Category Archives: Services

The Complexities of Strategic Service Management

I first introduced you to Strategic Service Management in February of last year where I indicated that it was a proactive approach to making the customer satisfied and efficient while making a profit that balances strategy, resources, commitments, and pricing. It supports the integration, optimization, and efficient management of core business processes, adds to your overall business solution, and helps to differentiate your offering from that of your competitors. And it is a practice that is growing rapidly at many consulting firms as it is a topic that is now become common in many boardrooms that are feeling the squeeze in both directions on the product front: production costs are rising rapidly but prices need to remain flat in order to move any product at all.

For many companies, Strategic Service Management is now the only way to increase profits – as it not only allows premium prices to be charged for quality services that are perceived as valuable by the customers, but can also substantially reduce service costs when the right product is in the right place at the right time to be put in the hands of the right technician to do the job. The fact of the matter is that poor service often translates into real losses – which go beyond the financial penalties specified in your SLAs. If the product isn’t available or is priced too high when a customer wants it, that can result in a lost sale as well as dissatisfaction that may prevent the customer returning to you in the future. If your service team is unresponsive, not only will you lose repeat business, but your brand can take a hit. And if you price too low, you’re losing profit.

So what is involved in Strategic Service Management? As I covered in depth in my piece on Strategic Service Parts Management a few months ago, a lot of it revolves around parts and price management – having the right product available at the right place at the right time and at the right price – and this involves forecasting, inventory management, and price optimization, but it also involves having the right technician available to install the part and get the repair right the first time and making sure the technician has access to the knowledge she needs to do her job – and this involves workforce management, scheduling, routing, and knowledge management.

In other words, good strategic service management has to address all aspects of the entire service value chain (that may also include other suppliers, distributors, OEMs, dealers / value added resellers, and after market services) and not just the part or the price of the service. It also has to go beyond just the short term issues of problem diagnosis, replacement part location and delivery, technician scheduling and dispatch, and price optimization and address the long term issues of regular re-orders of parts when inventory reaches threshold levels, appropriate workforce training and staffing, and performance monitoring to insure that price levels and service remain at optimal levels.

Furthermore, the fact that this has to be done across geographies, diverse customer segments, product types, various types of SLAs, various levels of customer commitments, and both company-owned and third-party resources, should be enough to convince you that this requires a dedicated solution designed to address strategic service management. A spreadsheet (despite the fact that Aberdeen found that 91% of companies still use spreadsheets to plan and forecast parts and service levels in its report on “The Emergence of the Chief Service Officer”) is NOT enough. Furthermore, neither is your ERP.

An ERP was designed for inventory control, work order processing, basic product tracking, catalog management, simple case management, and, maybe, basic call center management. Enhanced add-ons may also handle inventory forecasting and planning, replenishment planning, exception monitoring and analysis, simple GANTT scheduling, and work order tracking, but this barely covers stage 2 (operational control) of SSM (where stage 1 is firefighting) and doesn’t even begin to address stage 3 on the optimization of performance management, and definitely doesn’t even hint at stage 4 where true integrated service management is reached and strategic service management acts as a growth engine for your company. To get there, you need the foundational capabilities that include parts optimization, integrated PLM, order planning and sourcing optimization, manpower planning and optimization, knowledge management for issue diagnosis and resolution, and performance analysis which then enable multi-enterprise collaboration, integrated part location and technician dispatch; integrated parts, labor, and pricing optimization, contract and market profitability analysis, and integrated service offerings – the ultimate key to successful strategic service management.

As my previous entries on Servigistics and MCA Solutions addressed strategic parts, pricing, and warranty management, my next two contributions to this series will cover workforce planning and knowledge management for service success, and, specifically, Servigistics’ new offerings in these areas.

What Does the doctor Do … For You?

In What Does the doctor Do?, I gave you a high-level overview of what the doctor does — Innovation for the Real World — and how it came to pass. Then, in What Does the doctor Do? … For Executives, I outlined what the doctor can do for sourcing & procurement technology and/or services providers and for enterprises looking to acquire sourcing and procurement technology and/or services for their day-to-day operations.

