unhappy about their bills.
Billing related problems also impact negatively upon service providers themselves. Research undertaken in the United Kingdom in 2004 found that customers owed utility services over £1 billion, every £ of which carries a potential financing cost for the utilities concerned. In addition, information provided by energy utility companies themselves, in response to a statutory information request made in May 2004 by the Gas & Electricity Consumer Council in the United Kingdom, suggested that up to a third of customers regularly contact their energy service provider to query or complain about their bills or account issues. It is estimated that this could amount to a body of 60 million unnecessary contacts per year, requiring a substantial resource for its processing and resolution. This will have required investment that, had billing and billing procedures been more effective, could have gone straight to the bottom line of the service providers concerned.
A parallel piece of research, undertaken with the permission of the UK Citizens Advice Bureau (CAB) has added supplementary information, in this connection. As part of its advisory role CAB tends to act as „a point of reference‟ for customers experiencing difficulty in resolving disputes with service providers of all kinds. CAB cases therefore relate to services other than just energy supply and it is highly likely that they will already have been subjected to scrutiny through service providers own systems. They are therefore likely to include a residual hardcore or problems, some of which may have already been reported in the energywatch statistics.
A search of CAB case files, for the four years 2004 to 2008 (see Annex C), has found a total of 12,216 billing related items, with a pattern of year on year increase that is perhaps surprising given the energywatch reports of a reducing problem. More detailed analysis reveals that of the total cases, 1,029 specifically referred to „format and content‟; 6,273 were attributed to „misunderstanding or lack of clarity‟ and of those, 1,746 were claimed to be caused by misunderstanding due to billing layout whilst, 948 were identified as being misunderstanding due to the presence of peripheral information on the bill, such as advertising.
74 Energywatch. Annual Report 2006 - 2007. Available at
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Quite clearly, this does not represent anything like the weight of problem reported by energywatch. However, given that these cases are what remains after others have made attempts at resolution, they still represent a core of dissatisfaction with bills and billing that should not be dismissed. .
Attempts to obtain similar information in other EU Member States have not been successful. The reasons for this are not known. Although statistical data has not been forthcoming, there is evidence of problems in the Netherlands and Sweden but elsewhere, requests for information have not received response. Whether this is because we have been researching in the wrong places or because the problem doesn‟t exist to anything like the same extent outside of the liberalized market in the UK is unclear.
With the exception of the London event, billing related discussions at the CHESSS World Cafés did not provide evidence of a major billing problem. Even in London, the areas of concern were more related to systems than to format or content. Internet searches, looking for reports of billing related problems, almost always link back to a UK source.
One of the tools claimed to be effective in stimulating better service performance in a liberalised market is the ability of customers to switch service provider and there is evidence that this is now happening to an increased extent in the UK. However, energywatch estimate that customers could save millions of Euros if they were more confident about changing supplier and it is suggested that adoption of a more uniform approach to the provision of unambiguous billing formats, would assist in this.
Other relevant activity in this area includes the recent publication of a British Standard, BS 8463 Specification for customer billing practice, published in the autumn of 2005 and currently undergoing a relatively minor amendment (see Annex D for outline of content).
The objective in preparing this standard was ―to provide a tool for suppliers of utility services (i.e. broadly, but not exclusively, gas, electricity, water, telephone and cable services for which periodic billing is made) to enable them to ensure that their customers can be provided with clearly comprehensible, accurate, timely and complete bills and billing related information”.
It is tempting to take the reported reduction in complaints relating to energy billing as evidence of the effectiveness of BS 8463. This would however be wrong given the substantial number of billing related issues subject to complaint but outside the scope of the standard.
It is also known that at about the same time as the publication of the standard, the Energy Retail Association (representative body for the 6 major energy suppliers in the UK) published a document Understanding your electricity and
132 CHESSS gas bills 75 that addressed many of the same issues but in the form of a code of practice, rather than a specification.
This too will have influenced the pattern of complaint. However, in what relationship with the standard and whether it‘s content was in any way influenced by the development of the standard, it is not possible to establish.
The intrinsic role of billing in the service lifecycle and their demonstrable impact on customer satisfaction levels, confirms that any proposal(s) for standard(s) for service provision that might emerge from the CHESSS feasibility study, will need to include requirements relating to billing and billing processes. Whether this will be by direct incorporation or cross-reference cannot yet be determined.
4.2.2 Work in progress
Another potentially significant item of work in the billing field is the recently approved new ISO Work Item for Standardization of network services billing.
The proposal for this was put forward by ISO COPOLCO with the objective identified as being to provide a framework for transparent billing information and inquiry and redress systems, and customer-oriented billing and provision of retail network services. It is designed for gas and electricity utilities but could also be used by other utilities (e.g. water, telecommunications)(See Annex E)
COPOLCO also identified a relationship between this project and research by Consumers International as part of their programme, "General Agreement on Public Services", which itself resulted from the perception of problems in the delivery of network services, notably water services, to disadvantaged consumers. 76
The justification offered for undertaking this work has been that there has been no general response to what is a clear case of market failure, with many instances of information asymmetries and serious instances of unnecessarily large transaction costs to consumers. Poorly estimated bills or delays in sending bills often lead to significant detriment and customer complaints. This is especially true for the vulnerable consumer trying to pay off accumulated debt, or, in some cases, undergoing interruption of service.
Following a close ballot, approval of this new work item depended upon the identification of an appropriate secretariat and Chairperson and this has now been completed and the project will proceed.
75 Energy Retail Association (ERA). Understanding your electricity and gas bills. Available at
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Analysis of the ballot result, to identify the level of support or otherwise, from Standards Bodies in EU Member States, reveals the following.
Responding Response Comments NSB Austria Negative Existing regulations Belgium Abstain None
Czech Positive None Republic Finland Negative Supportive in principle Existing legislative barriers identified Cross service solution rejected France Abstain No need identified Germany Negative Suggestion that existing national differences could not be overcome. Belief that cross service solution would not be achievable Italy Positive No comment Romania Positive Notification of some national requirements that would need to be taken into account Spain Abstain Identification of existing legislative instruments: 1. EU Directive 2001/115/EC 2. National Treasury Order HAC 3134/2002 (5/12/2002) 3. National Tax Administration Agency (AEAT) Resolution 2/2003 (14/02/2003) 4. Royal Decree 1496/2003 (28/11/2003) Sweden Abstain None United Positive Submission of BS 8463 as possible draft for Kingdom consideration Identification of need to take account of ISO 10002
Subsequent to the World Café discussions, a short opinion seeking questionnaire was sent to stakeholders having a known interest in the outcome of the CHESSS Initiative. This included a question in relation to possible CEN standardization for periodic billing, the response to which was broadly neutral (see Annex F)
The complete response analysis is available as part of the report on Module 4 but it is clear from the above that in a purely European context, there is no overall demand for a billing standard and no evidence that a project to deliver a European standard for billing format and content, would attract support or participation from stakeholders, at this time.
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4.3. Intelligent (SMART) Metering
4.3.1 The case for smart meters
From the many articles and reports that are published on this subject every month, it is apparent that 'intelligent (smart) metering' is now viewed as a subject with the potential to deliver significant benefits but there is perhaps a lack of clarity as to what those benefits might be and how best to make them available.
It is helpful to recognise that the ‗smart meter‘, is just part of a system, consisting of meter, display units, communication protocols, methods of communication and Interface with billing mechanisms all of which need to be effectively coordinated if the potential benefits of introducing such metering are to be fully realised.
In the United States, which has long been in the forefront of this area of technology, the U.S. Energy Policy Act of 2005, and initiatives in California, Texas and several other states are significant strategies intended to deliver improved energy efficiency.
The State of California‘s Title 24 2005 Building Energy Efficiency Standards mandates programmable communicating thermostats to all residents and obligates utilities to devise energy efficiency strategies to make use of this connectivity. In May 2007, the Public Utility Commission of Texas laid down rules on the features for Advanced Metering Initiatives and set minimum technology requirements which included a requirement for home area networking (HAN) capabilities.
In March 2007, the European Union adopted a road map for an integrated energy and environment policy based on clear targets to ensure less fossil fuel usage along with the introduction of energy efficiency measures. Energy performance standards and certification requirements were established for buildings that would allow technology to play a key role in using energy more rationally. Currently, the EU‘s framework programs for research and technological development fund large amounts of energy research and its Intelligent Energy Executive Agency is spending considerable sums over the next five years on research into energy saving, energy efficiency, renewable energies and the energy-related aspects of transport in the EU, Croatia, Liechtenstein, Iceland, and Norway.
Until recently, Intelligent (SMART) Metering programmes had been initiated in relatively few European Member States. However, a series of new initiatives are known to be under way.
In Denmark, EnergiMidt, a cooperative owned by its customers and known to focus on providing innovative and high-quality service, plans to roll out a meter data management system to all of its 170,000 residential customers. These meters will be networked via a web services based network operating system and are said to have the potential for other in-home products to use information from the meter to implement automated demand response, energy management, and other programs.
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In May 2008, 400 private households in the Oldenburg area of Germany will take part in trials of new intelligent metering technology that will not only transfer information about energy (electricity and gas) consumption patterns to energy providers on a continuous basis but also provide customers with a display that will provide access to meaningful usage/ price information. It is expected that the former will not only make billing more efficient but enable energy providers to offer targeted pricing models. For customers the available information could warn of sudden/ unplanned changes in consumption (perhaps caused by a technical fault in a home appliance) and permit corrective action sooner rather than later.
In Italy, ASM Brescia77, an Italian multi-utility provider delivering a broad portfolio of utilities -- including electricity, gas, water and heat -- to clients in the province of Brescia in northern Italy, has streamlined processes and enhanced it‘s service offering with the help of an automated meter management (AMM) solution78.
This is probably the most advanced of the current „smart‟ metering projects in Europe and through it, the company is seeking to automate its electricity meter and other services (gas, heating, etc.) reading processes. It was calculated that automating the process would allow the company to remotely connect and disconnect service, more efficiently monitor usage levels and reduce customer service costs.
With the European utility market opening up for full competition, ASM Brescia has clearly sought to develop new capabilities that will enable it to provide more customized and flexible commercial offerings. These include offering a range of commercial services, including the ability to remotely start and stop services, update parameters and tariffs and more effectively manage the use of energy, with the potential to enlarge market share whilst reducing operational costs.
The company also claims to provide capabilities to help ensure that energy is used effectively (including the ability to remotely deliver commands and download programs) while helping to ensure that client energy services are secure. In addition they offer to provide alarms and to monitor and manage gas hydraulic system and electrical equipment; and to provide for the transfer of information coming from customer installed devices to video as well as customer auto programming.
It is claimed that advanced metering (AMM) solutions of this type, can assist service providers to better comply with regulations related to network monitoring and optimization, reducing utility outages and the efficient use of electrical energy.
77 ASM Brescia SpA merged with AEM SpA in January 2008 to create A2A. Italy's second-largest power generator. This report should therefore be read, replacing ASM Brescia by A2A. 78 Provided by IBM solutions software.
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In the Netherlands, a Technical agreement NTA 8130 - Minimum set of functions for metering of electricity, gas and thermal energy for domestic customers has been published (see Annex D). This technical specification does not include any references to the provision/ presentation of information likely to influence customer usage behaviour. The Netherlands energy sector and Government are engaged in discussions over the implementation of smart meters for consumers. SenterNovem has utilised a cost-benefit study carried out by KEMA for its recommendation to the Dutch Ministry of Economic Affairs 79. This study suggests that large-scale implementation of digital energy meters for the Netherlands is, on the whole, profitable. On the other hand, the advantages and disadvantages are not evenly divided. The benefits appear mostly to go to the consumers in the form of lower energy rates and energy savings. Throughout the Netherlands, it costs the energy companies income even though they could profit individually from digital meters, for example through customer relations or streamlining of the internal organization. The report concludes that the government can influence the cost-benefit distribution through policy measures.
In Sweden, the government have recently published requirements for electricity meters to be accurately read, monthly, by 2008, which it is anticipated will have the effect of speeding up the introduction of smart meters.
In 2007, the United Kingdom, Government Department for Business, Enterprise and Regulatory Reform (BERR)80, commissioned a programme of research into smart-meter roll-out.
There were four primary objectives in the scope of this research:
Collection and consolidation of reliable and detailed cost and benefit data required to assess different roll out options, such as the costs of information technology and installation.
Utilisation of data collected and already available, in modelled scenarios, based on different methods of roll out, including effective alternatives proposed by the suppliers. This analysis will include consideration of broader second order and competitive market implications, including competition assessments.
Analysis, advice and conclusions on roll out options, and potentially suggest more effective solutions. It is expected that a small number of extra scenarios will emerge during the course of the work.
79 KEMA. (2005). Report to the Dutch Ministry of Economic Affairs. Available at
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Possibility to envisage that some elements of the work may benefit significantly from further research beyond the remit of this specification. The limits of the data presented (in terms of robustness) should be clearly explained and proposals for further work made if appropriate. Potential benefits from further work should be identified.
The focus of this project was:
The private costs and benefits to energy suppliers, energy distributors, meter manufacturers and installers, balancing and settlement organizations and the Government; The wider social costs and benefits; Pragmatic, empirically founded understanding of ‗real world‘ investment dynamics in light of government roll out decisions; Conclusions based on a robust modelling approach to GB energy sector investment and prices; A particular focus on the issues surrounding communications; Clear articulation and discussion of the relative merits of roll out options; Robust economic analysis, quantifying the main costs and benefits of specific roll out options and taking into account second-order effects and competitive market implications.
Report of this research became available in April 2008 and includes a progress report and an impact assessment of smart metering roll out81. The key area of information provision covered in the response to the consultation include requirement to for suppliers to provide historical consumption data to all domestic customers but makes no requirement with regard to the provision of real-time display devices to domestic premises, although there is a request that electricity suppliers provide such devices on a to particular customer segments. There will not be any proposals for displays to be included when a meter is replaced or newly-installed.
For business customers, however, there will be requirement that electricity and gas suppliers provide smart meters for usage above a certain threshold, by 2013.
In addition, there is commitment to complete further economic assessment work and consultation to finalise a policy position in respect of smart metering for small businesses and domestic consumers.
In this latter connection, the rollout of smart meters in the UK has taken a step forward with the announcement that 7,000 such meters are to be installed as part of a pilot scheme to establish customers‘ reactions to the additional energy information that will be available.
81 Thomas, R. Impact Assessment of Smart Metering Roll Out for Domestic Consumers and for Small Businesses
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The project, known as Energy Demand, is being run by UK energy regulator Ofgem and BERR. Four utilities are taking part. The regulator has invested £10 million to trial the meters, and the four utilities are believed to have contributed the same amount. To facilitate the project, some customers are being supplied with smart meters, while others will have stand-alone display units installed in their homes which will show energy usage in cash terms.
The Energy Retail Association (ERA), in the UK, has recently developed a document Electricity Smart Meter Functional Specification. This was drafted as an expression of energy supplier requirements for smart metering.
The scope of this document is identified as providing a common minimum functional specification for electricity smart meters. This will allow energy suppliers to build more detailed requirement specifications.
The primary focus is on domestic non-half hourly (NHH) metering, but it is envisaged that such meters could also be installed for non-domestic customers and this has been considered in the development.
The specification is intended to cover as many site configurations as possible, but it is acknowledged that due to the number of variants of site installations, the electricity smart meter specified may not be suitable for 100% of non-half hourly premises in the UK. Those sites which might be excluded are viewed to be low volume and would typically be customers on preserved tariffs due to the heating systems installed in their homes.
With regard to the potential of smart meters to provide service beneficiary influencing information, the draft includes the following:
Suppliers may choose to include a consumer display unit, separate from the smart metering system, as part of their overall smart metering solution. Similarly, customers may make their own decisions about using a customer display unit and the type of unit they prefer. As a consequence, the features, use and types of such units will be subject to a number of variables, such as consumer choice or supplier differentiation, which precludes suppliers from defining common functional requirements at this time.
It has been agreed that any such consumer display units are outside the scope of this specification, but a requirement for the capability for 2 way communication with these devices is included as mandatory.
The project will specify the interoperability requirements for communications and metering systems and this includes communication to and from any consumer display unit.
Not included in the general World Café report but strongly expressed at the Madrid World Café discussions, was a view that the universal introduction of ‗smart‘ meters could have significant downside, in terms of the:
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additional cost of their manufacture, installation, maintenance, operation and potentially shorter life-span; and additional energy consumption resulting directly from their being driven electrically for metering of all services (currently, water and gas meters are almost entirely mechanical).
Overall, it is generally accepted that the costs of roll out for a programme of innovative (smart) meter installation of any size, are of a magnitude that to make a sound business case for the introduction of such metering it will be necessary to include all possible benefits. These should include any that may accrue from cooperative operation with other household devices and through the sharing of facilities and information with other delivered services.
Even in this scenario, the costs/ benefits equation is far from conclusive with regard to both service providers and customers82 (see also KEMA report to the Dutch Ministry of Economic Affairs reference 15).
4.3.2 The need for interoperability
A significant factor to emerge during the period covered by this report has been the potential benefit to be derived from the provision of interoperability between smart meters installed in residential and work spaces and other devices installed at the same areas.
Providing for such interoperability could potentially swing the financial case in favour of the roll-out of smart meters, in that benefit to the provision of other services could be taken into account or some costs shared.
Standards projects in this subject area are already being considered in CENELEC TC/ 205 and a separate project under Mandate M/ 371 (Project 11) has considered the standardization needs of Smart House Services for Elderly and Disabled People.
Interoperability and interworking between systems, networks, devices and appliances in places of residence and home offices (the SmartHouse) is seen as a necessity for the successful and efficient delivery of many services (from energy management to health and telecare to home security to entertainment) since to be efficient, most services would benefit from being able to utilize existing devices and networks (and the information they carry) in the home and thereby avoid duplication of effort and resources.
4.3.3 The Smart House
4.3.3.1 General
82 MacDonald, M. and BERR. (2007). Appraisal of Costs & Benefits of Smart Meter Roll Out Options. Available at < http://www.berr.gov.uk/files/file45997.pdf>
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The difference between a Smart property and any other house fitted with domestic appliances and systems with controls is the potential for enabling those appliances to cooperate and to instruct and modify that cooperation through an interactive pre-programming facility.
The extent and complexity of this cooperation and therefore the perceived level of ‗smartness‘ of the property, will vary, depending on the range of service application and the flexibility required. To achieve even a basic level of smart property activation however, cooperation between several distinct elements will be required.
4.3.3.2 Control systems:
There are many control systems available but the three most commonly used in Smart Housing applications are:
Powerline – makes use of mains power supply to appliances (through building ring mains) Avoids the need for a separate ‗wiring loom‘ for control purposes by superimposing an additional, low powered, digital signal on to the normal current supply which is ‗addressed‘ to the appropriate accessory by the system controller..
Dedicated Control Wiring - Commonly used in new-build applications, this is a dedicated cabling structure designed for the specific application in the smart house and generally installed during construction. The electrical cabling required is considerably simplified and additional appliances can be added as required. The system usually operates at low voltage and is divorced from the power supply wiring to the appliances. By making use of digital signals transmitted in packets, it avoids the drawbacks of an analogue system in that it does not require a signal wire for each function of every device connected to the system.
Low Power Radio & Wireless Systems -Using special wavelengths such as infra-red to transfer communications between controls and appliances and between appliances (similar to TV remote control), systems such as those developed by ZigBee (referred to elsewhere in this report), can be used to control equipment over a short range as an alternative to Powerline or dedicated wiring
Many Smart House applications in fact use a combination of all three control media types the systems involved have required extension or modification. This is generally quite practicable provided the necessary interfaces to enable mixed systems to function correctly are available
4.3.3.3 Metering
It is likely that the need to measure the extent of service use, for payment purposes, will be even more of a requirement in the smart house than in a
141 CHESSS standard dwelling. Smart metering will be expected not only to share information with a range of appliances, applications and services but should also provide service customers with information on a real time basis about patterns of use for those services to enable informed choices to be made. In the case of energy consumption, for example this could includes data on how much gas and electricity is being used, how much it is costing and the impact that this consumption is having on greenhouse gas emissions.
For a significant number of existing customers, electricity and gas meters are hidden from view and provide them with little or no information with regard to patterns of energy usage. In the USA and Italy and more recently in Australia and Sweden, smarter metering capable of generating greater customer awareness and facilitating influence over actual energy use have been rolled out with considerable success.
There is however, no ready made, single definition of smart metering functionality. All smart-meter systems comprise an electronic usage recording box and a communications link. Such arrangements vary considerably in their complexity however and at its most basic, a smart meter simply measures electronically how much energy is used, and communicates this information to another device which in turn allows the customer to view how much energy they are using and how much it is costing them.
The key distinction between smart-meter types lies in their communication capabilities i.e. whether there is connection to the energy supplier, whether this is one-way or two-way and the extent of any data-storage capability. It is the combination of these features that determines the extent to which the metering system can assist customers in optimizing their usage efficiencies, reducing their energy usage and minimising carbon emissions.
Information display that appropriately configured smart meters can support includes energy usage and costs; CO2 emissions; historical consumption patterns; current tariffs and demand. As has already been referred to, such meters have been rolled out in a number of markets around the globe including the United States, Italy, Sweden and Australia. From the experience gained in these developments there is growing evidence that providing customers with appropriate, relevant information on their energy use does lead to their greater control of energy use.
4.3.3.4 Interactive protocols.
These define the digital signaling used to enable cooperation between controls and appliances in all of aspects. Including address structures as well as instruction and control parameters for all of the sensors, appliances and accessories including meters, connected to the system.
Many protocols have been developed, some proprietary and some freely available. The user should not have to worry about this aspect of the system which is determined to some extent by the choice of equipment and to some extent by the control medium used. In recent years much progress has been
142 CHESSS made in developing open systems, so that today there is a degree of interoperability. But to preserve complete freedom of choice in the selection of appliances and services for use in the smart house, it will be beneficial if a framework for complete interoperability can be developed.
It is important, particularly in a liberalised energy market that full interoperability extends to the metering systems installed, whether smart or otherwise. This is because a feature of a liberalised market is the encouragement of customer switching as a means of applying pressure for improved service on the market. This will only be fully effective a means of market stimulus, if installed meters are transferrable to a new service provider. If one energy supplier installs one type of smart system into a property, the basic functions of the meter at the heart of the system must be able to be used by a different supply source, if the customer chooses to change. Service providers are of course free to install systems with more functionality but it is essential that the basic functions of the systems should be interoperable so as to be capable of integration in a new suppliers systems.
