CRM Methodology & StrategyAchieving Complete Service Lifecycle Management
Frank FesnakVP, Strategic Alliances
Agenda
• The CRM Challenge
• Service Lifecycle Management (SLM)
• SLM Drivers
• Key Applications and their Benefits
• Summary
Pop Quiz
CRM Addresses …
• Sales
• Marketing
• Product Management
• Service and Support
All of the Above!
Pop Quiz
CRM Objective …
• Cost Containment
• Revenue Growth / Market Share
• Customer Satisfaction
• Customer Retention
All of the Above!
The CRM Challenges
• Organizations Are Struggling with CRM Performance and Improvement Decisions
– Unsure about relative and absolute performance
– Unsure which initiatives to select
– Unsure whether selected initiatives will deliver expected benefits
• Marketing, Sales, Service, and Support Executives are …
– Uncertain about what actions they should take to maintain or improve performance
– Competing for budget or funding in tight economic timesThe Uncertainty Around Actions Fuels Unintended Consequences
Justified with Conflicting Metrics
Where to Go for Help?
Inside the Organization
• Financial and operational reports
• Performance trend analysis
• Continuous improvement programs
• Experience
Outside the Organization
• Industry trends and projections
• CRM benchmark data from industry associations and research groups
• Observed “best practices” from consulting and software companies
CRM Successes: Service
• First Service Networks shortened its invoicing and payment cycles by 50% by replacing a paper-based system with SIEBEL’s wireless field service application.
• An office imaging manufacturer achieved an ROI of 129%—a savings of $30M—by replacing several legacy systems with ORACLE’s contracts, spares management, and mobile field service.
• Siemens Medical Solutions implemented a CLICK SOFTWARE product for optimized technician scheduling and increased engineer utilization by 10%, reduced travel time by 15%, and decreased overtime by 10%.
• A SERVICE POWER customer lowered its dispatcher-to-engineer ratio from 1:10 to 1:50.
• An MCA service parts optimization user reduced service inventory by 40% while maintaining service levels of 98% to 99%.
• GEM Industrial implemented software from FIELD CENTRIX and was able to increase its rate of closing new business by 15%.
AMR: Tactical automation can cut of costs by 5% to 15% within specific operations; strategic automation can improve margins by 25% and gain 60% in share
Service Contribution
24%
76%
Revenue Profit
ProductServices
55%
45%
• On average, 76% of the product revenues come from the initial sale, leaving service to account for 24% of the revenue.
• On the other hand, services make up 45% of the profitability and provide the potential for long-term cash flow stability.
What Is Service Lifecycle Management (SLM)?
ERP
SCMPLM
CRMCRMSales & MrktgSales & Mrktg..
Collaboration
SLM
Service & SupportService & Support
Operations
Products
The Case for SLM
• SLM is a strategy that maximizes profit and revenue opportunities over the long term.
• SLM starts with the foundation of customer knowledge that leads to operational efficiency and proactive managed services.
• Tactical automation can cut costs by 5% to 15% within specific operations; strategic automation can improve margins by 25% and gain 60% in share.
• The IT investment pattern and strategy are highly dependent upon the service lifecycle, competition, and contractual terms of service.
• Success requires a dedicated technology strategy beyond Enterprise Resource Planning (ERP).
According to AMR’s research of over 125 companies in industries that have significant service businesses:
Strategic Automation of Service
From the Fall/Winter 2003 Survey Repair cycle time improvements of 30%-50%, Time to invoice up 40%-60%, Warranty sales up 15%-40%, Service response time improvements of 50%-80%, Time to collection dropped 25%-50%, Call avoidance improved 30%, Cross-selling up 100% Reassign 50% of dispatchers to higher value tasks Close redundant dispatch centers (40% of facilities) Travel costs drop 35 percent Technicians handle 20 percent more calls
SLM: Underlying Principles
• Recognition of P&L effects of customer-purchased assets
• What is the revenue lifecycle opportunity of that asset (for the customer and vendor)?
• What amount in sales should be generated by that asset (think of it as a business franchise) for your customer?
