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 Is …

• Technology

• Applications

• Process

• Strategy

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

Field Service – Service Performance Dashboard

Field Service Business Question Encyclopedia – Example 1

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