SERVICE LIFECYCLE MANAGEMENT: PATHWAY TO PROFITABLE SERVICE

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1 WRITTEN BY: JOHN CARROLL, CHIEF EXECUTIVE OFFICER FEBRUARY 2013

2 Page 2 of 9 In The Service Council s The Role of Service Culture In Driving Service Revenues research (October 2012), virtually half of organizations reported they are currently managing service as an independent profit center. The global services community has come a long way in the past dozen years or so. However, in order to attain the highest levels of performance, an organization must first have a strong and effective Service Lifecycle Management (SLM) solution in place, along with an internal philosophy and approach to service that allows it to leverage all of the benefits associated with the solution. Presently, just over half (i.e., 53%) of global services managers claim they see service as a top priority [that is] being well-managed by executives in charge. However, half again as many (i.e., 27%), while they still cite service as a top priority, are forced to admit that they are lacking in resources to manage it effectively. Perhaps nothing is more telling than the fact that roughly 90% of executives believe that a strong service culture is key to attaining the organization s revenue goals and profitability and that the implementation of SLM is one of the fastest and best ways to assist in driving the organization toward a goal of Best Practices. Whether an organization is managed as a profit center or a cost center; looks at service as a top priority, or not; or has the management wherewithal to fully leverage its service philosophy, SLM can be the great equalizer to assist it in attaining Best Practices performance. Other factors that support the need for an effective SLM solution include: Service revenues are being generated from a variety of sources and each component needs to be supported by the appropriate SLM tools and resources Most services organizations see their revenue streams expanding in the next 12 months; and this growth needs to be facilitated through SLM solution scalability Best Practices organizations are prepared to re-invest their expanding revenue base into new/enhanced technologies, sales and marketing materials For many services organizations, current levels of service delivery underperformance reflect a distinct need for SLM tools and technologies and year-overyear trends confirm this The outcomes of a strong service culture, supported by the right tools and resources, are more satisfied customers, an expanding revenue base and increased profitability Organizations using outsourced solutions are more satisfied than those using homegrown applications Planned technology acquisitions in the next 24 months are strong with respect to key components of SLM Services organizations are planning to add more SLM functionality in support of both their field techs and their customers i.e., resulting in more visibility, more empowerment and more data accessibility in real time

3 Page 3 of 9 The Evolution of SLM SLM is not a new thing; there has been a long evolution of what, today, is known as Service Lifecycle Management. The SLM market has morphed over the years from FSMS (i.e., Field Service Management Systems), to SMS (i.e., Service Management Systems, covering both field and on-premise operations), to CIS (i.e., Customer Interaction Systems), to CRM (i.e., Customer Relationship Management), and, presently, to SLM. More changes (and additional acronyms) can be expected over the years as part of the natural evolutionary process. Many of the evolutionary changes we ve witnessed with respect to the emergence of SLM have been responsive to the evolution of service delivery models, from reactive (traditional break-fix ), to proactive (preventive maintenance), to predictive (intelligent analytics and diagnostics). Analytics has become a popular buzzword over the last decade; however, analytics alone adds no value. It is the application of insight that matters. However, lately, the market may be characterized as expanding, but consolidating, as evidenced in part by the acquisitions of 4CS and Servigistics (including previouslyacquired MCA Solutions) by PTC. Further expansion and consolidation of the global SLM marketplace is also anticipated. The end result is that services organizations no longer need to look to multiple solution providers to power their services operations they can comfortably select the one solution (and provider) that offers all of the tools and functionality they require to manage their entire services business. The Principal Components of SLM Service Lifecycle Management (SLM) comprises many functionalities, each requiring its own measure of technology support in order to run effectively and efficiently (i.e., with a dual focus on both the bottom line and customer satisfaction). The components of SLM that are most commonly deployed include: Field Service Management Front Office / Back Office support Field Technician enablement Mobile Workforce Management Scheduling & Dispatch, Appointment Management Fleet Management / GPS Tracking Invoicing / Billing Service Parts Management Inventory Management Demand / Fulfillment Management

4 Page 4 of 9 Parts Planning and Pricing Logistics / Reverse Logistics Service Parts Sales Management Warranty / Contract Management Warranty and Claims Management (e.g., serialized components) Logistics / Reverse Logistics Returns Processing Refurbishment / Remanufacture / Asset Disposal Customer Management CRM / Customer Partnerships Marketing Automation Service Supply Chain Management Services Sales Enablement Customer Enablement (e.g., customer portal, etc.) Business Intelligence / Analytics Knowledge Management (i.e., data and analytics) Database Management Big Data Asset Management Product / Service Intelligence Remote Services / Diagnostics (e.g., M2M) Asset Management / Uptime Optimization Product Lifecycle Management Social Media / Community Development Customer Self-serve E-serve / E-Commerce Social Media tools, resources and interface Of course, the SLM solution chosen by any organization will need to address both the common areas of service management that all organizations face (e.g., scheduling and appointment management, parts management, etc.) as well as those areas that may be unique to a specific business (e.g., green service and transportation management, etc.). In either case, there is probably only one solution (and provider) that can best meet the organization s unique requirements for an SLM solution.

