Aberdeen - Impact of Globalization

The Impact of Globalization on the
Service Supply Chain

January 2008
The Impact of Globalization on the Service Supply Chain

Page 2
Executive Summary
Aberdeen research shows that the need to deliver a cost-effective service
experience to customers across multiple geographic regions is driving
service executives to adopt centralized management and business processes
to better manage people, parts, and data within their service organizations.
A survey of 180 global service executives conducted in December 2007 and
January 2008 found that Best-in-Class firms are centralizing knowledge
management and logistics functions, developing local service models that can
be integrated into a global service function, and leveraging technology with
global functionality to address an expanding international customer base.
Research Benchmark
Aberdeens Research
Benchmarks provide an indepth and comprehensive look
into processes, procedures,
methodologies, and
technologies with best practice
identification and actionable
recommendations
Best-in-Class Performance
Aberdeen used five key performance criteria to distinguish Best-in-Class
companies. These Key Performance Indicators (KPIs) are the financial,
operational, and customer-facing metrics most frequently cited as indicators
of balanced service performance. Best-in-Class firms reported:
39% profitability as a percent of service revenue
4.2 (on a 1 to 5 scale) customer retention performance
88% overall workforce utilization
50% two year Service Level Agreement (SLA) compliance

improvement
43% two year asset uptime improvement
Competitive Maturity Assessment

Survey results show that the firms enjoying Best-in-Class performance
shared several common characteristics:
They are three-times more likely than Laggard firms to evaluate

and compare service operations on a region-by-region basis
They are almost twice as likely as Laggard firms to store customer

information in a global centralized knowledge base
They are almost twice as likely as Laggard firms to have a global

parts planning and procurement process in place
Required Actions
To achieve Best-in-Class performance, companies must:
Measure key operational and customer-facing metrics monthly
Adopt global common practices, reporting structures, and metrics
Centralize knowledge management across service operations
2008 Aberdeen Group.

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"The value of having a global

service organization is that it
provides a consistent business
model across global customers,
aids in developing evolving
markets, and supports a
predictable and consistent
brand message."
~ Director, Customer Service,
Large Industrial Equipment
Manufacturer
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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance..................................................................................... 2
Competitive Maturity Assessment....................................................................... 2
Required Actions...................................................................................................... 2
Chapter One: Benchmarking the Best-in-Class ..................................................... 4
Business Context ..................................................................................................... 4
The Maturity Class Framework............................................................................ 5
The Best-in-Class PACE Model ............................................................................ 5
Best-in-Class Strategies........................................................................................... 6
Chapter Two: Benchmarking Requirements for Success .................................... 8
Competitive Assessment........................................................................................ 8
Capabilities and Enablers........................................................................................ 9
Managing Global Service Parts ............................................................................11
Global Workforce Management Challenges....................................................12
Technology Adoption Plans.................................................................................13
Chapter Three: Required Actions .........................................................................15
Laggard Steps to Success......................................................................................15
Industry Average Steps to Success ....................................................................15
Best-in-Class Steps to Success............................................................................16
Appendix A: Research Methodology.....................................................................17
Appendix B: Related Aberdeen Research............................................................19
Figures
Figure 1: Pressures Driving the Need for Global Service Operations................ 4
Figure 2: Best-in-Class Prefer Centralized Service Management....................... 6
Figure 3: The Strategic Actions of Best-in-Class Firms........................................ 6
Figure 4: Leading Supply Chain Challenges for the Best-in-Class....................11
Figure 5: Leading Workforce Challenges for the Best-in-Class.......................13
Figure 6: Technology Enablers Among the Best-in-Class ..................................13
Figure 7: Improvements Since Technology Adoption ........................................14
Tables
Table 1: Top Performers Earn Best-in-Class Status.............................................. 5
Table 2: The Best-in-Class PACE Framework ....................................................... 5
Table 3: The Competitive Framework..................................................................... 9
Table 4: The PACE Framework Key ......................................................................18
Table 5: The Competitive Framework Key ..........................................................18
Table 6: The Relationship Between PACE and the Competitive Framework
.........................................................................................................................................18

