Service Lifecycle Management (SLM) Is a Prerequisite for "Best-in-Class" Field Service - But, How Do You Get Management to "Buy-in"?
(Originally published in the March/April 2006 issue of AFSMI's Sbusiness)
By Zack Bergreen
Managing today's service enterprise means planning and coordinating service on a global scale. It means delighting your customers - and your shareholders. And it calls for new technologies and business practices designed specifically to solve the service lifecycle management challenge. That is why we believe that any organization that strives to provide "best-in-class" field service in support of its customers must first implement a robust Service Lifecycle Management (SLM) solution in order to achieve its objectives.
While at first glance, it may appear that there are many alternative SLM solutions available; however, not all of them are designed with the same levels of functionality, application, and comprehensiveness or full understanding that the SLM market requires - the key ingredients for success. Simply listing and describing the potential benefits of SLM constitutes only half the battle - you will still need to "sell" the concept to management in order to gain their "buy-in". That is where our Service Impact Assessment, or SIA, model comes in handy - by quantitatively proving the case for implementing SLM with "real" numbers that positively impact the bottom line.
Therefore, before moving forward it is critical that you not only understand the benefits of SLM - but that you are also able to communicate these benefits to company management. Read on to see how you can accomplish both of these tasks in the most efficient manner.
A. The Benefits of Implementing Service Lifecycle Management
The benefits of implementing Service Lifecycle Management are many - and are fairly universal (that is, applicable in virtually every services organization, regardless of type, size, or geography served). In fact, the larger and more global the organization, the greater the benefits are likely to be. Our customers typically identify the following five areas of benefits as the most compelling talking points in selling the concept to management (Figure 1).
1. Reduced Service Costs
Simply citing generic data regarding potential cost reductions does not generally entice management to look any further. In order to truly gain their attention, you've got to specify exactly where the cost savings will be coming from - and to what extent (i.e., provide them with hard numbers). The good news is that a robust SLM solution can manifest quantifiable cost savings from several specific areas including:
These areas of cost savings will very likely peak management's interest - as well as entice them to ask for more detailed cost-saving information. For example:
- Improved technician productivity
- Improved Inventory/parts management
- Optimized service delivery
- Reduced time in the "service-to-cash" cycle
Improved Technician Productivity
Through SLM, improvements in technician productivity can be gained in a variety of ways including:
Empowered by the data and information made available through SLM, field engineers can also serve as the "eyes and ears" of the organization with respect to identifying potential cross-selling or upselling opportunities for the company's various products and services. For example, armed with recent service call activity data, a field engineer can provide customers with fresh information on new product or service offerings that would ultimately benefit their operations in the long-run - while at the same time, identify potential leads for the company's sales team. By doing so, customers will not only look at their field engineer as "the person who gets things fixed", but also as a "trusted advisor" - or the one they can count on to both fix their equipment, and provide them with recommendations for acquiring new products and/or upgrading their service level coverage.
- Providing field engineers with real-time, direct access to customer service history, equipment repair records, product information, and inventory and parts availability enables them to provide the best service possible in the most cost-effective manner by eliminating time-consuming paperwork and forms preparation. As a result, the engineers are able to spend virtually all of their time (i.e., billable time) providing their customers with the highest levels of service and support, rather than simply collecting information and filling out forms.
- Providing field engineers with specific service level information for each customer they serve so that they never unknowingly provide their customers with anything less - or more - than those levels of service that are specifically covered in their respective Service Level Agreements (SLAs).
- Reducing overhead costs through the elimination of most paperwork, delays in communications, and the use of outdated systems that had previously required manual data entry or redundant data input.
However, while improved technician productivity is generally an eye-opener to management, there are still far more compelling cost benefits that can also be gained through an SLM solution.
Improved Inventory/Parts Management
SLM can also result in "hard" cost savings through improved inventory/parts management, as summarized below:
Some organizations may also wish to implement "vendor managed inventory", or "just-in-time" inventory replenishment models to support their customer base, so that once a needed part is identified, it can be ordered and shipped immediately from the vendor source to the customer site. These types of fast-track inventory models can be easily implemented and supported through SLM.
- SLM enables services organizations to enhance their Asset Management (AM) capabilities by allowing them to track specific component/equipment relationships, and monitor their inventories for the purpose of automatic replenishment. By developing - and following - tightly integrated inventory management processes, users are able to significantly reduce inventory size and related carrying costs.