In this post, I’m going to outline some of the specific services that I offer.
Quick Links:
Investment Firms and Companies Doing Acquisitions
Technology & Service Companies
Buying Organizations


Investment Firms and Companies Doing Acquisitions

Technology Due Diligence
the doctor has not only been a CTO, but has done literally every job in a technology organization under the CTO role and with his deep academic background can, and has on multiple occasions, literally done an entire technology due diligence on his own – architecture, infrastructure, security, code review, roadmap, etc. – and can do it all for you if you are considering acquiring a small company with a small product portfolio. (Not that he can’t do a large product portfolio on his own, but given that exclusivity windows these days are short, it’s impossible for one person to do a large portfolio on their own with sufficient certainty no matter how well trained, experienced, and skilled they are.)

Product Due Diligence
the doctor has deep expertise in multiple areas of e-Commerce, Sourcing, Procurement, and Supply Chain technology, as well as deep expertise in advanced technology, especially in the areas of RPA, optimization, analytics, ML, and AI.  If you are looking for deep insight into product maturity, competitiveness, direction, and potential capability, and the product overlaps one of the doctor’s market areas of expertise and advanced technology, the doctor can offer you deep insight and analysis in a short timeframe.

 


Technology & Service Companies

Assessments

Total Solution Assessment
the doctor will spend approximately three days to two weeks on your site, meeting with your senior staff, depending on the depth and breadth of your solution.  Together, we’ll explore your technology offering, services offering, training and education materials, product roadmap, messaging, positioning, and current marketing strategies. I’ll then provide you with a written high-level assessment that captures where you are, how that compares to the market, and, if appropriate, what you could be doing to be more competitive. After you’ve had a chance to digest the report, I’ll conduct one or more one to two hour conference call to discuss it in depth.

Technology Roadmap Assessment & Recommendations
the doctor will spend approximately two days to two weeks taking a deep dive into your technology offering, depending on the depth and breadth of your solution.  I will assess functionality, architecture, platform, and UI; compare it to the state of the practice; assess it with respect to customer needs; and then prepare a detailed written assessment that captures where your solution is with respect to the market, what improvements might need to be made, and what enhancements could be made to differentiate it. After you’ve had a chance to digest the report, I’ll conduct one or more one to two hour conference call to discuss it in depth.

Product / Technology (Management) and Roadmap Advisory Services
the doctor will review specific modules, current or planned, and specific aspects of the product and roadmap and provide advisory services as appropriate.  This can include architecture, delivery infrastructure, stack, algorithms, and other technology components.

Research / Advisory Services
the doctor is a Ph.D. in Computer Science with a degree, and advanced training, in Mathematics.  As such, for certain products / technology endeavours, he is uniquely qualified to provide research and research-based advisory services on a short, or long, term basis.

Public Label Writing

Solution Whitepapers
the doctor will work with you to create a co-branded expository white paper relevant to your solution domain that explains what the problem is, why it needs to be addressed, and what the benefits of addressing it can be. The first step in selling a solution is making sure that people understand they have a problem. A sponsored white paper is a powerful way to get your salespeople over that first hurdle.

Sourcing Innovation Illuminations
Sourcing Innovation Illuminations, like the briefs and perspectives offered by analyst firms, will serve to elucidate a service or technology need and the state of the market with respect to that need. However, unlike the briefs and perspectives offered by many of the analyst firms, these pieces will be written by someone with a strong understanding of technology, and will clearly define how technology (or the technology-based solution offering) can help, what the current capabilities of the relevant (underlying) technologies are, and what a buyer should look for.

What’s the difference between White Papers and Illuminations?
a) Co-branding – Illuminations can be sponsored by, but are not co-branded
b) Distribution – you can distribute the white-papers for lead-gen on your site, but Illuminations are only distributed by SI
c) Focus – white papers can lead up to a specific solution, Illuminations focus on generic needs and do not lead up to specific solutions

  1. d) Cost – Illuminations cost less, but the topic and editorial discretion is entirely at the discretion of the doctor

Private Label Writing

Marketing Brochures
the doctor will help you to prepare your marketing brochures. I have a strong understanding of technology, supply chain needs, and the space as a whole, and I can help you focus on messaging that succinctly summarizes the problem, the solution you’re offering, and the particular benefits of your solution that are most relevant to a buyer.