Stakeholders are suggesting that a standard that provides a framework to enable systems in the smart house to interwork and interoperate provided they follow the requirements of the framework, is required. The standard should not attempt to require any system, protocol or component used by devices and systems constructed to any other specification to be altered significantly in complying with this Interoperability Framework but it would set objectives which if met would allow any device, appliance, application or system to interwork and enable multiple services to serve people in their homes and work premises.
Without interoperability, the requirements of the various services delivered to homes and work-spaces will be addressed independently and most likely without cross reference, with all the potential for unnecessary differentiation and additional cost that such proliferation frequently brings. As a result, the overall period of development is likely to be longer and for some services may not happen at all, because the additional costs associated with unique development will not be economically justifiable. A framework for interoperability is therefore seen as essential to the introduction of smart meters and the future development of efficient smart-house technology.
4.3.4 Reference to Interoperability in M/371- Project 11
In addition to this module of M/ 371 - Project 1, project 11 also acknowledges the need to provide for appliance interoperability in smart houses. Given its subject of Smart House Services for Elderly and Disabled People, this is perhaps to be expected. The report concludes that there is requirement for technical and operational interoperability which is primarily a technical issue, interoperability of systems may be a very important element to Smart House Services. It is suggested that interoperability can be viewed as the last stage before the techniques change to services. Technical interoperability is indicated to be a crucial aspect in the further development of a (free) market
143 CHESSS for Smart House Services. It confirms that operational interoperability, which is related to the supply chain, is important as well.
A final conclusion is that ‗currently there are a number of activities going on in this field. Although creating interoperability at European level has been indicated by the stakeholder as is a possible major advantage for the market there seems to be lacking a strong coordinating and structuring body to facilitate this development. The developments in the Smart House Services and the interoperability should be in coordination with each other. Therefore it is important to have liaisons between the groups working on this and create good working means of communication and information exchange‘.
4.3.5 Possible Scope of a new Framework Document
Key stakeholders in this area of activity have identified the need for a framework standard that will enable all services, applications, networks and devices in the Home (Smart House) or commercial premises to interwork or interoperate, either directly or from within pre-existing protocols, networks, specifications and standards. It should also identify the elements that need to be present for interworking or interoperability to take place (see Annex G).
In summary, it is envisaged that an interoperability framework will set major areas of compliance, including:
1. SERVICE SUPPLY CHAIN DECONSTRUCTION 2. SERVICE OBJECTS 3. DECLARATION 4. SERVICE AGENTS 5. APPLICATION MODELS 6. ABSTRACTION and that in addition, requirements for the framework to work and be useful (not necessarily compliance), will be specified: 1. Any methodology, but not necessarily end systems and devices, that fulfils the requirements above may utilize IP and IP related methods of identification and communication. 2. All descriptions and methodologies that link into the framework will need to be Open or FRAND. 3. Languages or protocols that support IP, Web 2.0, etc. as open systems should be supported.
A framework standard would therefore be generic in nature in that it is integral to the service lifecycle and has the potential for impact across a wide range of
144 CHESSS services. It therefore sits well with the other proposals likely to emerge from the CHESSS study.
Note 1: Useful additional information on the current development of intelligent (smart) meters is provided in an abstract from a paper titled Smart metering – the real energy benefits prepared by Howard Porter of the British Electrotechnical and Allied Manufacturers Association (BEAMA), which for convenience, is included with this report in Annex H.
Note 2: A paper providing information on what is achievable for interoperability with currently available technology is included in Annex I.
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5. CONLUSIONS 5.1 Conclusions: Billing
From the research undertaken, we conclude that development of a standard to provide a tool for service providers (i.e. broadly, but not exclusively, gas, electricity, water, telephone and cable services) to enable them to provide their customers with clearly comprehensible, accurate, timely and complete bills and billing related information could assist in engendering consumer confidence in utility services, wherever they are sourced from.
It has been further concluded that a billing standard could assist by: setting minimum standards of billing services for customers; avoiding restricting opportunities for innovation in billing and billing processes and allow for differentiation in supplier/brand; offering a means of giving consumers a clearer understanding and greater certainty of the billing process; assisting in minimizing complaints by addressing issues that have been the source of frequent complaints about periodic billing; facilitating informed customer choice; present service providers with a means of demonstrating corporate social responsibility.
Such a standard would be both beneficial and technically feasible.
However, given:
our inability to locate evidence that a significant billing problem exists outside of the UK at the present time; the lack of commitment by European National Standards Bodies to the recently confirmed ISO project to undertake preparation of a document Standardization of network services billing; and the lack of any clear demonstration that the recently published BS 8463 will be generally adopted and applied by service providers.
We further conclude that such a project is unlikely to acquire adequate support in CEN, in the immediate future.
5.2 Conclusions: Intelligent (Smart) Metering
There is evidence to show that intelligent meters could play a significant role in promoting energy-efficient behaviour and in helping consumers to reduce their costs and assisting vulnerable households. However, the fragmentation and uncertainty that has characterised the metering sector in much of the EU has, to date, worked as an effective barrier to implementation and there is still a lack of conclusive evidence as the actual benefits that can accrue from such application.
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For this and the other reasons identified in the findings section of this report, an unequivocal case in favour of the introduction of innovative (smart) meters for purely billing related reasons has not thus far, been made and it is therefore necessary that we seek to include all the benefits likely to accrue from the operation of such meters in co-operation with other devices and services used in residential and business premises. Interoperability with other devices is therefore seen as key to the successful roll-out of such meters.
The necessary framework to enable interoperability and to facilitate cooperation to the required extent, has yet to be developed in Europe because many of the benefits are still emerging and are still under investigation.
As a result CHESSS module 6 concludes that although the technical capabilities of smart meters are to some extent already being addressed in standards (independent development of two national standards) the information provision capabilities/ requirements remain to be determined and it is in this connection that the aspect of interoperability will weigh most heavily.
As a result, it is further concluded that as a matter of policy, CEN should seek to liaise with CENELEC in the development of all future standards or standards related projects on „interoperability of equipment and appliances in the home or work space‟.
Involving its sector fora for Energy Management and Information Communication Technology (ICT), CEN should seek to be aware of and liaise closely with ongoing CENELEC activity (particularly that of CENELEC TC/ 205) in this subject area83 and jointly with CENELEC should facilitate stakeholder debate on the most appropriate way forward, at the earliest opportunity.
Throughout this liaison, every effort should be made to ensure that the content of any future interoperability standard includes the items identified as necessary in the findings section of this report, namely that the standard should set major areas of compliance, including the following:
1. SERVICE SUPPLY CHAIN DECONSTRUCTION – Requirement that for any service or application there shall be a method of identifying the entities that make up the supply chain for the service from the source of the service to the end user and the inter dependencies of one entity to another in the supply chain. 2. SERVICE OBJECTS – Requirement that there shall be a template for describing devices, systems, applications and services in the supply chain, to the home and in the home, as objects with known methods of object description.
83 It is known that a proposal for a CENELEC Workshop Agreement (CWA) to develop an interoperability framework, is in preparation. This is currently stalled pending identification of the necessary funding. Annex F of this report provides an outline of the proposal.
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3. DECLARATION – Requirement that for any system, protocol or specification there shall be declaration of objects, their identity, their attributes and methods of interaction. 4. SERVICE AGENTS – Requirement that for services and applications, a set of intelligent agents with embedded rules shall establish and maintain the end-to-end service supply chain as well as detect and resolve interoperability conflicts. This includes discovering, reporting and managing the availability of all the entities and objects required by the service as well as monitoring and maintaining the functionality of the service or application. (These may initiate the service or application, monitor and control the service or application in operation or delivery and terminate the service or application when it is complete.) 5. APPLICATION MODELS – Requirement that application models shall be available for commonly used applications and that these can be instantiated in middleware and combined to create services or larger applications. 6. ABSTRACTION – Requirement that any Supply Chain Entity, Service Object and Service Agent can be abstracted, utilised remotely and can represent the current state of the service remotely to the end that applications can be driven from remote locations and can model specific actions of a service or application, in isolation. In addition it will be necessary for the framework to provide for
Any methodology (but not necessarily end systems and devices) that fulfils the requirements above, may utilize IP and IP related methods of identification and communication. All descriptions and methodologies linking into the framework being Open or FRAND.
Support for languages or protocols using IP, Web 2.0, etc., as open systems.
In view of this interdependence between metering and device interoperability, work to define the specific information provision capabilities of intelligent (SMART) meters should be deferred until an interoperability framework project is underway and the reports of the various smart metering trials currently scheduled and in progress, are available or such other time as may be determined as practicable by the joint CEN/ CENELEC ‗Interoperability‘ meeting, referred to above. This will help to ensure that the work eventually undertaken can be focused on the most appropriate and useful functionality on a basis of the most up to date, practical experience and that it retains the provision of customer relevant information, as a primary objective.
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6. RECOMMENDATIONS and NEXT STEPS
6.1 Recommendations
6.1.1 Recommendation in response to conclusion 5.1 Billing We recommend that CEN, through its Sector Forum Energy Management, should seek to liaise with ISO/ PC 239 in respect of the project for Standardization of network services billing.
6.1.2 Recommendations in response to conclusion 5.2 Intelligent (SMART) Metering
We recommended that CEN and CENELEC cooperate in the development of a shared strategy for future standardization for ‗smart house services and enabling technologies‘ (including meters) for use in the home and work space, in order to ensure that:
multiple service provision is catered for appliances and equipment are interoperable customer choice is preserved; and provision is made for customers to have access to information they require to properly manage their service usage.
To facilitate this coordination we suggest that CEN and CENELEC organize a joint stakeholder meeting on the subject of ‗interoperability‘ as soon as practicable, with the following objectives:
Initiate a CWA to establish an interoperability framework for ‗smart house services and enabling technologies‘ establish a program of future standardization for ‗smart house services and enabling technologies‘
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6.2 Next Steps
Action By Start Duration 6.2.1 Establish liaison with CEN Sector ISO/ PC 239 Forum Energy October 36 months Management 2008 6.3.2 CEN/ CENELEC CEN Immediate Ongoing Liaison 6.3.3 Organise joint CEN/ November 6 months ‗Interoperability‘ CENELEC 2008 meeting *** 6.3.4 Creation of CEN/ TC CEN June 2009 Ongoing for ‗Interoperability‘ * 6.3.5. Joint CEN/ CENELEC CEN/ June 2009 12 to 18 Workshop ** CENELEC months
Notes: * If support not sufficient at that time, substitute action 6.3.4 ** In the event that 6.3.3 proceeds, 6.3.4 will probably lapse. *** Stakeholders attending this meeting should include standardization experts (including CEN Energy Management and ICT sector fora), equipment manufacturers, software developers, service providers, business customers and consumer representatives
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7. BIBLIOGRAPHY
BERR. Smart Meter Roll Out. Available at
Consumer Bill Payment Survey (April 2007). Available at
Ellison, C. (August 2007). CRM Magazine. Available at
Energy Retail Association (ERA). Understanding your electricity and gas bills. Available at
Energywatch. Annual Report 2006 -2007. Available at
European Commission. DG Enterprise. New Approach & Global Approach, conformity assessment, legislation & standardization. Available at
European Commission. Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity. Available at
European Commission. Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services. Available at
European Commission. Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market. Available at
Grey, P. (March 2005). Electric Light and Power. Available at
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KEMA. (2005). Report to the Dutch Ministry of Economic Affairs.
MacDonald, M. and BERR. (2007). Appraisal of Costs & Benefits of Smart Meter Roll Out Options. Available at < http://www.berr.gov.uk/files/file45997.pdf>
Thomas, R. Impact Assessment of Smart Metering Roll Out for Domestic Consumers and for Small Businesses
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8. ANNEXES
ANNEX A: CHESSS World Café
Summary of discussions about Module 6
This brief report aims at analysing in a coherent and useful manner the outcomes of World Cafés relating to Module 6 – Billing and innovative metering systems. The analysis is structured as follows:
3. Description of the methodology used during the World Cafés 4. Identification of clusters of preference
4. Description of the methodology used during the World Cafés
During the World Cafés the attendees were asked to answer two questions relating to Module 6. The questions aimed at encouraging the attendees to express their view on two crucial issues. They were formulated as not to prejudice or influence the answers so that the outcome would be as original and non-biased as possible.
The questions were:
What is stopping us from developing a common format for bills?
What could raise the profile and use of ―Smart‖ meters?
Furthermore, the participants were asked to indicate what element they thought to be the most important by sticking a dot on it. The dot was either yellow or blue. The former indicated the service consumer, the latter the service provider. The following analysis takes into consideration both the frequency of dots and the recurrence in the use of terms in order to establish the most important elements.
For a more complete description of the World Cafés‘ methodology, please see the main report (section 2 - methodology).
5. Identification of clusters of preference
For the first question, the main blockers that were identified relate to the billing system. Although the feasibility of a common billing format was not questioned, the benefits that it could bring to the customers should be clarified. Concerns were also raised in relation to the cost of change and of implementation (i.e.: adapting the different IT systems)
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The participants indicated also a couple of basic requirements that should characterize common format for bills, which are a common template and simplicity so that customers are not confused as to what they pay.
For the second question, the participants articulated their answers on several points. They focused on the definition of smart meters and their benefits. Then they listed the obstacles and the actions to be taken to raise their profile and use.
The benefits were quite clear. They ranged from consumption control and reduction to easy use. The obstacles relate to accountancy systems, the bill contents, the legislative requirements, the costs involved. It was also suggested that bills can be used as a marketing tool.
The suggested actions to raise the profile and use of ―Smart‖ meters involve raising customers‘ interest in smart meters. This can be done by the clarification and explanation to customers about the benefits, public awareness campaigns, illustrating the convenience versus the costs, presenting the information in a timely manner.
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ANNEX B: Extract from the Energy End Use Directive
Article 13 Metering and informative billing of energy consumption
1. Member States shall ensure that, in so far as it is technically possible, financially reasonable and proportionate in relation to the potential energy savings, final customers for electricity, natural gas, district heating and/or cooling and domestic hot water are provided with competitively priced individual meters that accurately reflect the final customer's actual energy consumption and that provide information on actual time of use. When an existing meter is replaced, such competitively priced individual meters shall always be provided, unless this is technically impossible or not cost-effective in relation to the estimated potential savings in the long term. When a new connection is made in a new building or a building undergoes major renovations, as set out in Directive 2002/91/EC, such competitively priced individual meters shall always be provided.
2. Member States shall ensure that, where appropriate, billing performed by energy distributors, distribution system operators and retail energy sales companies is based on actual energy consumption, and is presented in clear and understandable terms. Appropriate information shall be made available with the bill to provide final customers with a comprehensive account of current energy costs. Billing on the basis of actual consumption shall be performed frequently enough to enable customers to regulate their own energy consumption.
3. Member States shall ensure that, where appropriate, the following information is made available to final customers in clear and understandable terms by energy distributors, distribution system operators or retail energy sales companies in or with their bills, contracts, transactions, and/or receipts at distribution stations:
(a) current actual prices and actual consumption of energy; (b) comparisons of the final customer's current energy consumption with consumption for the same period in the previous year, preferably in graphic form; (c) wherever possible and useful, comparisons with an average normalised or benchmarked user of energy in the same user category; (d) contact information for consumers‘ organizations, energy agencies or similar bodies, including website addresses, from which information may be obtained on available energy efficiency improvement measures, comparative end-user profiles and/or objective technical specifications for energy-using equipment.
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ANNEX C: Analysis of CAB Case records for evidence of billing related complaints
The Citizens Advice service helps people resolve problems by providing free information and advice from over 3,000 locations in the UK and by influencing policymakers.
The bureau keeps a data base of case records that goes back to the year 2004/ 2005 and is searchable by key word. By their kind permission this was examined to try to obtain a view of the percentage of billing related complaints relating to bill format, presentation, layout and content that had not been resolved by service providers, to the satisfaction of their customers.
Of the cases identified in the keyword search, a sample of approximately 1 in 100 was reviewed in slightly more detail to confirm that the case did indeed relate to the subject of the keywords.
Search 1: Cases including „billing‟ in identification and/ or main complaint text.
Year Number of Case record Reviewed cases reviewed for cases not- key word relevant relevance 2004/ 2005 430 5 1 2005/ 2006 1652 17 0 2006/ 2007 3771 37 1 2007/ 2008 6363 50 1 Totals 12216 109 3
Search 2: Cases including „billing, format and content‟ in identification and/ or main complaint text.
Year Number of Case record Reviewed cases reviewed for cases not- key word relevant relevance 2004/ 2005 35 1 0 2005/ 2006 156 3 0 2006/ 2007 318 3 1 2007/ 2008 520 5 0 Totals 1029 12 1
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Search 3: Cases including „billing, misunderstanding and clarity‟ in identification and/ or main complaint text.
Year Number of Case record Reviewed cases reviewed for cases not- key word relevant relevance 2004/ 2005 186 3 0 2005/ 2006 822 8 1 2006/ 2007 2172 22 1 2007/ 2008 3093 30 0 Totals 6273 63 2
Search 4: Cases including „billing, misunderstanding, clarity and layout‟ in identification and/ or main complaint text.
Year Number of Case record Reviewed cases reviewed for cases not- key word relevant relevance 2004/ 2005 86 1 0 2005/ 2006 287 5 0 2006/ 2007 442 9 1 2007/ 2008 931 18 0 Totals 1746 33 1
Search 5: Cases including „billing, misunderstanding, clarity and advertising‟ in identification and/ or main complaint text.
Year Number of Case record Reviewed cases reviewed for cases not- key word relevant relevance 2004/ 2005 42 1 0 2005/ 2006 149 3 0 2006/ 2007 299 5 0 2007/ 2008 458 9 0 Totals 948 18 0
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ANNEX D: Outline content of existing standards relating to billing and smart metering
F1. BS 8463 Specification for customer billing practice 1 Scope This British Standard specifies the minimum generic requirements for suppliers of services for which periodic billing is made. The requirements pertain to both the billing process and to the billing documents. It can be applied to services that are unmetered, metered at the point of delivery or metered remotely (e.g. on the supplier's own premises). Design guidelines for billing documents are given in Annex A. Supplementary requirements pertaining to the billing of corporate customers are specified in Annex B.
2 Terms and definitions 3 Billing processes 3.1 Meter readings 3.2 Estimated bills 3.3 Multi-service providers 3.4 Annual statement 3.5 Overcharging and undercharging 3.6 Handling of billing enquiries and billing complaints 3.7 Final bill after closure of account 3.8 Timeliness 3.9 Performance 3.10 Payment methods 3.11Changes of customer details 3.12 Access to billing history 3.13 Compliance system 3.14 Continuous improvement 3.15 Promotion of special services 3.16 Customers with difficulty in paying bills 3.17 Changes of a significant nature 3.18 Disconnections
4 The billing document 4.1 Format 4.2 e-billing 4.3 Information to be provided (split into fundamental information and further information) 4.4 Bills based on estimations 4.5 Customer supplied meter readings 4.6 Composite bills 4.7 Method of calculation/ information on price 4.8 Complaints handling 4.9 Change of customer details
Annex A (informative) Recommendations for bill presentation Examples are included as follows: Principal page of an estimated bill or statement Principal page of a direct debit statement Principal page of a multi-service annual statement for a direct debit customer Supplementary page of a multi-service bill
Annex B (normative) Supplementary requirements for the billing of corporate customers Bibliography
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F2. NT 8130 Minimum set of functions for metering of electricity, gas and thermal energy for domestic customers
1 Subject and scope The NTA 8130 focuses on agreements concerning the addition of minimal basic functions of the metering installation for gas and electricity and the with this associated required functions for communication, switching and setting the electricity threshold. In other words, a minimal set of basic functions for connecting the consumer to the energy distribution infrastructure in the Netherlands. For thermal energy and water, recommendations are included in the informative appendix. The scope of this NTA is metering installations for domestic consumers in the Netherlands. The involved parties are consumers, suppliers, grid operators, metering data companies, and independent providers of services, systems and equipment. The minimal set of basic functions shall support the capabilities for the various parties in a standardized manner. This concerns both critical company processes and support for future new products and services.
2 Normative references 3 Terms and definitions 4 Symbols and abbreviations 5 Description of the various functions and the requirements specified for these functions 5.1 General 5.2 Data requests 5.2.1 Meter readings of used indexes 5.2.2 Number of indexes 5.2.3 Date and time stamp 5.2.4 Actual meter readings on request via port P3 5.2.5 Actual meter readings via port P1 5.2.6 Interval readings 5.2.7 Status information 5.2.8 Monitoring 5.3 Control commands 5.3.1 Activate/de-activate and set threshold 5.3.2 Information 5.4 Parametrization commands 5.4.1 Set tariff switch times between registers 5.4.2 Firmware updates 5.5 Communication 5.5.1 Port P1 5.5.2 Port P2 5.5.3 Port P3 5.5.4 Port P4 5.5.5 Access and security 5.6 Prepaid support 6 Application of the various functions.
Appendix A (informative) Additional requirements for thermal energy and water Appendix B (normative) More specific physical realization P1
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ANNEX E: ISO Project – Network Services Billing Standard Justification for new work submitted in support of proposal.
Purpose Billing complaints form a substantial number of consumers' complaints against utilities. An International Standard would provide a market-based and market- sensitive way of dealing with consumer concerns about billing practices. It would also be a useful tool to help prevent the occurrence of consumer debt. An International Standard would also define minimum requirements for customer service, and in so doing will provide the basis for utilities to adopt contemporary customer service practices and sound quality outcomes – and increase customer satisfaction among utility users. The result will be greater consumer confidence in utility services as consumers gain a clearer understanding of the billing process, as well as increased efficiency and cost savings for the utilities. An International Standard would also: provide a fairer basis for an ongoing relationship between the utilities and their users, particularly as there is often a huge disparity in bargaining power; serve as a means of preventing/reducing complaints by addressing issues that have been the source of frequent complaints about utilities, and; provide benchmarks for the level of customer expectations.
Justification There has been no general response to what is a clear case of market failure, with many instances of information asymmetries and serious instances of large transaction costs to consumers. Poorly estimated bills or delays in sending bills often lead to significant detriment and customer complaints. This is especially true for the vulnerable consumer trying to pay off accumulated debt, or, in some cases, undergoing interruption of service. In the United Kingdom alone, inaccurate and untimely billing cost customers at least £10 million in 2004.
However, poor billing systems also impact negatively upon utility companies; research undertaken in the United Kingdom in 2004 suggests that the customers owed utilities over £1 billion. In addition, data provided by energy utility companies to a statutory information request made in May 2004 by energywatch, the Gas & Electricity Consumer Council in the United Kingdom, suggested that up to a third of customers regularly contact their energy suppliers to query or complain about their bills or account issues. This could amount to as many as 60 million unnecessary contacts per year.