- SLM also provides technicians with access to real-time inventory information, as well as the ability to order parts directly from the field, rather than having to wait until they return to their home base, or gain access to a telephone connection. The ability to work with real-time parts/inventory information provides both the technicians - and the customers they serve - with immediate access to parts availability, while simultaneously updating inventory levels and triggering automatic replenishments.
However, while improved inventory/parts management ultimately benefits both the services organization and the customers it serves, there are still additional cost savings benefits that management can literally "take to the bank".
Optimized Service Delivery
Optimized service delivery may mean different things to different people; however, the most compelling benefits of service optimization delivered through SLM are typically manifested in terms of:
Ultimately, each of these benefits is realized through improved response time, decreased need for follow-up/repeat calls, and less equipment downtime. Even so, there are still several other types of benefits that will also be of significant interest to company management.
- Minimized time to dispatch (i.e., quicker response time);
- Increased first-time fix rates (i.e., fewer repeat failures and/or service calls); and
- The ability of customers to perform self-diagnosis and problem resolution via the Web.
2. Streamlined Workflow
Technology is the tool that assists services organizations in making their operations run more efficiently - but it is only a tool. However, SLM leverages best-of-breed service management solutions with industry best practices already built-in, thereby allowing practitioners to benefit not only from the automation of their current processes, but also by allowing them to redefine and improve their processes to deliver optimum results. These results are typically manifested in the following ways:
Integrated Processes and Technologies
Only through SLM can the practitioner benefit from a completely integrated and seamless solution that provides an instant 360-degree web-based view of the entire business. For example, when Sales or Marketing require information from Service Operations to develop targeted promotions to maximize cross-sell and up-sell opportunities, a robust SLM solution can give them exactly what they want - when they want it. Similarly, when Service needs real-time customer information from the Contact Center prior to making a call, SLM makes that information readily available.
We have always believed that a unified and modular approach, based on open industry standards, protects our customers' existing IT investments, lowers their Total Cost of Ownership (TCO), and paves the way for the deployment of the appropriate SLM modules - as required - as the organization grows.
Improved and Streamlined Processes
The end result of successfully integrating the organization's processes and technologies is improved and streamlined processes - in otherwords, running the organization more efficiently. These benefits are typically manifested in the following ways:
3. Improved Service Levels
- Through an automated call management system based on CTI, IVR, dynamic scheduling and dispatch, and closure capabilities, services organizations can rapidly improve and streamline their call management process, thereby significantly increasing customer satisfaction and retention.
- With the ability to apply contract templates, implement automatic contract renewals, and build structured workflow processes, users can maximize their contract processing, resulting in more predictable revenues and improved productivity.
- The capability to track, monitor, and automate stock based upon user-defined rules, in conjunction with the ability to support multiple warehousing strategies, also leads to improved and streamlined stock management levels at reduced inventory levels (also resulting in reduced inventory costs).
There are basically two ways to look at SLM - (1) as a tool for lowering the cost of doing business, and (2) as a means for improving existing service levels. While the cost savings may be very real, SLM can also be a significant contributor to the overall improvement in the levels of service performance for the organization. Complete charge capture, and maximizes cross-selling and up-selling opportunities are just some of the ways that play to both outlooks on SLM.
Complete Charge Capture of Service Delivery
SLM enables the complete capture of all parameters involved in delivering service (parts, T&M, expenses, ancillary services, extended warranties, etc.) ensuring that no billable charges are ever lost or overlooked, and ultimately improving invoicing accuracy. Through SLM, as soon as the technician closes a call and captures the customer's electronic signature, that data can instantly be transmitted to the central billing system, thereby significantly streamlining and compressing Days Sales Outstanding (DSO).
An SLM system can also serve a useful role in assisting organizations in improving future product (and service) designs by identifying any flaws in their existing products based on both aggregate and product-specific service history. What's more, by continually tracking product service history over time, any new or emerging design flaws can be identified as a particular product line moves through its maturity cycle, or as a new product line is introduced.
Maximized Cross-Selling and Up-Selling Opportunities
Through the capability of leveraging a web-based customer self-service portal in conjunction with a dynamic self-learning knowledgebase, users gain the ability to offer new products/services at every customer interaction, resulting in increased revenues without increasing costs. A state-of-the-art SLM solution that embeds intelligent automation along with a robust product information management repository can arm all of the employees in the field with first-rate cross-selling and up-selling capabilities by prompting/alerting them of any potential sales opportunities (e.g., contract/warranty expirations, aging equipment, ancillary accessories, add-ons, etc.) at the specific time of interaction with the customer. According to William K. Pollock, president of the Westtown, PA-based consulting firm, Strategies For GrowthSM, "Studies have shown that there is no better place to cross-sell or up-sell than at the specific point of customer interaction - and SLM is the only solution that provides field personnel with all of the tools they need to make it possible."