5 Page 5 of 9 Deploying a System for Service The most effective way to deploy SLM is as a cohesive System for Service. The SLM solution should enable a full lifecycle approach to customer service and product performance to optimize the total value of the customer experience. The approach should provide the manufacturer/oem, dealer and customer with a single view of service for continuous service improvement, powered by the following key technology differentiators: Single source of product and service knowledge Connected processes across the service network Closed feedback loop to enterprise systems Often, service operations are managed functionally to improve individual service processes such as scheduling, spare parts, and warranty management. However, this siloed approach fails to reap all of the potential benefits of a truly cross-functional, full service lifecycle management approach especially as it relates to meeting customer expectations for both product and service performance throughout the entire lifecycle. A single system for service, however, optimizes both product and service performance, from a single unit to the entire installed base. This is accomplished best by organizing service strategy and delivery in a synergistic process centered around maximizing product performance to yield the greatest customer value and service performance. Leveraging Service Intelligence into SLM Service intelligence is also a key component of SLM, and may most simply be described as knowing how the product is designed and manufactured, updated and structured, and serviced and supported etc. (as well as how reliable it is once deployed in the field). The principal benefit of service intelligence may then be described as the ability to leverage the organization s unique product heritage by incorporating service intelligence into improving service planning, procedures, information management, and overall service operations. To corroborate this viewpoint, research by The Service Council confirms that big data continues to increase in both interest and planned usage. However, many services organizations do not yet have an adequate handle on the enormity of their service data, let alone product intelligence and, as such, are not currently able to benefit from a service by design interactive scenario. It is also clear from The Service Council s research that many services organizations have already begun to look at SLM solutions that can foster this kind of collaboration, or link, between product and service.

6 Page 6 of 9 Best Practices What the Leaders Are Doing The leading services organizations (i.e., those that may be characterized as Best Practices ) are also among the leaders in technology adoption, and the application of that technology to the enablement and empowerment of both their field technicians and their customers. For example, a majority of Best Practices organizations presently offer a minimum of the following types of SLM functionality to their field technicians: 66% Ability to track and update current status of work orders 64% Access to product schematics / documentation 63% Access to customer / asset service history 58% Ability to initiate service work orders These all represent specific areas that provide the organization s field force with added data and information on both the product and service history sides to assist in their ability to meet their customers needs. However, it is the ability to provide critical information to the field, on a real-time basis, that ultimately differentiates Best Practices organizations from the also-rans. Other functionality support provided by Best Practices organizations to their field technicians may also include: 46% Ability to provide customers with an estimated Time to Arrive (TTA) / Time to Complete (TTC) 41% Availability of required parts, either in van or en route 37% Access to real-time parts inventory / availability 28% Use of GPS-based turn-by-turn directions to the customer site 27% Access to resolution scenarios Similarly, the primary types of functionality presently being made available by Best Practices organizations to their customers / users include: 49% Ability to order parts 44% Ability to initiate / create service tickets online 33% Ability to view current status of work order 30% Access to self-service resolution scenarios 23% On-site chat capability with technical support representative 17% Ability to track service part(s) shipping status 17% Availability of real-time status update alerts regarding technician status or estimated arrival time, etc., via or text 15% Ability to update status of current work order These levels of enablement and empowerment may be considered as a baseline for today s more progressive services organizations. However, it will not be long before they

7 Page 7 of 9 are nothing more than prerequisites for every organization hoping to become a key player in an expanding and increasingly demanding services marketplace. Why a Best of Breed, End-to-End SLM Solution Is Best The main factors typically used in evaluating and selecting an SLM solution are many and meaningful. As a result, it is critical to choose both the provider and the solution that best address the organization s needs both today, and in the future. These factors may include: A best of breed, end-to-end, SLM solution typically has more scalability to support the organization as it grows (i.e., it is easier to scale a solution from a single vendor, than across many vendors) Implementation of an end-to-end SLM solution will likely be less invasive / disruptive to existing service operations, involving a single / quicker implementation, burn-in and training SLM solution providers know service; however, some ERP vendors don t yet get it Single systems tend to be more scalable; and easier to upgrade, expand or enhance (e.g., think merger/acquisition) All components of SLM within a single system will be able to talk to one another no major integration required Cloud technology is the great equalizer that allows a best of breed SLM vendor to easily provide users with the latest technology / fixes, etc., across all SLM components / modules Users benefit from the economies of scale that the best of breed SLM vendor has already realized Everything comes integrated no vendor finger-pointing or attempts to pass the buck The user s desired specs are more easily built into the solution; you buy it, you use it, they provide the upgrades and maintenance Outgrowing your solution is never a problem; there is always a updated version or upgrade available There is only a single throat to choke one vendor, one call, one fix The research also shows that users are typically more satisfied with the performance of SLM solutions provided by a best of breed solution vendor, rather than a bundled offering provided by an Enterprise Resource Planning, or ERP, vendor. That does not mean to say that an ERP solution will not, or cannot, support Service Lifecycle Management but, rather, that a services-specific, best of breed solution can generally be more effective and easily integrated within organizations who have an in-house ERP solution.

8 Page 8 of 9 In any case, and regardless of which type of solution or technology is chosen, it is extremely important to ensure that all alternatives technologies, solutions and vendors are screened and evaluated with the same high level of due diligence that is, evaluating and comparing all potential vendors using the same set of criteria, and holding them to the same standards. The key advantage of SLM is that it enables the ability to provide information directly at the point-of-need. It is more than just delivering work orders to field technicians; it is about the ability to put all of the required information in their hands, electronically as they need it, and when they need it. Ultimately, however, it will all come down to an evaluation of functionality, acquisition cost, ease of implementation, ongoing maintenance and support, scalability and all of the other individual components that contribute to the company s ability to satisfy its customers and contribute to the bottom line.

9 ABOUT THE SERVICE COUNCIL The Service Council is an exclusive community of Services Executives representing global, industry-leading, service-centric businesses. The mission of The Service Council is to provide a platform for innovation sharing, shaping and sharpening; where uncommon service-centric businesses can emulate the strategies deployed by Global Service Leaders. The Service Council presents its annual Smarter Services Executive Symposium in April May. The Symposium provides an invaluable opportunity to meet and network with Services, Customer Experience and Customer Management Executives in an environment conducive to advancing Executive relationships. For more information on The Service Council visit For general inquiries please submit an to [email protected].