The Service Council’s (TSC) service market outlook research for 2014 highlighted that increasing competition was tabbed as the top challenge for organizations looking to emerge from years of financial and global economic uncertainty. This competition was initially felt in the sale of product and equipment but is now increasingly being felt in the service and support space as more organizations are vying for profitability on the service side of the business.
For European organizations polled by The Service Council in a recent effort on Service Transformation, 30% report that competition is a major factor fueling an increased focus on service and support. The other top factor for European organizations is the need to open up net new revenue opportunities. As such, 70% of organizations have an initiative in place to raise the level of importance placed on service and support.
In fact, nearly 50% of European organizations indicate having a formal initiative in place to transform their service businesses. Therefore, these organizations aren’t just talking about transformation; they have actually enacted initiatives in order to change the way that service operates within the organization. For these organizations, the focus of transformation is to:
- Increase customer-centricity and customer commitment
- Increase profitability via new service revenue streams and improved resource planning
- Evolve service delivery and consumption models
To enable a successful service transformation, European organizations highlight the following factors and attributes as being essential:
- Executive leadership and ownership of service to build and support the service business case
- Customer insight and feedback to truly understand the desired customer-focused outcomes of the transformation
- Service-centric culture in the organization to support service-oriented initiatives and plans
- Well-defined service business plan to map out the requirements and expectations at every stage of the transformation
- Engaged service workforce that takes a stake in customer success and can identify opportunities for improvement with regards to customer relationships and revenue growth.
More than 60% of organizations with an initiative in place indicate that they have been transforming service for more than 12 months and the table below highlights some of the strategic changes that have been made with regards to service organization structure and oversight. Overall, the move to a more profit-centric service model is supported with executive ownership and accountability for service. In turn, this leads to an increased focus on dedicated service resources from sales, operations, marketing and IT, essentially wherein service is actually treated as its own business.
Other areas of service transformation for European organizations center around increased collaboration, greater accountability for profit-oriented metrics, and an evolving focus on performance-based or usage-based service relationships. While these are still relatively early days in the path to transformation, European organizations are taking swift steps to position themselves as the partner of choice in an extremely competitive marketplace.
Forty-three 43% of European organizations currently view research and development to be the biggest driver of competitive advantage for their organizations. Nearly 60% believe that service and support will be the primary driver of competitive differentiation in three years. This is a significant shift in the mindsets of these organizations.