Published Articles
the doctor will ghost-write articles on your solution space and how your solution addresses problems in that space. These articles can be submitted to traditional and on-line publications, which will publish vendor-specific content if it is broadened appropriately for general consumption.

 


Buying Organizations

Needs Assessment

the doctor will spend up to three days meeting with your team to identify what your problems are, where you are on the process and technology curves, and what solutions would be best for your organization. I will then prepare a written report that summarizes your challenges, your current processes, your current technology, what you need to look for in a technology and/or service solution, and what benefits you can expect to receive.

RFX Preparation

If you need a new technology(-based) solution, the doctor will help you create the RFx that you need to be sending out to make sure you get the information that is relevant to your needs, which is essential to selecting the right solution. It’s hard to write an RFx for a solution you don’t yet fully understand, and every day dozens (if not hundreds) of companies are sending out RFxs for sourcing and procurement technology solutions that don’t effectively communicate the solution the company actually needs. There’s no need for you to be one of these. the doctor can help.

As he co-created the Spend Matters Solution Map and Tech-Match solutions, he can also work with you to take maximum advantage of those solutions (which can be used to verify the vendors you are sending the RFI to are relevant and that their solution meets at least a market average level of appropriate technical and product maturity), thereby allowing you to focus your RFI on the key technical capabilities that are most important and/or unique to your organization and the service, culture, security, roadmap, and other requirements not captured in a relatively useless feature/function checklist that most RFIs end up becoming due to a lack of appropriate expertise on the buying organization’s part).

Solution Assessment

the doctor will helping you assess proposals from potential vendors, and prepare a formal recommendation on the strengths and weaknesses of each proposal, as well as follow-up questions to consider asking.

Train the Trainer

the doctor has a background in both academic education and industrial training, and in select cases can assist you in training your power users and star performers on change management, best practices, new processes and even new technologies. The goal will be for these key resources to achieve the level of understanding and proficiency necessary to be able to disseminate their knowledge to the rest of the organization, thus making your organization independent of vendor and other third-party services personnel and consultants.

Contact us (using the contact information in the FAQ) for details!

 

Designing for BPO and Shared Services

SourcingMag.com recently printed an article from Alsbridge on “Designing Your Organization for BPO and Shared Services”. With one exception, it was quite good.

According to Alsbridge, there are three main components to the shared services model:

  • the service management organization, or BPO,
    which performs the shared services on behalf of the retaining organization,
  • the retained organization
    which is the organization “left behind” that retains all tasks not outsourced to the service management organization, and
  • the governance layer
    that manages the customer/supplier relationship, including service level agreements (SLAs), performance reporting, billing, and issue resolution.

This is dead-on. It’s good to see someone making it clear that the governance layer has to be treated as a separate entity. Some people seem to think there’s only two components: the service management organization and the retained organization, and that the retained organization should be responsible for managing the service management organization. This, of course, is very problematic. Typically, your retained organization consists of employees who didn’t negotiate the contract and don’t have the authority to tell the service management organization to “do their job and get it right” if the service management organization isn’t performing up to expectations, and they definitely don’t have the authority to withhold payment until the terms of the SLAs are met.

Of course, the point of the article was how to go about designing the 3-part model. According to Alsbridge, you should use a top-down design that defines, in succession:

  1. vision and strategy
  2. design criteria
  3. operating model
  4. shared-services organization structure
  5. retained organization structure
  6. job descriptions
  7. role profiles

while simultaneously using a bottom-up design, guided by the governance council, to flesh out the organization structures and job descriptions – if you want to arrive at the proper model.

The article takes deep dives into each of these steps, starting with vision and design principles, for which it gives the following examples.

Vision
We will deliver a shared service organization that

  • increases the quality, efficiency, and speed of Procurement transaction services
  • improves reporting
  • delivers significant cost savings

Design Criteria

  1. organize to ensure flexibility and responsiveness to customer requirements
  2. minimize cost in delivering agreed service levels
  3. ensure clear roles and accountabilities
  4. structure to maximize work process effectiveness, quality, and excellence while exploiting economies of scale
  5. create a rewarding, challenging, and stimulating working environment

And, at this point, you realize that the article missed step 0, which I believe to be absolutely critical if you want to get it right.

