Leading organizations manage their service and support business as a profit center, implying the presence of an executive (the Chief Service Officer — CSO) who has responsibility for operational and financial goals.
In Aberdeen Group’s September 2010 research on the State of Service Management, leading organizations, as determined by excellence in customer retention, service efficiency, and service profitability, were 18 per cent more likely than all other companies to manage service as a profit center.
To achieve profitability goals, leading organizations indicated a strict focus on the revenue side of the equation for 2011 (see figure 1).
Customer satisfaction, customer retention and cost management continue to be extremely vital in ensuring the sustainability of a service business, but succumb to the need for revenue growth in the priority list for CSOs in 2011.
This focus on revenue was re-affirmed at Aberdeen’s 2010 Chief Service Officer Summit, wherein 89 per cent of attendees were forecasting growth for their service businesses, primarily on the revenue side of the equation.
Where Does the CIO Come In?
To support revenue growth objectives, leading organizations are structuring their service operations around key pillars that not only impact, but also rely upon the support of Information Technology (IT) and the CIO.
– Integration of Service Functions:Aberdeen’s March 2011 research on Service Performance Management revealed that more than 50 per cent of leading organizations had centralized the oversight of key service functions (such as, field service, parts management, call center and multi-channel support, contract and warranty management) under service leadership. Most of these areas had traditionally been treated as functional business silos or managed by supply chain related lines of business. The success of a centralized view of service operations is predicated on the improved and increased integration of information residing on function-specific applications.
– Performance Management:
Centralized oversight of service has also necessitated an increased focus on performance management. Attendees at Aberdeen’s 2010 CSO Summit indicated that increased performance insight was their service organizations’ top area of investment and improvement in 2011. In March 2011 research; nearly 40% of all service organizations polled indicated that accuracy, timeliness and usability of current performance data was ‘poor.’ Therefore IT needs to lead the charge to ensure the availability of appropriate tools and integration frameworks that support the real-time capture, organization, and utilization of service performance data.
– Collaboration:Aberdeen’s Service Management research also shows that 2010 will be the era of the “fully connected service organization”; one where Service is tightly integrated with other functional areas such as sales, marketing, product management, engineering, and human resources. This is essential to enable a complete view of the entire customer lifecycle, including all interactions and transactions that drive the eventual customer experience. To accomplish this, IT must enable the increased integration of information, systems, and workflows across these varied business functions.
In addition to the pillars identified, service organizations are also taking an increased interest in mobile devices and applications to empower their field workers, while tinkering with social tools to drive better customer insight and overall support.
The success of these technology initiatives will rely heavily on a well laid out IT roadmap that supports the service organization during selection, deployment and day-to-day operation.
CIOs must work with service leadership to ensure that service is tightly integrated with the entire organization. As a result IT leaders need to take a significant stake in mapping out a technology strategy that supports increased visibility and collaboration across all levels of the service organization. These facets will enable service organizations to attain the aggressive revenue and profitability goals for 2011.
For more research from Aberdeen Group that applies to the CIO, please refer to Aberdeen’s CIO Tookit. Aberdeen’s 2011 CSO Summit will feature a session that highlights the role of the CIO as a service champion.
Sumair Dutta and Aly Pinder are researchers in service management at Aberdeen Group.