Accenture Global Megatrends Shaping Service Success
Accenture Global Megatrends Shaping Service Success
Accenture Global Megatrends Shaping Service Success
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Across regions and industry segments, For example, in the automotive and more than 50 percent3 of its revenues and
surveys often find that customers are industrial equipment industry, service Xerox expects that to rise to two-thirds by
unhappy with the service they get. and spare parts average 10 percent to 2017. Xerox’s service strategy focuses on
One reason that service experiences 25 percent of sales. But they can account vertical expertise through inorganic growth
fall short is because customer support for as much as 40 percent to 75 percent combined with innovation in its service
competencies aren’t keeping pace with of profits.2 offerings. The company is fueling growth
growing customer expectations. The hyper efforts in its three main segments: managed
drive of technology use—digital, mobile, But financial impact is only part of the print services, business process outsourcing,
social—offers new ways to access service equation. Services can also provide and IT outsourcing. Xerox’s service offerings
and support. They are fueling customers’ these powerful strategic advantages: include customer care, healthcare claims
growing service expectations and changing reimbursement, and automated tolling and
the way companies think about today’s • Service-driven companies can parking transactions.
service operations. generate stronger shareholder value
than do product-driven companies: Philips Healthcare is another prime
“capital light” investment costs can example. Over the years, the growth of
The Global Rise of yield high net cash proceeds. its service business has rivaled that of its
Service Profit • Service businesses can enjoy recurring other operations and now accounts for
approximately 25 percent4 of revenues.
revenue streams and often don’t rely
The rise of services as a business and on one-time product sales. Companies To achieve that growth, Philips Healthcare
economic engine is a global phenomenon. with these revenue streams may have has introduced a wide array of service
The economies of more than 80 percent of stronger shields against economic swings. offerings including consulting, clinical
the world are now led by services.1 In scores services, education, equipment financing,
of product-focused industries, services are • Since services can create full asset management, and equipment
emerging as a new source of growth, profit solutions for customers, they open maintenance and repair. Philips MediGo
and competitive advantage. The reasons up new markets and segments—by is an example of the company’s market
are straightforward: Product offerings their very nature, services can bring leading offerings. A pay-per-use service,
can become commoditized quickly and companies closer to their customers. it provides access to Philips medical
challenged by more efficient and cheaper • Services can provide powerful technology on a fee basis, with predefined
options. Disruptive technologies can make product differentiation and build minimum and maximum patient volumes.
products redundant and saturation in barriers against other players that Philips MediServ is another example—a
mature markets cuts off even more growth can’t easily replicate them. managed service that covers procurement,
opportunities. The result can be a fruitless installation, commissioning, training,
treadmill of low-yield product battles. In many cases, company services grew to maintenance, upgrading and replacement of
Services, however, can provide significant such a degree that they became enormous all client equipment for a fixed service fee.
economic and strategic advantages. businesses in their own right. Xerox is a
case in point. Services now account for
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Global Snapshots
A region-by-region look at what customers
are expecting and what businesses need to
know about the service landscape.
North America
What Customers Experience5
What Customers Expect CRM systems, portals, call centers, systems. All of which typically results in
data collection and product tracking. these companies not only failing to meet
As the most industrialized economies across They also devote considerable resources customer commitments, but also attempting
the globe, North America is dominated by the to customer and dealer management to do it in a cost-inefficient manner.
service sector, both in terms of contribution systems, work-order management and
to GDP and job creation. The largest and
most sophisticated consumer market in
enterprise management systems, as well as
preventive maintenance programs. Most
On the Horizon
the world, its customers are in hyper-drive. organizations have these basic systems The new age customer in North America is
Their ranks are swelling and vary across and technology infrastructure in place. forcing service organizations to rethink their
demographics, from aging Baby Boomers channels. Social media is major component
who are slower to embrace new technologies of the marketing mix and has the potential
to Millennials, who are uncomfortable if Regional Weaknesses to become the primary channel for customer
they’re not punching on a mobile device Despite the significant investments in interactions and service delivery. In addition,
this very instant. Moreover, consumers systems and technology, North American the rise of connected machines and
are demanding customized, high quality companies often fail to meet growing service equipment is driving the growth of Big Data,
experiences at a low price. They want to expectations. For example, businesses advanced analytics and decision sciences.
be recognized for their loyalty and expect often fall short on delivering premium Service organizations are striving to garner
many premium services, such as exchange, services they offer and sell. Moreover, actionable insights and redefining their
to be free. They also expect companies to service experiences are rarely seamless service offerings to better meet the needs of
treat them proactively and notify them of across multiple functions and operating ever evolving customers. And a few visionary
any service issues and their resolution. partners. Nor are they tailored to customer businesses are attempting to reach the holy
demographics. Many organizations also fail grail of services: to deliver a personalized
Regional Strengths to develop new service revenue streams and customer experience for each transaction in
optimize retail-level service inventories/ a cost-effective manner.