Why are You Engaging a BPO?
Before you even start the process, you should have a good understanding of why you want to outsource part, most, or all of an internal function to a BPO. You need to understand what you are doing well, what you are not doing well, what could be done better, and why, and then figure out what tasks you plan to outsource and what tasks you plan to keep in house before you even begin the organizational design process. This is because the skill-sets need to do tactical procurement versus strategic supply-base identification versus contract negotiation are totally different and your organization design needs to reflect the tasks being done appropriately. How you plan to split up the work will affect your vision, your design principles, your criteria, your operating model, your shared-services organization structure, and your retained organization structure, because, let’s face it, sourcing and procurement is not like HR and Accounting.

IQ-based Navigation of Contingent Labour Sourcing

One of the subjects that is important to discuss from time to time on a sourcing blog is the subject of services sourcing. I’ve discussed the subject of Strategic Service Management a few times on this blog, along with the service management capabilities of Servigistics and Provade, but I’ve never dived into the subject of contingent labor force sourcing.

Although it may not be as universally applicable as the sourcing of marketing, print, and legal services, which every company needs, if you’re a call center, drop shipper, retailer, or seasonal manufacturer, for example, contingent labor services can be a very significant part of your budget. Furthermore, if left unchecked, these costs can not only soar out of control, but lead to significant losses through uncaught over-billing (and by the time you caught them in a properly executed spend-analysis project, it could be too late to get a refund if you’ve switched vendors).

That’s why, if you fall into one these categories, you really should have a good labor sourcing and management solution. One such solution that I would consider is the one offered by IQ Navigator.  I recently had a chance to walk through and discuss their SaaS-based services management solution in length, and while, like a few other offerings, it is flexible enough to handle multiple services category, it is particularly well suited to contingent labour force sourcing and management.

Contingent labor is a complex category. Sometimes you’re hiring by the hour, sometimes by the day, and sometimes by the week. Sometimes you’re hiring one person for a job, sometimes twenty. Each position has a different job description, and different requirements. And, each HR person usually has hundreds of jobs across dozens of positions across multiple locations to fill simultaneously in your typical multi-national. Furthermore, multiple documentation requirements, including resumes, need to be maintained for each potential resource.

IQ Navigator’s solution not only allows each job requisition to be customized by type, requirements, and process flow, but it supports the entire process from job definition, advertisement distribution to staffing agencies, resource resume review, resource selection, time and rate approval, project tracking, billing, matching against approved rates, and alerts if a resource comes close to their approved hours. It also supports job type templates, project and process templates, and calendar based definition of resource requirements. This last capability is well thought out and rather unique – it allows a supervisor to load up a single monthly-calendar based screen, and, for each job, specify how many resources are needed for each shift in that month. All the supervisor has to do is enter numbers – and the system enables the HR manager to take care of the rest – automating the distribution of the advertisement to staffing agencies, the collection of resumes, and the matching of experience and certifications against job requirements.

IQ Navigator’s product is also quite configurable. It supports the definition of projects with multiple statements of work (SOW), where each SOW has multiple deliverables, and every SOW can have different terms and rates, tied to a contract, which can be incorporated as a key field or as an attachment. It also allows mass approvals, which can be done by e-mail or mobile device by a busy manager in the field.

And it works. IQ Navigator has over 50 clients, including a couple dozen Global Fortune 500s, processes over 50,000 thousand contractors weekly, from over 4,700 staffing agencies in over 15 countries which represent over 3 Billion in spend under contract annually. Furthermore, over one quarter of spending by its global multi-national clients is outside of the US.

Consultants are Cheap!

Last month, over on the CNet blog, Steve Tobak posted a great entry on “when to hire a consultant”. However, instead of repeating all the reasons why you should hire a consultant, I want to echo his sentiment that too many executives still think that consultants are parasites that charge ridiculous rates, waste precious time, and present obvious conclusions when, in fact, good consultants can be the most cost effective business saviors you’ll ever have the good fortune to hire! But I’m not just going to do the traditional “soft-sell” and wave rhetoric. I’m going to put some hard numbers behind my justification of why hiring a consultant, even at thousands per day, is not only a great deal, but maybe even a better deal then what you get when you hire a senior director or vice president.

