Transcript HIGH TECH SERVICES The Role of Service Innovation

HIGH TECH
SERVICES
The Role of
Service Innovation
In the Economy’s
Most Famous
Product Sector
J.B. Wood
President and CEO
Service & Support Professionals Association (SSPA)
Technology Professional Services Association (TPSA)
© SSPA and TPSA 2006
The Two Largest Industry Associations
in Tech Services
…for customer support
© SSPA and TPSA 2006
…for professional services
SSPA and TPSA Support Major Tech
Companies Across The Broad
Technology Market
Enterprise
(>$1bn
in revenues)
SME (<$1bn in
revenues)
Networking
HW
HW
Computing
And Desktop
HW
Storage Infrastructure
Software
SW
Client server Desktop SW
applications
Office
Products
SW
Home office and
Consumer
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Consumer
Technology
Products
Office
Products
Medical
Technology
Internet
3
A Line-Up of Over 200 Member Companies
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4
The World is Becoming One Big
Top Ten Nations by Labor
Force Size System
Service
(about 50% of world labor in just 10 nations)
A = Agriculture, G = Goods, S = Services
Nation
% WW
Labor
China
India
21.0
17.0
%
A
%
G
%
S
50
15
35
60
17
23
25 yr %
delta S
2004
191
28
U.S.
4.8
3
27
70
21
Indonesia
3.9
45
16
39
35
Brazil
3.0
23
24
53
20
Russia
2.5
12
23
65
38
Japan
2.4
5
25
70
40
Nigeria
2.2
70
10
20
30
Banglad.
2.2
63
11
26
30
Germany
1.4
3
33
64
44
>50% (S) services, >33% (S) services
© SSPA and TPSA 2006
2004
United States
(A) Agriculture:
Value from
harvesting nature
(G) Goods:
Value from
making products
(S) Services:
Value from enhancing the
capabilities of things (customizing,
distributing, etc.) and interactions between things
The State of the Technology Services Industry
Services revenues
are growing across
the software industry . . .
. . . and have become
the critical component
in IT sector growth
© SSPA and TPSA 2006
The State of the Technology Services Industry
Services revenues
are growing across
the hardware industry . . .
. . . and have become
the critical component
in IT sector growth
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Technology Services Universe:
Q4 1996
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The TPS Universe:
Q4 2006
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The Key Shifts As
The High Tech Market Has Matured
Call Center
Service Margins
More
Service
Revenue
Professional
Service
Margins
© SSPA and TPSA 2006
The Service 50
Gross Margin Analysis
PS in a Product Company
Service Companies
Hardware Companies
The Service 50
All Product Companies
Software Companies
Support in a Software Co.
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
30%
35%
40%
45%
50%
55%
60%
65%
© SSPA and TPSA 2006
INNOVATION:
Technology,
KM and
Globalization
Call Center
Service
HAPPY
CFO
Call Center
Service
Gross
Margins
Professional
Services
Professional
Services
MODEST INNOVATION:
Still Labor Intensive
SAD
CFO
1996
2006
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The Big Questions
For Customer Service Execs:
For Professional Services Execs:
“Are we running out of margin
improvement opportunities? If
no, then what is next? If yes,
then help me prove it to my
CFO.”
“There has to be more than just
process and service system
improvement. Where is the
capture and re-use of IP? Where
is the scale? Where is the
technology? Does more services
have to mean more people?
© SSPA and TPSA 2006
The Three Pulling Forces On the
Chief Services Exec
Revenue
Mix
Customers
Solution
Centric
Valuation
Business
Strategy
Analysts
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Capabilities
Staff
THE MANAGEMENT IMPERITIVE:
Tech Companies Must Find Ways of
Delivering More and Better Services
To Customers But Avoid the Margin
Drag of More People
Service Innovation Is Key!
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Four Generations of Computing Over 40 Years…
Product as Service
Web
PC & Client Server
Mainframes
1960
1980
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2000
And Technology Services Have Not Had
To Significantly Change Their Role…
Professional Services
Support and Maintenance Services
Product as Service
Web
PC & Client Server
Mainframes
1960
1980
© SSPA and TPSA 2006
2000
Prediction: By 2015 Services Will Look Nothing
Like What We Know Today
TODAY
Professional Services
?
