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Transcript of © SSPA and TPSA 2006 HIGH TECH SERVICES The Role of Service Innovation In the Economy’s Most...
© SSPA and TPSA 2006
HIGH TECH HIGH TECH SERVICESSERVICES
The Role of Service InnovationIn the Economy’sMost FamousProduct Sector
J.B. WoodPresident 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 professional services…for customer support
© SSPA and TPSA 2006
SSPA and TPSA Support Major Tech Companies Across The Broad
Technology Market
Enterprise (>$1bn
in revenues)
SME (<$1bn in revenues)
Home office and Consumer
Networking ComputingAnd Desktop
HW
Storage InfrastructureSoftware
Client server applications
HW SW
HW
Desktop SW
SW Internet
Office Products
OfficeProducts
Medical Technology
ConsumerTechnology
Products
3
© SSPA and TPSA 2006
A Line-Up of Over 200 Member Companies
4
© SSPA and TPSA 2006
Nation % WW
Labor
%
A
%
G
%
S
25 yr %
delta S
China 21.0 50 15 35 191
India 17.0 60 17 23 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
Top Ten Nations by Labor Force Size(about 50% of world labor in just 10 nations)
A = Agriculture, G = Goods, S = Services
>50% (S) services, >33% (S) services
2004 2004United 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 World is Becoming One Big Service System
© SSPA and TPSA 2006
The State of the Technology Services Industry
Services revenuesServices revenuesare growing acrossare growing acrossthe software industry . . .the software industry . . .
. . . and have become . . . and have become thethe critical component critical component in IT sector growthin IT sector growth
© SSPA and TPSA 2006
The State of the Technology Services Industry
Services revenuesServices revenuesare growing acrossare growing acrossthe hardware industry . . .the hardware industry . . .
. . . and have become . . . and have become thethe critical component critical component in IT sector growthin IT sector growth
© SSPA and TPSA 2006
Technology Services Universe:Q4 1996Q4 1996
© SSPA and TPSA 2006
The TPS Universe:Q4 2006Q4 2006
© SSPA and TPSA 2006
The Key Shifts As The High Tech Market Has Matured
MoreService
Revenue
Call Center Service Margins
ProfessionalServiceMargins
© SSPA and TPSA 2006
The Service 50Gross Margin Analysis
30% 35% 40% 45% 50% 55% 60% 65%Hardware Companies
30% 35% 40% 45% 50% 55% 60% 65%Software Companies
30% 35% 40% 45% 50% 55% 60% 65%The Service 50
30% 35% 40% 45% 50% 55% 60% 65%All Product Companies
30% 35% 40% 45% 50% 55% 60% 65%Service Companies
30% 35% 40% 45% 50% 55% 60% 65%PS in a Product Company
30% 35% 40% 45% 50% 55% 60% 65%Support in a Software Co.
© SSPA and TPSA 2006
Call CenterService
ProfessionalServices
GrossMargins
Call CenterService
INNOVATION:Technology,
KM andGlobalization
ProfessionalServices
1996 2006
MODEST INNOVATION:Still Labor Intensive
HAPPYCFO
SADCFO
© SSPA and TPSA 2006
The Big Questions
For Customer Service 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.”
For Professional Services Execs:
“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
BusinessStrategy
SolutionCentric
Valuation
Analysts
Product
Centric
CapabilitiesProduct+
Staff
Customers
© SSPA and TPSA 2006
THE MANAGEMENT IMPERITIVE: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!
© SSPA and TPSA 2006
1960 1980 2000
Mainframes
PC & Client Server
Web
Product as Service
Four Generations of Computing Over 40 Years…
© SSPA and TPSA 2006
1960 1980 2000
MainframesPC & Client Server
Web
Product as Service
And Technology Services Have Not Had To Significantly Change Their Role…
Support and Maintenance Services
Professional Services
© SSPA and TPSA 2006
2000 2005 2010
Web
Product as Service
Prediction: By 2015 Services Will Look Nothing Like What We Know Today
Professional Services
2015
???
Support Services
TODAY
Nine Years of Radical Change
?
?
?
?
© SSPA and TPSA 2006
2005
What Will Drive This Change?
2015
???
TODAY
?
?
?
?
Support Services
Professional Services
Service Margins Will Temporarily
Drop As Price Pressure Overtakes The Ability
to Reduce Costs
Street Will Begin ToAsk About Services
Margin Drag
Lines Between Product
And Service Blur
Customers Demand More Value
For Service Money
Offshore Service Providers Take
More Market Share
Complexity StranglesUsers and the Ability
To Support Them
Consumer and Enterprise Computing
Converge ConfusingService Supply Chain
Product DevelopmentMethodology Will
Be Applied to Services Development
Service Will Shift From People Based
To Asset Based
Services Commoditization
Will Accelerate
Service InnovationWill Accelerate
© SSPA and TPSA 2006
Five Key Areas For Service Research
and Innovation in High Tech
© SSPA and TPSA 2006
Percent of VisitorsTo Support WebsiteThat Find The AnswersThey Are Looking For:
46%Percent of SupportCases Deflected FromThe Phone to WebBased Self Service
29.7%
Most Frequently Used Web Resources
#1#2
Source:2006 SSPA IndustryBenchmark Survey
#1 - The Capture, Management and Re-use of Knowledge
© 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
Please indicate the percent allocation of NEW incidents by type of customer issue
1 in 4 cases related to productdefects or limitations
#3 - Building Supportability Into Technology Products
© SSPA and TPSA 2006
#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?
© SSPA and TPSA 2006
#5 - The Service Supply Chain
The ProductMaker
The Reseller orIntegrator
The IndependentServiceProvider
The Consultant ?
© SSPA and TPSA 2006
Projected US Service Employment Growth, 2004 - 2014
US Bureau of Labor Statistics. http://www.bls.gov/opub/ooq/2005/winter/art03.pdf
© SSPA and TPSA 2006
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 professional services…for customer support
Thank You and Questions
© SSPA and TPSA 2006
Five Key Areas For Service Innovation in High Tech1. 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.