Many North American companies have in-stock positions. They also lag in the
already invested heavily in websites, use of remote diagnosis and telemetry
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APAC
What Customers Experience5
What Customers Expect Regional Weaknesses order to become more agile, reduce costs,
and redistribute risks while maintaining
In Western Europe, like most industrialized Service providers in Europe continue to customer satisfaction. Scientific methods
economies, customers’ service expectations struggle with the rising cost of service in service planning will likely play an
are rising quickly, often beyond the delivery. As in other developed markets, increasingly compelling role: companies
competencies of service operators. customers place significant emphasis will look for analytical solutions to deliver
Customers are well informed and ready on individualization of services. When quality service at a balanced cost.
to complain when service doesn’t meet individualized, however, costs increase
muster. In Eastern European countries which requires optimizing customer Another shift could be towards cloud
that are still industrializing, services are lifetime value with the cost to serve. based solutions for service management
catching up fast. Customers expect good In many parts of Eastern Europe, as in order to bring down the cost of service
service as a minimum, and seek customized well as some parts of Central Europe, delivery. The companies would look at
service that truly meets their needs. service providers face an “infrastructure a common platform to gather, collate,
gap” due to historic underinvestment in analyze and use datasets to enhance
Regional Strengths public and social infrastructure in these
regions. As a result significant capital
their after market service delivery.
Many European companies have investments are needed in order to Also, while economic conditions
standardized service provisioning and provide the same service levels that are remain challenging in Europe and many
delivery mechanisms. Investments in being provided across Western Europe. organizations continue to have declining
service technology solutions are on the margins, a strong after sales service
rise, especially for field force enablement performance is uniquely placed to
and enterprise asset maintenance.
On the Horizon address these issues – drive new high
With rising customer expectations and margin revenue streams, differentiate
service delivery costs, the regional focus product offerings, and improve the
will shift towards modularity in the service relationship with consumers.
chain. The shift may require companies to
leverage third-party provider capabilities in
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Services Don’t Meet Muster
At the same time that services are execution, resource planning (parts, labor)
becoming important, surveys consistently and production execution (schedule,
find that customers around the world dispatch, routing) can remain almost
are disappointed and frustrated with the totally un-integrated despite considerable
customer service they receive. Whether investment over the years. All too often,
they realize it or not, companies make technicians show up without the right part,
implicit service promises to customers all can’t fix the particular equipment, or miss
the time. Often, however, customers feel the appointment window altogether.
that the promises have been broken. In our
experience, we have found that customer
service is failing in these three areas: Ability to execute
on premium service
Keeping pace with programs
connected customers Premium customers want to be treated
The shift to digital, social and mobile has as such. They demand a personalized,
fundamentally changed the way users differentiated and, above all, a complete
seek service and support from businesses. service experience. And since they often
Last year, many customers clamored for know more about products and services
basic push notifications when their laptop than providers do, customers can switch to
was ready for pick-up. Today the trend alternatives if their expectations are not
appears to be a demand for context-based met. Premium service offerings, however,
services that guide them to tailored buying often misfire because siloed service
experiences using location services and functions can compromise service execution
social media. The expectations of new age capabilities. Indeed, many companies
digital customers are growing and they have lose track of important customers once
a burning desire to control their service they leave the call center. Other issues
experience. Traditional service models tend arise when companies fail to balance the
to fail to meet the demands of nonstop costs and service levels of differentiated
customer experience. service programs. The potential result:
over-spending on some groups of
customers and missed opportunities to
Getting it right the attract those willing to pay more for
premium product and service bundles.
first time
Although call centers have been a major
source of investment for decades, the
typical call-center experience often falls
far short of expectations. Many call centers
use measures and incentives designed to
get a customer off the phone as quickly
as possible. AHT (average handle time) has
absolutely nothing to do with customer
issue resolution. Similarly, in-home service
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Global Service Megatrends
ual
o n text on
C i
mat
Infor
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To align with customer expectations, understands the situation and begins with
individualized services will likely be driven an appropriate assumption. It uses advanced
by more than customer demographics analytics to process the most likely cause
and relationship history. Contextual for a product or service support request.
information—such as emotion, location, and The system anticipates future issues which
past behavior—will be central to meeting can be very powerful in after-sales service.
customer expectations and delivering
service quickly and profitably (See Figure 3).
