Running a Global Services Organization

Globalization is becoming the norm in the services industry. A market once content with relying on a local, regional – or even national – services organization is increasingly becoming even more reliant on a global support infrastructure. Continuing advances in technology and the proliferation of cloud-based Services Lifecycle Management (SLM) solutions have empowered even the smallest of services organizations with new and expanding possibilities to improve their global service and support operations.

For example, as a result of this trend, we have seen a growing customer demand for global service agreements that result in uniformity in the delivery of service to customers all around the world. In many cases, the unique local or regional service and support needs are rapidly disappearing for many customers who no longer wish to deal with local organizations anymore but, instead, are looking for consistency in global service and support performance, as well as (relative) uniformity in pricing across regional territories based on single contract negotiation.

Customer requirements for service and support will never be the same from one country to another, any more than they will be the same from one customer to another. However, one thing remains very clear – the requirements for service are becoming increasingly standardized on a global basis. A growing number of businesses are going global each year in terms of sales, marketing and services capabilities, supported not only by the proliferation of new Internet-based tools and multinational strategic partnering, but also by the increasing demand for global services and support as evidenced by the market as a whole. However, there are many key functions that will need to be consolidated into a global organization.

Another factor supporting the movement toward globalization is the ability to improve internal efficiency. In a typical decentralized organization, many functions are duplicated and performed independent from each other, which leads to increased communication efforts and differing ways of operating. We have seen organizations where product support documentation was developed by at least three different regional organizations, in some cases, providing conflicting information. For these organizations, operating on a more uniform basis would serve to both improve efficiency dramatically and, at the same time, provide a higher level of consistency in the way in which certain activities are performed. Through improved information and communication technology, new opportunities are also being created that allow services organizations to perform certain business functions more efficiently at a global level, while maintaining local control over their individual market segments.

A third factor supporting the case for globalization is the ability to reduce costs while maintaining or improving service level. The greatest area of opportunity involves the logistics operations where local policies have historically resulted in high investments in inventory, especially for slow moving items. Based on what we have seen in the industry, it makes sense to elevate certain of these functions to a global level in an effort to:

  • Meet customer requirements
  • Increase efficiency
  • Improve consistency

The details of each of these functions obviously will vary by company, but the basic functions do exist in virtually all of the companies in the services sector.

There are many functions that may be offered on a global basis

The best way to determine which functions can be offered on a global basis is to evaluate them from both an efficiency and consistency point of view. However, this does not mean that all tasks must be performed at a global level. Dependent on the individual situation, certain tasks may still be outsourced, or executed at the regional level. A good example is training, where the overall structure of the training programs and material should be consistent all around the world, although the courses can be fine-tuned and provided at regional or local training centers to reduce travel cost. Still, there will likely be increasing pressure on services providers to ramp up to their customers’ increasing global needs by offering a full range of global service and support solutions.

Among the principal functions that may be offered on a global basis are:

Business Development

The Service and Support function is critical for all businesses and has to be an integral part of the overall business strategy. For this reason, it is important to be actively involved in the planning activities that result in the development of a Service and Support Business Development Plan that addresses:

  • Service and Support product portfolio
  • Global marketing plans
  • Global Customer Care and Sales

This business function is most critical at the global level because it ties everything together and establishes a framework for setting the goals and objectives for the other parts of the organization.

Product Management

The Product Management function is also critical at the global level. Historically this function has been highly technology-oriented, and tied very closely both to the business’ development and manufacturing environment as well as its regional and local operations. With the implementation of global systems, this function can now be most efficiently managed at the global level. The function includes tasks such as:

  • Lifecycle management
  • Product documentation
  • Product analysis
  • Sustaining engineering

As stated earlier, the information and communications systems presently available allow for a faster and more reliable information flow to be managed at a central point, thereby requiring the need for only minimal additional investments in research and communications tools to support a global operation.

Logistics

The Logistics function probably represents the greatest opportunity from a cost reduction point of view. Historically each segment of the organization was responsible for its own planning and execution, which generally led to the implementation of multiple independent logistics systems requiring additional safety stock and a huge risk for obsolescence. Based on our consulting experiences, and supported by information culled from our ongoing surveys, creating a Global Logistics System, supported by the right automation systems, commonly reduces the inventory requirement by 20% – 30% without jeopardizing customer service levels.

