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Expecting Different Results?
By Peter J. McGarahan, Founder and President, McGarahan & Associates


Einstein believed the definition of insanity was doing the same thing over and over again and expecting different results. This describes perfectly the day-to-day service-delivery environment of many Global 2000 organizations, who continue to operate in a reactive mode yet wish for proactive results. They continue to apply a band-aid approach to treating poor internal service delivery symptoms rather than addressing the structural root of the problem. In reading this article, I am hopeful that someone in the Global 2000 IT organizations will make the connection that business processes operate on top of IT processes and that external service delivery is highly dependent on the quality of internal service delivery. One might manage their IT operations and service delivery differently if the realization was apparent that IT enables the firm to conduct and transact business with customers, create value, grow revenue and increase profitability. In the end, there is business value (business metric) created by IT services enabling business processes.

Connecting the dots

IT is a strategic linchpin in the service-profit chain, because it provides internal service value waiting to serve the business in the delivery of business services. Yet historically, IT has been viewed as a tactical function, and its services as commodities. This legacy perception remains the norm in spite of the fact that the strategic role of IT has grown spectacularly over the last decade. Unlike externally-focused service centers, most IT organizations and other internal service teams have not yet deployed automated or standardized processes that are the keys to operational efficiency and continuous improvement. This is the IT leader’s greatest challenge, one that supersedes all others, particularly in a dynamically changing business environment - transform the perception of IT from that of a support function to a vital link in the service-profit chain.

When it works well, internal service delivery is seamless. When it works poorly, the costs to Global 2000 firms are billions of dollars wasted annually. A few years ago, I traveled east to present the value and business impact of Change Management to a multi-billion dollar financial services company. The problem with the event was that no one showed up for the morning presentation! They were busy resolving and recovering from an application change gone bad that was now impacting everyone’s (almost 8,000 employees) ability to access email, the internet and hosted business applications. A vital link in the service-profit chain had been severely severed. The company measured their estimated losses in lost employee productivity, over-time IT expense and lost revenue opportunities to the total of $1.5 million for the 28 hours of down-time. The afternoon session was PACKED with all the right people who could and would change the way they performed Change Management. They realized that they needed to quickly get on the road to IT maturity – their business depended upon it.

Low- to medium-performance IT organizations

Are your support services meeting the ever-changing needs and expectations of your company? Are they delivering business value to the organization? Is your IT function helping to create a high-performance organization?

Here are some signs that you might be behind the quickly changing times – read fast – time’s a wasting!

1. You operate an outdated support model that substitutes headcount for efficiency and effectiveness, thus increasing support costs, reactive headaches, and employee dissatisfaction. The last outcome is particularly pernicious, because it forces employees “underground” ? seeking support service and solutions from outsides sources.

2. You continue to use the phone as the primary method of contact (the most expensive option) and interaction between the customer and the service desk.

3. You spend large sums of money on complicated technologies that are no longer applicable or relevant to how customers want to be supported.

4. You have not fully integrated key technologies with best-practice processes to deliver measurable value (cost reduction, improved performance quality and customer experience).

5. You fail to understand the importance of the service desk, which should be the face and voice IT. The performance of the service desk can build or destroy IT’s credibility and perception within the business. Why do we continue to under invest in the service desk when we know of its vital link in service delivery and the service-profit chain.

6. You do not focus on the services and metrics that matter most to the business and how to better deliver those services using new technologies, best-practice processes and better trained and engaged employees.

Always ask, never settle

To best address the above challenges, IT leaders must define and manage the linkages and tradeoffs among the four most critical dynamics:

1. Understanding IT’s true role in the organization’s service-profit chain.
2. What is important to customers?
3. What is important to the business?
4. What resources (money, people, projects, and assets) to leverage to hit the sweet spot among the first three?