• What amount of revenue should be generated across the lifecycle of that asset for your organization (include initial sale through to available services opportunities)?
• How can you continue to build on that business relationship and leverage the revenue opportunityrevenue opportunity??
Why SLM? The Upside
Cus
tom
er R
even
ue P
oten
tial
Services Lifecycle
100%
0%
Initial sale
Comfort Point50-70%
of revenue potential is not realized
Why SLM? The Upside
Cus
tom
er R
even
ue P
oten
tial
Services Lifecycle
100%
0%
Initial sale
High Performance80% Share
Mid-Performance50% Share
Low Performance20% Share
25% Margin
Gap
SLM: Key Application Areas
• Service Parts Planning
• Scheduling Optimization
• Product Knowledge
• Remote Diagnostics
• Contract Management
• Customer Intelligence
Achieving Upside Requires Investment
Revenues, IT Spend, and Profits in Product vs. Services
24%
76%
Revenue20%
80%
IT Profit
Product
Services
55%
45%
“As competition in the services market heats up, companies will lose their high margins if they continue to spend 60% less on IT for their services
business.”
Source: AMR ReportService Lifecycle Management (Part 1): The Approaches and Technologies To Build Sustainable Competitive Advantage for ServicesJudy Bijesse, Lindsey Higgs, Marc McCluskey
SLMSLM
ProductDesign/Mfg.
ServicesCustomerTakes Title
PLM
ERPSCM
CRM(SFA)
MES
Customer Spends 5-20X
Customer Spends X
Sales and
Marketing
ProductConfigurationManagement
Logisticsand
Operations
CustomerSupport
Why SLM Now? Historical IT Investment Why SLM Now? Historical IT Investment ShiftShift
Materials Requirements Planning (MRP)
Manufacturing Resource Planning (MRP II)
Enterprise Resource Planning(ERP)
Supply Chain Management (SCM)
Service Lifecycle Management(SLM)
Evolution of Information Requirements
SLM is that “Real Time” Enterprise Resource Execution
Transactional processingDays, weeks
Real time processingMinutes, hours, days Dynamic front-office
TransactionalProcessing
Real-timeProcessing
Traditional Service Systems
Call Center Agent
Analyst / Dispatcher
Technician Billing Clerk
Inbound Customer
Inquiry
Complex Integration, Batch Synchronization, Latent InformationNOT SLM!!
What does this
customer have?
What is warranty
and what is not?
How do I prioritize
requests?
What is the best
solution?
Service Lifecycle Management (SLM)
Self Service /Call Center
Agent
Optimized Dispatch by
Contract
Knowledge Worker
Customer Revenue
Recognition
CustomerManagement
Business Drives Integration Access to Information
Model ABC has an
upgrade available.
Just dealing with
exceptions.
Gold level appointment
s are fully staffed.
Product knowledge repository calls for fix
X.
SLM: Strategic Considerations
• Business Case Requires Analysis and Work; C-Level Buy-In Required
• Ultimate Goal: Move from Reactive Services Platform to Proactive Platform
• Take Phased Approach: Apps that Contain Costs, Followed by Apps that Drive Revenue
• As Required, Evaluate Employee Behavior with New Measurements
• Existing Packaged Applications Exist to Overcome Nearly All Common Operational Issues
CRM / SLM Implementation
• Service lifecycle length and type determine specific automation requirements and Information Technology (IT) investment priorities.
• The 65% of businesses that have not automated to support SLM are twice as likely to lose customers than SLM leaders.
• 39% of companies put investment in sales and marketing at the top of the priority list, but this isn’t always the best move.
According to the 2003 AMR Survey …
Categories of Equipment Assets
Top-Line / Revenue Generating Resource / Cost Containment
• Medical Diagnostics Equipment
• Gaming Equipment
• V-Commerce/ Kiosk Equipment
• Manufacturing Equipment
• Construction Equipment
• Telecommunication Equipment
• Service Equipment
• Power Generation Equipment
• ATMs
• Others
• Office Equipment
• R&D Equipment
• Quality Assurance Equipment
• Banking Equipment
• Point-of-Sale Equipment
Usage is a billable event Usage is not a billable event
Key Applications by Business Stage
• Phased CRM Deployment
• Phased SLM Deployment
• Applications that Achieve …
– Cost Containment
– Revenue Generation
– Market Share
Rome Wasn’t Built in a Day … Nor Are Effective SLM Deployments!