At the same time, the risk for obsolescence is reduced which also creates additional cash for a company on the basis of lower reserves kept in the books. Dependent on the situation, most of the specific operational aspects of the logistics function may be outsourced to logistics service providers, which ultimately changes the focus of this function from one of execution to basically one of managing the function. At a global level, the Logistics function should include, at the very least:

  • Forecasting and inventory planning
  • Procurement
  • Repair management
  • Inventory control
  • Vendor management

The benefits of a global operation are obvious through the elimination of safety stock at all levels, automatic replenishment based on planning and forecasting, alliances with global parts and services vendors, etc.

Training

Training also needs to be consistent on a global basis. However, the development of good training programs and tools requires specific knowledge in addition to product knowledge. For this reason, it is most efficient to develop training programs at a global level, which will allow for specialization where required, and will improve the overall quality of the individual courses and material. This would encompass:

  • Customer training, and train-the-trainer
  • Technical and Partner training
  • Licensing (if services are outsourced to other companies)

Newer developments in training techniques via distance learning and the Internet are just an extra motivation to centralize this function at a global level.

Field Service

The Field Service function should also be managed on a regional or local level. The principal reasons are that labor restrictions and language barriers are still important geo-centric issues. The challenge is to determine what the appropriate service level should be from a management and support perspective (i.e., second/third line support).

In most situations a hybrid model may be developed where first-line support is provided at the local level, while second- and third-line support are concentrated at the regional or global level. Dependent on the specific type of business, the availability of new technology and expanding Internet capabilities may offer opportunities to increase operational efficiency in an environment where the location of the actual support person becomes less important.

Customer Support

The Customer Support function is a front-line function that is very dependent on the regional and local situation. Similar to the field service function, the level of centralization will be dependent on the local situation and culture. It remains important, however, to link all of these functions together via centralized automation systems and rolling out the appropriate communication systems to allow for local optimization.

Regional and local functions must also be carefully integrated


Because of key factors such as cultural differences, language barriers and the importance of a local presence, certain functions may still be best performed on a regional or local level. Although the trend is typically geared more toward the centralization of certain functions at a regional level (e.g., Pan-European, ASEAN) some cultures still require a local presence to do business. The challenge is to determine which front-line functions are absolutely necessary at the local level, and which can be combined at a higher geographic level.

Although some customers will do business on a global basis, the majority of sales will still occur at the local level, dependent on the culture of the region or country. Some markets might even have local requirements that point to a local sales function. However, all local sales functions supporting the business’ service and support products should be in line with the company’s global programs.

How does your organization get there?

Looking at each of these business functions and determining which can more effectively and efficiently performed at a global level is easy – you simply take a step back and apply some common sense, and the conclusion is almost the same for every business. However, in most cases, managers have to deal with an existing organization that has historically grown to where it is now operating on a non-global basis, and the change to a global environment is likely to greatly impact both the organizational structure, and all of the people in the organization.

In addition to these more tangible effects, there will also usually be many underlying issues that have to do with other, harder-to-define issues, such as philosophical and geo-political factors, changing roles and responsibilities, new reporting structures, etc. To address these issues, a careful approach will be necessary, and it might take some time.

The transition from a regionalized to a globally-managed operation is not easy. There will be a great deal of roadblocks that require attention, and the sensitivity of certain solutions will require a well-crafted and thought-out approach. For this reason it is generally helpful to seek assistance and support from an external party to manage the overall effort and ensure the development of the most appropriate global business model.

Choosing the Right Technology Is Only Half the Battle to Managing Your Services Lifecycle

Technology isn’t new – it’s what makes things new. It’s like that old BASF television commercial – “we don’t make the products you buy; we make the products you buy better“. Well, when it comes to Service Lifecycle Management (SLM), technology is the primary tool you can use to make the services you sell better – but there’s much more to it than just the technology!

One of the greatest opportunities we have in the services sector is the ability to use technology as an enabler to make our offerings better. R&D is used all the time to make products better; but for most product manufacturers, R&D typically takes years, costs tons of money, and involves a great deal of rebranding and market re-positioning. The advantage we have in the services sector is that we generally have a much faster turnaround, and it’s far easier to improve our existing service offerings than it is to, say, reengineer an entire product line.

However, one of the greatest fallacies in the services business is that if you simply embed technology, you’ll be in a better position just for the sake of having done so – that you’ll automatically be able to make your customers happier, and you’ll make more money. But that isn’t always true. If all you’ve got is an old, archaic services delivery model, and you apply the newest technology to it, you’ll just end up with a quicker, more automated, archaic system – but not necessarily a better one.

