Service Technology Investments:Building the Case

Service Technology Investments:Building the Case

Mike Woodard

[email protected]

610.742.4701

Service Technology Investments

• My objectiveEducate - ValidateCreate an appetite for action

• Your expectations?


• My background– Strategy Development – Service Consultant– IKON Office Solutions – 20 years; VP Service, North America;

VP Service Strategy; VP Service Operations– Xerox Corporation – 18 years; District Service Manager,

Financial Planning & Analysis Manger, Field Service Manager, Customer Service Technician.

Today’s most *beneficial technologies

• Mobile Field Service – work order management, dispatch, parts management, real time data access, signature capture, communications

• Scheduling and Routing• Remote Product Monitoring• Forecasting & Planning• Business Intelligence

* productivity enhancing



Service Technology SolutionsSMB Service Industry research

• Best-in-class service organizations (top 20%)– 55% already made technology purchases– 17% more will invest in next 12 months– More than twice as likely as all others to have embraced technology

solutions – 55% vs 24%– Almost twice as likely to be using a mobile service solution

• Mobile service solution– $10 avg reduction in cost per dispatch event– 12% increase in service profitability


Today’s climate

“A stiff investment headwind with opportunity at hand”


So, how do you make a convincing argument to justify the required the required dollar investment?

Generate a formal business case

Moment of truth – now is the time to act………

• Narrow sighted organizations will cut IT budgets to “get through the hard times”.• Visionary organizations will invest in technologies that make sense and support

goals of managing cost and preparing for long-term demand from customers.


What is a formal business case?

A formal business case is a written document that enables management to determine if a proposed project is of value to the business and objectively measures the business case’s benefits.


Business case components• Background• Project description• Expected business benefits • Costs• ROI• Risks• “Do nothing” option


Business case components - example• Background of the project - increase in low touch product base presents

opportunity to move away from 100% assigned territories and optimize resource utilization.

• Project description - implement a service “location intelligence” solution to optimize technician utilization through automated scheduling and routing

• Expected business benefits- Reduced response time (improved customer sat)- Increased tech productivity (reduced cost)- Reduced business miles (reduced cost)


Business case components – example cont’d• Costs

– Software purchase/user fees/maintenance– IT support– Training– Hardware

• ROI – Net Benefit over defined time period

• Risks– Employee backlash (GPS, change, job satisfaction)– Customer dissatisfaction with loss of assigned technicians– Financial (cost reduction benefits not realized)

• “Do nothing option” - lost opportunities (cost reduction, competitive differentiation)


An Actual Business Case


Project Background• 5,000 service technicians – assigned territories, specialized• 300 field service managers• 3 customer call centers• 18,000 customer facing events per day• Double digit productivity improvement – prior 4 years• Growing price pressure• Increasing margin pressure• Competition starting to invest in mobile service solutions• Imperative – differentiate and add value

Reality – reluctance to invest in service

• Imperative - maintain or improve service margins Reality – increased productivity is biggest margin lever


Project Background

Productivity Busters

Paperwork Time Daily Call Logs Customer receipts Daily time sheets Mileage reporting Asset inventory

management

Phone Time Technician Call Center

Data & Information Acquisition Time Parts availability Service histories Technical knowledge base Customer entitlements


Project Description

Mobile Service Solution – project goals• Equip all field technicians with state-of-the-art wireless

application/hardware technology to increase productivity and improve customer satisfaction

• Provide technicians with real-time access to business-critical data

• Use new technology to support multiple uses: streamline dispatch calls, call de-briefing, inventory control, time automation, point of service sales and field communication functions


Business BenefitsTarget Benefits (Benefits in red were quantified in Business Case)• Technicians/Dispatchers productivity gains – Reduced Telephone Transactions

and Time• Reduction in telecommunications, Alpha Pager & dispatch software costs• Elimination of over 5 million documents (annual amount) and the time to

administer them• Timely and accurate T&M Billing• Tech access to technical knowledge base – internal and external• Reduce purchases of books and technical publications• Broader, more accurate/timely visibility to available parts inventory• Improved Car Stock Accuracy• Improved First Call Effectiveness – know before you go• Reduced number of data entry errors• Improve meter read reporting accuracy and related Service billing