Climbing the SLM Pyramid
• Value
• Revenue
• Margins
• Differentiation
• Stickiness
With Each New Application, More …
Key Applications by Product Lifespan
LONG LIFECYCLE PRODUCTS
• Customer Intelligence
• Product Technical Documentation
• Inventory and Parts Planning
MODERATE LIFECYCLE PRODUCTS
• Demand Visibility
• Service Order Management
• Customer Intelligence
SHORT LIFECYCLE PRODUCTS
• Inventory and Parts Planning
• Warranty and Claims Management
• Channel Management
SLM Application Components
• Application Suites & Modules
– Field Service
– Call Center
– Dynamic Scheduling Engine
– Logistics
– Depot Repair
– Analytics
– Marketing
– Professional Services
– Sales
Single view of the customer
• Better Utilization of Technicians
– Warnings about potential duplicate calls
– Advance notice of potential spares required
– Send the right skilled technician for the job
– More resolution over the phone
– With mobility, less time filling out paper
2% savings on labor
• Reduced Travel Time
– Paging eliminates technicians visiting office
– Changed assignments may not reach first person assigned, resulting in doubling up
– Integration with maps can help sending the closest technician to a call
2% reduction in cost of travel time
SLM Opportunity
• Inventory Savings
– From 10% to 25% reduction
– Reduction of insurance and carrying costs
– Less hoarding by technicians when they have visibility
• Reduce Obsolescence Write-offs
– Better visibility of slow moving parts
– Super session control of spares
At least 5% reduction or write-off
• Warranty Tracking Savings
– Verify online if supplier still liable for warranty
– Improved productivity of staff for tracking entitlements
– Fewer repair costs absorbed instead of charging supplier
Savings of 2% of total in-house repair costs
SLM Opportunity
• Accurate Billing
– Contract entitlements verified online
– Eliminate guesses of what is chargeable
Increase revenue 2% on services
• Fewer Credit Notes
– Less claims that billing is incorrect
– Reduced administration time to verify
Saving of 5% of current credit notes value
• Reduced Freight Costs
– Planning reduces ‘rush’ orders to be shipped by expensive methods
– Less distortion of profitability
Savings of 5% on inward freight
SLM Opportunity
• Reduced IT Costs
– Integrated service/logistics results in fewer IT staff required
– Fewer demands for functions that are standard in service system
– Reduce or eliminate maintenance costs on old hardware/software
Reduction of 5% in IT overhead
• Easier to Document Business Processes
– Software flow becomes integral part of documented processes
– Fewer manual interventions for missing functions in software
– Staff find it easier to follow procedures
Reduction in training time for new employees by 10%
SLM Opportunity
SLM Opportunity
• Call Center
– CTI/IVR increases staff productivity
– Total view of the customer makes staff more productive in fielding questions from the customer
– Self-help facility for customers reduce the number of calls
Reduce costs by 5%
• Cheaper, faster communications
– Use e-mail to send escalation messages
– Allow customers to enter and potentially resolve their own calls
– Eliminate phone calls to call center to update status, report time, and request parts
– Eliminate courier costs between office and technicians
Save 5% of Call Center staff costs
• Better Utilization of Service Admin Time with Remote Solution
– Eliminate calls to record arrival time, time worked, parts used, inventory availability, etc
– Eliminate much of paper filing and retrieval time
– Keep electronic documents printable at any time
– Sales to service integration reduces multiple entry of data
Savings of 10%
• More Profitable Contracts
– Charge more for marginally profitable contracts
– Leverage cost information to fine tune contract offerings for profitability
– Provide customer with more details of service provided so they can appreciate the value of the contract
Increase profits by 5%
SLM Opportunity
• Depot/Repair Center
– Claiming in-house warranty costs from supplier
– Charging customers who exceed the free exchange period
– Eliminating missing supplier free exchange period for returning parts
Improve depots profitability by 5%
• Savings on Purchases
– Pooling of requirements to get better negotiating power
– Forecasting usage to plan replenishment
1% reduction in purchasing costs
SLM Opportunity
Customer Intelligence Applications
• Tracking and sourcing defects and quality issues … hitting the supplier for credit
• Knowing when you customer visits … presenting offers to buy frequent purchases
• Gathering intelligence on product field use … cross-selling and up-selling
• Determining when products are approaching end of life … presenting new service and maintenance schedules and/or purchase recommendations
• Forecasting resource requirements for parts and labor based on purchase history … developing customer comfort
• Creating simple configurations and calculations for product upgrades … presenting part replacement / upgrade scenarios
• Analyzing customer purchase history and spending patterns … determining introductions of new products.