As another case, Europe has undergone huge market development in the area of utilities. Directive 2003/54/EC of the European Parliament and Council (concerning common rules for the internal market in electricity) was adopted on 16 June 2003 and has impacted upon the information that suppliers have to provide to consumers. In July 2004, the EU expanded from 14 to 24 countries with a combined population of 450 million people. Up until then, state ownership of utilities had been the norm, and one critical factor in aiding
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consumer acceptance of privatization of utility services would be to have sensible and informative billing systems.
An International Standard could provide an ideal platform to support consumer confidence in a privatization context and would help avoid some of the problems that have already arisen in other countries. (see examples page xx)
Potential benefits
For customers (i.e. primarily individual consumers, businesses also affected):
it will be easier for customers to read and understand their bills; customers will be better able to verify the accuracy of billed charges, resulting in customers having increased confidence in their bills; customers will receive more timely bills; coherent bills can also help customers overcome language and cultural barriers; by engaging more with consumers through the bill, suppliers can promote the benefits to be derived from energy efficiency measures (personal and environmental savings); customers will be better informed about a supplier‘s service related for billing; customers will have less cause to lodge billing complaints; and the costs associated with customer contact to query bills which are passed through to them in their utility charges will be reduced.
For suppliers
higher levels of customer satisfaction, with implications for market share; improved confidence in service providers that they are able to give higher levels of assurance with the billing processes; fewer customer complaints about billing matters, resulting in lower costs; ability to recover more accurately and timely the charges that are properly due to them from their customers; and greater accuracy of metering data that will enable suppliers to reconcile wholesale costs.
For regulators
The standard will be the basis for improved performance by suppliers so that regulators will have less cause to intervene, resulting in more efficient industry regulation.
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Other considerations Other considerations which argue in favour of an International Standard include the following:
Ownership of utilities: given the high capital costs involved in owning utilities, there are few actors and increasingly the owners are becoming global. It would greatly assist owners of utilities in a number of jurisdictions to have one standard for billing, particularly from a cost standpoint. Providing information for consumers in one easily comprehensible format would simplify work procedures for the owner.
Cross border trade: with companies able to buy utilities in a number of countries, common approaches to contracts and billing are needed.
Competitive environment: as the utility sectors become more competitive, businesses will need to shave transaction costs; one means will be making dispute resolution more efficient. International norms in this area will help and sustain acceptable levels of consumer protection, while reducing costs for utilities. A competitive environment will provide scope for innovation in billing, particularly as an International Standard can set minimum performance requirements in which innovation can occur.
Comparability: complex or unclear bills can be confusing and difficult to understand. This not only exacerbates budgeting problems, but makes it difficult for consumers to properly decide whether they would be financially better off staying with their existing supplier or switching to another.
Market credibility: many jurisdictions are suffering from reform fatigue at a critical time when consumers can benefit from reform. An International Standard on retail network billing would provide a solid basis for reform.
Change in utility culture: an International Standard can help instill a culture of giving utility consumers factual and timely information, especially where this culture has not existed before.
Regulatory certainty: in the absence of International Standards, different systems will develop, resulting in incompatible regimes, which in turn will deter competition and entry.
Dispute avoidance: billing has traditionally been an area that has attracted a number of complaints. Having an agreed standard for billing could serve as a dispute avoidance mechanism.
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Some issues and developments in Network Services Billing.
Australia
Utilities The Energy and Water Ombudsman of New South Wales (EWON) investigates 84customer complaints and reports back to providers and other stakeholders on ways to address complaints in a systematic way in order to help resolve disputes, through dialogue and system improvement by providers. In 2004-2005, among the major issues identified were high rates of energy- related debt, disconnection of services, inconsistent internal referrals to providers' customer assistance programmes and back billing due to delays in meter reading. Figures for billing statistics from the 2004-2005 Annual Report of EWON show that 25% of all issues raised by consumers for electricity relate to billing (about 4000 complaints in absolute terms). The share of complaints linked to billing issues was even higher for water (26% of total complaints), and especially for provision of gas (33%).
However, these figures are conservative because they do not include complaints linked to affordability issues (which often arise from fundamental billing issues). When all aspects of the billing process are considered (meter reading, application of tariffs and bill formats through to errors, delays, high bills, payment options and billing related disconnection and or restriction of supply) the real figure for billing-related complaints is probably closer to 65%.
Communications 85 In a report on issues raised in complaints to the Telecommunications Industry Ombudsman in the year to June 2004, billing issues were the largest single category of landline service complaints, accounting for 36% of complaints about this service. The highest percentage of complaints regarding Internet services was also about billing issues: just over 31 per cent in 2003/4. Billing issues accounted for just over 22 per cent of complaints about mobile service in 2003/4 (second largest category of complaints about this service).
However, the above figures were somewhat lower than the previous year. The reductions may have been due to the introduction of a code on billing: The Australian Communications Authority (ACA) introduced a code of practice for customer billing in October 2000: it sets minimum standards for content and presentation of bills, customer access to billing information, verification and itemisation of charges, and timeliness, frequency and payment of bills. Their press release said that billing had been consistently the largest category of complaints lodged with the TIO. The code covers fixed and mobile telephone services, as well as Internet. 86
84 (Source: Energy and Water Ombudsman of New South Wales (EWON) www.ewon.com.au) 85 (Source: Telecommunications Industry Ombudsman (TIO) website) 86 (Source: Australian Communications Authority website)
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In its 2002-03 Annual Report, the Energy & Water Ombudsman for New South Wales stated that billing accounted for 63.8% of electricity complaints, 58.6% for gas complaints and 32.2% for water complaints. The Energy Industry Ombudsman for South Australia likewise recorded that billing made up 55.9% of complaints made to it in 2002-03.
Canada
Introduction In recent years, there have been a number of legal and regulatory developments taking place related to utility billing. While some of the developments relate to general billing practices by the utilities, the issues have become more complex due to the de-regulation of utilities and the different regulatory approaches in Canadian provinces. Plus there is general recognition that there is an increased need for consumer education and information in today‘s marketplace. This report is not intended to be comprehensive but will focus on some of the key issues and initiatives that have taken place recently, which may be relevant to the work underway in the ISO/COPOLCO Working Group on the Global Marketplace.
Legal Developments In 1975 the Ontario Energy Board (the governing body for the gas companies in the province) allowed companies to charge a late payment penalty of 5% of unpaid charges for monthly charges. It was felt that it would encourage customers to pay their bills on time and the costs of collection of unpaid bills would not be borne by the entire customer base. A class action under the criminal code was launched in 1995 on behalf of 500,000 customers claiming that the late payment fees represented a criminal rate of interest. A final ruling by the Supreme Court of Canada in April 2004 found the company guilty of unjust enrichment and ordered the firm to pay up to $100 million in compensation to customers who were charge usurious late payment fees.
The company has stopped the practice of late payment fees and it has indicated that it intends to ask for an increase in rates.
Electricity Bills regulated The Province of Ontario has ordered utilities to simplify electricity bills to make them easier to understand. Following complaints from consumers about the complexity of bills following the de-regulation of electricity, research and pilot studies were undertaken and a new standardized format and terminology for bills has been recently introduced. The bill will require 6 lines of information: Cost of electricity (includes one amount for the energy charges + supply service charge + charges from previous bill) Delivery charge (includes customer charge+distribution charge+ transmission charges Regulatory charge (cost of oversight bodies)
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Debt retirement charge Past usage (so you can compare daily usage) Conservation tip
Review of Electrical Billing Practices in Province of Alberta Electricity customer service issues and billing inaccuracies in Alberta led to a review and the implementation of measures to address the concerns. Consumer concerns included: excessive or irregular charges, confusing bills, inaccuracies in meter reading, billing processes and lack of a consumer complaint process.
The Report of the Task Force on Electricity Billing Issues87 was issued in August 2002. Recommendations to improve the overall retail market called for the establishment of a centralized Ombudsman Office for complaints, improvements in disconnect practices and standardized line items in bills. An Alberta Consumer Advocate Office has now been established to cover both gas and electricity and to challenge government policy and to listen to consumer complaints, represent consumers at rate hearings and provide consumer education materials. However, the office is not empowered to investigate complaints independently.
Energy Sales Practices With the introduction of the deregulated energy market, new energy suppliers have started to sell long-term contracts for household energy. Some of the benefits were increased competition and better customer service. But, it also resulted in many highly publicized reports of aggressive and unfair sales practices and numerous consumer complaints against contracted field agents. Some of the reported problems included: Harassment and high pressure tactics by itinerant sellers and telemarketers Forged signatures on contracts Agents misrepresented themselves False information/claims about contracts Unfair practices to elderly and non-English speaking customers
Government regulators and the head office of the supplier have responded to these complaints but consumers remain sceptical and lack confidence in the system.
Netherlands
Energy `DTe and Energy Companies Agree on Clarity of Consumers' Invoices 05-07- 2004
87 (Note: the report contains a detailed analysis of Ombudsman and Complaint Investigation Programs in Alberta, US states, Australia, New Zealand and the UK – pages 32-35, see: http://www3.gov.ab.ca/gs/pdf/Alerts&Releases/task_force_electricity.pdf
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Energy companies will have to produce clearer invoices for consumers. DTe (Office of Energy Regulation) has agreed to this with the energy companies. In consultation with the sector, DTe has drawn up a guideline, which includes minimum criteria, which the annual statement must meet if it is to be clear to consumers.
DTe receives many complaints from consumers on the (lack of) clarity of the final statement. DTe is in favour of the sound operation of market forces and competition on the energy market, which ultimately benefits consumers. "If liberalisation is to be successful, it is essential that consumers understand their invoices," according to Gert Zijl, the Director of DTe. "On the basis of the agreed criteria, a step has been taken towards a final statement which in many respects will be clear and provide more insight."
In total, the agreed guideline contains 16 criteria. According to these criteria, energy companies must, for instance, indicate the period to which the consumption of gas and electricity relates, so that the customer knows the precise period to which the settlement relates. In addition, concepts such as the supply, transport and tax components must be clarified. Furthermore, the method of calculating the instalments must be specified.
DTe has requested energy companies to make adjustments to their annual statements in line with the criteria before 1 January 2005. At the beginning of 2005, DTe will check whether the energy companies' final statements meet the criteria. DTe will publish the results of this check on its website.‘
Sweden
Energy There have been many problems with billing for energy charges. The biggest problem relates to lack of meter readings and estimated bills. Consumers are meant to receive at least one bill a year based on a confirmed reading but some received estimated bills for up to three years. After one and a half years, consumers have the right to compensation of 15% of the total bill. But people have experienced problems in facing heavy bills once the meter is read, and some may have been disconnected (figures not available).
As a result of these problems, a law has been passed which means that network operators are obliged to read meters monthly. But this will not take effect until 2009. However, energy companies (through an organisation representing 90% of suppliers, network operators and generators) are working together to improve billing. 88
88 (Source: telephone interview with Bo Hesselgren, Electricity Advice Bureau, 9/12/04)
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United Kingdom Data provided by energy utility companies to a statutory information request made in May 2004 by energywatch, the Gas & Electricity Consumer Council in the United Kingdom, suggested that up to a third of customers regularly contact their energy suppliers to query or complain about their bills or account issues. This could amount to as many as 60 million unnecessary contacts per year.
Currently, energywatch records that 67% of consumer complaints made to them are on account and billing issues (3,700 cases each month). In the United Kingdom, complaints to WaterVoice, the water Consumer Council, on billing comprise over 60% of their total complaints with poorly estimated bills, inaccurate meter readings or a lack of clarity over a breakdown of the components of the bill being cited as major issues. In the UK, work has already begun on the development of a national standard by the British Standards Institution.
More than 45,000 of the 110,000 complaints made to the UK energy users body Energywatch between April 2002 and March 2003 related to accounts and billing issues. This has continued to remain a high proportion of the complaints consumers make to the organization.
Key findings from research carried out for energywatch by NOP World in April 2003 include: 9% of those surveyed had experienced debt due to estimated billing. [When applied to the known 24 million UK households with electricity, this could mean that 2 million customers have experienced debt due to poorly estimated electricity bills during the last few years]; 1 in 3 of those, said that the debt exceeded £100; More than 1 in 4 of those consumers had some degree of difficulty or could not pay off the debt; 35% of those surveyed said that they received estimated bills frequently or very frequently; 1 in 5 believe that the estimated bills they receive are very or fairly inaccurate; less than 1 in 3 people said that their meters were read quarterly less than a half (48%) check the accuracy of the energy bills they receive.
United States Telephone bills `Consumer confusion over telephone bills has significantly contributed to the growth of slamming (changing a consumer‟s telephone provider without his/her permission), cramming (adding charges to a consumer‟s bill for services he/she did not authorize), and other types of telecommunications fraud. To help consumers detect fraud, the FCC has asked phone companies
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Highlight new service providers and indicate the date the provider change was made; Contain full and non-misleading descriptions of charges; Identify those charges for which failure to pay will not result in disconnection of the customer‟s basic local service; and Provide a toll-free number for customers to call in order to lodge a complaint or obtain information. If the customer does not receive a paper telephone bill but instead accesses that bill only by e-mail or over the Internet, the telephone company may provide the customer with an e-mail address or Web site for inquiring about charges. The FCC has also determined that telephone companies should use standardized labels on bills when referring to certain line item charges relating to federal regulatory action, such as local number.‟ 89 The National Association of State Utility Consumer Advocates (NASUCA) has launched a campaign, called `Truth in Billing‟ – there is a pending petition to the Federal Communications Commissions on hidden phone fees. Extracts from press release: 90 `Silver Spring, MD – August 13, 2004 – Today, the National Association of State Utility Consumer Advocates (NASUCA) told federal regulators that the telephone industry‟s arguments defending the use of surcharges and line items do not justify the hundreds of millions of dollars these misleading fees will cost customers this year. NASUCA filed its response with the Federal Communications Commission (FCC), which a month ago received scores of arguments by telephone companies and their trade associations seeking to continue the charges. “Since the nation‟s consumer utility advocates called for the misleading surcharges to be banned, the telephone industry has thought up numerous defences which fail to address why today‟s bills lack the truth and clarity that customers deserve,” said David Bergmann of the Ohio Consumers‟ Counsel and Chairman of Nausea's Telecommunications Committee.
89 (Source: Federal Communications Commission website) 90 (Source: National Association of State Utility Consumer Advocates website)
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In March, NASUCA asked the FCC to ban long-distance and wireless carriers from imposing misleading surcharges on customers‟ monthly bills. Many of the current fees, by their name and/or description, imply that they are required by the government. In actuality, any government, law or regulatory agency does not mandate them. ―Telephone companies have even suggested their surcharges are ‗political speech‘ protected by the United States Constitution. We believe consumers deserve an accurate monthly bill, not an invoice full of invented charges serving to boost a telephone company‘s bottom line at our expense,‖ said Bergmann. ―We renew our call for these deceptive charges to end, and for customers to be able to truly compare the prices of services offered by the telephone companies.‖ NASUCA argues that only surcharges specifically authorized or ordered by the government should be allowed on bills; any other amounts now included in company-imposed surcharges are operating expenses that telephone companies can recover in their per-minute rates or the price of their monthly calling plans. Telephone companies do not usually advertise their “regulatory” or other fees when they advertise low-priced monthly plans or per-minute calling rates, and bury any explanation of the fees in the fine print on bills and websites. Not until after receiving their monthly bills do most consumers discover the full cost of their telephone service. NASUCA said that virtually any business could keep attracting customers if it advertised low prices but added surcharges to customers‟ bills and labelled them as “regulatory.” In its March request, NASUCA provided the FCC with numerous examples of misleading charges.‟
Energy Billing issues accounted for around half the total electricity complaints received by the Public Utility Commission of Texas in 2003. This represented an increase of nearly 37% over the previous year. 91
Consumers International Consumers International has been active for a long time within ISO TC 224, Service activities relating to drinking water supply systems and wastewater systems - Quality criteria of the service and performance indicators. This involvement has given CI the opportunity to deal with standardization issues related to water services provision and to observe the challenges involved providing water and wastewater services to all types of populations. Consumers International is joining efforts with Public World, a non-profit consultancy, and two other non profit organizations:, One World Action and Public Services International to develop a new international accord called the "General Agreement on Public Services", a proposal for a convention to address the problems of public service provision not adequately covered by
91 (Source: Regulatory Compliance Services `2003 Year End Scorecard‘ on electricity complaints received by the Public Utility Commission of Texas. Source recommended by contact at the Consumers‘ Union, Texas) December 2004
169 CHESSS the current WTO agreements. While it deals with water rather than energy utilities, CI's experience echoes the problems that COPOLCO members have mentioned in the survey. According to the CI report to a meeting in Berlin of ISO TC 224, "The world needs international conventions to be developed for water services for essentially two reasons. Firstly there are international players, be they companies or funders, NGOs, federations of unions or consumers. But imbalances between the global scale of some funders (and private providers) and the local scale of governance, consumers and workforces leads to mistrust, misunderstandings and even to breakdowns as has happened just this year in the case of major water contracts in La Paz -El Alto, Dar-es-Salaam, and Buenos Aires. There is public speculation about the viability of other major contracts. 74% of private water contracts in Latin America were renegotiated or terminated between 1985 and 2000 and over 40% of private water contracts are considered to be „distressed‟ at present. Private investment has collapsed since 1997 and in recent years has been running at about half the level of that year. Thames Water, the third largest private water operator in the world has withdrawn from service provision in China." The report goes on to mention transparency and disclosure of information to be among the most important items to include in any such agreement. An International Standard on network services billing would be a valuable tool to underpin this or any other such agreement, and would aid significantly in building confidence between supplier and customer. For more information, see www.consint.org (programmes, public services).
European developments: The European Union has already brought into effect one piece of legislation (The Fuel Mix Disclosure Directive 2003/54/EC) that requires energy suppliers to provide information on the sourcing of electricity generation with or on their bills to their customers. It is further consulting on another Directive (the “End User Directive”) that amongst other things will require more precise and understandable indications of actual consumption on bills. An extract of the Directive appears below: Draft Article 13: Paragraph 2 - billing reflects: o actual consumption; o in understandable terms; o is carried out frequently enough to enable consumers to regulate their own energy consumption. o Paragraph 3 - in or with bills, as appropriate: o current prices and actual consumption; o year on year actual comparison of consumer‘s usage; o comparison with average or benchmarked user; o environmental impact of usage;
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o contact information.
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ANNEX F: The CHESSS Initiative – Key Concepts Survey (Extract in respect of Module 6)
The information reported below is an extract from the report on responses to a short opinion seeking questionnaire sent to stakeholders having a known interest in the outcome of the CHESSS Initiative, after the CHESSS World Café discussions The complete response analysis is available as part of the report on Module 4.
352 previously engaged stakeholders were requested to complete the questionnaire of whom 39 (11%) responded.
Responses were provided as from: Service Providers: 17 (43%) Service Customers: 10 (26%) Service Intermediaries (e.g. government/ local government) 12 (31%) and with 24 of the 39 providing name/ contact details
Of the 39 respondents, 16 (41%) had attended one or more days of the CHESSS World Cafés.
10. Customers would understand their bills better if broadly uniform layout and information content were used for all bills across all sectors. Strongly Disagree Neither Agree nor Agree Strongly Disagree Disagree Agree 2 (5%) 6 (15%) 10 (25.5%) 11 (29%) 10 (25.5%)
Negative Neutral Positive
Fig: 5 Uniform Billing Format Q8
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ANNEX G: Proposal for a CENELEC Workshop Agreement (CWA) on interoperability of equipment and appliances in the home or work space.
The development of future standards in this subject area should be based on work already in preparation. Two significant examples of this are summarized here.
G: 1 The Application Home Initiative (TAHI), formed in 2001, was set up to facilitate the interoperability between the new enabling technologies that deliver services to customers in their homes or at their places of work.
Industry experience of markets for networked services and applications for the home has shown that individual applications and services are difficult to justify in cost terms. TAHI was formed in 2001 to address this and is committed to resolving the problem by facilitating delivery of a ‗bundle‘ of services across a common infrastructure that will enable the costs of support and delivery to be shared across the participating service providers. It also aims to provide a uniform, intuitive user interface that will lower the barriers to acceptance.
It is apparent that individual organizations do not have the resources, the spread of competencies or access to all the technologies and methodologies required, to grow the market alone. Indeed, even if they did it is questionable whether the resulting offering would have the credibility necessary for general acceptance.
Its various projects have addressed many of the challenges of delivering multiple services with greatly differing requirements across many different networks to a wide range of customer types. One significant challenge currently facing TAHI is that of interoperability: the ability of two or more entities to communicate and co-operate, despite differences in the implementation language, the execution environment and/or the model abstraction.
Until relatively recently, most electrical and electronic systems (outside of highly specified systems such as avionics) were self contained and were not able easily and did not need to communicate with one another. This situation is rapidly evolving and as a result TAHI has decided it must lead the development of new consensus-based standards, developed rapidly to keep pace with new market developments and applicable across all of Europe, in order to resolve the key challenges its members are facing in bringing new ―Smart‖ house technologies to the market.
The objectives for the CWA have been identified as
1. Provide a framework that will enable all services, applications, networks and devices delivered to the home and/or commercial
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premises to interoperate either directly or within pre-existing protocols, networks, specifications and standards
2. To provide solutions capable of meeting three levels of Interoperability requirements, within the context of ―Smart‖ home technologies: a. Ensure that the market can operate within the regulatory framework, yet provide suppliers and consumers choice b. Achieve a basic level of ―Smart‖ metering c. Allow ―Smart‖ metering solutions to work with other solutions that may be found in the home and may be desirable to install (e.g. automated energy efficiency solutions)
3. To develop a framework that can: a. Clearly define the interoperability requirements for systems, networks, equipment and services necessary for the efficient, effective delivery of services and applications of all kinds, into homes of places of work b. Provide the necessary information to describe and operate the elements of existing systems to create an end-to-end architecture capable of transferring information without restriction where required, to the end that services, products and solutions can be designed in a manner that does not require consumers to acquire more hardware than is necessary and that can be developed using solutions from multiple suppliers c. Be capable of ready updating to accommodate subsequent development of participating, coordinating systems
4. A standardized framework that is: a. Developed and agreed by key stakeholders across Europe b. Non-proprietary (i.e. not owned by a stakeholder with a vested interest) and royalty free
G:2 The European Home Systems Association (EHSA) is an open, non-profit making organization formed with the aim of supporting and promoting European industry in the field of Home Systems. Its members include several major manufacturers with large R&D facilities as well as representatives from building and installation, architects, electrical utilities, connection experts and suppliers of telecommunication systems. All have expertise, a contribution to make and a shared vision of co-operation to achieve a common standard and shared experience.