Business BenefitsTarget Benefits (Cont’d)• Capture sales opportunities / competitive intelligence, communicate to Sales • Improve field management – Remote access & managing team activities• Comply with SOX requirements for document retention• Establish technical infrastructure/framework for future wireless users (sales, ops)• Increase communication effectiveness• Improve customer satisfaction & retention – view to critical account information• Real time capture & update of changes in account info (Address, Key Operator, Meter

Admin)• Simplified / Automated Workflow (ie Payroll Time reporting)• Reduced Hardware Expense (Leverage one device for both Dispatch Device and

Laptop Device)


Business Case Highlights• $30M+ investment over 5 years• 12% service tech productivity opportunity• 15% call center productivity opportunity• 20 month ROI

But, is this business case relevant to a typical dealer service organization?


Business Case Detail – Business Factors

Number of work days per year (assumes 7 company holidays): 253Average length of a service call (min.) 90Technician loaded hourly cost $25.00Dispatcher loaded hourly cost: $14.00Technician utilization efficiency (absence due to vac, sick & training,etc): 85.0%Call Center Productivity Utilization 80.0%Work hours per day: 8

I. Business Factors Used for Analysis


Business Case Detail – Savings Opportunity

Number of field service Technicians: 30Average number of field service calls per day per technician: 4.28Total number of field service visits per day: 109Number of phone calls into dispatch System per service call: 1.25Total phone calls into dispatch System per day from Technicians: 136Avg. total time (minutes) per phone-in 4.40Total technician hours spent on phone with dispatchers per day 10.0Total # of technicians consumed by phone time with dispatch activities 1.5

$74,445

Monthly hours consumed per technician per month in completing and delivering paperwork 10Total monthly Hours consumed completing Paperwork 255# of Technicians consumed by paperwork time 1.5

$76,500

Gross Savings Opportunities Analysis

II.Current State Field Technician "Phone Time" Labor Cost Analysis (Call Handling)

IIa. Current State Field Technician Labor consumed with Paperwork Administration

Annual technician loaded cost for technician forms completion time:

Annual technician loaded cost for technician total phone time with dispatch:



Number of Dispatch personnel: 3Dispatch phone activity break-out

1) Daily customer in-coming phone call into Dispatch (Live, Vmail) 87Average time (in minutes) per phone call 2.00Total hours per day (avg time + 1 minute call management) 4.4Total Dispatchers required to handle 0.7Annualized Dispatcher cost $15,463

2) Daily Live service call close 136Quantity handled live by Dispatcher 136Average time (in minutes) per phone call 2.10Total hours per day (avg time + 1 minute call management ) 7.0Total Dispatchers required to handle 1.3Annualized Dispatcher cost $36,400

3) Daily "live" service call delivery and information messages to Technicians 14Average time (in minutes) per phone call 2.50Total hours per day (avg time + 1 minute call management) 0.8Total Dispatchers required to handle 0.15Annualized Dispatcher cost $4,260

4) Miscellaneous other dispatch activities (reporting, supervisory, record updates, etc.) 0.9Annualized Dispatcher cost $26,837

III. Current State Dispatcher "Phone Time" Labor Cost Analysis



Cost of 1-800 call ($/min): $0.07Average call duration in minutes (includes pickup, close, voice mail, etc.): 1.65Annual technician phone connected minutes: 56,951Annualized pager cost (@ $9.25 per month per pager) $1,665

1) Annual 800 #'s cost for tech to dispatch calls: $3,987

2) Annual Alpha pager cost $1,665

IV. Long Distance "Phone Time" / Pager Cost (Excludes Telephone Line Savings)



Total Annualized Potential Savings / or Cost displacementsII. - 21 Technician, Reduce Telephone Acquisition/Transaction Time 1.5 Techs $74,445IIa. - 4 Technician, Reduce Forms Completion Time 1.5 Techs $76,500III. - 2) Dispatcher, Automate Service Call Closing 1 Dispatcher $36,400III. - 3) Dispatcher, Automate Service Call Delivery $4,260IV. - 1) Long Distance/800#, Reduce Cost $3,987IV. - 2) Alpha pager, Reduce Cost $1,665

