Service Insights from SAP

At the technology services conference in Las Vegas last week, Dr. Bernd-Michael Rumpf delivered an outstanding keynote to the TPSA attendees. Bernd-Michael is the head of global field services for SAP and leads an organization of over 14,000 service professionals. In his presentation, he provided a litany of observations and insights on optimizing a technology services organization in today’s maturing tech marketplace. However, I want to comment on six observations I took away as I sat and listened to his keynote: 

1.       A successful PS organization like SAP’s understands current best practices and current industry performance metrics. This understanding is table stakes for a services organization that hopes to excel.

a.       Of course, this comment was music to my ears because I believe many service organizations operate in the dark—with very little sense of how their industry peers perform.

 

2.       Services organizations need to take more ownership of partner enablement. Who else is more capable to ensure service delivery partners are competent? Who else is more motivated?

a.       In working with embedded PS organizations in developing their guiding principles, the following principle is often documented: PS enables the path to volume product sales by providing the partner ecosystem with best practice service delivery methodologies, service partner assessment, and partner capacity tracking. I think this is a good start as PS gains ownership of partner enablement activities.

 

3.       Companies like SAP clearly see the potential advantage of better coordinating the activities of the customer support and professional service organizations. This is the only way a company can make intelligent, conscious decisions regarding what service activities can be monetized. For example, better coordination reduces the potential for support service organizations to provide a valuable professional service offering for free in the interest of protecting a maintenance revenue stream.   However, Bernd-Michael stated he felt the business models for support and professional services would remain different.

a.       In the opening keynote of the conference, JB Wood, Stephen Smith, and I co-delivered a keynote that outlined the reasons PS and support organizations will be driven closer together.  

b.      TPSA benchmarks PS business performance. SSPA benchmarks support services performance. I absolutely agree with Bernd-Michael’s assertion the business models will remain separate for some time to come.

 

4.       Professional Services must engage early in the product development cycle. Bernd-Michael’s comment was that PS can’t simply complain about product quality issues that impact PS profitability without engaging in the actual product development process.

a.       JB Wood, the CEO of AFMSI, TPSA, and SSPA has been advocating the impact of services on product development for the past three years. Our three associations are convinced that service engagement throughout the product development and adoption life cycles can reduce the cost of sales for product companies.

 

5.       Geo-centric hiring models can cripple PS organizations. If all hiring decisions for delivery headcount are made at the local country level, it becomes impossible to hire skills required for future directions.

a.       At the TPSA summit in May 2007, the theme was the annual PS Planning process. In that opening keynote, I discussed the friction point of aligning corporate strategic plans to local hiring plans. I polled the audience and validated that many PS plans have failed because hiring within the geographies lagged:

Impact of GEO Hiring on PS Success

Impact of GEO Hiring on PS Success

 

b.      In October 2007, TPSA published a Services Insight titled Negotiating with the GEOs. This article describes multiple tactics a PS organization can leverage to drive alignment between corporate and geographic PS departments to improve overall execution.

 

6.       Centralized centers of excellence help breakdown geo silos. Finally, Bernd-Michael commented on SAP’s strategy to leverage global delivery resource pools. This is a tactic TPSA has been aggressively promoting for almost two years now. Dr. Rumpf commented that one of the critical success factors for making this model work is making sure centralized delivery pools with specific expertise are physically located together. This accelerates their learning process. A snapshot of SAP’s model is shown below:

 

Global Resourcing at SAP

Global Resourcing at SAP

 

 

a.       In August of this year, Bo DiMuccio and I hosted a webcast on the topic of global sourcing models. This webcast can be replayed. In the webcast, you will see a step by step breakdown of the above tactic.  

Once again, I feel SAP delivered a fantastic keynote to help anchor our event. These are just six of the many insights that were delivered in the presentation.  Most importantly, there are multiple resources available for companies to optimize the success tactics Bernd-Michael described. I made the following comment in my opening keynote to the TPSA members attending:

“I believe 80% of our strategic success in professional services over the next three years will be driven by our ability to execute known tactics.”

After Bernd-Michael’s presentation, I believe that statement more than ever.

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