EHSA is committed to the promotion of the EHS specification, standardization and encouraging harmonization in Europe and internationally. EHSA's objective in this respect is to stimulate the use of the EHS specification and to promote co-operation and understanding between all parties interested in EHS, to encourage and support the introduction of integrated interactive home applications. EHSA are further committed to ensuring the proper use of the EHS specification, providing for certification and encouraging international standardization and harmonization.
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Inter-operability: EHSA recognises that this need is fundamental in home automation and smart house development. This acknowledges the expectation that appliances developed independently by different manufacturers, should be able to co-operate, thus ensuring that customers remain free to choose the product brands they want.
EHS specification and architecture EHSA members have participated in the development of a specification that has been defined in order to facilitate communication between home appliances and their sharing of each other's resources. The EHS protocol is based on a shared communication system and on unambiguous definitions of device functionality. The specification describes all the necessary communications aspects, completely. The EHS communication model follows the structure of the Open Standard Interconnection (OSI) reference model. EHS specifies the physical layer, the data link layer, the network layer and the application layer. Due to the fact that the message length is limited, the dialogue session is short and the command language is managed by the application layer, the transport, session and presentation layer has been omitted. The specification is open for future evolution. Introduction of new physical layers and new application domains are possible. Evolution of the specification to Building Automation is on-going (Momentum and Horbit project); One recent enhancement of the specification is the integration of a new Twisted Pair medium named TP0 identical to the BatiBUS physical layer. The specification provides "PLUG & PLAY" capabilities. At the beginning, some key market requirements for a home automation system have been identified. These key market requirements have been implemented in the EHS specification and provide a set of tools at application level which can be used to design a "Plug & Play" system. Designing a "Plug & Play" home automation system with EHS gives the following benefits to the customer. Expandability, Flexible positioning, Automatic configuration: In a Home Automation system, appliances can be located elsewhere in the network and can be moved easily. The configuration of the network can be done easily either automatically (Plug & Play) or manually to respect different zones in the home. For example, a heating control system has to take into account different heating zones (living room, bedroom etc). A Home Automation system based on EHS is easily expandable. New applications and new physical layers can be added at any time in an existing network. This modular functionality allows the customer to start with the units needed for the application and to add more units when he wants. Inter-working of applications: Different applications are able to communicate over the same network without interfering each other. For example, an energy management system do not interfere and disrupt a security system. Units can also use the facilities located in other units. The architecture of EHS network is based on the notion of controllers and devices sharing application domains. The controller controls the application and provides features and intelligence of the application such as resources monitoring, control algorithm or decision making process. A controller defines one application domain but can cover several application domain by sharing their resources.
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Devices provide and manages application resources. For example, an electrical heater manages the heating resource, a thermostat manages a threshold temperature. A device belongs to a single application domain but may be shared or controlled by several controllers. Each device is described by a Device Descriptor (DD) codified by the specification. Thus, devices having the same DD are interchangeable. Controllers and devices may establish a logical link, named enrolment, between them to define an application domain. A device capable of being enrolled by a controller is classified as a complex device.
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ANNEX H: Smart metering – the real energy benefits
Abstract from a paper by Howard Porter, BEAMA
Smart metering is now discussed as a real opportunity for carbon reductions in many energy markets across the world. What is the scientific basis for this enthusiasm?
Smart metering can be defined as delivering more data to consumers and energy companies than can be delivered by standard metering and billing systems. This probably covers the main perceived benefit but there are many other potential uses of smarter metering systems, including the integration of household renewables, and demand response mechanisms. This paper explores how smarter metering can provide the key to the efficient use of energy in buildings.
Why the interest? The primary reason for the high level of interest in smart metering is the requirements brought by the ‗Energy End use and Energy Services Directive, published in the European Journal in May 2006 [1]. Article 13 of this lays out a number of requirements for the accurate reflection of the customer‘s actual energy consumption and on the time of use. It also covers a number of requirements for more regular and accurate billing.
What is smart metering? There are as many interpretations of what smart metering is as there are organizations espousing their opinions, however, from a UK context, a set of guidelines for what smart metering is has been developed and has received reasonable acceptance. These guidelines are perhaps transferable to other energy markets, but some elements are a result of the particular market structure in the UK.
Market structure has a much greater impact on the type of technical solution that can be adopted in each country, than any other types of energy efficiency measure. This needs to be taken into account all through the decision process for designing, and implementing smart metering systems.
The guidelines for smart metering systems for the UK follow the following model [2]: • A smart metering system provides a level of service above and beyond measurement of consumption. A smart metering system provides significant additional functionality for suppliers and end use customers. The guideline is based on a fundamental set of capabilities (A,B,C) plus a range of optional functions that a smart system could include. A smart metering system must include all fundamental functions plus at least one of these optional functions. The guideline allows for a number of technology solutions including single unit, multiple units and communications options. The guidelines can be used to describe a wide range of smart systems which can meet a number of policy and commercial objectives.
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A system for metering any residential energy or water supplies that:
A Measures consumption over representative periods to legal metrology requirements B Stores measured data for multiple time periods C Allows ready access to this data by consumers as well as by suppliers or their agents and at least one of the following functions: Provides analysis of the data and a local display of the data in a meaningful form to the consumer or as part of a smart housing solution. Transfers consumption data to the supplier or his agent for the purposes of accurate billing without requiring access to the home. Provides a payment facility for one or more supplies. Measures, and records information as to the continuity and quality of the supply and provides this and other data to the Distribution Network Operator for purposes of system operation, planning, and loss assessment. Permits remote control (e.g. interruption and restoration) of specific consumer circuits or equipment for the purposes of agreed load management. Allows display of price signals for different time periods as part of a cost reflective tariff for the purposes of demand response. Allows for remote change of tariff, debt or other rates for utility charging without requiring access to the home and, where a consumer has micro generation equipment installed: Provides a facility to measure energy export and/or generation, where required for official purposes.
The basic set of functions A,B and C are required by any smarter metering system, as these produce the basic data that can be used by utilities or customers. Without this type of basic meter, almost all of the benefits of smart metering cannot be delivered. For example in the UK consumers often only receive accurate reads in their bills every 6-9 months. The maximum number of accurate reads in the UK can only be 4 per year even if meters were read accurately every quarter. Clearly with this infrastructure smarter metering is difficult to roll out, and many of the benefits would be lost.
The second section of the guidelines covers the additional features that could be added to the basic meter either individually or as a package. Each one would deliver benefits for either the utility and/or the consumer, in many cases to the country in general, and the environment.
Local displays Traditionally, utility meter readings are not easily accessible for consumers, the information is displayed in KWh, often shown as a cumulative total, with no ability for the consumer to access historical, or even instantaneous information. The
178 CHESSS positions of the meters are almost always determined by where the electricity or gas supplies come into the building and are not usually accessible for building users. The result is that the majority of consumers, firstly, may have difficulty in locating their meters, and, having found them, would not easily understand the information displayed on the existing meters. This historical use of meters has reflected the market requirements – the accurate measurement of KWh, the accurate billing of this energy use, and the settlement of the energy markets for utilities as well as the technical capabilities of the first mechanical and electromechanical meters. There has been little historical need for consumers to have a ready access to their metered energy use.
The much higher political importance of climate change and security of supply in all markets in Europe and worldwide is now questioning the lack of connect between consumers and their energy use. Many believe that the most effective way to increase the customer‘s awareness is to provide them with in- house displays of readable, easy to comprehend energy use information. Examples of these displays have been used in various markets in the world, primarily the US and Australia, although home displays have been used in Northern Ireland with some success [3]. Many observers think that once the consumer can see the changes in their energy use instantaneously they are much more likely to act to reduce that consumption, in particular in the present and expected future higher fuel pricing environment. A recent study carried out for Logica [4] by the Future Foundation asked consumers the estimated savings that they feel they could deliver by the use of a smart meter ―If you had a smart meter, by how much do you think you would reduce your energy bill?‘‘ The results showed a range between 0 and 34% with an average of 15%.
A 15% reduction in energy use across electricity and gas would meet the UK‘s targets for the domestic sector. Making this potential a reality, though, is not straightforward, but evidence from world markets, with differing climatic, and market conditions indicates that energy reductions of between 5-10% fairly common. The actual energy reductions from the availability of easy to access data in customers‘ homes is very difficult to quantify. Significant work is still required to precisely quantify what the real benefits in this area are, and, further, on how to maintain benefits over the longer term. However this need for exact savings figures must not be allowed to hold up the deployment of effective solutions for smarter metering and customer displays.
Accurate Billing In an era of low energy prices, accurate billing for many consumers has not been an issue high on their list of concerns. However, for a significant minority of society (3.5 million) in the UK, the ability to budget via pre payment metering systems has been a great benefit. What these consumers have had for many years is a direct link with their energy use and their billing system. These consumers have received accurate billing for many years, but the vast majority of customers have had estimated bills in the main. Additional problems in a free utility market like the UK, arise when a culture of estimated bills is combined with a customer change of supplier. Energywatch, the UK
179 CHESSS gas and electricity consumer watchdog, has catalogued the significant problems that very often occur when customers change supplier. The main problem results from the long term use of estimated bills. In summary, the standard of billing systems in the UK and some markets compared to comparable utilities such as telephony is very poor.
Smart metering systems can be used to significantly improve the billing for all consumers. This could be achieved by just mandating accurate quarterly or monthly reads, as is now the case in Sweden.
The example from Sweden shows that as soon as there is a need for more regular and accurate reads automated meter reading becomes economically viable. Once automated reading is in place combined with the basic data sets available from meters, bills can be designed and presented to consumers in many different ways that allow information to be understandable so that it can be acted upon. Other information can also be included on these new bills including environmental information and the sources of electricity (nuclear, gas, renewable etc).
As well as providing richer information to go on the utility bill, smart meters can, in principle, provide a data stream directly into the house. This data can have a higher resolution than the utility billing without swamping the data processing systems of the Suppliers. Taking data directly off the meter also means that the information can be real time, much increasing its value and effectiveness.
Recent developments in domestic communications provide paths for the data and destinations. For instance, the data can be transmitted via WiFi, Bluetooth, PLC, Ethernet to a standalone display, the TV or a home pc. All of these destinations allow the data to be brought somewhere convenient for the customer. Better billing can, when combined with in-house display contribute to customer awareness of energy and environment and help them to make reduction decisions. Information alone will not of course deliver energy savings, however once consumers are aware of their usage, in particular in times of increasing energy costs, many observers believe they are much more likely to reduce usage.
The likelihood of this will almost certainly increase if traditional energy efficiency advice is adapted given with the knowledge that consumers are aware of their energy usage.
Load management The term load management has been used in the UK for many years, but is probably known in other markets as demand response. The benefits of allowing consumers and /or utilities to change usage patterns as a result of variable tariffs has been demonstrated in many world markets, primarily the US and Australia. How these benefits manifest themselves varies in different markets, but a shifting of energy usage from peak periods is seen in almost all examples, and in many cases the energy usage does not increase to the same levels at other lower usage time periods. There is still a very current
180 CHESSS debate as to the extent to which demand response methods lead to carbon emission reductions, either via reduced demand or the reduction in use of high carbon intensity generation plant at peak periods. The benefits in terms of security of supply are more clear cut.
Load management can have other effects if combined with the use of smart appliances, building services and household renewables. The ability of a washing machine, for example, to only operate when there is a low carbon electricity supply available can increase the carbon abatement possibilities significantly. This is particularly the case when household renewables are available locally(?), and their output can be matched to the use of, for example, appliances such as washing machines.
To achieve any of these load management solutions the basic meters installed in the UK and elsewhere must be upgraded at least to the minimum levels in the guidelines.
Integrating household renewables Smarter metering can play an important role in the widespread take-up of household renewables.
Firstly, it is impotent that the customer for these technologies can easily see the contribution that their solar generator or wind turbine is making. This is often not provided with the renewable technology, and is remote from the overall energy usage information on the utility meters. If most homes have customer display units, it is likely that these will be combined with other display equipment, such as heating controllers, and a logical extension would be to show renewable generated data on these units as well.
In addition the electricity network needs to know what the output of household renewables are for the management of the system, to balance the settlements system, and to claim any appropriate renewable certificates. Very often these important aspects of household renewables are forgotten, but the roll out of smart metering systems can provide cost effective methods to maximise the contribution that these technologies can make.
Summary The examples given of where smarter metering systems can assist the objectives of carbon emission reduction, better billing for utilities and customers, or integrating smart appliances and renewables are the main ways in which better metering can help Government, industry and consumer objectives.
There are others concerned with the management of data in the back office operations of utility companies, and debt recovery, and revenue protection. None of these benefits can be achieved with the installed metering base in the UK, and in many other European and world markets. However the implementation of smart metering solutions to meet only one of these benefits may exclude delivery of others. Therefore there needs to be a co-ordinated
181 CHESSS approach to the development of policies for smart metering in different world markets.
[1] Directive 2005/…/EC of the European Parliament and of the Council on Energy End-Use Efficiency and Energy Services
[2] Industry Metering Advisory Group, OFGEM et al, UK Guidelines for Smart metering systems in the UK, 2006.
[3] Owen G, Ward J, „Smart Meters: Commercial, Policy and Regulatory Drivers‟, Sustainability First, March 2006
[4] Logica CMG, Energy Efficiency, Public attitude, Private action, 2006. www.logicacmg.com
Source: http://mail.mtprog.com/CD_Layout/Day_2_22.06.06/0900- 1045/ID189_Porter_final.pdf
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ANNEX I: Interoperability - USA Example
By way of example of what is achievable with currently available technology, the ZigBee Alliance is a group comprised of more than 250 international technology companies working together to enable reliable, cost effective, low power, wirelessly networked, monitoring and control products based on an open global standard.
Companies use ZigBee standards-based wireless platform optimized for the unique needs of remote monitoring and control applications because of its claimed simplicity, reliability, low power consumption and low cost. Using this technology in products is made easy because the network, security and application software layers are already defined. This provides interoperability, backed up with conformance testing specifications to ensure products operate as promised.
Used in the real time control of devices the home network can communicate quickly to execute the user‘s commands across a range of functions. This helps lower device power consumption and keeps radio frequencies clear. Installations range from a single room to an entire home up to 1,850 m2. The key applications supported include lighting, heating/cooling, window shades and security. With two-thirds of residential energy consumption powers heating/cooling and lighting in homes, utilizing home automation can reduce energy usage in key areas. By using ZigBee Home Automation, consumers may reduce their energy consumption without sacrificing on comfort or spending excessive amount of time managing lighting and thermostat settings.
Recently, the U.S. Department of Energy's Pacific Northwest National Laboratory released the results of a year-long study showing that households with digital tools controlling temperature and price preferences saved on average 10% on utility bills. The study also showed that if households have digital tools to control temperature and price preferences, peak loads on utility grids can be cut by up to 15%, translating into $70 billion dollars saved over a 20-year period on new power plants and infrastructure expenditures.
A number of companies are hard at work today preparing products using ZigBee Home Automation. Home Automation networks will be easily installed by home owners, or professional installers, without needing extensive training on ZigBee networks. Because of its standard approach, ZigBee Certified Products using Home Automation will be easily installed. When forming a new network, or scanning to join a network, Home Automation devices scan the radio frequency channels to find the best channel. This improves response times while devices join the ZigBee network, and on average, improves network bandwidth. Built with security in mind, Home Automation includes several security features that prevent unauthorized users or devices from accessing your network. Security is based on keys that can be updated or changed as needed.
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The Home Automation profile contains commands to form and maintain the network, switch devices on and off, and collect devices into a group. The profile also supports storing multiple settings into a ―scene.‖ The opening example of a typical morning in a kitchen is just one way that using scenes can make home life more comfortable, convenient and energy efficient. With ZigBee Home Automation, ZigBee certainly expects to create a new scene in home comfort, convenience, security, and energy savings.
Smart Energy Features
Metering Support: Multiple commodities including electric, gas, water, and thermal Multiple units of measure for international support Battery or mains powered Multiple measurement types including load profile, power factor, summation, demand, and tiers Historical information (previous day, today, etc.) Status indicators including tampering Real-time consumption / production information Ability to record both generation (delivered) and consumption (received) Support for meter-as-gateway and meter-as device on the network
Demand Response and Load Control Support: Scheduling of multiple events Built-in support for customer override Auditing of event enrollment, participation, and other actions Ability to individually or simultaneously target specific groups of devices including HVACs, water heaters, lighting, electric vehicles, and generation systems Multiple control methods including temperature set points and offsets, criticality levels (such as emergency signals) and duty cycling Ability to randomize start and end times to avoid spikes
Pricing Support: Multiple commodities including electric, gas, water, and thermal Multiple units of measure for international support Multiple currencies for international support (using ISO 4217) Support for multiple providers and rates in a single location Support for price ratios and price tiers Support for separate generated (delivered) and consumed (received) prices
Text Message Support: Scheduling and cancelling of messages Ability to request message confirmation Multiple urgency levels Optional message duration for short-lived messages Support for multiple international character sets
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Sample Devices: Meter-integrated or standalone AMI gateways In-home displays including low-cost standalone devices such as refrigerator magnets and energy orbs Programmable communicating thermostats (PCT) Generic load control devices for appliances such as water heaters. lights and pool pumps Smart appliances Electric and plug-in hybrid electric vehicles Energy management systems Range extenders
Security: Support for consumer-only, utility-only or shared networks Automatic, secure network registration using either pre-installed keys or standard public-key cryptography methods Data encryption
Other: Time Synchronization provided by meter integrated or stand alone gateways Compliant with draft OpenHAN standard Designed for easy upgrade and adaptability
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CEN Horizontal European Services Standardization Strategy (CHESSS)
In response to Mandate M/371
Module 7 The specification, sourcing, delivery and quality of business-to-business services
Final Report
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ...... 188 2. INTRODUCTION ...... 190 3. METHODOLOGY ...... 195 4. FINDINGS ...... 199 5. CONLUSIONS ...... 217 6. RECOMMENDATIONS and NEXT STEPS...... 219 7. BIBLIOGRAPHY ...... 225 8. ANNEXES ...... 226 ANNEX A: Survey – Results ...... 226 ANNEX B: Expert Interviews – Results ...... 263
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1. EXECUTIVE SUMMARY The business-to-business (B2B) service sector is the largest and most dynamic sector of the European economy. It is characterised by being highly diverse and by a large number of very small enterprises.
Several concerns have been expressed about the provision of B2B services in Europe including lack of transparency in the market, lack of competitiveness, poor productivity, low international trade, significantly lower provision and use of B2B services in some EU Member States compared to others etc.
The objective of this study has been to identify how generic standards could contribute in solving some of these challenges and to analyse how generic standards can be developed for B2B services.
The study has included desk research, a European-wide survey with questionnaires, four European World Cafés and a series of expert interviews.
Within all research strands we have identified a clear need for horizontal standards in the B2B service sector.
Based on the findings, it is concluded that there is a need for horizontal standards in the B2B service sector. In particular, SMEs and customers express a high need for horizontal standards.
Horizontal standards are useful and feasible in a series of aspects in the service lifecycle and a lot of aspects have potential for standardization for at least groups of B2B services including description of the service, contract design, negotiation procedures, organizational and technical interfaces, documentation, complaints management etc.
The most important benefits of horizontal standards expressed by the companies (providers and customers) are:
saving time and money (due to a better understanding between customers and providers, a simplification of processes and an increasing efficiency and productivity); improving quality and transparency.
Although a clear need for horizontal standardization was expressed, the prevailing opinion among many companies is that this is not possible across all sectors and all aspects all at once. These concerns were mainly expressed because of the diversity of B2B services which vary from more simple services such as cleaning to very complex and highly innovative services such as consulting or third party logistics.
Therefore, it is recommended to develop a classification of B2B services in a standardization perspective and to identify common elements of B2B services.
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The benefits of such a new classification would be firstly the identification of similar B2B services or at least B2B services that need similar approaches of standardization and secondly it could significantly improve the existing International Classification of Standards (ICS) which does not display the service sector very well at present.
Furthermore, as there are major concerns about the feasibility of horizontal standards due to different legislation in several countries an expansion of the New Approach on the B2B service field is recommended. Of course the New Approach does not exclude services at the moment, however it is not yet fully rolled-out.
Finally a clear organizational framework for future horizontal B2B standardization is recommended which takes into account the particular characteristics of the B2B service sector.
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2. INTRODUCTION
Business-to-Business services (B2B services) – also known as business- related services – constitute the largest and most dynamic sector of the European economy. It is responsible for 22% of all employees and 37% of gross value added. The gross value added of B2B services increased by 33% between 1995 and 2004 – whereas the rest of the European economy rose only by 23% (EU KLEMS92).93
B2B services are services which are provided by companies and purchased by companies and can therefore be separated from B2C services which are purchased by household consumers. Services purchased by government (B2G) are very similar to B2B services but were not considered specifically within this study.
B2B services are very important due to not only their pure quantitative dimension but their qualitative dimension. They are present in every stage of the value chain and are a fundamental necessity for the performance of any enterprise – both for the manufacturing and the service sector itself. They are essential for enterprises‘ ability to operate, function and compete.
The B2B service sector is very dynamic with both a lot of enterprise creations and cessations. Nearly 60% of all new European enterprises begin in the area of B2B services94 .
Furthermore, the sector can be characterised by a very large number of very small enterprises. 31% of all employees are working in enterprises with less than 10 employees (compared to 13% in manufacturing)95.
Within the EU Member States B2B services account for substantial different shares of value added. The highest shares can be found in the Netherlands (65%) and UK (61%) – the lowest are in Portugal (45%) and Italy (48%) (data for EU 15)96. In most of the new Member States this number is even lower.
The recent growth of B2B services is often explained by the outsourcing of service activities previously produced in-house to reduce costs, to increase flexibility and to concentrate on the core business. But even more important are the rising challenges for enterprises in globalised, highly competitive and dynamic markets. In reaction to this demanding environment they need the
92 EU KLEMS. (2007). Growth and Productivity Accounts. March 2007 Release. 93 According to COM (2003) 55% of all employees belong to the B2B sector. This number was for the EU 15 in 2001 and includes the trade sector which includes retail (B2C). 94 COM - Commission of the European Communities. (2004). Business-relatedservices: a key driver of European competitiveness. An enhanced economic analysis. Brussels (Enterprise DG – Working Paper) 95 Ibid. 96 Ibid.
