Service growth will need portal-based systems

Manufacturers wanting to grow their service and after-market repair and maintenance revenues, and to add differentiation, need to invest in portal technology and joined up business processes. Dr Christine Legner, of the University of St Gallen, Switzerland, has been researching industry, and observes that, while service is seeing huge growth, there has been little spend on supporting IT. She says that must change: “It’s a mater of professionalism,” she says. “Companies need to improve their business processes if they want service revenue.” One of the drivers will be users’ push to reduce procurement complexity: those with the slickest, lowest cost service and warranty offerings will win business at the expense of those without. Additionally, service models are moving from same-day, next-day service to contracted equipment percentage uptimes, necessitating service support and business systems geared to getting that right. SAP UK last month launched a cross-product, cross-industry service management offering and business unit, recognising the requirement. The system is based on the firm’s NetWeaver integration and application platform, and brings together aspects of its supply chain management, supplier relationship management, analytics, customer relationship management and ERP, as well as technologies like mobile. “More manufacturers are seeing service management as a profit, not a cost centre,” observes Paul Eggleton, business development manager, SAP UK. “But the information flows and operations need to be quite different from other parts of their business.” SAP has been working with big names to get this right – companies like Caterpillar Logistics, Deloitte and Ford. “Some manufacturers are making significant numbers, but to manage better they have to look at risk and service processes – otherwise they could lose money,” says Michael Wood, SAP service business consultant. The logic varies little from current manufacturing business thinking – right first time, reduced spare part stocks and just-in-time matching. “It’s about joined up thinking, just like manufacturing in the early ‘80s, but applied to service,” says Wood. “But companies can’t just integrate their legacy systems: they need to make their processes more lean – and integrate and support those with their existing systems,” says Michael Clement of Deloitte Consulting. He advises thinking about profitability, benchmarking the support requirements, logistics and warranty forecasts for example. Says Wood: “We’re working with UK manufacturers whose warranty business costs them money. They’re looking for savings, but because of their technology, they can’t pass costs onto their suppliers and they don’t have the analytics to resolve their issues.” Point made. SAP’s Eggleton says: “This is early days. Service businesses have been running on point solutions, and there’s going to be big change now. It will be a major growth area.” “SAP has the most comprehensive approach,” says Legner, “but there are also a lot of niche players.” From the IT perspective, she recommends the portal approach to improve connectivity between distributed and fragmented systems – focusing on bringing together visibility of ERP, call centres, service management and so on.