Strategic Service Management FAQ

Q:  What is Strategic Service Management?
Q:  Where did Strategic Service Management come from?
Q:  Is Strategic Service Management focused on tactical service execution?
Q:  Is Strategic Service Management delivering value?
Q:  What is driving the evolution of Strategic Service Management?
Q:  What type of technology infrastrcuture is required to transform a service business into a strategic growth engine?

Q:  What is Strategic Service Management?
Strategic Service Management is a mind set, a new way of thinking that represents a fundamental shift in how companies conduct business.  It’s a new commitment-centric business strategy that is built around a company’s understanding of the power and value associated with delivering on the commitments it makes to its customers.  This new strategy is causing companies to completely reinvestigate how their often sub-optimized service businesses manage service commitments, resources, partners, knowledge and prices in search of creative ways to harvest more profits while improving customer loyalty and competitive differentiation. Elevating service to a strategic level through Strategic Service Management can enable industry leaders to completely change the playing field in their respective industries by breaking the rules of competition and breathing new life into companies caught in a downward spiral of declining markets.

“Strategic Service Management is about tying together parts, people, technology, and visibility under one roof, with unified leadership in the company to drive growth and bring service to the forefront of your company,” said Steve Simpson, Senior Director of Supply Chain Management, Sun MicroSystems.

Q:  Where did Strategic Service Management come from?
While intense global competition drives the further decline of product-based margins in maturing industries, service margins remain very healthy.  This is driving leading companies to invest in service as a new source of profit, competitive differentiation and customer loyalty; demonstrating the power of service as a growth driver.

However, a service led growth strategy requires effective collaboration across functions, new decision-making capabilities, and the underlying integrated service technology infrastructure to support those processes which is an approach the market is now referring to as Strategic Service Management.

While point solutions and ERP systems can deliver limited tactical value to today’s evolving service operations, they are not designed to enable the cross functional collaboration and decision making capabilities required to use service as a strategic growth driver.

Q:  Is Strategic Service Management focused on tactical service execution?
No, Strategic Service Management is not about tactical execution or service firefighting, it’s a business strategy that’s focused on optimizing high value service resources to improve corporate performance.  If we look across diverse industries companies like Sun Microsystems, Case New Holland, Volvo, Honeywell Engines and others, it becomes clear that Strategic Service Management can lead an overall business strategy and create a competitive advantage that is much harder to replicate than any new product or feature.  In fact, one could argue that in certain industries, Strategic Service Management is not a business strategy and philosophy.  It is the business strategy and philosophy that leaders practice and followers fail to understand.

Q:  Is Strategic Service Management delivering value?
Manufacturers across durable goods industries have documented massive, quantifiable benefits as a result of elevating service to a strategic level and adopting a Strategic Service Management approach.  For these leading companies, the benefits have included:

• Dramatic increases in profitability and cash
• Positive impact on revenue growth
• Large improvements in customer loyalty

Today’s business executives’ patience is wearing thin for multi-year, low ROI software projects delivering marginal value.  However, their appetite for solutions delivering immediate and measurable ROI is becoming insatiable.  The results Strategic Service Management can bring speak for themselves. Recent articles in top tier business and trade publications have highlighted dramatic case studies, including Avaya reducing its service parts inventory from $250 million to $160 million, Sun Microsystems saving $40 million in one year in service parts purchases and repair avoidance, and Dell edging out Hewlett-Packard for the top spot in U.S. hardware support satisfaction while growing service revenues by more than 20%.  These are real-world results that deliver measurable bottom-line impact.

Q:  What is driving the evolution of Strategic Service Management?
Most companies today are deploying Strategic Service Management initiative for very pragmatic reasons: they need to improve profitability and competitive position—and to do so, they realize that they must move beyond the traditional service firefighting philosophy and the low-level tactical service solution and ERP systems which have not been designed to enable service as a strategic growth driver.

Three key trends are converging, building critical mass for manufacturers across all industries to embrace the Strategic Service Management paradigm.  These trends are:

• The prioritization of bottom-line results in the boardroom: More than ever, best-in-class companies are focusing on improving business performance beyond the current quarter. As such, these organizations are prioritizing SSM and successfully getting board-level buy-in.
• Few remaining options for improving margins in the manufacturing business: In most sectors, it is getting increasingly difficult to improve business performance by focusing on R&D or squeezing costs out of the supply chain. That means bottom-line improvements have to come from other sources like post-sales service.
• A maturing Strategic Service Management technology environment: Technologies that enable Strategic Service Management have received broader acceptance over the last few years. Early adopters have proven the value of enabling systems, paving the way for pragmatists to deploy these solutions with lower risk and lower total-cost-of-ownership. However, manufacturers should note that point solutions and service modules developed by ERP vendors can only move them forward in their quest to improved service performance to a certain extent. These systems simply cannot provide the full, integrated view into service-centric business process necessary for a shift to a Strategic Service Management model.

Q:  What type of technology infrastructure is required to transform a service business into a strategic growth engine?
Transforming a service business from tactical firefighting to a strategic growth engine is best enabled by a fully integrated technology solution that has been exclusively designed to solve complex service business problems - not general ledger, supply chain or low value tactical problems. The solution should enable the optimization of a service business’ most significant cost drivers which include service parts, service technicians and vehicles, sharing knowledge across the service network and the most the most significant profit lever which is service pricing.

The Servigistics software solutions are the only comprehensive Strategic Service Management solutions that deliver value across the extended service network, including service parts, service workforce, service knowledge and service pricing management. Servigistics delivers integrated software that enables the effective collaboration across functions, new decision-making capabilities and processes that are required to truly use post-sale service as a strategic growth driver.