190 CHESSS input of specialist B2B service providers who themselves can realize advantages regarding specialisation and rationalisation97.
The sector of B2B services is highly diverse. It reaches from low-value cleaning services to high-value management consultancy and from labour- intensive call centres to capital-intensive distribution of electricity. Some need high interaction with the customer (like human resource management) whilst others can be delivered more or less without direct contact (like translation services).
The definitions of which services belong to B2B services often differ. For our study we are influenced by the definition of COM98 but differ from it slightly. In accordance to the NACE classification (code in brackets) we define B2B services as follows:
Electricity, gas and water supply (40-41); Transport and storage (60-63); Communications (64); Financial intermediation (65-67); Real estate (70); Renting (71); Computer and related activities (72); Research and development (73); High-value business services, i.e. advertising and management consultancy (74.1 – 74.4); Other business services, i.e. security and cleaning services (74.5 – 74.8); Product-related services (not reflected in NACE).
Compared to COM99 we excluded the trade sector (50-52) as this sector includes retail which we feel cannot be classified as B2B services.
In addition we included product-related services. The problem with these product-related services (e.g. maintenance or assembling) is that they are not accurately reflected within the NACE classification. Most of them are hidden in the manufacturing sector as most of these services are provided by the manufacturing companies.
Identifying the most important B2B services is challenging because:
some of the above mentioned sectors are both B2B services and B2C services (e. g. transport or communication);
97 Bagchi-Sen, S, Sen,J. (1997). The current state of knowledge in international business in producer services. Environment and Planning A, Vol.29, pp.1153-1174 and Toivonen, M. (2004). Expertise as Business. Long-term development and future prospects of knowledge- intensive business services (KIBS). Helsinki University. Doctoral Dissertation. Helsinki. 98 COM – Commission of the European Communities. (2003). The competitiveness of business-related services and their contribution to the performance of European enterprises. Brussels. (COM[2003] 747 final). 99 Ibid.
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a complete quantitative comparison is not possible because there is less statistical data about product-related services; it is not only the quantitative dimension that matters. Often the qualitative is much more important. For example management consultancy or research services have less relevance in terms of turnover but are highly relevant for the competitiveness of their customers.
Nevertheless in Figure 1 the gross value added and the number of employees in 2004 is shown for the EU 25. The biggest gross value added can be seen for real estate, financial intermediation and transport and storage (all are not pure B2B services). The highest number of employees can be found in the other business services (like cleaning and call centres), transport and storage and business services (like advertising).
B2B Services in Europe (Gross value added and Employees in 2004) 1.200 9.000 8.000 1.000 7.000 800 6.000 5.000 600 4.000 400 3.000 2.000 200
1.000 Numberof employees thousands) (in
0 0 Grossvalue added (in billionsof PPP-convertedEuros)
Renting (71) Real estate (70)
Communications (64) Gross value added Transport & storage (60-63) Research & developmentBusiness services (73) (74.1-74.4) Financial intermediation (65-67) Computer & related activities (72) Number of employees Other business services (74.5-74.8) Electricity, gas & water supply (40-41)
Figure 1: B2B Services in Europe (Gross value added and Employees in 2004) (Source: EU KLEMS March 2007)
There are several concerns about the provision of B2B services in Europe which were expressed in COM100, EFBRS101 and Pilat102:
There is a lack of transparency in the B2B service market and the knowledge about the sector and the markets is scarce, hampering the decision making of enterprises and policy makers; Market integration and competition in B2B service markets is not vigorous enough to ensure and strengthen their competitiveness;
100 COM, 2003 and 2004. Op.cit. 101 EFBRS – European Forum on Business Related Services. (2005). Report 2005. Brussels. 102 Pilat, D. (2001). Innovation and Productivity in Services: State of the Art. In OECD (ed.) Innovation and Productivity in Services. Paris, pp. 17-56.
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The inputs necessary for the production (labour qualifications, integration of ICT and capital) are lacking in quality and quantity; The outputs from the business-related services enterprises are not sufficiently transparent, valued or documented; B2B services in Europe show a relatively poor productivity performance (comparing to the manufacturing sector as well as to the service sector in the US); The international trade of B2B services is significantly lower than in manufacturing. As the proximity to the market is much more important for service companies the multitude of internationalisation has been conducted by foreign direct investments (FDI). But even the FDI are lover than average; The provision and use of B2B services is significantly lower in some Member States (especially less developed regions) which negatively affect the economic development in the European Union and the convergence processes in the new Member States; Co-operation and networking play an ever greater role in services which could be hampered by interface problems.
According to COM103, EFBRS104 some of the above mentioned challenges could be addressed by the development and use of voluntary standards.
An even greater benefit was assumed for the development of horizontal meaning cross-sectoral standards in the B2B service sector.
The overarching objective of module 7 was to establish the extent to which generic standards can be developed for B2B services. This overarching objective could be split into seven subordinated objectives:
1. Identify the scope and boundaries of business processes across the value chain, relevant sourcing, delivery and quality of business services including industrial and economic needs and requirements analyses with a specific focus on standardization; 2. Analyse which services European businesses require; 3. Categorise those identified services in the light of business importance; 4. Identify and analyse both formal and informal national, sector-specific standardization activities to establish their applicability to a pan-European situation; 5. Identify and prioritize services with most potential for standardization; 6. If feasible, recommend how a horizontal framework of standards for the sourcing, delivery and quality of business services can be developed and implemented; 7. Develop proposals for tools that can support the standardization of business-to-business services.
During the first steps of the research it became obvious that in order to ensure comprehensive conclusions on the feasibility of horizontal standards for B2B
103 COM, 2003 and 2004. Op. Cit. 104 EFBRS. Op. cit.
193 CHESSS services, both Service Providers as well as Service Customers have to be considered and integrated.
Module 7 was conducted by three partners:
DS Danish Standards (module leader); DIN German Institute for Standardization (module partner); FIR Research Institute for Operations Management at RWTH Aachen University (subcontracted research partner).
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3. METHODOLOGY
The research of Module 7 is based on quantitative and qualitative methods. Between February 2007 and April 2008 we conducted:
Desk research; Survey; World cafés; Expert interviews.
3.1 Desk research
The first part of the desk research focused on identifying those B2B services that are the most important in Europe. For this we used statistical data and secondary literature.
This was followed by the identification of existing standards – formal as well as non-formal de facto standards. This research was primarily based on Perinorm and on Internet searches by keyword searching via Google and other search engines.
Research via the Internet has, however, a series of limitations. First of all there is a language barrier as many web sites are only available in the local language, e.g. Estonian or Spanish. In these cases the Internet research will typically not find the relevant information. Secondly it seems that a lot of information is not freely available on the respective web sites. In some cases a password is needed or you have to be a member of the respective association.
Within this desk research for identification of existing standards we primarily concentrated on non-formal de facto standards like company standards, guidelines etc., as research on formal standards (ISO, CEN etc.) had already been performed under the Mandate M/340 (CEN/BT/WG 163, No 22, 2005 [incl. Annex 1 to 7]) and was in addition part of the CHESSS module 1 research. The results from this existing research were, however, included in our studies e.g. in the comparison of formal and non-formal standards in different sectors.
The regional scope of the research was mainly Europe but some major standards from USA, Canada and Japan were also included.
The main objective was to give an overview of standards that are used in the field of B2B services.
Furthermore, we analysed if there is a connection between the largest European service areas in the trading statistics and how propagated standardization is.
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Finally, we compared the formal standards with the non-formal standards to discover if there are common horizontal aspects in the documents e.g. terms and definitions etc.
The results of the desk research were used in the planning of the further work within the module – the surveys and the interviews - in order to find out if there is a need for new horizontal standards.
3.2 Survey
Between June and September 2007 we conducted a European-wide survey. More than 25.000 B2B service providers and customers were invited by e-mail to participate in the online survey. In addition to the e-mail invitations we had announcements on several websites (CEN, CHESSS, national standardization bodies and relevant communities like www.dl2100.de, a German community for service scientists and practitioners).
We made two different questionnaires available: one for B2B service providers and one for B2B service customers. These two questionnaires were as similar as possible allow for the comparisons of the results out of a provider and customer perspective respectively. Nevertheless slight differences were necessary e.g. "Which kinds of services are provided by your company?" would be less suitable for the customer questionnaire.
The general topics addressed in the questionnaire were as follows:
Questionnaire Provider Questionnaire Customer Characteristics of the company (company size, sector, …) Characteristics of the services which are Characteristics of the services which are provided purchased General use of standards in the company Standards in the service delivery process - before, during and after the service delivery Feedback
We received 145 returns in total (response rate below 1%). This response rate is not satisfying but there are several reasons for this. Firstly the large numbers of questionnaires now routinely sent to companies tends to mean lower response levels overall. Secondly the topic addressed in our survey is very complex ("horizontal B2B service standardization") and thirdly the survey was conducted in English which can be a barrier for some participants.
Within the returns there is a clear overrepresentation of Germany (61%) and Denmark (12%). This is partly due to a lack of contacts in form of e-mail- addresses from other countries – about 40% of e-mail addresses were from Germany and about 10% were from Denmark.
This was largely due to the fact that it is no longer possible to buy e-mail addresses from specialist companies and other national standardization bodies are not allowed to release their databases. Nevertheless the project partners and other national standardization bodies sent around our invitations
196 CHESSS to their e-mail contacts (e.g. EVS – Estonian Centre for Standardization, SN – Standard Norway and SIS – Swedish Standards Institute sent out more than 1,000 invitations each).
In spite of this overrepresentation, especially of Germans, the survey results are valid for Europe as a whole. This was verified by several tests which all showed no significant differences between the answers of Germans and those of people from the rest of Europe. Three of these tests are shown in slides 7 to 9 in Annex A.
3.3 World Cafés
Within each of the four World Cafés there was a session on Module 7. For the methodology of the World Café please see the methodology chapter in the main project report.
The two questions for Module 7 were as follows: 1) What characteristics are common to the majority of B2B services? 2) How could both business service providers and their customers benefit from horizontal standards?
The objective of the first question was to identify clues for the feasibility and potential of horizontal standards (the more common characteristics there are the more feasible horizontal standards become). The second question aimed to identify the need for horizontal standards (the greater the benefits the greater the need).
All contributions were collected, structured and analysed. Questions for the analysis included:
What aspects were mentioned for each of the two questions? How often were the several aspects mentioned? Were there similarities between the groups? Were there significant differences between countries? Did the answers support results from other research strands or were they contradictory?
3.4 Expert interviews
Between July 2007 and January 2008 34 interviews were conducted with experts in the field of service standardization. The experts were from all over Europe but this time there was an overrepresentation of Denmark and a slight overrepresentation of Germany:
Denmark (13); Germany (6); Austria and UK (3 each); Estonia and international companies (2 each); Bulgaria, Netherlands, Switzerland, Slovenia and Sweden (1 each).
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The overrepresentation was due to the fact that it was very difficult to get interview partners from other countries – especially if the interview was conducted in English. However the survey shows that there were not significant differences for Germans and people from the rest of Europe. In addition, the overrepresentation of both – Germans and Danes – can be compensated by the fact that only a few Germans have been to the World Cafés and that the workshop in Copenhagen was more a Scandinavian one than a purely Danish one. All in all the overrepresentation of Germans and Danish has not adversely affected the study as a whole.
The interviews with experts themselves were conducted by the means of an interview guideline which again was slightly different for customers and providers respectively.
The general topics addressed in the interviews were as follows:
Interview Guideline Provider Interview Guideline Customer The process of trading in B2B services Environment of the company Environment of the company customers – services – markets providers – services – markets General us of standards application – impacts – difficulties Standards in the service delivery process before, during and after the service delivery
The interviews were analysed quantitatively as far as possible. The qualitative information which is the key resource of expert interviews was structured and analysed. This was mainly done question by question.
The focus of the expert interviews and its analysis was to get more detailed information than it was possible within the survey. Relevant aspects which were considered during the analysis were similar to those questions which were used for the analysis of the World Cafés:
Was there a difference between the customer and the provider perspective? Were there significant differences between countries or between sectors? Did the answers support results from other research strands or were they contradictory?
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4. FINDINGS
4.1 Desk research
The main objective of the desk research was to get an overview of standards that are used in the field of B2B services. The result was used in the further work within the module especially the planning of the survey and interviews.
As the first step the most important B2B services were identified. For many reasons identification of the most important B2B services is a difficult endeavour as stated in the Introduction. Among other statistics we have used the gross value added and the number of employees in different services as an indicator of the importance of the specific services. In Figure 1 (shown in the Introduction chapter) the gross value added and the number of employees in 2004 is shown for the EU 25 for a number of services.
The biggest gross value added can be seen for real estate, financial intermediation and transport and storage (although none of these are pure B2B services). The highest number of employees can be found in other business services (like cleaning and call centre), transport and storage and business services (like advertising).
Regarding formal standards covering the service sector relatively few international standards from CEN and ISO have been published and not all of them are relevant to the B2B sector.
In relation to formal national standards there is – not surprisingly - a distinct excessive representation of standards from the largest CEN countries like AENOR, AFNOR, DIN, UNI and BSI.
Within the services with relatively high importance (Figure 1, Introduction) a number of standards exist, and we experienced that in areas or subjects where formal standards are published (CEN/ISO) both national standards and non formal de facto standards are typically present too. This issue of clustering is further elaborated in the interview section.
In a comparison between the formal standards and the non formal standards in relation to common horizontal aspects in the documents we identified a series of differences in central elements like terms and definitions.
Within for example facility management, maintenance and cleaning a number of formal as well as non formal standards can be found and many of them are to a great extent focusing on the same aspects but with differences in for example, definitions.
These findings indicate a need for and the appropriateness of standardizing horizontal aspects in the service sector.
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The characteristics identified during the research were incorporated in the detailed design of the other parts of the project, the survey, the questionnaires and the World Cafés.
4.2 Survey
Within this chapter we present only a short summary of the main findings of the survey. The whole analysis can be found in Annex A.
Out of the 145 returns 79% were B2B service providers and only 21% were B2B service customers. The participating companies were largely from the following sectors:
Mechanical / plant engineering (21%); Business services (17%); Automotives industry (10%); Construction industry, electronics / EDP, Iron steel (each 8%); Public services, trade (each 6%) and Communication services (5%).
All other sectors were below 5%.
28% of the participants see a high need for horizontal standards; whilst a further 50% see a medium need. Only 17% see a low need for horizontal standards and just 5% say that there is no need given for horizontal standards. The share of B2B service customers who see a high or medium need for horizontal standards is higher than the share of providers (87% compared with 76%) (see Figure 1). The differences between the sectors are high but because of the small number of cases for most of the sectors a qualified finding is not possible.
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How do you estimate the need for horizontal/cross-sectoral standards for the trade in services? Provider Over all Customer Not Not given High given Low 6 % Low 13,3 % 23 % High 18 % Low 5 % 46,7 % 28 % 40 % High 53 % 17 % Medium Medium n=111 n=30
50 %
Medium n=141
Figure 2: Need for horizontal standards
There is a correlation between the size of a company and its articulated need for horizontal standards: The smaller a company is, the bigger the need for horizontal standards (as measured by the number of employees). The Spearman's rank correlation coefficient is 0,30 which is not very strong but it is highly significant on the 0,01-level. This is an interesting finding because usually especially SMEs express a resistance to standards and have a lack of access to standardization105.
We asked for the success factors in the development and implementation of international or European standards in the service sector (without distinction between horizontal and sectoral standards). From the customer perspective the appropriate composition of the committees as well as the involvement of all interested parties at an early stage are the most valid aspects. For providers it is the appropriate composition and the given relevance of the standard content for the target group (see Figure 2).
105 COM – Commission of the European Communities. (2008). Towards an increased contribution from standardization to innovation in Europe. Brussels. (COM [2008] 133 final).
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Success factors in the development and implementation of international or European standards in the service sector are: I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 Appropriate composition of standard 5,23 30 4,75 109 committees and working groups The involvement of all interested 4,97 30 4,55 110 parties at an early stage Mutual approval of established / pre-existing standards 4,63 30 4,49 107 The standardisation activity is initiated 4,53 30 4,45 108 by the future standard users The given relevance of the standard content for the target group 4,73 30 4,66 109
Figure 3: Success factors in the development and implementation of international or European standards in the service sector
Asked for the problems which may occur when developing or implementing international or European standards the most essential aspect were the different legal requirements in several countries. A similar result has been found in module 3 regarding the safety of services. The last important problem identified was cultural barriers.
Going into more detail we divided the questions alongside the service delivery process (see slide 16 in Annex A). In the following paragraphs we highlighted only the most interesting and most relevant findings on an aggregated level. For more information please see the slides in Annex A.
In general, standards are regarded slightly more useful by customers than by providers (4,5 compared to 4,3 – for the categories see Annex A).
For customers, standards are the most useful, if they: o increase the process efficiency (5,0); o constitute a reliable basis for certification by neutral bodies (4,9); o define frequently used terms consistently (4,8) ( module 2).
For providers, standards are the most useful, if they: o increase the process efficiency (4,7); o define frequently used terms consistently (4,7) ( module 2); o enable a consistent documentation of the service delivery.
The overall use of standards does not differ between providers and customers (57 compared to 56%). But the phases of usage differ slightly from each other. While providers use standards more in the phases before and during the delivery (60% each) customers use standards mainly in the phases before and after the delivery (59 and 56% respectively).
However the overall need differs clearly between providers and customers (41 compared to 51%). And again there is also a difference between the phases. While the highest need for providers is in the phase before the delivery (45%)
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(especially the negotiation of tenders and service contracts with 47%) for the customers the highest need is in the phase after the delivery (56%) (especially the evaluation of the delivered service with 59%).
If we look at the current use in combination with the further need for standards it shows that both customers and providers show a higher need for new standards if they already use standards (see table 1).
There are sometimes very big differences between standard users on the one side and nonusers on the other side. For example:
Customers who already use standards in the phase during the service delivery have a much higher need for further standards than nonusers (64% compared to 37%). Providers who already use standards in the phase after the service delivery have a significantly higher need for further standards than nonusers (49% compared to 34%).
This is all an indication that the use of standards is of clear benefit for the companies. This benefit is further analysed below.
There are four steps where the need from nonusers is higher than the need from users. For the providers this is the case for the steps tendering and negotiation of tenders and service contracts. For the customers these steps are negotiation of service contracts and tender process.
Provider Customer further no further further no further need need need need standards are used 47 53 57 43 standards are not used 36 64 46 54 Table 1: Usage and further need for standards (average above all phases)
To specify the above mentioned indication of benefit we asked what specific advantages the companies see in the use of standards with respect to the different phases. This question produced some very surprising findings.
Providers as well as customers see the improved quality of services as the major benefit of standards. The second most important benefit is the increase of transparency. Saving of time and reducing costs come only third and fourth. Whilst reducing of costs is more important for providers than saving time it is the other way around for customers (see tables 2 and 3). For this comparison we only used the ranks to make it simpler to read but for more information and the detailed percentages see Annex A.
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Provider Reduce Save Increase Improve costs time transparency quality Classification of service offers 4 3 1 2 Tendering 4 3 1 2 Before Negotiation of service 4 3 1 2 contracts Organization of the delivery 3 4 1 2 process itself Organization of the consumer- 3 3 2 1 During provider interface
Management of employees 3 4 2 1 Quality of assurance of 3 4 2 1 services Evaluation of the delivered 3 4 2 1 service by the customer After Acceptance of the delivered 3 4 2 1 Servicedelivery service by the customer Average Rank 3,3 3,6 1,6 1,4 Table 2: Benefits of standards for providers (comparison of ranks) (see for more detail slides 41, 46 and 51 in Annex A)
Customer Reduce Save Increase Improve costs time transparency quality Negotiation of service 4 1 2 3 contracts Market analysis 3 2 1 3 Before Tendering 4 1 3 1 Selection of potential suppliers 4 1 3 2 Award of service contract 4 1 2 2 Evaluation of service delivery 4 3 1 2 in progress Controlling of the service During 3 4 2 1 provider Documentation of the received 4 3 2 1 services Evaluation of the delivered 4 3 1 2 service After Acceptance of the delivered 4 3 2 1 Servicedelivery service Average Rank 3,8 2,2 1,9 1,8 Table 3: Benefits of standards for customers (comparison of ranks) (see for more detail slides 63, 68 and 73 in Annex A)
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4.3 World Cafés
As mentioned in the methodology, there were two questions related to module 7 asked during the World Cafés. We are therefore going to structure the findings alongside these two questions. Nevertheless there were a lot of interesting aspects mentioned by the participants that are not included in these two questions. As we did not want to ignore them we collected the most important in a third category.
Question 1: What characteristics are common to the majority of B2B services?
According to the participants of the World Cafés there are some general characteristics of B2B services which were often expressed in comparison to B2C services. Those which are potentially relevant for standardization are as follows:
Within B2B services providers and customers act more like professional partners who are on equal footing. However some felt that that bigger companies may dictate terms and conditions (same is sometimes true for monopoly status, public procurement and so on). Usually there is more background information within the whole process. This is due to the fact that decisions in the B2B world are usually based on facts. All in all information is seen as an essential characteristic for the whole service process. But nevertheless information asymmetry can be possible in the B2B field as well. The organization is usually much more complicated. People who decide on the service are sometimes many steps behind the line of those who are actually involved in the service (this is true for the customer as well as the provider side). This can be followed by a gap between the purchasing department and the requesting department. All in all B2B services requires much more interaction across both organizations. Additionally it is necessary to define the roles of people who are involved (like e. g. coordinator, supervisor, operator, …) B2B services often have a higher economic relevance for both partners: For the provider there is a higher risk of economic losses by unsatisfactory services and for customers a good quality of the received service is sometimes critically important for the survival of the business. Minor points that were mentioned are that within the B2B field there is more stress on confidentiality and data protection and that sometimes B2B Service Provider need information about the customer of the customer.
When discussing question 1 most of the groups started to structure the mentioned aspects along some kind of service lifecycle (see the main project report for a presentation of the service lifecycle). The overall structures as well as the steps themselves are generally common for the majority of B2B services. Commonalities were also identified for contents / aspects within these steps.