Field Service Management
ROI: Field Force Utilization, First-Time Fix Rates, Rate, Time & Expense Capture, Accurate Billing, Service Parts Management
• Contract Management
– PM, draw-down, metering, T&M
• Warranty Entitlements– Vendor warranty, customer
warranty
• Inventory/Logistics– Parts management, returns,
logistics
• Decision Support– Automated diagnostics, skills
tracking/selection, equipment configurations, ECN, customer intelligence, attachments, question trees
Scheduling Optimization
• Cost Based Scheduling
– Job location, technician skill class, outlet hours of operation, resource availability…
– Service level (SLA), road-network based drive time, job priority, technician skill rating, amount of overtime work, territory covered by technician ...
• Simultaneous Constraint Handling
– Dynamic rescheduling
– Continually test for best schedule
• Ultra Fast Travel Calculation
– Based on real road networks
• Real-time Optimization
– Accommodates new jobs, jobs being cancelled, job status changes, overruns, finishing early, travel early or late, arriving early or late, repair time will take longer than expected
ROI: Decreased Travel 14%, Increased Jobs 8%, Overtime reduced, 99.75% automated scheduling
Customer Self-Service Portal
Intelligent Customer Service 24/7, Consistent Answers, Urgency Routing
• Access to Customer Profile
• View Call Status Real-time
• Problem Researching
• View Contract Entitlements
• View Equipment Location/ History
• Call Logging/Updating
• Call Resolution
• Secure Customer Access
Technician Portal
• Work Order Management
• View Customer Information/History
• View Contract Entitlements
• Activities Management
• Time/Expense
• Parts/Inventory Management
• Returns Management
• Field Contract Quotations
Optimize Efficiencies, Reduce Administrative Costs, Improve Billing & Cash Flow
Sub Contractor Portal
• Accept/Reject Assignments
• Service Order Tracking
• Drill Downs (Service Order Details)
• Service Order Execution
– SLA & Warranty Compliance– Products/Parts Received– Work Performed (Resolution)– Labor & Material Capture
• Invoicing
– 3-Way Match– Automatically Creates AP Voucher for Processing by Financial System
ROI: Service Engagement Visibility, Resource Utilization & Allocation, Reduced Administrative CostsBillings/Payments Accuracy, Vendor Relationship Management
Mobile Users
• Untethered Mobility
• Laptop and Pocket PC Solutions
• Security Logon/Transfer
• View Customer/Contract Information
• Menu Driven, Drill Downs and Tabbed Dialog
• Time, Expense, Material Capture
• Job Resolution
• Customer Signature CaptureDeploy Anywhere/Anytime, Optimize Efficiencies, Reduce Administrative Costs, Improve Billing & Cash
Flow
GPS and GIS
• Automatic Vehicle Location (AVL) solution for fleet vehicle tracking
• Shows position and status of vehicles on desktop map
• Unique solution leverages same handheld data terminal for both AVL & mobile data
• “Breadcrumbing” shows stop-by-stop route history for management analysis
Device Relationship Management
Internet
SLMOverheating Delay6 hours
Scheduled Maintenance Request
Diagnostics Failure
Toner Empty Benefits of DRM Move from reactive to
proactive: improveslevels of service/speedof service
Reduces service costs Raises uptime Built-in intelligence
optimizes customerCopyright © 2003
Increase price due to event
Remote Tech
Marketing Campaign Management
ROI: Enterprise Data Sharing, Coordinated Execution, Analysis of Marketing Spend, Automation of Processes, Opportunity Management
• Seamless Integration to Field Sales for Lead Management
• Campaign Management
• Multi-Channel Coordination
• Graphic Script & Campaign Creation
• Literature Center Support
• Budget Management
• List Management
• Product Offerings with Price and Discount Tolerance
Sales Force Automation
ROI: Enterprise Data Sharing, Sales Process Management, Planning & Forecasting, Automated Processes, Coordinated Team Selling
• Lead-to-Close Management
• Integration to Campaigns, Service Histories & Contracts
• Mobile Access
• Proposal Management
• Sales Methodologies
• Pipeline & Opportunity Management
• Correspondence Automation
• Sales & Marketing Analysis, Reporting & Forecasting
Case Study: Fujifilm Canada
“Astea demonstrated superior capabilities in our independent evaluations. The fact that the software was also selected by Fujifilm USA only served to confirm that we were making the right decision.”