What we have found is that only by applying the right technology, to the right functions and applications, will you be able to provide your customers with exactly what they want, when they want it, and all the while reducing your internal costs, and ultimately keeping both your customers – and your CFO – happy!

There have been some stunning examples of the misapplication of SLM technology over the years involving businesses that have implemented “brand name” technology just for the sake of implementing technology. They have built some enormous infrastructures – state-of-the-art – but as impressive as they may have initially appeared on paper, they generally end up being only anecdotal to what the real mission of the business is in the marketplace. Even with all the technology they have put into place, they’re still not running efficiently! They didn’t “get it” before they implemented the new technology, and they still don’t “get it” – they’re just more automated than they were before.

The sad thing is – what should have been a tremendous business transformation opportunity for them, generally turns out – instead – to be nothing more than an expensive technology implementation with no real value-add to either the organization’s business operations – or its competitive market position. And, this is sad, because, in most cases, they’ve spent a great deal of time – and money – for the technology, but without any plan for how to actually use it. So all of their time and money spent ends up going for naught. That’s why technology without a purpose is just an expensive – and disruptive – toy. But technology – with a plan – will undoubtedly yield some positive results for those who know what to do with it.

But technology is not the only thing that a services organization needs in order to succeed – and thrive. There are many other things that are also needed to make it strong – and successful – in the marketplace. It certainly needs people, because without people, it has no “face” to show its customers.

However, in recent years, an organization’s “face” may no longer be merely visual. In fact, what has historically been the service provider’s “face” is increasingly being transformed into a “voice” – and that voice, text or chat doesn’t only have to be located right here in the United States. It can – and is increasingly being – distributed all over the world, regardless of where the organization’s customers are actually located themselves. People will always be important to services organizations; but where they’re located – and who signs their checks – may be quite different tomorrow than they are today.

Services organizations also need customers. It’s a fact of life – without customers, they’ve got no one to sell their products and services to – no one to complete the transaction. However, the days are long since gone for when manufacturers would only support those customers that had purchased their products. Today, not only do most services providers support multi-vendor products, but they also find themselves selling services to completely different types of customers, such as consortiums, group purchasing organizations, and other “new” types of buyers.

Services organizations also need infrastructure – both in terms of organization and operations – in order to ensure that the transactions between their people and their customers are executed and managed effectively. To run their operations efficiently, services organizations must also have the right mix of business processes, policies, and procedures to provide the levels of support that are required – and expected – by customers.

Each and every one of these needs – at first blush – may look to be standalone, independent elements that all organizations face; but, there is a common thread that runs between and among all of them – and that is technology. Technology is the great facilitator – the great expediter that ties everything together: the people, the customers, the infrastructure, and the processes – and it is the one element that most directly impacts all of the others.

It impacts the people, because it empowers them to do things that they would not otherwise be able to do on their own – that is, without the latest IT systems, communications, or software applications. It impacts the customer, because it allows the services providers to deliver the levels of support that are expected, and empowers the customers to assume some of the management and accountability that may go along with it. It impacts the infrastructure, because it ties together all of the otherwise separate and distinct components of the business that now need to “communicate” with one another – generally on a “real-time” basis.

However, technology, in and of itself, has no value. If it isn’t being used effectively, it adds no real value to the organization. But, if it is being used effectively, it can be the single greatest empowering tool that any organization can have – empowering people, supporting customers, and facilitating the infrastructure to get the job done.

Technology also enables us to do things we never dreamed we could do. Services providers can now resolve equipment problems either remotely, on-site, by phone, over the Web, through social media or through any combination thereof. They can wait to hear from the customer before initiating the “fix”, or they can fix the problem before the customer even knows there is a problem. They can fix the problem themselves, or they can partner with others to get the job done. Services providers have many alternatives to accommodate their customers’ needs, and customers have their choices, as well.

Even last year’s technology may just not cut it anymore in today’s business environment – certainly not in a segment that is as demanding as the services industry. The technology that abounds today runs circles around yesterday’s technology – and it is almost frightening to think about what tomorrow’s technology will bring to the table. But what’s even more frightening, is where your organization will be if it doesn’t also evolve technologically along with the times – and the demands – of the marketplace.