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Below are the most relevant answers structured alongside a rough service lifecycle:
Marketing Definition of customers need and expectations Offer Comparison of Service Providers (among others with help of reference projects, reputation or offer analysis procedures) Negotiation (scope and price) Procurement Contract (usually more detailed than in B2C) o General conditions o Description of service / definition of service levels (SLAs) / o Terms of delivery / timing o Technical issues o Responsibilities and rights / organizational framework o Payment conditions / payment terms / penalties / financial issues o Methods for measurement, evaluation and acceptance of service (e.g. checklists) o Renewal options Delivery of service (on time / on price / on specification) Documentation of service Control (e.g. through a service control system) Complaints and redress handling Billing / payment procedures / financial transactions Measurement and evaluation of provided service (internal / external) (see also below the quality aspect) After sales service Ending of relationship / closure
In addition to those aspects which fit into a service lifecycle there are some more characteristics which in general are valid for all or most of the B2B services. Some of those are even superior to those mentioned before:
Terms and definitions (absolutely vital and essential, see module 2) Service quality (mentioned a lot of times, also absolutely essential for B2B services). More detailed aspects that were mentioned are the follows: o Definition of quality o Quality levels o Quality expectations Safety aspects (e.g. occupational safety, customer safety, safety requirements for environmental issues) Human resources (e.g. Human resources management, qualification skills, training, staffing issues) Technical resources and requirements Risk management, Risk assessment
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Important especially for services are the ―soft factors‖. But those "soft" factors are indeed sometimes even more important than ‖hard factors‖. The following aspects were mentioned:
Communication; Emotions; Satisfaction; Expectations; Assumptions.
Last but not least the whole relationship between provider and customer is an important characteristic for B2B services and common to a majority of services. This aspect was mentioned in several connotations:
Interaction; Partnership / partnership for quality / partnership is necessary for sharing the same competitiveness goals; Team; Behaviour between company and customer; Sharing the commitment.
But for the two last points (soft factors and relationship) there was a lively discussion as to whether there is potential for standardization. More or less common was the opinion that these factors cannot be standardized completely but that at least some generalities (e.g. the interaction or communication) could be standardized.
Finally one has to consider that even if the participants have collected a lot of common characteristics this does not necessarily mean that there is a possibility for horizontal standards. This is because most of the aspects above are more or less categories rather than contents. But nevertheless there were indications in the discussions that there are possibilities for horizontal standardization.
Question 2: How could both business service providers and their customers benefit from horizontal standards?
Common agreement was that horizontal standards have to have generated a clear business benefit. But the question of whether there could be a benefit of horizontal standards could not be solved conclusively. Some of the participants were of the opinion that B2B services cannot benefit from horizontal standards. But most of the World Café attendees agreed that there could be benefits. The detailed aspects that were mentioned were the follows.
The most common aspect was saving time and money. This results mainly from:
Better and common understanding / more and better information ("Things are more clear", "standards provide clarity [e. g. terminology]");
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Easier and better communication (e. g. call for tenders [especially European wide], contract negotiations, easier definition of specifications) which all together leads to less paper work to do and make for example external consultation with lawyers unnecessary; Simplification of processes and procedures / increase of efficiency (overall this was the most important aspect which was mentioned); Synergies are possible between different services, processes etc; Could lead to lower costs for switching providers which reduces the dependence on one service provider. Then the concept "plug and socket" could be possible for services as well; Helps to define cross points between provider and customer (regarding responsibilities).
Other important benefits dealt with quality issues (in a broader sense):
Improve quality and competence (mentioned a lot of times); As B2B services are part of a value chain the quality of B2B services will also affect the quality and the performance of the final product – standards can help at this point; Clear measurement of the service provision possible – even within the process (monitoring with the help of checklists etc.); Following from the measuring there are possibilities to benchmark, to evaluate (and to make these information public maybe in a database for the benefit of future customers); All in all standards make the comparison of different providers there qualification etc. possible; Standards help to establish a broader view (not only on the price) (this is a benefit for the customer but maybe even more for providers who offer high quality).
Apart from quality issues and saving money and time there were a lot of other benefits mentioned:
Increase transparency (for provider as well as customer); Basis for communication / facilitate communication; Allow and simplify comparisons of offers; Ensures data protection / confidentiality; Transfer of technology (benefit for both); Increase safety and security for both; Increase reliability, confidence and trust as well as financial security; Enables risk analyses, risk assessments, risk reduction; Can overcome cultural differences; Can help in human resources (occupational standards, training of staff); Standards can help for the modularisation of services and therefore facilitates the design and delivery of services. Modular services allow customers to pick only those services they really need; Standards can create economies of scale;
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Horizontal standards can help, especially for complex services with different inherent services, (e.g. facility management where you can have among others cleaning services, security services and maintenance).
The majority of the benefits mentioned above are true for standardization as a whole but most of the discussions during the World Cafés, at least for this question, focussed on horizontal standards specifically.
Aspects mentioned during the World Cafés which are not directly linked to either question 1 or question 2:
First of all there were some additional thoughts about the general benefits of standardization and the role of standards in a European market. In general a lot of people think that standards are a tool to assist the European internal market. There was also no doubt that standards make a lot of things easier but the question was to what extent. For the future work one has to consider the cost of the development of a standard and make a real cost/benefit analysis before starting. This leads us to the difference between "need" and "benefits". First of all the question has to be answered if there is a need for horizontal standards. Finally for a lot of people the benefits of horizontal standards are visible but they worry that it is very difficult to achieve agreement.
The last point leads to the discussions on how horizontal standards could be produced. The involvement of all stakeholders (customers and providers) was a very important point for the participants as their concern is that:
customers maybe underrepresented; small and medium enterprises are not fully represented (see below); and There is always a dominant player within the value chain who is dictating the contents.
Considering the involvement of all stakeholders there are concerns about its realization because the involvement of all B2B service providers and customers is not possible. It will be difficult to attract their involvement because the economic benefits for each company are too small, although the benefits for the national economy might be very big. Public funding to develop horizontal standards might affect the legitimacy of the standard itself. All in all the development process should consider the experiences of previous horizontal standards and activities.
Regarding the content of potential horizontal standard it was mentioned that horizontal standards could be a framework to produce sector standards and therefore facilitate sector specific standards. The horizontal standards should include general points (as detailed as possible) and then the sector specific standards can go into more detail (on the basis of the horizontal standard). Here the question was raised who is the customer of horizontal standards: maybe those who are writing sector specific standards. At this point it was also mentioned that the references to other standards must be handled in a customer friendly way so that there is no need to buy too many standards.
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On the World Cafés there were several discussions about possible differences between large and small companies. This issue was not entirely resolved but aspects that were mentioned are the follows:
SMEs are in some relationships more like a consumer than a business partner (due to lack of knowledge, resources, etc.); Standards, procedures, legislation should be simple regardless the size of the company; Small and large companies should compete on equal terms; Size is irrelevant – quality of services is more important; Customers do not care whether the service is provided by a small or large company as long as they comply with standards.
Last but not least there were some problems, difficulties and challenges expressed during the World Cafés these are as follows:
There is a huge range of B2B services. It is a very complex area and you have a high heterogeneity of services (e. g. traditional services vs. high- tech services); A clearer definition of horizontal standard is necessary – perhaps combined with an example and a best-practice of a horizontal B2B service standard; Sectors and companies have their own existing standards and these are sector and/or company specific. How to deal with the existing standards? Especially in the service sector there is a dichotomy of USPs and standardization; The service provider is often dependent on conditions offered by the customers? A lack of standardization on the customer side may as well prevent him from providing the highest quality; There were some critical aspects mentioned that are valid for standardization in general but are maybe more relevant for horizontal standardization. How do they… o … deal with conflicting interests? o … react on changes, new solutions, regulations etc? o … handle country specific elements (local rules, regulations, customs, cultures, languages, …? o … deal with legal issues and requirements? Specific questions for this were, among others, what happens if standards demand more than existing legislation? Also some participants mentioned that the most vital questions are determined by law.
All in all the essence of the aspects mentioned during the World Cafés by the participants – which are shown above without commenting from the authors – is that there seems to be a clear indication that horizontal standards are feasible and of benefit but that there are some concerns to consider.
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4.4 Expert interviews
Within this chapter we present only a short summary of the main findings of the expert interviews. The whole analysis can be found in Annex B.
There is a need for horizontal standards
We asked the companies if there is a need for horizontal/cross sectoral standards for the trade in services. 67% answered yes, 18% answered no and 15% answered perhaps, see figure below.
Is there a need for horizontal standards for the trade in B2B services
No
18%
Perhaps 15% 67%
Yes
N = 33
Figure 4: The companies‟ answers to the question “Is there a need for horizontal/cross sectoral standards for the trade in B2B services”
There was a slight difference between the answers from the providers and the customers. For the providers the figures were 60% yes, 25% no and 15% perhaps whereas for the service customers the figures were 77% yes, 8% no and 15% perhaps.
In addition, we asked the companies if there is a need for additional or new standards in specific steps of the service delivery process. 81% answered yes, 16% answered no and 3% answered perhaps.
Remarkably, 90% of the providers said yes compared to only 67% of the customers.
The respondents were active in standardization
We asked the respondents if they were actively involved in standardization. 69% were active and 31% were not. The figures for the providers showed that 70% were active in standardization and for the customer 67% were active.
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The respondents represented both smaller companies (SMEs) and very big companies.
The numbers involved in standardization seems relatively high and may reflect that many of the respondents were recruited from the standardization bodies‘ network.
Which types of standards are used?
The companies were asked which types of standards they use. Generally, different kinds of standards are used: International, European, national and company standards and some differences were seen between customers and providers, see Figure 5.
Figure 5: The use of different types of standards by providers and customers
What are the reasons for using standards?
The companies were asked for their reasons to use standards.
For the providers the main reasons for the use of standards were:
By using standards our company fulfils customer requirements; Standards improve the quality of our services; Standards may optimize our internal processes.
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Figure 6: Providers reason for the use of standards
For the customers the main reasons for using standards were:
Standards may optimize our internal processes; The use of standards creates transparent internal processes; Our company fulfils legal requirements; Our company is able to access expertise fast and easily.
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Figure 7: Customers reasons for the use of standards
Standards are used in all parts of the service delivery process
The companies were asked in which part of the service delivery process they use standards and 31% said before, 36% said during and 33% said after the service delivery. Only minor differences were observed between customers and providers: For the customers 33% said they use standards before, 33% said during and 33% said after the service delivery compared to 29% before, 38% during and 33% after for the providers.
The main advantages in the use of standards with respect to the specific steps were specified as:
increases transparency of service delivery process; makes processes more efficient; eases negotiation of service contracts; reduces costs; enables a better documentation of the service delivery; enables a better evaluation of the delivered services.
The companies were asked to characterise useful standards in the different steps of the service delivery process.
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Focusing on the step before service delivery the customers gave the highest priority to standards that:
―constitute a basis for the development of Service Level Agreements (SLA)‖; ―define frequently used terms consistently‖; ―enable to compare costs and performance‖; ―constitute a basis for the development of service contracts‖.
In the step before service delivery the providers gave the highest priority to standards that:
―define frequently used terms consistently‖.
Figure 8: The companies ranking of the reasons for using standards in the „before service delivery‟ step
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Focusing on the step during service delivery both the customers and the providers gave the highest priority to standards that:
―enable a consistent documentation of the service delivery‖.
Figure 9: The companies ranking of the reasons for using standards during the service delivery step
Focusing on the step after service delivery both the customers and the providers gave the highest priority to standards that:
―enable a consistent evaluation of the delivered service‖.
Figure 10: The companies ranking of the reasons for using standards in the „after service delivery‟ step
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5. CONLUSIONS
Within the introduction we have already shown the high importance of B2B services for the European economy – both out of a quantitative and a qualitative perspective. Therefore it is essential to specifically address the B2B service sector within a study about the feasibility of horizontal standards especially with the background of a business environment that is getting more and more challenging.
Out of the research we came to several conclusions and recommendations which are presented below.
Conclusion 1
There is a need for horizontal standards
Within all research strands we identified a clear need for horizontal standards in the B2B service sector.
SMEs and customers in particular expressed a great need for horizontal standards. An obvious benefit for the customers of such standards is that they do not need to apply or at least to understand the different standards of each of their service providers.
Horizontal standards will also benefit the value chain. As illustrated in Figure 11, each service provider (P) is usually also a customer (C) of one or more services. The implementation of these horizontal standards will make the internal processes much easier as companies can apply the same standards – on the demand side as well as on the supply side.
A lack of service quality at the beginning of the value chain and during the whole B2B service chain may also have negative influences on the final service delivered to the consumer (B2C service).
B2B B2C service service service C P delivery C P delivery C P delivery C Company A Company B Company C Consumer
Figure 11: Value chain within the delivery of services
Within the different research strands there were a lot of benefits highlighted which could result out of the development and application of horizontal B2B standards. In the following paragraph only the most important ones are mentioned (for a more detailed view on the benefits please see the findings in section 4).
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The most important benefits are:
Saving time and money (due to a better understanding between customers and providers, a simplifying of processes and an increasing efficiency and productivity) (expressed in World Cafés, survey and expert interviews); Improving quality and transparency (expressed in World Cafés, survey and expert interviews); Making the body of standards consistent and reducing the effort involved in the drafting of new standards and the updating of existing ones (World Cafés106).
Although the above mentioned aspect will have significant economic benefits for each company the macroeconomic benefit regarding the strengthening of the whole B2B service market is even bigger.
All in all it was often expressed that there should be clear cost-benefit analysis. While the most important benefits were described above (although not specified in monetary terms) the specification of the costs is difficult at the moment as they are very much dependent on the results of the discussions about the further organization of the development of horizontal standards.
Conclusion 2
Horizontal standards are useful and feasible in a series of aspects in the service lifecycle
Within the different research strands we got a lot of indications where horizontal standards could be useful and feasible.
Without going into too much detail, as all these can be found in the findings sections of this report, terms and definitions was identified as an obvious subject for horizontal standardization. A lot of terms and definitions should be the same within all B2B services, like for example the definition of KPI (Key performance indicators) or SLA (Service level agreement).
Additionally there were a lot of aspects mentioned that have potential for at least groups of B2B services and which can be clustered alongside the service lifecycle. These include:
Way of describing the service; Contract design; Negotiation procedures; Organizational and technical interfaces; Documentation; Complaints management.
106 See also Kan – Kommission Arbeitsschutz und Normung. (2007). Bedeutung von Querschnittsnormen – dargestellt am Beispiel Maschinensicherheit (The relevance of generic standards: the example of machine safety). Bonn.
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These are only indications because for the final identification of aspects for horizontal standards there has to be further research by the experts of each sector – something that could not be done within a general feasibility study.
Conclusion 3
There are some concerns on horizontal standards in the B2B sector
Although a clear need for horizontal standardization was expressed, most were of the opinion that this is not possible across all sectors and all aspects all at once.
These concerns were mainly expressed because of the diversity of B2B services which vary for example from more simple services like cleaning to very complex and/or highly innovative services like consulting or third party logistics.
6. RECOMMENDATIONS and NEXT STEPS This leads to our first recommendation:
6.1 Recommendations
Recommendation 1
Develop a classification of B2B services in a standardization perspective and identify common elements of B2B services.
This project should be organized by CEN with sufficient support of experts in classification and standardization matters. As this is an essential starting point for horizontal B2B standardization this project should start as soon as possible and as this project is a basic groundwork, financial support from the European Commission would probably be necessary.
Of course there already exist a lot of classifications within a trade perspective, e.g. the NACE classification. Although these may be useful and should definitely be taken into account in a standardization strategy, they do not necessarily reflect a standardization point of view.
The benefits of a new classification is twofold: Firstly it could help to identify similar B2B services or at least B2B services that need similar approaches of standardization and secondly it could significantly improve the existing
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International Classification of Standards (ICS) which in the moment does not display the service sector very well.107
The identification of common elements of B2B services has already started in this study (see question 2 and the findings section 4). However further identification can only be conducted by the standardization experts of the different services. For the possible organization see recommendation 3.
The concern that the diversity of B2B services makes horizontal standards unfeasible is very valid. This is the reason why we do not recommend a single horizontal standard for B2B services. However with consideration of all the research we have done and all the feedback we got we are sure that for some aspects standards are feasible which are applicable for all B2B services, meanwhile for other aspects standards are only applicable for a group of services and for further aspects only service specific standards are useful.
This leads to our second recommendation:
Recommendation 2
Organize the development of horizontal standards in a hierarchical system of ABC-Standards.
The framework of this hierarchical system should be discussed with all stakeholders. The organization of the overall process should be conducted by CEN with sufficient support of the national standardization bodies. Additionally the national standardization bodies are responsible to organize the discussion process on national level as well.
This discussion should start as soon as possible as achieving an agreement on at least the general framework on European level will take some time. Nevertheless there should be an agreement on the framework within approximately one year so that the development of horizontal standards within this framework could start at the end of 2009 at the latest. As a starting point so called "semi-horizontal" standards (B-standards) which cover only some aspects for some B2B services could be developed – these "semi- horizontal" standards could function as a good practice for horizontal standards and the whole hierarchical system as well. As the existence of horizontal standards is of great benefit for the European economy (see above) it should be considered if public funding could support and speed up the whole process as it will demand some personnel and financial resources.
Hierarchical systems of standards are already known in the standardization world, e.g. in the field of machine safety. Based on existing systems of
107 This is not a horizontal issue but we have identified a lack of knowledge about existing standards in specific fields. An updated ICS could improve the visibility of B2B service standards and could therefore strengthen the application of standards.
220 CHESSS hierarchical standards, the future system of ABC-Standards in the area of B2B services could be:
A – Standards: applicable for all B2B services (e. g. terminology, general guidelines); B – Standards: applicable for a group of B2B services (e. g. Human Resources Management (HRM) for knowledge-intensive B2B services like advertising, consultancy or legal advisory); C – Standards: service specific.
To create a signal effect we would recommend adding the term A-, B- or C- standard to the title of each standard.
One other major concern was the organization of the development of horizontal standards in the area of B2B services. As generic standards have no direct relationship to specific services, the willingness of stakeholders to participate in horizontal standardization is very low. The involvement of B2B service customers and SMEs was seen as a particularly essential aspect for the development of horizontal standardization. Furthermore, there were a lot of concerns about redundancy, waste of resources etc.
Considering these concerns leads to the third recommendation:
Recommendation 3
The development and organization of horizontal B2B service standards should consider some general rules:
Learn from other horizontal standardization activities (use the knowledge of experts); Organize the process efficiently regarding time and resources; Use existing resources; Consider existing standards and integrate them in a comprehensible, logical and transparent way; Involve SMEs and customers (e. g. through trade organizations and industry organizations); Ensure a balanced representation of sectors on the one hand and countries on the other hand; Due to the low willingness of stakeholders to participate in horizontal standardization one possibly has to think about new ways to get the engagement of stakeholders – maybe through public financing.
Out of these general rules we recommend the structure shown below in Figure 12 for future horizontal B2B service standardization.
This suggested organizational framework should be discussed within CEN and the NSBs. If agreed, this framework should be implemented as soon as possible to test the structure and make any necessary adjustments and have
221 CHESSS a workable system ready for horizontal standardization activities.
We strongly recommend a clear organizational framework as this is one guarantee for the consideration of the above mentioned general "rules" for horizontal service standardization in the B2B service area.
Figure 12: Organization for the development of horizontal B2B service standards
The proposed committee on horizontal B2B service standards consists of a double representation system:
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1) The classic European system of standardization has a delegation system from service specific committees on national level to service specific committees on European Level. This builds a bunch of service specific committees (shown at the bottom/right part of the figure). Each of these sector committees can, by a liaison, send at least one delegate to the committee on horizontal B2B service standards.
2) Identical to the European level, there may be a committee on horizontal B2B service standards in each of the CEN Member States. Each of these national committees can – via the national standardization body - send a delegate to the European committee on horizontal B2B service standardization; see the right part of Figure 12.
3) Additionally there will, by liaison, be support from the BT Working Group 163 (right/bottom part of the figure) as well as from experts on horizontal standardization (right/top of Figure 12).
This double representation system ensures a balanced representation of sectors on the one hand and of national interest on the other hand.
In addition to establishing this system there is also a question of timeline or time order. Ideally the work on the vertical standards and the horizontal standard is done in parallel. Then the work on the horizontal standard should be finalised, followed by the finalised vertical standards.
But of course there can be changes from this ideal picture. An uncomplicated change is if the horizontal standard already exists and the vertical standard which is going to be developed builds upon the horizontal standard. More difficult is the case where vertical standards already exist and a horizontal one is going to be developed to support the vertical standards. In this case, a revision of the vertical standards may be necessary. In most cases this should not mean a change of content, rather a simplification of the standard with regard to the new horizontal standard.
In addition to the three main recommendations mentioned above, module 7 makes two further recommendations.
Recommendation 4
We recommend that the European Commission work with CEN Management Centre on an information programme to increase stakeholder awareness of the nature and extent of the cooperative relationship intended to exist, between regulation and standards. This would help overcome stakeholders expressed concerns that the existence of service related legislation in member states will make the development of European business to business service standards, impracticable.
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Recommendation 5
The quality of B2B services is a major driver of the discussions on standards and especially horizontal standards. This aspect is reinforced by the high dynamic of the B2B service sector shown in the high number of creations and cessations. To signal at least some minimum level of quality and to strengthen the transparency a certificate for good services would be useful. The design of this certificate as well as the organization around it (e.g. first, second or third part certification) has to be discussed by experts on European Level.
6.2 Next steps
Based on our recommendations we suggest the following next steps.
1. CEN to decide how to best organise a new work on classification of B2B services.
2. CEN to start discussions on how to develop horizontal standards in a hierarchical system of A-, B- and C-standards, and how to organise this work.
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7. BIBLIOGRAPHY
Bagchi-Sen, S. / Sen, J. (1997). The current state of knowledge in international business in producer services. Environment and Planning A, (29), pp. 1153-1174.
COM – Commission of the European Communities. (2003). The competitiveness of business-related services and their contribution to the performance of European enterprises. Brussels. (COM [2003] 747 final).
COM – Commission of the European Communities. (2004). Business-related services: a key driver of European competitiveness. An enhanced economic analysis. Brussels. (Enterprise DG – Working Paper).
COM – Commission of the European Communities. (2008). Towards an increased contribution from standardization to innovation in Europe. Brussels. (COM [2008] 133 final).
EFBRS – European Forum on Business Related Services. (2005). Report 2005. Brussels. (http://ec.europa.eu/internal_market/services/docs/ brs/forum/2005-report_en.pdf; web page access date: 19.03.2008).
EU KLEMS. (2007). Growth and Productivity Accounts. March 2007 Release. (www.euklems.net; web page access date: 19.03.2008).
KAN – Kommission Arbeitsschutz und Normung. (2007). Bedeutung von Querschnittsnormen – dargestellt am Beispiel Maschinensicherheit (The relevance of generic standards: the example of machine safety). Bonn.