Ability to Leverage Service as a Competitive Advantage
Through SLM's business intelligence capabilities, users can identify, monitor, and track opportunities to offer customized and global service agreements based upon each customer's unique usage levels. By doing so, the customer benefits from having its service needs and requirements fully met, and the services organization can maximize its total revenues in the field. SLM also supports the services organization's ability to deliver proactive rather than reactive personalized service - at an affordable price - empowering it to exceed customer expectations and generate repeat sales.
4. Enhanced Quality and Growth
While most of the benefits described thus far focus primarily on transitioning from the past to the present, enhanced quality and growth clearly looks to the future of the organization - and this is where SLM excels. The three main components of these forward-thinking benefits may best be summarized as follows:
Ability to Deliver Consistent Service Globally
The most effective SLM solution is one that is truly global, able to support customers using all types of equipment, in all applications, and in all geographies using the same database. As such, the SLM solution must be designed to implement common business processes on a single system worldwide with support for multiple currencies, operation centers, and price books - and be able to support global, regional, and local views of the service operation. Even if your organization does not presently operate on a global basis, your SLM solution must be ready to step up to the opportunity if it arises.
Modularity for Supporting Growth
An SLM solution must also be able to grow with the organization. Few services organizations actively plan to reduce their operations over time; however, with today's economic and competitive pressures continually limiting available growth opportunities, services managers have to take advantage of every real opportunity that comes their way - and the best way to do this is through system modularity. For example, few systems today can support a global deployment through a single application.
As the service business grows, it will also likely require additional solutions to support that growth. A robust SLM solution will be able to support the business through the availability of specific modules that can be easily - and seamlessly - added as it undergoes growth, or change. We believe that only a scalable SLM solution can offer the precise configuration and functionality that can enable a services organization to continue to support a growing number of users as it, itself, grows in size and capability.
Improved Quality and Reduced Costs
Through SLM, users are also able to identify defective, outdated, or unnecessary parts, resulting in both enhanced quality of service delivery and reduced costs. More importantly, the most cost-effective spare parts can be easily identified and stocked, and any individual line items that may be adding unnecessary costs to operations can also be identified and flagged.
5. Increased Customer Satisfaction
Historically, for some operations managers, customer satisfaction has been nothing more than an inexact science that defies accurate reporting, consumes a great deal of time and resources, and is immeasurable in terms of actual results. However, the vast majority of services managers in today's marketplace recognize customer satisfaction for exactly what it is - an essential building block for long-term, profitable relationships that ultimately leads to customer loyalty and repeat business.
Numerous studies have also shown that acquiring a customer is a lot more expensive than retaining an existing one. What's more, the level of service a company offers may ultimately be the principal deciding factor between whether a customer becomes loyal to its vendor, or decides to switch to a competitive vendor, product, or service. By utilizing SLM to anticipate customers' needs and requirements, improve responsiveness, and deliver consistent service, services organizations can improve the way in which their customers perceive the quality of their service offerings - and this will go a long way in their ability to transform customer satisfaction into true customer loyalty.
The principal benefits of facilitating the transition from customer satisfaction to loyalty are summarized below:
Ability to Anticipate Customer Service Requirements
SLM provides users with easy-to-use functionality, an intelligent knowledgebase, and a comprehensive customer repository to track problems and potentially identify many other problems before they occur. With this valuable information at their fingertips, users can offer more efficient scheduling for preventive maintenance, and minimize the need for repeat service calls, wherever possible. As a result, customer satisfaction is increased, and costly unscheduled service visits can be minimized.
By having real-time, anytime, anywhere access to customer information, repair histories, parts availability, and technical product specifications, field engineers will always be properly prepared and empowered to complete all of their work during the first visit to the customer site, thereby saving both the service provider and the customer time and money.
Improved Responsiveness to Customer Calls and Service Delivery
SLM empowers Contact Center and field personnel with visual alerts, automatic escalation, scripting, and question trees, so they are able to respond to customers' inquiries quicker and more completely. Through SLM, they will also have a full range of corporate knowledge stores readily available to optimize the customer interaction process. In addition, the integrated, multi-channel inbound/outbound capabilities facilitated by SLM provide for unparalleled customer support in all areas, including placing an order, updating records, making payments, receiving remote support, and scheduling a service call. As a result, there will be significant improvements realized with respect to first call resolution, decreased call center times and costs, and the ability to deliver consistent - and consistently high - levels of service.