- Harry Weening, IT Director, Fujifilm Canada,
Challenge:• Eliminate paper-based processes
• Improve service tracking and billing
• Improve emergency call response and service scheduling based on technicians’ skill sets
Results:• Implemented laptop-enabled solution for paperless
connectivity between contact centers and field technicians (one-time data entry for all information throughout the enterprise)
• Increased billing revenue from same number of field technicians
• Accelerated service to cash cycles
• Improved contact center call handling and problem resolution times, where 85% of service is handled without need for field dispatch
Fujifilm Canada serves a customer base largely comprised of 1-hour photo finishing labs at national retail chains in addition to a camera repair depot for professional and consumer products.
Case Study: Johnson Control, Inc. (JCI)
JCI is a global leader in automotive systems, facility management and controls. Founded in 1885 with sales topping $18 billion, they provide building control systems and services and integrated facility management.
Challenge:• Deliver against tagline: Exceeding Expectations
• Reduce cost of managing one billion square feet of building space.
• Improve deployment of 5,000 field service representatives handling 70,000 calls/month
Results:• Faster resolution & automated escalation
• Streamlined parts ordering – integrated parts sales, support, accounting & factory ordering
• Eliminated manual processes & data re-entry by linking front and back-office systems
• Reduced inventory through better visibility to field usage, control & seamless integration
• Enhanced staff assignment, reflecting needs, skills and availability
• Universal access to one common database – across call centers & technicians
InformationWeek and CGE&Y named JCI to the Innovation 100 list, recognizing the top 100 companies for successful use of information technology to serve customers.
Case Study: Gamestec Leisure
The company develops and supplies amusement and gaming machines to the pub, club and leisure sectors throughout Europe
. Remote self-diagnostic and service alarms to connect 45,000 machines across 20,000 locations - - maximizing equipment value at customer locations
Challenge:• Leverage system-generated faults to automate
diagnosis, reporting & resolution of problems
• Coordinate dispatch of 280 field engineers and ensure cost-effective remote access
• Integrate Field Service Management & Device Relationship Management
Results:• Generated significant overhead savings by
consolidating from 28 to 3 regional offices
• Centralized dispatch for machine-generated and customer service calls
• Implemented real-time bi-directional mobile communication with field via low-cost PDAs
• Maximized asset profitability by prioritizing dispatch based on issue, location & contracts
• Enabled delivery against ½ to 2 hour SLAs
• Achieved Return on Investment in one year
Summary
• Service businesses with the highest share and margins are also the largest implementers of SLM
• Without C-level commitment, companies will never achieve SLM
• Service lifecycle length and type determine specific automation requirements and IT investment priorities
• The 65% of businesses that have not automated to support SLM are twice as likely to lose customers than SLM leaders
Leading service companies adopt SLM to realize a 5% to 10% total cost structure advantage, allowing them to grow
revenue and market share