Pilat, D. (2001). Innovation and Productivity in Services: State of the Art. In: OECD (ed.). Innovation and Productivity in Services. Paris. pp. 17-56.
Statistisches Bundesamt (ed.). (2004). Produktbegleitende Dienstleistungen 2002. Wiesbaden.
Toivonen, M. (2004). Expertise as Business. Long-term development and future prospects of knowledge-intensive business services (KIBS). Helsinki University. Doctoral dissertation. Helsinki.
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8. ANNEXES
ANNEX A: Survey – Results
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Online Survey
CHESSS Module 7 – Online Survey
Statistical basics • Arithmetic average or mean value is calculated by summing a set of values and dividing by the number of values in the set.
Example: The mean of the five values 2, 3, 4, 8, 8 equals (2+3+4+8+8)/5 = 5. • Median describes the number separating the higher half of a sample from the lower half.
Example: In the data set (2, 3, 4, 8, 8), the median is the value of the third variable since there are two variables above it and two variables below it. Therefore, the median of the five variables is 4.
2
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CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Online Survey Part I: Overview
CHESSS Module 7 – Over all analysis
Need for horizontal standards
Provider Over all Customer
Not given Not Low High 6 % given Low High 13,3 % 18 % 23 % Low 5 %
46,7 % High 28 % 40 % Medium 53 % 17 %
Medium n=111 n=30
50 %
Medium n=141
4
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CHESSS Module 7 – Over all analysis
Participating Countries
Germany Provider Over all Customer Denmark 1% UK 2% 3 % 3 % 3 % 3% Belgium 3% 3 % 3% 1% 3 % 4% 3 % Sweden
6% 7 % Austria 6% 62% 2% 57 % 7% France 11%11% NL 3% 10%
n=115 n=30 Norway 4% Switzerland 5% 61% Bulgaria Europe Estonia 12% Finland Luxembourg Poland n=145
5
CHESSS Module 7 – Over all analysis
Comparison of the general attitude considering the need for horizontal standards in… …Germany vs. …the rest of Europe Not Not given given
5% 5% Low Low 16% 18% 27% 28% High High
51% 50%
Medium n=85 Medium n=56
6
228 CHESSS
CHESSS Module 7 – Over all analysis
Comparison of the need for standards in the step of “tendering” in… …Germany vs. …the rest of Europe 60% 51,9 50 50%
40%
28,9 30% Rest of Europe (n = 52)
21,2 Germany (n = 76) 20% 13,5 13,5 13,2 10% 7,9
0% No need for further/ Yes, need for Yes, need for Yes, need for new standards further/new further/new both types of process standards document standards standards
7
CHESSS Module 7 – Over all analysis
Comparison of the need for standards in the step of “negotiation of tenders and service contracts” in… …Germany vs. …the rest of Europe 60% 51,9 50,9 50%
40%
29,9 30% Rest of Europe (n = 53) 24,5 Germany (n = 77)
20% 17
11,7 10% 6,5 7,5
0% No need for further/ Yes, need for Yes, need for Yes, need for new standards further/new further/new both types of process standards document standards standards
8
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CHESSS Module 7 – Over all analysis
Participating Sectors
Mechanical / plant engineering Provider Over all Customer Business services Automotives industry 1% Aerospace
3% 3% 3% Construction industry 5% 3% 3% 3% 13% 5% 3% 3% 23% 3% 3% Electronics / EDP 5% 1% 3% 3% 13%13% Iron / steel 7% 2% 7%7% 3% Public services 8% 7%7% Trade 22% 4% 21% 13%13% 7%7% 10% Communication services 5% 7% 7% 13% 10% n=115 n=30 Consumer goods industry 6% Chemical industry Ship building 6% 17% Aerospace Energy / water supply 8% Packaging Pharmaceutical industry 8% 10% 8% Plastic / rubber n=145
9
CHESSS Module 7 – Overall
Need for horizontal / cross sectoral depending on participating sectors
4% 3% 100% 7% 17% 13% 17% 14% 21% 40% 25% 20% 30% 17% 80% 13% 25% Not given Low 60% 36% 58% 50% 60% 50% 30% 47% 61% 25% Medium 40% High 20% 43% 17% 60% 33% 75% 20% 33% 40% 33% 13% 50%
0%
n=6
n=4 n=8
n=5 n=8
n=12 n=10
n=10
n=14 n=30
n=24
steel
Trade
goods
industry
industry industry
services
services
and plant and
Iron / Iron
services
industry
Public Public
Communication
Consumer
Electronics/ EDP
Chemical Chemical
Business Business
engineering
Automotive Automotive
Mechanical Construction Construction
10
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CHESSS Module 7 – Overall
Success factors in the development and implementation of international or European standards in the service sector are:
I totally Median I totally disagree agree Customer n Provider n 1 2 3 4 5 6 Appropriate composition of standard committees and working groups 6,00 30 5,00 109 The involvement of all interested parties at an early stage 6,00 30 5,00 110 Mutual approval of established / pre-existing standards 5,00 30 5,00 107 The standardisation activity is initiated by the future standard users 5,00 30 5,00 108 The given relevance of the standard content for the target group 5,00 30 5,00 109
11
CHESSS Module 7 – Overall
Success factors in the development and implementation of international or European standards in the service sector are:
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 Appropriate composition of standard committees and working groups 5,23 30 4,75 109 The involvement of all interested parties at an early stage 4,97 30 4,55 110 Mutual approval of established / pre-existing standards 4,63 30 4,49 107 The standardisation activity is initiated by the future standard users 4,53 30 4,45 108 The given relevance of the standard content for the target group 4,73 30 4,66 109
12
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CHESSS Module 7 – Overall
The following problems may occur when developing or implementing international or European standards:
I totally Median I totally disagree agree Customer n Provider n 1 2 3 4 5 6 Different legal requirements 5,00 30 5,00 109
Different market structures 4,50 30 5,00 110
Different standardisation procedures 4,50 30 5,00 107
Administrative barrieres 4,50 30 5,00 108
Cultural barrieres 4,50 30 5,00 109
13
CHESSS Module 7 – Overall
The following problems may occur when developing or implementing international or European standards:
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 Different legal requirements 4,73 30 4,64 109
Different market structures 4,27 30 4,50 110
Different standardisation procedures 4,23 30 4,33 107
Administrative barrieres 4,33 30 4,43 108
Cultural barrieres 4,10 30 4,31 109
14
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CHESSS Module 7 – Overall
. market analysis . documentation of . evaluation of the . selection of potential the received service delivered service supplier delivery . acceptance of the . tender process . evaluation of service delivered service delivery in progress . negotiation of Customers‗ service contracts . controlling of the service provider steps . award of service contract
Service Delivery Process
. classification of . organisation of the . evaluation of the service offers delivery process itself delivered service by Providers‗ (development of . organisation of the the customer steps catalogues) customer-provider . acceptance of the . tendering interface delivered service by . negotiation of tenders . management of the customer and service contracts employees . quality assurance of services
15
CHESSS Module 7 – Overall
For our company standards are useful that… (I/II)
I totally I totally Median disagree agree Customer n Provider n 1 2 3 4 5 6 …define cross-sectoral requirements and 4,50 30 4,00 102 specifications with respect to the service …define frequently used 5,00 30 5,00 105 terms consistently …define qualification requirements for the employees 5,00 30 4,00 105 …constitute a reliable basis for 5,00 30 5,00 104 certification by neutral bodies
16
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CHESSS Module 7 – Overall
For our company standards are useful that… (I/II)
I totally I totally Average disagree agree Customer n Provider n 1 2 3 4 5 6 …define cross-sectoral requirements and 4,47 30 4,07 102 specifications with respect to the service …define frequently used 4,80 30 4,70 105 terms consistently …define qualification requirements for the employees 4,37 30 4,05 105 …constitute a reliable basis for 4,87 30 4,41 104 certification by neutral bodies
17
CHESSS Module 7 – Overall
For our company standards are useful that… (II/II)
I totally Median I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …constitute a basis for cross-sectoral standard service catalogues 4,00 30 4,00 102 …enable the tendering in a consistent format 4,00 30 4,00 101 …enable to compare costs 5,00 30 4,00 106 and performance
…constitute a basis for the 4,50 30 5,00 105 development of service contracts …constitute a basis for the development 4,00 30 4,50 104 of Service Level Agreements (SLA)
18
234 CHESSS
CHESSS Module 7 – Overall
For our company standards are useful that… (II/II)
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …constitute a basis for cross-sectoral standard service catalogues 3,87 30 3,84 102 …enable the tendering in a consistent format 4,40 30 4,27 101 …enable to compare costs 4,67 30 4,13 106 and performance
…constitute a basis for the 4,30 30 4,38 105 development of service contracts …constitute a basis for the development 4,23 30 4,20 104 of Service Level Agreements (SLA)
19
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Median I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …enable a consistent documentation 5,00 29 5,00 106 of the service delivery
…increase the process efficiency 5,00 29 5,00 106
20
235 CHESSS
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …enable a consistent documentation 4,72 29 4,46 106 of the service delivery
…increase the process efficiency 5,00 29 4,69 106
21
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Median I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …enable a consistent billing and 5,00 29 5,00 106 metering of the delivered services …enable a consistent complaints 5,00 28 5,00 104 and redress handling …enable a consistent evaluation 5,00 29 4,00 105 of the delivered services
22
236 CHESSS
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …enable a consistent billing and 4,66 29 4,37 106 metering of the delivered services …enable a consistent complaints 4,68 28 4,35 104 and redress handling …enable a consistent evaluation 4,41 29 4,10 105 of the delivered services
23
CHESSS Module 7 – Overall
. market analysis . documentation of . evaluation of the . selection of potential the received service delivered service supplier delivery . acceptance of the Customers‗ . tender process . evaluation of service delivered service delivery in progress . negotiation of steps service contracts . controlling of the service provider . award of service contract
Comparable Steps
. classification of . organisation of the . evaluation of the service offers delivery process itself delivered service by Providers‗ (development of . organisation of the the customer catalogues) customer-provider . acceptance of the steps . tendering interface delivered service by . negotiation of . management of the customer tenders and service employees contracts . quality assurance of services
24
237 CHESSS
CHESSS Module 7 – Overall
Need for standards according to their usage
no standards 47,9% 16,7% 14,6% 20,8% are used
standards Tendering are used 53,3% 6,7% 13,3% 26,7% no standards 64,7% 10,3% 5,9% 19,1% are used No need for additional/new standards standards
Acceptance are used 44,4% 22,2% 12,7% 20,6% Yes, need for additional/new no standards 53,3% 18,3% 6,7% 21,7% process standards are used Yes, need for further/new document standards standards Evaluation are used Yes, need for both types of 59,7% 13,9% 9,7% 16,7% standards no standards 31,6% 26,3% 26,3% 15,8% are used
standards
Negotiation are used 55,8% 7,8% 9,1% 27,3%
0% 20% 40% 60% 80% 100%
25
CHESSS Module 7 – Overall
Sector specific need for standards – Step „tendering“
56% 11% 11% 22% Iron / steel
40% 20% 40% Electronics / EDP
67% 11% 22% No need for additional/new standards Construction industry Yes, need for additional/new process standards 29% 7% 21% 43% Yes, need for further/new document Automotive industry standards Yes, need for both types of 43% 14% 14% 29% standards Business services
60% 12% 4% 24% Mechanical and plant engineering
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
26
238 CHESSS
CHESSS Module 7 – Overall
Sector specific need for standards – Step „negotiation“
44% 11% 11% 33% Iron / steel
30% 10% 60% Electronics / EDP
70% 10% 20% No need for additional/new standards Construction industry Yes, need for additional/new process standards 36% 7% 57% Automotive industry Yes, need for further/new document standards Yes, need for both types of 48% 14% 5% 33% standards Business services
54% 15% 31% Mechanical and plant engineering
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
27
CHESSS Module 7 – Overall
Correlation after Spearman's rank correlation coefficient
Correlation of turnover 2006 with need for horizontal/cross sectoral standards
-1 -0,281** 0 1
Correlation of number of employees with need for horizontal/cross sectoral standards
-1 -0,303** 0 1
**The correlation is signficant on the 0,01-level.
28
239 CHESSS
CHESSS Module 7 – Survey Overview
Companies use standards for…
P C P C P C P C 100% 17% 17% Yes (both types) 27% 26% 21% 23% 22% 21% 17% 21% 17% 11% 12% 18% 20% Yes (document standards)24% 21% 13% 12% 21% 18% 13% 28% 15% 31% Yes (process standards) 53% 53% 40% 40% 45% 43% No (no type of standard) 34% 31%
0%
service contracts of ...negotiation customer bydelivered …
...tendering (by customer) servicesdelivered …
evaluation of evaluation of
acceptance of
P = Service Provider C = Service Customer
29
CHESSS Module 7 – Survey Overview
There is a need for standards for…
P C P C P C P C 100% 14% 17% 19% 17% 21% Yes (both types) 29% 29% 23% 7% 14% 8% 17% 9% 27% 7% 20% 14% Yes (document standards) 14% 24% 8% 11% 21% 10% 28% 17% Yes (process standards) 61% 57% 54% 53% 47% 48% 40% 41% No (no type of standard)
0%
service contracts of ...negotiation customer bydelivered …
...tendering (by customer) servicesdelivered …
evaluation of evaluation of
acceptance of
P = Service Provider C = Service Customer
30
240 CHESSS
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Online Survey Part II: Provider
CHESSS Module 7 – Service Provider
Need for horizontal standards for B2B services given Not given
6 % Low High 18 % 23 %
53 %
Medium
n=111
32
241 CHESSS
CHESSS Module 7 – Service Provider
Participating countries
1% 2% Germany 3% Denmark 3% 3% UK 4% Belgium France 6% 6% 62% NL Norway 11%11% Austria Estonia Finland Sweden Switzerland Poland
n=115
33
CHESSS Module 7 – Service Provider
Participating sectors
1% 3% Mechanical / plant engineering 5% Business services 5% 23% Electronics / EDP 5% Automotive industry 7% Construction industry Public services Communication services 8% Iron / steel 22% Trade 10% Consumer goods industry 10% Chemical industry
n=115
34
242 CHESSS
CHESSS Module 7 – Service Provider
. classification of . organisation of the . evaluation of the service offers delivery process delivered service by (development of itself the customer catalogues) . organisation of the . acceptance of the . tendering customer-provider delivered service by . negotiation of interface the customer tenders and service . management of contracts employees . quality assurance of services
35
CHESSS Module 7 – Service Provider
Companies use standards for…
Yes (both types) 29% 27% 26%
21% 20% Yes (document standards) 24% 15% Yes (process standards) 5% 13%
No (no type of standard) 41% 40% 40%
of service offersof …
...tendering
service contracts of ...negotiation
classification
36
243 CHESSS
ANNEX A: Survey – Results (continued)
CHESSS Module 7 – Service Provider
There is a need for standards for…
Yes (both types) 31% 29% 29%
Yes (document standards) 3% 9% 7% Yes (process standards) 9% 8% 11%
No (no type of standard) 56% 54% 53%
of service offersof …
…
service contracts …
classification
tendering
negotiation of of negotiation
37
CHESSS Module 7 – Service Provider
Use & need of standards for…
U N U N U N 100%
Yes (both types) 29% 31% 27% 29% 26% 29%
7% 3% 20%9% 20% 9% 21% 21% Yes (document standards) 24%24% 8% 11% 15% Yes (process standards) 5% 13%
56% 54% 53% No (no type of standard) 41% 40% 40%
0%
of service offersof …
...tendering service contracts of ...negotiation
classification
U = Use of standards N = Need of standards
38
244 CHESSS
CHESSS Module 7 – Service Provider
Need for standards according to their usage
no standards 65% 12,5% 5% 17,5% are used
offers standards of are used Classification 48,1% 7,4% 1,9% 42,6%
no standards 52,6% 13,2% 10,5% 23,7% are used
standards No need for additional/new Tendering are used standards 55,4% 5,4% 8,9% 30,4% Yes, need for additional/new
no standards 48,7% 12,8% 10,3% 28,2% process standards of are used Yes, need for further/new document standards standards
tenders Yes, need for both types of are used standards
Negotiation 56,1% 8,8% 5,3% 29,8%
0% 20% 40% 60% 80% 100%
39
CHESSS Module 7 – Service Provider
Benefits of the use of standards: Standards…
70% 67 70 …classification of service offers 60%60 55 54 …tendering …negotiation of service 50%50 44 43 contracts 39 40%40 37 37 38
30%30
20%20
10%10 3 2 3 0%0 …reduce …save time …increase …improve costs transparency quaility
40
245 CHESSS
CHESSS Module 7 – Service Provider
Companies use standards for…
23 % 26% Yes (both types) 35% 40% 14% 10% Yes (document standards) 9% 12% 12% 19% Yes (process standards) 20%
19% 51% 52% No (no type of standard) 36% 22%
provider interface consumer … …
employees …
itself delivery process …
of servicesof
organisation quality assurance
management of
organisation
-
of of
of of
41
CHESSS Module 7 – Service Provider
There is a need for standards for…
Yes (both types) 19% 19% 24% 27% Yes (document standards) 4% 5% 7% 7% Yes (process standards) 11% 8% 12% 11%
No (no type of standard) 65% 69% 57% 54%
provider interface consumer … servicesof …
employees …
itself delivery process …
organisation quality assurance
management of
organisation
-
of of
of of
42
246 CHESSS
CHESSS Module 7 – Service Provider
Use & need of standards for…
U N U N U N U N 100% 19% 19% 23% 24% 27% 26% Yes (both types) 35% 4% 40% 5% 7% 7% 11% 14% 8% 10% 12% Yes (document standards) 9% 24% 12% 11% 12% 19% Yes (process standards) 20% 69% 65% 19% 57% 51% 54% 52% No (no type of standard) 36% 22% 0%
provider interface consumer … servicesof … employees …
itself delivery process …
organisation quality assurance management of
organisation
- U = Use of standards
of of
of of N = Need of standards
43
CHESSS Module 7 – Service Provider
Need for standards according to their usage
no standards 74,3% 11,4% 2,9% 11,4% are used
standards Process
of delivery of delivery are used Organisation Organisation 59,7% 11,3% 4,8% 24,20% no standards 67,3% 10,2% 8,2% 14,3%
P P are used -
standards
of C Interface are used 44,7% 34% Organisation Organisation 14,9% 6,4% no standards 76,5% 2%5,9% 15,7% No need for additional/new are used standards
of standards Yes, need for additional/new are used process standards
employees 60% 13,3% 4,4% 22,2% Management Management 60,9% 13% 26,1% Yes, need for further/new no standards document standards are used Yes, need for both types of
Quality standards standards assurance are used 51,4% 10,8% 10,8% 27%
0% 20% 40% 60% 80% 100%
44
247 CHESSS
CHESSS Module 7 – Service Provider
Benefits of the use of standards: Standards…
70%70 64
60%60 57 56 ...organisation of the 51 delivery process 48 50%50 itself 43 44 40%40 ...organisation of the 34 33 consumer-provider 30 30 30%30 26 26 interface 22 ...management of 20%20 employees 10%10 ...quality assurance 2 of services 0 0%0 …reduce …save time …increase …improve costs transparency quaility
45
CHESSS Module 7 – Service Provider
Companies use standards for…
Yes (both types) 23% 22%
Yes (document standards) 11% 12% Yes (process standards) 13% 12%
No (no type of standard) 53% 53%
by delivered …
by customer servicesdelivered …
acceptance
evaluation of evaluation of
customer
services
of of
46
248 CHESSS
CHESSS Module 7 – Service Provider
There is a need for standards for…
Yes (both types) 19% 21%
Yes (document standards) 7% 8% Yes (process standards) 14% 14%
No (no type of standard) 61% 57%
by customer servicesdelivered …
by customer servicesdelivered …
acceptance of acceptance of
evaluation of evaluation of
47
CHESSS Module 7 – Service Provider
Use & need of standards for…
U N U N 100% Yes (both types) 23% 19% 22% 21%
7% 8% 11% 12% Yes (document standards) 14% 14% Yes (process standards)24% 13% 12%
61% No (no type of standard) 53% 53% 57%
0%
by customer servicesdelivered …
by customer servicesdelivered …
acceptance of acceptance of
evaluation of evaluation of
U = Use of standards N = Need of standards
48
249 CHESSS
CHESSS Module 7 – Service Provider
Need for standards according to their usage
66,1% 8,9% 7,1% 17,9%
C no standards
by are used
standards
delivered service Evaluation of Evaluation are used 55,3% 17% 6,4% 21,3%
of no standards 66,1% 8,9% 3,6% 21,4% C
are used by No need for additional/new standards
delivered standards
service are used Acceptance 46,8% 21,3% 10,6% 21,3% Yes, need for additional/new process standards 0% 20% 40% 60% 80% 100% Yes, need for further/new document standards Yes, need for both types of standards
49
CHESSS Module 7 – Service Provider
Benefits of the use of standards: Standards…
70%70
60%60 53 49 50 50%50 43 …evaluation of the delivered service 40%40 by the consumer …acceptance of the 30%30 22 delivered service 20 by the consumer 20%20 10%10 3 0 0%0 …reduce …save time …increase …improve costs transparency quaility
50
250 CHESSS
CHESSS Module 7 – Service Provider
The use of standards in the service delivery process for…
Before During After 100%
23% 23% 22% Yes (both types) 29% 27% 26% 26% 35% 40% 12% 14% 10% 11% 21% 20% 9% 12% Yes (document standards) 24% 12% 12% 13% 19% 15% Yes (process standards) 5% 13% 20%
19% 51% 52% 53% 53% No (no type of standard) 41% 40% 40% 36% 22% 0%
of services of … employees …
provider interface consumer …
itself delivery process …
of service of offers …
… customerby deliveredservices …
servicecontracts …
by customerby deliveredservices …
qualityassurance managementof
organisation
organisation
classification
tendering acceptance of
negotiation of
evaluationof
-
of of
of of
51
CHESSS Module 7 – Service Provider
The need of standards in the service delivery process for…
Before During After 100%
19% 24% 19% 19% 21% Yes (both types) 31% 29% 29% 27% 4% 5% 7% 8% 11% 7% 7% 3% 9% 7% 8% 14% 14% 9% 12% Yes (document standards) 8% 11% 11% Yes (process standards)
69% 65% 61% 56% 54% 53% 57% 54% 57% No (no type of standard)
0%
of services of … employees …
provider interface consumer …
itself delivery process …
of service of offers …