Take an example6 - a credit card is declined
during an Internet-based commercial
transaction from a loyal and profitable
customer. Most likely, the customer isn’t
intending to defraud. He or she is trying to
make a purchase and the issue is probably
an expired or retired credit card. A system
that processes contextual information
Long Term (3-5 years) • Big Data Analytics for Unstructured • Intent-Driven Customer Support Systems that are
data (video, speech, tweets etc.) context-aware and can detect emotion/sentiment
• Self Service Maintenance and • Intelligent consumer devices with real time
Repair Applications monitoring and proactive diagnostics enabled
• Rich Mobile Applications for through M2M technologies
Customer Service
Scale and Complexity
Current
• 24/7 Virtual Assistance on Web
• Social media monitoring and analytics
(e.g. Consumer sentiment analytics)
• Social Media Support—Facebook, Twitter etc.
• Video support and tutorial on • C2C communities, • Gamification and Infotainment based
usage, maintenance Peer to Peer Support service applications
Time
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Differentiated supply chains for decades – for example,
forecasting, S&OP, network optimization,
to support scheduling. The mega suite of
vendor portfolios will likely absorb many of
Many companies have launched premium synchronization, and analytics. These will these scientific methods and optimization
service offerings for valuable customers. be used increasingly to optimize service techniques. However, future innovation
But these programs are often limited to supply chains. The following methods are will ensure the emergence of technologies
front-end service operations only. When gaining the greatest traction today: that fuel this constantly evolving market.
the customer leaves the call center, most
• Integrated Supply and Demand Planning • Parts and Service Pricing Optimization:
companies lose track of them. More and
for Service (ISDP): ISDP for service is Global leaders, particularly in the
more, companies are looking to create
similar to sales & operations planning automotive and industrial equipment
a differentiated service program end to
(S&OP) for products. It addresses the industries, are realizing the importance
end – from initial contact right through
challenges of simultaneously optimizing of service and parts as a primary source
to post-purchase consumption. After sales
the labor, parts and material components of economic profit generation. As a
service operations can define a successful
of the service equation. The sophistication result, scientific and advanced pricing
differentiated service strategy.
of formal master planning in the service methods, based on market intelligence
Many companies are coupling traditional supply chain (See Figure 5) is evolving, and customer perceived value analytics,
segmentation approaches—such as providing planners with the tools, data are replacing the traditional methods of
demographics or channel—with new and processes needed to react effectively “cost plus” or “rule of thumb” pricing.
segmentation criteria including cost-to- to random, un-buffered service demand. As companies realize hard dollar,
serve and lead times. The combination This tool, used effectively for decades in topline benefits from applying scientific
improves the ability for back-end operations the product supply chain, is finally being pricing methods in their service chains,
to realize front-end promises efficiently. adopted in services. the adoption trend is most likely to
The new tack avoids overinvesting in service increase in the medium and long term.
• Scientific methods for spare parts
experiences that customers don’t value
management: Along with advanced
while providing services commensurate
segmentation models, rigorous statistics
with the delivery cost. It also results
in more predictable customer behavior
modeling for parts forecasting and, Data and Analytics
multi-echelon inventory optimization
and, ultimately, higher loyalty among a
are on the rise along with optimization Driven
company’s most important segments –
techniques for physical network modeling There are two primary sources of “Big Data”
the objectives of a truly differentiated
and logistics execution. in services:
service strategy. Of critical importance:
defining service variables that govern • Intelligent scheduling and dispatch
the level of differentiated post-sales 1. Customer stream data which is primarily
systems: Field service analytics solutions
service and operationalizing them in unstructured and comes from sources
and tools that optimize real-time field
different segments (See Figure 4) including video, Twitter, Facebook, blog
service are maturing in integrated service
posts, and voice.
