Competition Fuels the Service Transformation in Europe

The Service Council's (TSC) service market outlook research for 2014 highlighted that increasing competition was tabbed as the top challenge for organisations 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 companies vie for profitability on the service side of the business.

A poll by The Service Council on the transformation of firms service business shows 30% feel competition is a major factor in fuelling an increase on service and support. The other top factor is the need to open up new revenue opportunities. Around 70% of organisations have an initiative in place to raise the level of importance placed on service and support.

In fact, nearly 50% of European organisations indicate having a formal initiative in place to transform their service businesses. It follows these organisations aren't just talking about transformation; they have actually enacted initiatives in order to change the way that service operates. For them, 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 firms highlight the following factors and attributes as being essential.

1. Executive leadership and ownership of service to build and support the service business case
2. Customer insight and feedback to truly understand the desired customer-focused outcomes of the transformation
3. Service-centric culture in the organization to support service-oriented initiatives and plans
4. Well-defined service business plan to map out the requirements and expectations at every stage of the transformation
5. 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 companies with an initiative in place indicate that they have been transforming service for more than 12 months and the table highlights some of the strategic changes that have been made with regards to service structure and oversight.

Overall, the move to a more profit-centric service model is supported with executive ownership and accountability. In turn, this led to an increased focus on dedicated service resources from sales, operations, marketing and IT, essentially where service can be treated as its own business.

Other areas of service transformation centre 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 in their early days, many are taking swift steps to position themselves as the partner of choice in an extremely competitive marketplace.

Over 40% of European organisations currently view research and development to be the biggest driver of competitive advantage. But, around 60% believe that service and support will be the primary driver of competitive differentiation in just three years. This is a significant shift in the mindsets of these organisations.

About: Sumair Dutta is the Chief Customer Officer for The Service Council (TSC). In his role at TSC, Sumair is responsible for new member acquisition, member engagement, community expansion, as well as the development and expansion of TSC's Smarter Services-oriented research agenda and portfolio.

Author
Sumair Dutta

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