… customerby deliveredservices …
servicecontracts …
by customerby deliveredservices …
qualityassurance managementof
organisation
organisation
classification
tendering acceptance of
negotiation of
evaluationof
-
of of
of of
52
251 CHESSS
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Online Survey Part III: Customer
CHESSS Module 7 – Service Customer
Need for horizontal standards
Low
13,3 %
46,7 % High Medium 40 %
Medium
n=30
54
252 CHESSS
CHESSS Module 7 – Service Customer
Participating countries
3 % 3 % Germany 3 % 3 % Denmark 3 % Belgium 3 % Sweden Austria 7 % 57 % Bulgaria Europe 7% Luxembourg UK 10% Switzerland
n=30
55
CHESSS Module 7 – Service Customer
Participating sectors 3% 3% Automotive industry 3% 3% 3% 13%13% Chemical industry 3% 3% 3% 3% Iron / Steel 3% 3% 3% Mechanical / plant engineering 13%13% 7%7% Construction industry Consumer goods industry 7%7% Ship building 13%13% Trade 7%7% Electronics / EDP 7% Energy / water supply 7% 13% 13% Plastics / rubber Pharmaceutical industry Aerospace Packaging n=30
56
253 CHESSS
CHESSS Module 7 – Service Customer
. market analysis . documentation of . evaluation of the . selection of potential the received service delivered service supplier delivery . acceptance of the . tender process . evaluation of service delivered service delivery in progress . negotiation of service contracts . controlling of the service provider . award of service contract
57
CHESSS Module 7 – Service Customer
Companies use standards for…
10% Yes (both types) 21% 17% 20% 21% 10% 10% Yes (document standards) 17% 21% 20% 18%
Yes (process standards) 31% 28% 18% 33% 70% 43% No (no type of standard) 31% 34% 27%
potential suppliers potential …
service contracts of ...negotiation analysis...market contracts …
…
selection of selection of
award of of serviceaward
tender process
58
254 CHESSS
CHESSS Module 7 – Service Customer
There is a need for standards for…
Yes (both types) 23% 21% 17% 17% 21% 10% 13% 27% 14% Yes (document standards) 20% 10% 17% 14% Yes (process standards) 10% 17%
59% No (no type of standard) 47% 53% 51% 40%
… suppliers potential …
service contracts …
… contracts …
market analysis selection of
negotiation of of negotiation
tender process of serviceaward
59
CHESSS Module 7 – Service Customer
Use & need of standards for…
U N U N U N U N U N 100% 10% 17% 17% 17% Yes (both types) 21% 23% 21% 20% 21% 21% 10%
10% 10% 13% Yes (document standards) 17% 21% 20% 14% 20% 27% 18% 10% 17% 24% 14% 10% 18% 31% 28% 17% Yes (process standards) 33% 70% 59% 53% 47% 51% 40% 43% 34% No (no type of standard) 31% 27%
0%
… suppliers potential …
service contracts …
contracts …
…
market analysis selection of
negotiation of of negotiation
award of of serviceaward
tender process
U = Use of standards N = Need of standards
60
255 CHESSS
CHESSS Module 7 – Service Customer
Need for standards according to their usage
no standards 65% 10% 5% 20% are used
standards Market Market analysis are used 44,4% 11,1% 22,2% 22,2% no standards 50% 12,5% 12,5% 25% are used
supplier standards Selection of are used 54,5% 18,2% 13,6% 13,6% no standards 30% 30% 30% 10% are used
Tender standards process are used 47,4% 10,5% 26,3% 15,8% No need for additional/new no standards 33,3% 22,2% 22,2% 22,2% standards are used Yes, need for additional/new standards process standards
Negotiation are used 55% 5% 20% 20% Yes, need for further/new no standards 66,7% 16,7% 16,7%
of document standards are used Yes, need for both types of
standards standards contract Award are used 46,7% 13,3% 13,3% 26,7%
0% 20% 40% 60% 80% 100%
61
CHESSS Module 7 – Service Customer
Benefits of the use of standards: Standards…
70%70 63 60 60%60 57 53 53 53 …negotiation of service 50 50 contracts 50%50 47 47 43 43 43 43 ...market analysis 40 40 40 40 40%40 …tendering 30 30 …selection of potential 30%30 suppliers 20%20 …award of service contract 10%10 0%0 …reduce …save time …increase …improve costs transparency quaility
62
256 CHESSS
CHESSS Module 7 – Service Customer
Companies use standards for…
Yes (both types) 7% 4% 14% 17% Yes (document standards) 24% 21% 24% Yes (process standards) 17% 21%
No (no type of standard) 52% 55% 44%
in progress service delivery … service delivery received of …
service provider of controlling …
evaluation of evaluation of documentation
standards standards for
63
CHESSS Module 7 – Service Customer
There is a need for standards for…
Yes (both types) 25% 22% 22%
Yes (document standards) 7% 22% 14% Yes (process standards) 18% 7% 14%
57% 50% No (no type of standard) 43%
service delivery received of …
service provider …
in progress service delivery …
documentation documentation
controlling of the of controlling
evaluation of
64
257 CHESSS
CHESSS Module 7 – Service Customer
Use & need of standards for…
U N U N U N 100% 7% 4% Yes (both types) 14% 25% 17% 22% 22% Yes (document standards) 24% 21% 7% 14% 24% 22% Yes (process standards)24% 17% 18% 7% 21% 14%
57% No (no type of standard) 52% 50% 55% 43% 44%
0%
service delivery received of …
service provider …
in progress service delivery …
documentation documentation
controlling of the of controlling
evaluation of
U = Use of standards N = Need of standards
65
CHESSS Module 7 – Service Customer
Need for standards according to their usage
no standards 69,2% 15,4% 15,4%
are used received
service standards of
Documentation are used 46,7% 13,3% 13,3% 26,7%
no standards 66,7% 13,3% 6,7% 13,3% are used
No need for additional/new
service standards delivery standards Evaluation of Evaluation are used 30,8% 38,5% 23,1% 7,7% Yes, need for additional/new no standards 53,3% 26,7% 20% process standards are used Yes, need for further/new
document standards provider
standards Yes, need for both types of the Controlling of Controlling are used 30,8% 30,8% 15,4% 23,1% standards
0% 20% 40% 60% 80% 100%
66
258 CHESSS
CHESSS Module 7 – Service Customer
Benefits of the use of standards: Standards…
...evaluation of service delivery in progress 70%70 60 60 ...controlling of the service 60%60 provider 53 53 50 50%50 ...documentation of the 43 received services 40%40 33 30%30 27
20%20 10%10 7 3 3 0 0%0 …reduce …save time …increase …improve costs transparency quaility
67
CHESSS Module 7 – Service Customer
Companies use standards for…
Yes (both types) 17% 21%
Yes (document standards) 17% 18%
21% Yes (process standards) 18%
No (no type of standard) 45% 43%
delivered …
delivered servicesdelivered …
acceptance
evaluation of
services
of of
68
259 CHESSS
CHESSS Module 7 – Service Customer
There is a need for standards for…
Yes (both types) 17% 14%
Yes (document standards) 14% 17%
Yes (process standards) 28% 21%
48% No (no type of standard) 41%
delivered …
delivered servicesdelivered …
acceptance
evaluation of
services
of of
69
CHESSS Module 7 – Service Customer
Use & need of standards for…
U N U N 100% 14% Yes (both types) 17% 17% 21%
17% Yes (document standards) 17% 14% 18%
24% 21% Yes (process standards) 21% 28% 18%
No (no type of standard) 48% 45% 41% 43%
0%
delivered …
delivered servicesdelivered …
acceptance
evaluation of
services U = Use of standards
of of N = Need of standards
70
260 CHESSS
CHESSS Module 7 – Service Customer
Need for standards according to their usage
no standards 46,2% 23,1% 7,7% 23,1% are used
service standards delivered
Evaluation of Evaluation are used 37,5% 31,3% 18,8% 12,5% No need for additional/new standards
of no standards 58,3% 16,7% 16,7% 8,3% Yes, need for additional/new are used process standards Yes, need for further/new
service standards
delivered document standards are used Acceptance 37,5% 25% 18,8% 18,8% Yes, need for both types of
0% 20% 40% 60% 80% 100% standards
71
CHESSS Module 7 – Service Customer
Benefits of the use of standards: Standards…
70%70 …evaluation of the delivered service 60%60 57 53 53 50 …acceptance of the 50%50 delivered service
40%40
30%30
20%20 10 10%10 7 3 3 0%0 …reduce …save time …increase …improve costs transparency quaility
72
261 CHESSS
CHESSS Module 7 – Service Customer
The use of standards in the service delivery process…
Before During After
100% 7% 4% 10% 14% 21% 17% 20% 21% 17% 21% Yes (both types) 10% 17% 24% 21% 10% 21% 17% 17% 20% 18% 18% 24% 17% Yes (document standards) 21% 18% 21% 18% 31% 28% Yes (process standards) 33% 70% 52% 55% No (no type of standard) 43% 44% 45% 43% 34% 31% 27%
0%
servicecontracts … …
… potentialsuppliers … contracts … service provider … deliveredservices … delivered …
inprogress service delivery … service delivery received of …
negotiation of marketanalysis
tendering selection of award service of controllingof the evaluationof acceptance
evaluationof documentation
services
of of
73
CHESSS Module 7 – Service Customer
The need of standards in the service delivery process…
Before During After 100% 17% 17% 17% 14% Yes (both types) 23% 21% 21% 25% 22% 22% 17% 10% 13% 14% 27% 14% 7% 14% 20% 22% 10% 17% 14% 18% 7% 21% Yes (document standards) 28% 10% Yes (process standards) 17% 14%
59% 53% 57% 47% 51% 50% 48% No (no type of standard) 40% 43% 41%
0%
servicecontracts … …
… potentialsuppliers … contracts … service provider … deliveredservices … delivered …
inprogress service delivery … service delivery received of …
negotiation of marketanalysis
tendering selection of award service of controllingof the evaluationof acceptance
evaluationof documentation
services
of of
74
262 CHESSS
ANNEX B: Expert Interviews – Results
ANNEX B: Expert Interviews – Results
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Interviews
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Online Survey Part I: Overall
263 CHESSS
CHESSS Module 7 – Overall
Business services Participating Sectors: Construction industry Electronics / EDP 1,2% Mechanical and plant engineering 15,9% Communication services Energy and water supply Plastic / rubber 2,4% Finance / insurance Public services 8,5% Iron / Steel Trade Paper / print 3,7% Consumer goods industry Chemical industry 7,3% medical 3,7% Automotive industry Traffic 4,9% certification body 7,3% real estate 4,9% books & media governmental organisation 7,3% 6,1% consumer electronics 7,3% higher education labor organisation n = 29 fagforening union
3
CHESSS Module 7 – Overall
Company belongs to an industry or business association:
24%
Yes No
76%
n = 9
4
264 CHESSS
CHESSS Module 7 – Overall
The following standards are used:
25,5% 25 % Customer 20,8% Provider 16,7% 16,7% 15,7% 15,7% 15,7%
12,5% 11,8%
7,8%
4,2% 4,2%
1,9%
or
Other
National
company
standards standards standards standards standards
standards
Company
European European
specific
s
’ International International
n (Customer) = 11
Industry Customer
Consortium n (Provider) = 19
5
CHESSS Module 7 – Overall
Types of markets they purchase their services in:
31,8%
27,3% Customer 26,3% Provider 22,7% 21,1% 21,1%
15,8% 15,9% 15,8%
2,3%
Local n (Customer) = 9 Others
National n (Provider) = 20
European International
6
265 CHESSS
CHESSS Module 7 – Overall
Options to increase the transparency of the trade process:
Customer Improvement of information exchange Use of standards Exact specification of the service
Provider Better qualification of employees Use of standards Improve the information exchange between customer and provider Consistent definition of terms
7
CHESSS Module 7 – Overall
Options to facilitate the formalities prior to the actual trade:
Customer / Provider By the use of standards Improve the information exchange between customer and provider
8
266 CHESSS
CHESSS Module 7 – Overall
Expectation towards the respective business partners to use standards:
Reasons:
Standards enable a consistent 78,9% evaluation of the quality of the 72,7% delivered services.
Standards constitute a reliable basis for the certification for both, customers and providers.
27,3% 21,1% Standards stand for quality. Customer
Provider No
Yes n (Customer) = 11 n (Provider) = 19
9
CHESSS Module 7 – Overall
Main impacts that international standards might have on the trade in services:
Encouragement of (international) trade with 16 services
Increasing competition among service 14 providers
Prerequisite for participating in the 9 export market
Reduction of transaction 8 costs
no impact 1
n = 33
10
267 CHESSS
CHESSS Module 7 – Overall
Main difficulties that might exist during the development and enforcement of international and European wide standards:
Cultural barriers 15
Different market 12 structures
Different legal 9 requirements
Administrative barriers 8
Different standardisation 5 procedures
no difficulties 1
n = 32
11
CHESSS Module 7 – Overall
Main essential success factors that might exist during the development and enforcement of international and European wide standards:
The involvement of all interested parties at an 11 early stage
The standardisation activity is initiated by the 10 future standard users.
Appropriate composition of standard committees 10 and working groups.
The given relevance of standard content for 5 target groups
Mutual approval of established / pre- 4 existing standards. n = 27
12
268 CHESSS
CHESSS Module 7 – Overall
There is a need for horizontal/cross sectoral standards for the trade in services:
15,1%
18,2% Yes No 69,7% Perhaps
n = 33
13
CHESSS Module 7 – Overall
Active involvement in a standardisation process:
31,3%
Yes No
68,8%
n = 32
14
269 CHESSS
CHESSS Module 7 – Overall
For our company standards are useful that… (I/II)
I totally I totally Average disagree agree Customer n Provider n 1 2 3 4 5 6 …define cross-sectoral requirements and specifications with respect to the service 3,62 13 3,57 21 …define frequently used 5,15 13 5,43 21 terms consistently …define qualification requirements for the employees 4,77 13 3,62 21 …constitute a reliable basis for 3,92 13 4,62 21 certification by neutral bodies
15
CHESSS Module 7 – Overall
For our company standards are useful that… (II/II)
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …constitute a basis for cross-sectoral standard service catalogues 3,54 13 3,48 21 …enable the tendering in a consistent format 4,62 13 4,38 21 …enable to compare costs 5,08 13 4,14 21 and performance
…constitute a basis for the 5,00 13 4,57 21 development of service contracts …constitute a basis for the development 5,31 13 4,48 21 of Service Level Agreements (SLA)
16
270 CHESSS
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Average I totally disagree agree Customer n Provider n 1 2 3 4 5 6 …enable a consistent documentation 4,85 13 4,81 21 of the service delivery
…increase the process efficiency 4,15 13 4,38 21
17
CHESSS Module 7 – Overall
For our company standards are useful that…
I totally Average I totally disagree agree
Customer n Provider n 1 2 3 4 5 6 …enable a consistent billing and 4,77 13 4,10 21 metering of the delivered services …enable a consistent complaints 5,00 13 4,50 21 and redress handling …enable a consistent evaluation 5,38 13 4,79 21 of the delivered services
18
271 CHESSS
CHESSS Module 7 – Overall
Additional note to the use of standards :
Corvers: „Standard evaluation term Update the models, methodology (learn to improve the performance KVP)” and “Price methodology to be included in portal process but too complicated (ICT-projects: British Standard)”.
19
CHESSS Module 7 – Overall
The main use of standards in the specific steps of the service delivery process:
33,3% 31,1% before during after
35,6%
n = 30
20
272 CHESSS
CHESSS Module 7 – Overall
Main advantages in the use of standards with respect to the specific steps:
increases transparency of service delivery process makes processes more efficient eases negotiation of service contracts reduces costs enables a better documentation of the service delivery enables a better evaluation of the delivered services
21
CHESSS Module 7 – Overall
There is a need for additional or new standards in the specific steps of the service delivery process: 3,1%
15,6%
Yes No Perhaps
81,3%
n = 32
22
273 CHESSS
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Interview Part II: Provider
CHESSS Module 7 – Service Provider
Participating Sectors: Business services Construction industry Electronics / EDP 1,5% Mechanical and plant engineering 3,1% 16,9% 3,1% Plastic / rubber Communication services 3,1% Energy and water supply 3,1% Iron / Steel 3,1% 9,2% Finance / insurance 3,1% Public services Paper / print 4,6% Consumer goods industry 7,7% Trade 4,6% medical Automotive industry 7,7% 7,7% Traffic 7,7% 7,7% Chemical industry certification body
real estate n = 18 books & media
24
274 CHESSS
CHESSS Module 7 – Service Provider
Company belongs to an industry or business association:
25%
Yes No
75%
n = 16
25
CHESSS Module 7 – Service Provider
Participating sectors of their customer: Public services 2,8% 1,9% Automotive industry 3,7% 12,3% Electronics / EDP 4,7% Business services Construction industry 4,7% 8,4% Energy and water supply 4,7% Iron / Steel Mechanical and plant engineering 4,7% 7,5% Plastic / rubber Finance / insurance 4,7% Paper / print 7,5% Chemical industry 5,7% Consumer goods industry Other 7,5% 5,7% Communication services 5,7% 6,5% Traffic Trade n = 21
26
275 CHESSS
CHESSS Module 7 – Service Provider
Types of services the company provides:
Other professional business 3,4% 3,4% services 5,1% 22,0% Other business services
6,8% Product-related services
Infrastructure services
11,9% Communications, computer and related services Research and development 18,6% Real estate services, renting
11,9% Financial intermediation
16,9% Transport and storage
n = 21
27
CHESSS Module 7 – Service Provider
Crucial steps and main concerns about trading in B2B services: Phase-related Cross-phased
Negotiation of service contracts Ambiguous terms
Evaluation of potential suppliers Customer relationship Ambiguous terms Cultural barriers Communication between Use of different standards customer and provider Standards, that are independent of their sectors, are not easy to transfer to a specific case. Most of them are too generic.
28
276 CHESSS
CHESSS Module 7 – Service Provider
Providers‟ reasons for the use of standards (I/II):
very Average totally irrelevant relevant Provider n 1 2 3 4 5 6 Standards may optimise our internal processes. 4,52 21
The use of standards creates transparent internal processes. 4,10 21
By using standards our costs may be reduced. 3,38 21
By using standards the costs of our 3,38 21 customers may be reduced.
By using standards our company 4,38 21 fulfills legal requirements.
29
CHESSS Module 7 – Service Provider
Providers‟ reasons for the use of standards (II/II):
very Average totally irrelevant relevant Provider n 1 2 3 4 5 6 By using standards our company fulfills customers‗ requirements. 5,05 21 Standards improve our ability 3,57 21 for innovation. The use of standards enables us 3,90 21 to enter new markets.
By using standards our company is able 4,19 21 to access expertise fast and easily.
Standards improve the quality of 4,95 21 our services.
30
277 CHESSS
CHESSS Module 7 – Service Provider
Additional note to the use of standards :
Heidelberg Schweiz AG: “[The use of standards] eases the personnel leadership” and “[Standards] ease the identification of the employee with his work“.
Corvers: “[Standards] manage the risk of quality for the customer” and “Standards create trust“.
31
CHESSS Module 7 – Service Provider
There is a need for horizontal/cross sectoral standards for the trade in services:
15 %
Yes 25 % No 60 % Perhaps
n = 20
32
278 CHESSS
CHESSS Module 7 – Service Provider
Active involvement in a standardisation process:
30%
Yes No
70%
n = 20
33
CHESSS Module 7 – Service Provider
The main use of standards in the specific steps of the service delivery process:
29,2% 33,3% before during after
37,5%
n = 18
34
279 CHESSS
CHESSS Module 7 – Service Provider
There is a need for additional or new standards in the specific steps of the service delivery process:
10%
Yes No
90%
n = 20
35
CHESSS CEN Horizontal European Service Standardization Strategy Module 7 Business-to-Business services
Analysis – Interview Part III: Customer
280 CHESSS
CHESSS Module 7 – Service Customer
Participating Sectors:
Public services 5,9% 11,8% Business services 5,9% Chemical industry 5,9% Electronics / EDP 11,8% Mechanical and plant engineering 5,9% Finance / insurance Traffic Construction industry 5,9% 5,9% Communication services Energy and water supply 5,9% 5,9% Trade consumer electronics 5,9% 5,9% governmental organisation higher education 5,9% 5,9% 5,9% 5,9% labor organisation fagforening union
n = 11
37
CHESSS Module 7 – Service Customer
Company belongs to an industry or business association:
22,2%
Yes No
77,8%
n = 9
38
281 CHESSS
CHESSS Module 7 – Service Customer
Types of services the company purchases:
Infrastructure services 5,9% 5,9% 16,2% Other business services
5,9% Communications, computer and related services Other professional business 8,8% services 16,2% Real estate services, renting
Product-related services
11,8% Financial intermediation
Research and development 14,7% 14,7% Transport and storage
n = 12
39
CHESSS Module 7 – Service Customer
Crucial steps and main concerns about trading in B2B services: Phase-related Cross-phased
Brief overview / market analysis Negotiation of service contracts Selection of potential supplier Ambiguous terms
Communication between customer and provider Quality control Language barriers
Quality control and assurance Billing
40
282 CHESSS
CHESSS Module 7 – Service Customer
Customers‟ reasons for the use of standards:
very Average totally irrelevant relevant Customer n 1 2 3 4 5 6 Standards may optimise our internal processes. 5,08 13 The use of standards creates transparent internal processes. 4,85 13 By using standards our costs may be reduced. 3,69 13 By using standards our company fulfills legal requirements. 4,38 13 Standards improve our ability for innovation. 2,69 13 Standards improve the development of our suppliers. 3,69 13 By using standards our company is able to access expertise fast and easily. 4,15 13
41
CHESSS Module 7 – Service Customer
Additional note to the use of standards :
Eurogiro: “[Standards are useful] to ease business relations and transactions with our customer and partners”.
Energywatch: “Standards make it easier to select service providers (e.g. research organisations)”.
42
283 CHESSS
CHESSS Module 7 – Service Customer
There is a need for horizontal standards for the trade in services:
15,4%
7,7% Yes No Perhaps (concerns, just big 76,9% companies might be involved)
n = 13
43
CHESSS Module 7 – Service Customer
Active involvement in a standardisation process:
33,3%
Yes No 66,7%
n = 12
44
284 CHESSS
CHESSS Module 7 – Service Customer
The main use of standards in the specific steps of the service delivery process:
33,3% 33,3% before during after
33,3%
n = 12
45
CHESSS Module 7 – Service Customer
There is a need for additional or new standards in the specific steps of the service delivery process:
8,3%
25,0% Yes No 66,7% Perhaps
n = 12
46
285