  1. A top performer demands a high salary.
    Usually 200K to 300K for a high-performer. Let’s say $250K.
  2. A top performer demands pricey benefits.
    Health insurance (10K+), life & disability insurance (5K), 401K matching (10K), and a performance bonus of at least 10% to 20% (25K to 50K) in a good year. This will cost you another 50K to 100K. Let’s be very conservative and say 50K .
  3. A top performer comes with overhead.
    First off, there’s all the standard overhead of maintaining the nice office, the telecommunications equipment, and the IT equipment. There’s also a share of an administrative assistant’s salary, a transportation budget, and a reasonable expense account. This could easily eat up 25K to 50K (or more). Let’s be moderate and say 30K.
  4. A top performer needs a decent vacation to recharge.
    Depending on how long this performer has been with the company, we’re probably talking 4 to 6 weeks. This is a hidden cost, as it means you’re only getting 46 to 48 weeks of work, at most.
  5. A top performer needs to keep his skills up to date, and this will require good training.
    You should allow at least two weeks for any employee. For a top performer, I’d highly recommend three or four weeks of training and education related activities. Let’s be conservative and say this person is an extremely fast learner and you can get away with two weeks. Now your top performer is only working 44 to 46 weeks, at most.
  6. Training costs money.
    Whether it’s courses, workshops, conferences, or self-study guides, expect to shell out for this. A couple of conferences and a couple of courses could easily run you 15K to 25K to keep your top performer at above average performance levels. We’ll be realistic and say 20K.
  7. There will be other costs that arise with respect to raises, promotions, recognition, and performance.
    However, since you can always make them next year’s budget problem, we’ll ignore them for simplicity.

This says that your 250K top performer, that you believe is only costing you approximately 1K a day is actually costing you over 1.6K a day in a conservative estimation, and possibly over 2.1K in reality. (350K to 450K+ over 220 days, vs 250K over 260 days)

Now, it’s still less than a consultant, but let’s not forget the following:

  • Your top-performer will have most of his or her time consumed with the tactical day-to-day operation of the business.
  • If your top-performer is struggling to complete two weeks a year of training or education related activities, he or she is not going to be up to date on new ideas, technologies, and movements within the marketplace.
  • If you’re starting to run into stiff competition or problems within your business, you can be too close to the problem to make good, objective decisions.
  • Even a top-performer can only be an expert on a handful of technologies, processes, or business functions. At least collectively, outsiders will always know more about the best way to run your business with today’s technology in today’s market than you do.
  • It’s an innovate-or-die marketplace out there today. And if we’re in a recession, that’s doubly true.

In comparison,

  • A consultant can focus purely on the strategic, and purely on the problems you need help with.
  • A consultant will spend a considerable portion of his or her time keeping up to date on new processes, technologies, and advancements. Their knowledge is there to be used.
  • A consultant can be much more objective. Furthermore, a consultant probably has a better comprehension of the state of the market you compete in than you do.
  • Even though, like any top performer, a consultant can only be an expert on a handful of technologies, processes, or business functions, you are free to pick the consultant with the skills you need to advance your business.
  • When a consultant puts in a day, a consultant puts in a day. Usually 10 to 12 hours, compared to the 9-5 with a 2 hour lunch an employee will often try to get away with when he or she can. Plus, a good consultant can’t stop thinking about your problem until she goes to sleep at night, and usually starts thinking about it the minute she wakes up.
  • Consultants live by the innovate-or-die mantra.
    and, most importantly,
  • When the project is over, you can cut the consultant loose without any additional cost. In contrast, it could easily cost you six figures to cut a top-performer loose. Furthermore, if you’re smart and do a short initial engagement with a new consultant before agreeing to a long term engagement, the loss associated with hiring the wrong consultant is next-to-nothing. In comparison, the loss associated with hiring the wrong person for a director or vice president job will be hundreds of thousands by the time you add up the losses with dismissing the current employee, finding a replacement, and getting that replacement up to speed.

So, given that a consultant can bring you the badly needed 1) expertise, 2) objectivity, 3) credibility, 4) leadership, and 5) time that you need to be successful, don’t balk at standard consulting day rates. It’s a bargain compared to the value they can bring, especially when you remember that it’s not tactical day-to-day operations that bring you substantial cost savings and new markets, but strategic improvements that consultants can bring with them.