Nine Years
of Radical Change
?
Support Services
?
???
Product as Service
Web
2000
?
2005
2010
2015
© SSPA and TPSA 2006
What Will Drive This Change?
Service Innovation
Will Accelerate
TODAY
Street Will Begin To
Professional Services
Ask About Services
Margin Drag
Customers
Demand More Value
For Service Money
Offshore Service
Providers Take
More Market Share
Consumer and
Enterprise Computing
Converge Confusing
Service Supply Chain
Service Margins
Will Temporarily
Support Services
Drop As Price Pressure
Overtakes The Ability
to Reduce Costs
Lines Between
Product
And Service Blur
Product Development
Methodology Will
Be Applied to Services
Development
?
?
Services
Commoditization
Will Accelerate
?
Complexity Strangles
Users and the Ability
To Support Them
Service Will Shift
From People Based
To Asset Based
?
???
2015
2005
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Five Key Areas
For Service Research
and Innovation
in High Tech
© SSPA and TPSA 2006
#1 - The Capture, Management
and Re-use of Knowledge
Most Frequently Used Web Resources
Percent of Visitors
To Support Website
That Find The Answers
They Are Looking For:
46%
Percent of Support
Cases Deflected From
The Phone to Web
Based Self Service
29.7%
#1
#2
Source:
2006 SSPA Industry
Benchmark Survey
© SSPA and TPSA 2006
#2 – Servicing The
Growing Complexity of
Customer Systems
• 46% - Percent of staff that receives formal training on products from
other companies
• 31% - Percent of customer problems requiring expertise on other
company’s technology products
• 15% - Percent of customer problems requiring contact and
collaboration with another company who shares the common customer
(more than doubled from 2003)
• 4X – Cost of cases requiring multivendor cooperation
Source: 2006 SSPA Industry Benchmark Survey
© SSPA and TPSA 2006
#3 - Building Supportability
Into Technology Products
Please indicate the percent allocation of NEW incidents by type of customer issue
1 in 4 cases related to product
defects or limitations
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#4 - Mountains of Data
How can we turn
mountains of
transaction data into
usable management
information for
services management,
the sales force and
product development
teams?
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#5 - The Service Supply Chain
The Product
Maker
The Consultant
The Reseller or
Integrator
?
The Independent
Service
Provider
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Projected US Service Employment Growth, 2004 - 2014
US Bureau of Labor Statistics.
http://www.bls.gov/opub/ooq/2005/winter/art03.pdf
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What Does This Mean To You?
• Services will be THE word of the next
decade in high tech:
-
Consumer services
Automation of professional services
New models for customer support
Software-as-a-Service
• Tech companies are searching for talent in
both business and engineering disciplines
who can add value to the discussion.
• You: Right place, right time.
© SSPA and TPSA 2006
…for customer support
…for professional services
Thank You and
Questions
© SSPA and TPSA 2006
Five Key Areas For Service Innovation in High Tech
1. The Capture, Management and Re-use of Knowledge is progressing slowly. Where are
the breakthroughs?
–
In electronic self help?
–
In professional services/consulting IP capture?
2. The Growing Complexity of the Customer’s Systems is increasing cost-to-serve and
negatively effecting customer satisfaction. How can we apply innovative approaches to
tracking the customer environment, the cause of problems and to facilitate cooperative
service provision among different companies with common customers?
3. What are future approaches to Building Supportability Into Technology Products?
–
Predict environments conducive to problems
–
Sense developing problems
–
Take Pre-emptive actions (automated and non)
–
Collect information for service providers
4. Service organizations know more about the use of products and changing customers
environments than any other part of the company. How can we Turn Mountains of Data
Into Usable Management Information for services management, the sales force and
product development teams?
5. The Services Supply Chain is becoming increasingly complex. Innovation around the
“service system” business model that can help companies partner effectively will help
both the quality of customer solutions and the bottom line.
© SSPA and TPSA 2006