Total Potential Savings $197,257

Summary of Cost Savings (Opportunity) & Cost Displacements Areas


Business Case Detail – Solutions Cost

Type Totalhardware $7,000hardware $1,050hardware $1,225services $2,000servcies $2,000

Total One Time Costs for project $13,275

Type Fee Basis Monthly Cost Annual CostLicense Fee $75/user/mo $2,250 $27,000

telecom $75/month/user $2,250 $27,000

leases Included

s/w maintenance Includedservices Included

Total recurring cost $4,500 $54,000

Expense Item

Mobile Field Service Solution Costs Analysis

One-time Cost

Recurring Cost

S/W MaintenanceHelp Desk

Mobile Field Service Solution

Server Leases

Wireless Carrier

Estimate

HHD/Blackberry 35 at $20035 at $3035 at $35

Car Adapters

Estimate

HolstersInstallation/Integration

Fee BasisExpense Item

Training/initial support


Cost & Net Financial Benefit Schedule

2009 2010 2011 Total$150,945 $150,945 $150,945 $452,836

Savings Attainment Expectations 9% 69% 69% 49%1 Sept 1 Jan 0 0

29 28 28 28Effective Tech's Savings basis 0.25 2.0 2.0 2.0

$13,000 $104,000 $104,000 $221,000

2009 2010 2011 Total$40,660 $40,660 $40,660 $121,980

Savings Attainment Expectations 18% 74% 74% 55%1 Sept 0 0 0

Effective Savings rate (of Reduced heads) 25% 100% 100% 100%Effective Agent Savings basis 0.25 1.0 1.0 1

Projected Net savings $7,280 $29,988 $29,988 $67,256

2009 2010 2011 TotalGross Potential savings 800# cost $3,987 $3,987 $3,987 $11,960

0.0% 75.0% 75.0% 50.0%Gross Potential savings Pager cost $1,665 $1,665 $1,665 $4,995

0.0% 100.0% 100.0% 66.7%Projected Net savings $0 $4,655 $4,655 $9,310

Costs & Benefits Case - July 1, 2009 start date

Net Techs after Reduction

Gross Potential savings

Savings Schedule - Technician Call Handling & Forms Completion Labor Savings

Headcount Reduction Plan - Techs

Savings Schedule - Dispatcher Labor Savings (Delivery and Close)

Savings Schedule - 800# / Long Distance / Alpha Pager

Gross Potential savings

Projected Net savings

Headcount Reduction Plan - Agents

800# costs - Projected Savings Attainment

Pager Cost - Projected Savings Attainment


Cost & Net Financial Benefit Schedule

2009 2010 2011 Total$13,275 $0 $0 $13,275$27,000 $54,000 $54,000 $135,000

Total cost $40,275 $54,000 $54,000 $148,275

2009 2010 2011 Total

Total Savings and Cost Displacement $20,280 $138,643 $138,643 $297,566Costs - Wireless Solution $40,275 $54,000 $54,000 $148,275

($19,995) $84,643 $84,643 $149,291

8 months after Project InitiationReturn on Investment

Net Financial Benefit

One Time Costs - Spend Schedule

Net Financial Benefit & ROI

Recurring Cost - Spend Schedule

Cost Realization Schedule - Wireless Solution


Building a business case - lessons learned• Benchmark your technology solution against the competition• Brainstorm potential benefits and savings• Engage finance leadership early on• Make your IT department your new best friend• Identify and fully engage cross functional stakeholders• Build a conservative business case• No need to reinvent the wheel


Building a business case – key points• Business case generation should not be viewed as a

mechanical exercise – the case must demonstrate that:- issues have been thought through- benefits are realistic and attainable- technical aspects have been evaluated and costed- outcomes will be tracked and evaluated to determine success

• A sound business case is the foundation of any project charter; without it, there is no valid argument to justify the project.


What I do for companies……I help companies optimize all aspects of their service operations by

advising them on critical success factors: Target service metrics and goals Performance management Technology application Service growth strategies Compensation and incentive plans

I also provide Leadership & Management training designed for the service professional.


Questions?


Thank You!

Mike [email protected]

www.strategydevelopment.orgBlog: http://strategydevlopmentinc.blogspot.com

610.742.4701

Date post:	19-Nov-2014
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