Making It Easier to Do Business - Making It More Profitable
In today's increasingly fast-paced business environment, customers have very high expectations, and they will take no excuses for poor customer service. They expect fast, relevant, and accurate information from the companies they do business with, and they will accept nothing less. The self-service capabilities offered through SLM provide customers with all of the information they need - when they want it, anytime, anywhere. This, in turn, ultimately results in improved customer satisfaction and strengthened loyalty throughout the user's customer base.
By implementing a robust SLM solution, services organizations can positively impact all aspects of their business through improved invoicing accuracy, automated contract renewals, and the ability to offer customized service agreements - all of which are geared to improving their relationships with customers while simultaneously increasing revenues and reducing costs.
B. Service Impact Assessment (SIA) - Getting Management to "Buy-in"
Many of our clients tell us that selling company management on the general benefits of implementing an SLM solution is typically the easy part - the hard part is being able to provide them with some "real", quantifiable numbers that seal the deal. That is why we built our Service Impact Assessment, or SIA, model; to provide our clients with all of the hard and fast numbers that ultimately prove the case for implementing SLM - real numbers that positively impact on the bottom line (Figure 2).
SIA is a service developed to help companies make the right decision in deploying a Service Lifecycle Management (SLM) solution. It is a fast-track approach that identifies and quantifies the financial and operational impact that SLM can have on a company's total operations. In fact, several leading industry analysts concur that investments in SLM are far more likely to yield greater returns than similar investments in either Sales Force Automation (SFA) or Supply Chain Management (SCM).
Pollock claims that "As more and more companies recognize that field service optimization represents a tremendous opportunity for revenue growth and improving the bottom line, it becomes even more critical to ensure that management has all of the compelling financial data they need to justify moving forward. But the numbers have to be real!" This is where we believe the Service Impact Assessment stands up to the task. Essentially SIA provides a template for how to increase profitable revenue, decrease costs, and positively impact cash flow, financial metrics, and the bottom line by optimizing the processes, technology, and human capital within the service organization.
The objective of the SIA is to help service management organizations move toward a holistic approach that results in operational and financial improvements. By applying SLM best practices, an organization's existing critical business processes can be objectively examined, and the impact of implementing SLM can be easily predicted. The assessment begins with an intensive 2 to 3-day visit to the organization's site for interviews and observation, followed by a week of assessment and analysis, and concluding with a presentation of the findings and recommendations.
The SIA process is actually quite simple. Through a series of on-site interviews and observations, the SIA is designed to:
As such, we believe this to be the most effective - and compelling - selling point to gain management "buy-in" - and approval - for a proposed SLM implementation.
- Show services management how to cull out their key operational and financial metrics, and map the process flows where there is significant value to be gained.
- Identify and quantify proposed changes to existing processes, and show the impact that service management optimization can have on financial performance.
- Map out the political landscape as it affects the overall project, and pave the way toward fostering cross-functional "buy-in" throughout the organization to support the project.
SIA's unique and proven discovery process provides all of the information that management needs to streamline service operations and increase profitability. The documentation from the assessment can also be used as the baseline for any number of future projects within the organization. The deliverables of the SIA ultimately serve to quantify both the operational and financial benefits of SLM (i.e., payback and ROI, etc.) - which is exactly what management will need before making its decision.
The SIA is an effective way for Astea to help services organizations identify - and quantify - where they can streamline their workflow, increase revenues, improve customer satisfaction, and, ultimately, create a competitive advantage. However, at the end of the day, the main benefit of SIA, is that it quantifies the value of those changes in hard numbers, thereby providing indisputable justification for SLM project approval.
Embarking on any new project is difficult enough, but can be next to impossible if you don't have a way to generate the numbers to justify moving forward. That is why, for something as important as Service Lifecycle Management, a tool like the Service Impact Assessment plays such a valuable role. General talk about reducing costs and improving customer satisfaction won't provide your management with a compelling enough reason to move forward; however, through an objective and detailed assessment, you will have all the ammunition you need to get from Point A to Point B.
Zack Bergreen is Chairman and CEO, at Astea International, global leader in service management software that addresses the unique needs of companies who manage capital equipment, mission critical assets, and human capital. Zack can be reached at (215) 682-2500. Astea's website is accessible at www.astea.com.