The Future of Service Management

One of the problems faced by service provision industries, such as IT support, is that measurement of success is difficult because there are so many intangibles involved. That considered, with great interest I read a report called The Future of Service Management put together by a group of consultants (Downton, Taurel, Noventum) which claims to have discovered the types of organisation that can virtually guarantee sustained revenue growth, and those who are destined to fall further into the pit of cost cutting and tumbling margins.

The report identifies two types of service organisation, and the shared traits which help them to become profitable. Rather than use the report's overtly complex terms, it is easier to describe the two favourable business methodologies as 'large corporate service leaders' and 'smaller, niche providers providing premium service’.

The report argues that smaller businesses which put emphasis on service excellence can succeed by putting faith in staff to facilitate top-notch support and develop relationships with customers. The service in this example is so good that customers will pay a premium for goods and services to ensure support levels are maintained and are likely to buy more products from people they trust, all which lead to ever burgeoning profits for the business.

The problem for businesses in this segment is, as they grow, it is difficult to maintain the one-to-one intimacy that smaller businesses can offer. The solution for organisations in this position, according to the research, is to redevelop the business to move to the next category. The key for larger businesses is to develop a brand, embed service focus throughout the organisation and create processes which facilitate quality service for customers. Such a brand – the example given was John Lewis – doesn't have to rely on a specific individual to maintain a long-term rapport with the customer. Instead the business performs in such a way that the customer knows that whoever they deal with, they will be offered consistent service.
The report carries on by listing various other segments that businesses can fall within the category of negative service, falling profit margins.

I won't detail each of the business types here, but they generally try to compete on price and, as profits fall, have less to spend on the actual service delivery. As service levels fall, further price cuts are the only way to appease customers and the negative cycle continues.

There is much that the IT services market can learn from this way of thinking. IT services do have a direct impact on the profitability of service, and therefore investment to follow one of the models as set out in this report can ultimately impact the bottom line.

A detailed summary of the report can be found at www.thefutureofservice.com