© 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)


The Two Largest Industry Associations in Tech Services

…for professional services…for customer support


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


A Line-Up of Over 200 Member Companies

4


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


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


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


Technology Services Universe:Q4 1996Q4 1996


The TPS Universe:Q4 2006Q4 2006


The Key Shifts As The High Tech Market Has Matured

MoreService

Revenue

Call Center Service Margins

ProfessionalServiceMargins


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.


Call CenterService

ProfessionalServices

GrossMargins

Call CenterService

INNOVATION:Technology,

KM andGlobalization

ProfessionalServices

1996 2006

MODEST INNOVATION:Still Labor Intensive

HAPPYCFO

SADCFO


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?


The Three Pulling Forces On the Chief Services Exec

Revenue Mix

BusinessStrategy

SolutionCentric

Valuation

Analysts

Product

Centric

CapabilitiesProduct+

Staff

Customers


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!


1960 1980 2000

Mainframes

PC & Client Server

Web

Product as Service

Four Generations of Computing Over 40 Years…


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


2000 2005 2010

Web

Product as Service

Prediction: By 2015 Services Will Look Nothing Like What We Know Today


2015

???

Support Services

TODAY

Nine Years of Radical Change

?

?

?

?


2005

What Will Drive This Change?

2015

???

TODAY

?

?

?

?

Support 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


Five Key Areas For Service Research

and Innovation in High Tech


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


#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


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


#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?


#5 - The Service Supply Chain

The ProductMaker

The Reseller orIntegrator

The IndependentServiceProvider

The Consultant ?


Projected US Service Employment Growth, 2004 - 2014

US Bureau of Labor Statistics. http://www.bls.gov/opub/ooq/2005/winter/art03.pdf


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.


…for professional services…for customer support

Thank You and Questions


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.

© sspa and tpsa 2006 high tech services the role of service innovation in the economy’s most...

Documents

technology services

service companies

professional services

products s services

high tech services

service revenue

big service system slide

revenues sme sspa