By Shawn Santos, Senior Program Manager, SSPA
 In March 1964 a group of leading scientists sent U.S. President Lyndon Johnson a letter warning that the growing use of computers would lead to mass unemployment. The scientists said smarter machines would create a society that requires ''progressively less human labor."
Forty-two years later, there are still numerous unanswered questions about how the evolution of technology will continue to affect our personal and professional lives. One thing is certain; technology is here to stay. But what lies ahead in the realm of technology services? This article is the first in a three-part series describing the top business issues that service and support executives are facing, along with effective solutions that the Service & Support Professionals Association is pursuing.
This edition of the SSPA News will explore the following two critical services issues:
Critical Services Issue #1: Is the Service and Support Industry Running Out of Margin Improvement Opportunities?
Over the last six years, there has been significant top-down pressure on service and support organizations to develop and execute successful strategies for improving margins. Services management has responded by reducing call-center staff, outsourcing, off-shoring, moving towards web-based support and remote service delivery. Still, CFOs continue to make demands to streamline processes, improve productivity, and control costs, while at the same time demanding superior customer service and support.
Striving for customer satisfaction and loyalty, companies have long been looking for ways to obtain a high-level of service and support, while squeezing out costs and improving margins to satisfy the CFO and shareholders.
The question is resonant for support executives and management: “have service and support organizations—recently very successful in streamlining operations—reached a margin improvement threshold?”
If the answer is “NO” then what are the available levers to maintain and increase margins? If “YES”, how do I prove the situation to my CFO?
The Service & Support Professionals Association helps answer these questions by providing data points and trend analysis to help key stakeholders understand service’s growing role in revenue, profitability, customer satisfaction and loyalty. For example, the SSPA Benchmark Study provides decision-quality data around service demand, sales and marketing metrics, and delivery models. The SSPA has resources for services management that include insights on cost reduction, quality improvement, industry best practices, case studies, and benchmarks.
In addition, industry committees play a key role in our exploration and research into key service issues. We are currently delving into the total financial impact of support and maintenance in our new industry committee Measuring the Total Economic Value Creation and the Total Economic Costs of Service, Support and Maintenance. The output of this committee should provide compelling evidence of the risks of going too far with cost cutting in service delivery budgets.
Critical Services Issue #2: How do we Defend Against Support & Maintenance Contract Price Pressure?
This issue has been responsible for widespread concern and lost revenues. The SSPA has responded by launching a timely industry committee to explore the issue in detail and come up with practical solutions for service organizations. The result is an in-depth, members only white paper “Defending Support & Maintenance Prices (DSMP)” and a series of corresponding members only webcasts.
One of the most significant and frequently overlooked trends of the last five years for technology companies has been the emergence of services, support and maintenance as the primary economic driver of corporate revenue growth and profits. As a services and support professional, you need to be aware of certain emerging trends that threaten to reduce services growth and margins, and be responsive to effective strategies for defending prices for maintenance, service and support contracts.
The research results are clear—while the remarkable financial success of services, support and maintenance organizations now represent important factors in total company financial performance, enterprise customers have turned to renegotiating maintenance and support contracts and prices as a primary lever to reduce internal IT operating expenditures.
The DSMP white paper may be the single-most important piece of SSPA research that helps you protect your top and bottom line. SSPA’s primary conclusion is that price pressure on technology maintenance, service and support contracts is now a permanent part of the enterprise customer landscape and is likely to increase. The DSMP white paper lays out this emerging threat in detail, and discusses what levers are available to your organization to defend against this price pressure.
Additionally, the SSPA and Kotler Marketing Group have created a suite of ROI tools and training to help you prepare your front-line sales personnel to effectively quantify and articulate the value of your support and maintenance prices with customers.
“As a result of the SSPA Defending Support & Maintenance Prices white paper and webcasts , we were able to pin-point the systemic causes of the M&S erosion pressure and develop compelling defenses. Our sales force is much better armed with a compelling Go-To-Market message for our customers and partners.” - Global VP of Technical Product Support
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This article summarizes two of six critical services issues that we are discussing in the three-part SSPA News series “The Six Big Challenges Facing the Service and Support Industry” There's more to come—this series is only a brief introduction to the key industry issues the SSPA will be exploring in coming months. The SSPA strives to help you understand the emerging trends in the service and support industry, and to compliment that effort with effective solutions to your business challenges.
Next month, be sure and look for the second part in the series in which we will cover:
- Critical Issue #3: How do we Make Good Service Translate into Market Share Advantage?
- Critical Issue #4: What is the Future as We Move From Fixing Problems to Driving Product Value?
If you are an SSPA member and would like to discuss Critical Services Issues or how you can participate in and benefit from SSPA programs, contact Shawn Santos, SSPA Program Manager, or Trisha Bright, SSPA VP Member Programs. If you would like to find out more about an SSPA membership, please contact John South, SSPA Director of Membership Development, or click here for more information.
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