resource management. For example, a
cloud-based field service system can
Scientific interpret the working patterns of many
2. Data from the rise of connected devices
and equipment that communicate with
Service businesses—both profitable technicians, including the job types they central servers through machine-to-
aftermarket and internal maintenance handle, the tools they use, and the routes machine (M2M) interfaces.
operations—are turning to rigorous, scientific they take. These analytics can also provide
management methods used in production highly accurate predictions of capacity
Depot Repair Field Repair Warranty Mgt. Returns Mgt. Maintenance Sparing Program
Service Variables
• Work Order Mgt. • Appointment Window • Cover Policy • RMA Request Process • Maintenance Schedule • Service Level
• Labor/Resources Mgt. • Repair Lead-time • Extension of Goodwill • Return Options • Equipment Up Time • Turnaround Time
• Scoper of Work/SLA • Extended Coverage • Extended Warranty • Exchange Options • Contract Mgt. • Critical Part Mgt.
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Figure 5 – Master planning process in the service supply chain
Front End
Rough Cut Capacity Planning Master Service Sheduling (MSS)
Storage, flow and service capacities
by asset
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Conclusion
Customer service used to be something that
involved face-to-face interaction with a
customer. It was about smiling, empathizing
with customers, and going that extra step
to help resolve their problems. While these
basics still hold, the information revolution,
coupled with fundamentally changing
customer behavior, is transforming services
across industries.
We believe that six megatrends are defining the
transformation. Technologies are maturing to address
the always on customer. Contextual information is
underpinning individualized service experiences and
more sophisticated segmentation is driving differentiated
services for important customers. Scientific management
and analytics are reshaping service delivery by supporting
new levels of service-value chain efficiency. Finally, modular
approaches to the service chain will bring new expertise
and capability to bear and provide agility in service operations.
These service megatrends will likely have a profound impact
on the transformation of customer service as it increasingly
defines the competitive reality for global and local companies.
As we stated earlier, its easy to see that we’ve entered into a
new golden age for services, and it is likely that the changes
we’ll see in the next five years in services will be greater
than the combined changes of the last twenty-five years.
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References About the Authors About Accenture
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Central Intelligence Agency. The World Fact Robert Giacobbe is a Managing Director Accenture is a global management
Book. GDP- Composition by sector. Web. for Accenture and is the global lead for consulting, technology services and
2
Accenture Research and Analysis on Auto Accenture’s Service Strategy and Operations outsourcing company, with approximately
and IE companies practice. He works with clients in their 266,000 people serving clients in more
service chain, aftermarket business and than 120 countries. Combining unparalleled
3
Xerox. 2012 Annual Report: Today’s Xerox.
maintenance organization to help them experience, comprehensive capabilities
Xerox. Web.
improve their operational and financial across all industries and business functions,
4
Philips. 2012 Annual Report: Accelerate! results. He has extensive experience in and extensive research on the world’s
Progress in delivering our full potential. leading his clients through service business most successful companies, Accenture
Philips. Web. transformation programs, from strategy collaborates with clients to help them
5
Accenture Global Consumer Research 2012; formulation to solution deployment. become high-performance businesses and
Accenture Service Strategy and Operations Based in Atlanta, he can be reached at governments. The company generated
Pulse Survey 2013 robert.giacobbe@accenture.com net revenues of US$27.9 billion for the
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Hype Cycle for CRM Customer Service and fiscal year ended Aug. 31, 2012. Its
Support, 2012. Gartner Vivek Agarwal is a Manager in Accenture’s home page is www.accenture.com.
Operations Consulting practice. He has
extensive industry & consulting experience
in supply chain and service operations areas
with some of the world largest companies
in High Tech, Industrial Equipment and
Energy industries. Vivek supports the global
Service Strategy & Operations practice
in the areas of new offerings, assets and
thought leadership development. Based
in New Delhi, India, he can be reached
at vivek.b.agarwal@accenture.com
Special Contribution
The authors would like to extend a special
note of thanks to Deepak Kumar Sinha
who helped in research, envisioning and
detailing the relevant trends for this study.
Deepak is a Manager in Accenture’s Global
Operations consulting practice. He has
wide experience across consulting and
industry in areas covering product life
cycle management, product development,
aftermarket services and manufacturing,
among others. Based in New Delhi, he can be
reached at deepak.k.sinha@accenture.com