B-D

BD1: Providing unnecessary services hurts effectiveness.

BD2: Unnecessary services compete for the same resources, which may be busy providing truly necessary service.

BD3: Unnecessary services may constitute a significant part of the CS workload.

BD4: Unnecessary services may constitute a significant part of the CS expenses.

BD5: Unnecessary services do not contribute to CS revenue.

BD6: There is an ability of CS to distinguish between the necessary and the unnecessary services.

C-D'

CD'1: For the customers, service of their equipment is a necessity.

CD'2: It is almost impossible for customers to have an in-house expert covering at all times all of their equipment technology needs.

CD'3: In the long run, nobody will renew a service contract if CS is not capable of providing the necessary assistance at a time of need.

CD'4: In the long run, nobody will pay for a service if its provider is not able to provide the necessary assistance at a time of need.

CD'5: Service contracts do not discriminate between necessary and unnecessary services.

CD'6: Clients sometimes request what turns out to be an unnecessary service.

CD'7: Clients sometimes are unable to distinguish between necessary and unnecessary services.

D-D'

DD'1: Not all requested services are truly necessary.

DD'2: There is no ability on the part of the customer to distinguish between the necessary and the unnecessary services at all times.

DD'3: There is no need on the part of the customer to distinguish between the necessary and the unnecessary services at all times.

The key assumptions we would like to challenge lay behind the D-D' conflict arrow; it is the lack of either the ability or the need (or the will) on the part of the clients to differentiate between what is truly needed and what is not (assumptions DD' 2 and 3). It assumes that quite a significant part of the services customers request is superfluous and not really necessary. CS knows this distinction, but is prevented from acting upon it for fear of losing future contracts, while the clients are quite oblivious to it.

However, what if we challenge these assumptions? What if we create a reality in which this distinction is as clear to the customer as it is to CS? Moreover, if we succeed in designing an environment in which the interests of both sides coincide, instead of colliding, we may have a solution to our problem, one that stands a good chance of success. This would indeed be a breakthrough injection.

Rarely can a complex problem be solved with just one bold stroke (Alexander the Great and the Gordian knot not withstanding); we would like to present some of the main changes needed to restore CS contribution to a firm's overall profitability.

Differential Pricing

The very first order of business in resolving our problem is the mapping of unnecessary services (according to the CS personnel) that customers demand. It stems from the BD6 assumption, stating there is an ability of CS to distinguish between the needed and the unnecessary services. It is a valid assumption, which we do not challenge. As a rule, most events deemed unnecessary relate to unscheduled events, not to the routine (and planned ahead of time) service visits. Even when viewed as urgent, even emergency events, a good part of them could be resolved without creating an undue load on the service providers. When scrutinizing CS activity, one can categorize their activity according to the effort or the expertise level needed for their resolution. Moving from the most common and simple to the most complex, they can be listed as follows: 1. Problems the customer can easily resolve.

2. Problems that the Response Center (or Call Center) can fully resolve with the clients.

3. Problems that the Response Center can diagnose, but will still necessitate the on-site arrival of the Field Service Engineer (FSE) to repair.

4. Problems that the Response Center has difficulty diagnosing, which necessitates the on-site presence of the FSE for diagnosis.

It is often the feeling of the CS personnel that if the first two types were handled properly by the customers (i.e., as described previously), instead of the hasty dispatch of an FSE to the site, a large portion of the waste could be prevented. If only we could find a way to bring customers to try to resolve problems by themselves first, without turning to CS, or to cooperate better with the Response Center instead of calling for the prompt arrival of an FSE, it would change the business picture radically-and for the better.

As we have said previously, the idea is to create common interest between the customer and the service provider to resolve the problem quickly and effectively. As long as there is only one business model-the current one-it will not work.

However, what if we provide our customers with a different business model, one that creates incentives to reduce service calls, to make an effort to resolve problems by themselves, to minimize the usage of the service only to the "must" cases, instead of the current "why not?"

The elements of the proposed solution are as follows: Instead of the current one standard "unlimited" support service for a fixed fee, we can offer our clients a number of differentially priced options. We should price them in a way that will reward them for minimizing demanding unnecessary services, thus creating a truly win-win solution. The following are examples of the range of service options.

The Array of Service Offerings

Basic Services

This is the basic building block of all the service program options and consists mainly of remote services. Some customers who are currently on Time & Materials (T&M) only (i.e., they pay per call time of the FSE and per parts/material every time there is an occurrence), may be attracted to this option. Basic Services include: Phone support 9:00 AM to 6:00 PM, Monday through Friday, with a two-hour maximum response time.

Remote access support.

Remote application support.

Software upgrades (including implementation of upgrade).

System review or audit once per year (to ensure that there is no systematic degradation of certain equipment for customers who will take only the basic services).

CS publications (updates for user manuals, reference guides, quick reference guides, training materials).

Extended Basic Services

Basic Services are a prerequisite.

Extended hours phone support: 7:00 AM to 11:00 PM, Monday through Friday and 10:00 AM to 8:00 PM weekends, with a one-hour response time.

Limited FSE Visits

Basic Services are a prerequisite.

Consists of on-site visits, including FSE labor and travel costs. Does not include parts.

Five on-site service visits per product per year, 9:00 AM to 6:00 PM, Monday through Friday, with a one-business-day response time. Visits include preventive maintenance visits (according to product policy) and one system audit per year.

Right for additional visits at a predetermined fixed price (independent of time and travel; No-Questions-Asked [NQA] policy adopted for repeat calls).

Extended FSE Visits

Basic Services are a prerequisite.

Consists of on-site visits, including engineer labor and travel costs. Does not include parts.

Five on-site service visits per product, 9:00 AM to 6:00 PM, Monday through Friday and 10:00 AM to 8:00 PM during weekends, with a one-business-day response time. Visits include preventive maintenance visits (according to product policy) and one system audit per year.

Right for additional visits at a predetermined fixed price (independent of time and travel; NQA policy adopted for repeat calls).

Complementing FSE Visits

Coverage for unlimited visits (in addition to the five visits covered by Limited FSE Visits).

Complementing Extended FSE Visits

Coverage for unlimited visits (in addition to visits covered by the Extended FSE Visits).

Parts Services