Today, more than ever, computer, mobile, consumer electronic, heavy machinery, networking, storage and printer manufacturers want to invest in their core strengths rather than manage their service contracts-related administrative operations. While these manufacturers grapple with future disruptions in their product and service portfolio, it is also very important that they quickly re-adapt their existing administrative operations to the digital way and be ready for future disruptions. Their administrative operations (quote creation, ordering, setting up contracts, managing entitlements, warranty, repair ordering, invoicing etc.) are bureaucratic, fragmented, legacy systems’ driven, highly manual, and follow fossilized SOPs.

What’s happening?

In the current innovation-driven environment, smartphones and computer manufacturers are bracing for the onslaught of augmented reality from social networking giants, consumer electronics are no longer differentiated by the quality or make but by a rich user experience of its software and digital features, heavy machineries are being monitored and controlled by IoT sensors to predict failures, traditional printing majors are putting all their weight behind 3D-printing, storage manufacturers are being gobbled up by Cloud etc. In either trying to survive or lead the change; most of the monies and strategies are focused on • Increasing R&D – the next big ‘it’ • Cutting off excess fat – control the costs ‘it’ gobbles • Identifying opportunities for revenue lift – earns while ‘it’ burns The traditional way of cutting off excess weight has been outsourcing people and process to low cost locations and revenue lift tactics have mostly been restricted to cross-selling in customer facing roles. However, times have changed and these methods have become less effective. The need of the hour are new-age digitalized solutions that can be employed to address the emerging needs and challenges in this space.

Challenges and Digital Solutions

Manufacturing and high tech industries as a whole are witnessing some challenging trends across the service contract-related administrative operations. Following are some of the operational and business challenges and recommended solutions to address each, the digital way.

Operational Challenges:

IT landscape is a galaxy of dying stars and huge geographical spread, leading to lack of visibility and control – The teams which do administrative operations are global and localized with varied and disparate IT systems leading to inefficiencies, outdated legacy processes and high cost maintenance. Complete overhaul of IT systems is an expensive and risky proposition, hence there is a need for non-intrusive and quick integration workflow solutions.

Solution: Instead of investing heavily on a complete IT overhaul, one should look at the option of implementing a business process management (BPM) suite which would sit as a wrapper on the IT systems and double up both as a workflow and case manager with advanced integration options. While this would enable execution and tracking of processes end to end, it would also bring complete operational visibility of the administration team from a service level perspective through visual dashboards and root cause analysis. With this robust suite in place, piecemeal modernization of IT landscape can be carried out, ensuring efficient and controllable administrative operations managed at a global level.

Old ways of working have fossilized the processes– It is important to first revisit the existing SOPs and identify wasteful activities and candidates for process improvement, for example, while setting up the service contract, one needs to meet GTS/RPL and other compliance requirements, but then for each change order, these steps are routinely repeated which leads to duplicate efforts.

Solution: It is important to equip the transformation team with a powerful visual capture tool, where you define one process template, compare it globally and converge towards a global standard template to identify wastes like the above example. It should capture details like roles, systems, steps, metrics, risks, tacit tricks or information, and many more for each sub-process and activity box, and manage all of these in project management style.

Service contracts are getting complex and non-standard – Many companies have multiple global sites and a wide range of products to be covered, and hence have highly customized service contracts. The administration team needs to set up these service contracts on systems like ERPs, service portals, remote monitoring systems, contract management tools etc. The administrative drudgery of reading and abstracting these complex and non-standard contracts are no longer possible with simple OCR solutions.

Solution: To effectively read and abstract these non-standard and complex contracts, we can leverage Artificial Intelligence (AI)-powered Bots that can read, sift, manipulate data and incorporate feedback for continuous learning. AI Bots can also be used for query management with natural language processing (NLP) capability.

Invoice lines are exploding – With service contracts getting global and complex, there is a need for generating invoices in more numbers, types and with increased detailing. Most of the pricing models are now based on consumption which requires collection and processing of huge amounts of usage data. Though the accuracy in invoicing is maintained at the cost of employing an army, the invoicing turnaround time (TAT) is still high.

Solution: To address this problem, solutions like self-service are available. But that doesn’t solve the fundamental issue of invoice TAT. For such high volume and low judgement based activities, application of Bots, also called Robotic Process Automation (RPA) leads to significant reduction in invoice TAT.

Business Challenges:

Customer expects fixed slab rates for out of service contract repairs – There are instances where some products are not necessarily part of service contracts or their coverage has expired. In such cases, the requirement is generation of Time and Material (T&M) repair price on demand basis. The T&M repair price varies from the actual repair cost and this opens up possibilities of disputes during invoicing. The trend now is replacement of T&M based pricing with fixed slab pricing, which makes the whole process efficient. However, defining a fixed slab pricing can get challenging.

Solution: Two things necessary for this type of initiative is to first establish fixed slab rates - this can be achieved by advanced analysis of cost of spares and labor for various repair types and then making this available to the end customer in a self-service format, wherein the customer can directly generate a quote for his repair type.

Rise in number of off-the-shelf but low-value deals – With a manifold increase in start-ups and leaner new age companies, the overall deal size of service contracts are getting smaller. This requires off-the shelf type deal constructs and fast turnaround on quote creation, which usually is a clincher because of extremely short procurement cycles with these new firms. Typically, the quote creation process, which involves sales, business, operations, finance and administration team, can be a long-drawn affair.

Solution: Make sure you get yourself a quoting solution to minimize lost opportunities. It’s important to note that you may already have a quoting solution in your CRM that is supposed to be used by sales. But these quotes by sales aren’t usually firm quotes (due to poor discipline in usage, low maintenance and in many cases, not using them as sales depends on administration team to process it). You would be surprised -- your administration maybe creating a firm quote as a secondary process and here is where a quoting solution will be required.

Revenue lift or protection opportunities are absent due to lack of real insights – Revenue lift opportunities come with effective utilization of Advanced Big Data Analytics techniques. Some analytics you should have are

 Installed Base Customer Intelligence – Engine to create proactive offers on replace, upgrade, reconfigure or refurbish opportunities

 Customer-Wise Revenue Forecast - In case of lower forecast, either trigger account mining or investigate service issues

 Sales Conversion Prediction – Predict deals which will win, thus enabling efficient use of money spent on sales and realize better deal conversion rate

 Warranty Claim Analytics – Adjust warranty budgets by predicting expenses in advance by analyzing defect categories and service engineers’ notes

As the world witnesses increasing resistance towards offshoring of work, it is important to ensure major gains are realized through a combination of above solutions. If your digital adaptation strategy hits the bulls eye then expect your end-to-end operations to be faster by a third, leaner by half and digital-ready by the full.

The above measures will help you control the costs ‘it’ gobbles and also ensure you earn while ‘it’ burns. Most importantly, these will save your precious time and help channelize your energies in nurturing the next big ‘it’.