One thing is certain: More is not always better. Organizations spend millions of dollars on support infrastructure, enterprise applications, mobile devices and professional services to become more business-aligned and reduce the cost and complexity of delivering IT services. But does it translate to value creation? Are we over-complicating the model, the design and the delivery? Does it have to be this hard?

In the book “Does IT Matter”, author Nicholas Carr challenges IT organizations not to overspend, but instead to focus on optimizing the performance and cost-effectiveness of its resources. For most companies, IT has to matter and the sooner the better. I am hopeful that publications like this one can inspire leaders to awareness, adoption and action. A recent survey by Accenture's Institute for High Performance Business found that of 370 companies across 35 countries and 19 industries, high-performing businesses (a business that consistently outperforms peer companies in revenue, profit growth, and total return to shareholders) do not necessarily spend more on IT than their peers. Rather, they optimize their existing services, people, projects, and assets to deliver high-quality, highly available, high-value-add services that matter to the business. I have taught IT Management for over 10 years now and have witnessed the professional growth, awareness and business maturity of both service professionals and organizations. It’s been a pleasure to observe their ability to innovate as well as adopt and adapt industry best practices to become a high performing company. They found the “secret” to delivering high-quality, high-available, high-value-add IT services to the business through optimization, utilization and continuous improvement of IT services based on aligned business priorities.

Service-profit chain

In Frederick Reichheld, Earl Sasser and Leonard A. Schlesinger’s landmark study “Putting the Service-Profit Chain to Work” (1) , firms that placed frontline workers and customers at the center of the service model were benchmarked. The service-profit chain, developed from this analysis, established the interconnected relationships among internal service quality; employee satisfaction, retention and loyalty; service value; customer satisfaction and loyalty; revenue growth; and productivity.

The links in the chain are as follows: Profit and growth are stimulated primarily by customer loyalty; a 5% increase in customer loyalty can boost profits by 25% to 85%. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction results primarily from providing the right technology combined with high-quality support services and policies that enable employees to deliver results to customers.

Think differently

Cleary a customer experience strategy that encompasses all aspects of how customers want to do business with your company should be a high priority. Leveraging the right combination of technology, processes and the magic human touch at the right moment of opportunity through all of your customer touch points can work to your advantage in creating the best customer experience as designed in your playbook.

IT services deployed throughout the customer experience and touch points can work to your advantage in many ways, most importantly in continuing to grow profitable revenue. In the global marketplace, IT services enable your firm to extend and expand its brand, products and services to new and existing customers cost-effectively twenty-four hours a day. We are selling to one of the most diverse customer bases in the history of business. Continuing to market, sell and service the old fashion way will not support a sustainable and profitable business model.

Think differently about how you and your firm can continue to enhance the customer experience by deploying customer-facing technologies (e.g. customer satisfaction, loyalty, revenue, profitability) as well as internally-focused systems (e.g. internal service quality, employee satisfaction, employee retention, employee productivity). In order for firms to successfully deliver IT business-enabled services they must shed traditional ways of thinking and acting. IT leaders must make tough strategic and tactical decisions to rise to the challenge of competing globally in tough economic times – their business depends on it.

(1) The Service Profit Chain by James L. Heskett (Author), W. Earl Sasser (Author), Leonard A. Schlesinger (Author)

About the Author
Peter McGarahan is the founder and president of McGarahan & Associates and acting Chairman of the IT Infrastructure Management Association. Pete’s value to the service and support industry is his thought leadership. As a practitioner, product manager and support industry analyst and expert, he has influenced the maturity of the service and support industry. His passion for customer service led the Taco Bell support organization to achieve the Help Desk Institute Team Excellence Award. IT Support News also named him one of the “Top 25 Professionals in the Service and Support Industry” in 1999. Support professionals voted McGarahan “The Legend of the Year” in 2002 and again in 2004 at the Help Desk Professionals conference for his endless energy, mentoring and coaching and his valuable contribution to the support industry and community. You can reach Peter McGarahan at pete@mcgarahan.com or 714.694.1158.

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