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Chapter One:
Benchmarking the Best-in-Class
Business Context
Global expansion is a business reality for organizations faced with shrinking
product margins, increasing competition from foreign sources, and a
technology environment that gives customers unprecedented choice in the
selection of products and services. As companies expand sales operations
beyond national borders, post-sale service organizations are put under
significant pressure to deliver a high level of customer service at an
acceptable cost and with strong profit performance on a global scale.
Service executives facing the challenges of global operations must make
difficult decisions regarding management practices centered on service
resources, regularly deal with the complexity of parts logistics impacted by
trade and tariff restrictions, and ultimately must deliver service that
supports and enhances the enterprise's brand promise to the customer.
Aberdeen found that 76% of all companies surveyed are currently operating
service on an international scale, and more than half (55%) have at least
seven years of experience in global service operations. Companies deploy
different service models related to technicians and parts distribution and
these models sometimes change regionally. However, survey respondents
indicate a strong consistency in the pressures driving global service delivery
(Figure 1).
Fast Facts
Best-in-Class firms have
achieved more than three
times the two-year service
profitability improvement
than all other firms
generated more than four
times the two-year customer
retention improvement than
all other firms
posted more than twice the
performance improvements
in profitability, contract
compliance, and customer
retention from technology
implementations than other
firms
Figure 1: Pressures Driving the Need for Global Service Operations

58%
Provideunifiedcustomer
experienceforbrandvalue
42%
42%
Supportcompany
globalsalesstrategy
50%
31%
31%
Customerdemand
forlocalizedservice
27%
24%
Needtoreduce
servicecosts
0%
BestinClass
AllOthers
AllOthers
10% 20% 30% 40% 50% 60% 70%

%ofrespondents
Source: Aberdeen Group, January 2008
As Figure 1 indicates, a significant number of organizations place paramount

importance on their organization's brand promise and face the challenge of
delivering a positive and unified customer experience across all served
regions as part of that promise. Balancing the increasing customer demand
for more localized service with the need to control service costs across a
global landscape is also a top pressure point for service executives.
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The Maturity Class Framework

Aberdeen used a combination of current performance and two-year
performance improvements from key service financial, operational, and
customer-facing metrics to distinguish the Best-in-Class from Industry
Average and Laggard organizations.
Table 1: Top Performers Earn Best-in-Class Status
Definition of
Maturity Class
Mean Class Performance
Service profitability as a percent of service revenue: 39%

Best-in-Class:
Customer retention performance (1 to 5 scale): 4.2
Top 20% of
Overall workforce utilization: 88%
aggregate
performance scorers Two year SLA compliance improvement: 50%
Two year asset uptime improvement: 43%
Industry Average: Customer retention performance (1 to 5 scale): 3.9
Middle 50%
of aggregate
Two year asset uptime improvement: 8%
Laggard:
Customer retention performance (1 to 5 scale): 3.4
Bottom 30%
of aggregate
Two year asset uptime improvement: -2%
The Best-in-Class PACE Model

Managing an efficient and profitable service operation on a global basis
requires a combination of strategic actions, organizational capabilities, and
enabling technologies that are summarized in Table 2.
Table 2: The Best-in-Class PACE Framework
Pressures
Actions
The need
Integrate
to provide
contract labor
unified
into permanent
customer
workforce
experience Integrate
to support
multiple
the brand
knowledgebases
promise
into common
service
knowledgebase
Capabilities
Enablers
Global optimized parts

procurement system in place
Single vertically-integrated
global reporting structure for
all service operations
Centralized knowledge
management process to store
customer data on a global basis
Service operational and
financial performance
evaluated and compared on a
region-by-region basis
Centralized data warehouse / knowledge management

solution
Service management solution (workforce and parts)
Workforce management solution (beyond scheduling
and routing)
Global parts pricing solution
Schedule and routing solution with contract labor
management functionality
Service parts planning system with item-level
integration to ERP system
Best-of-breed parts management solution with logistics,
reverse logistics and inventory management capabilities

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Best-in-Class Strategies
As Figure 2 shows, Best-in-Class service organizations operating on a global
scale have adopted a centralized management approach for a majority of service
functions. Only workforce management, scheduling and routing, and repair
functions are managed on a regional basis by the majority of Best-in-Class firms.
Figure 2: Best-in-Class Prefer Centralized Service Management
86%
Pricing
DataCollection
79%
73%
Partsprocurement
Knowledgemanagement
68%
Excessmanagement/Dispositioning
65%
Distribution
59%
Contactcenter
57%
Inventory(parts)management
57%
Reverselogistics
0%
52%
20%
40%
60%
80%
100%
%ofBICrespondentsfavoringcentralmanagement
%ofBICrespondentsfavoringcentralmanagement
In addition to implementing centralized management and reporting of key

service functions, the Best-in-Class have embarked on a set of strategic
activities designed to foster seamless operation across their service
landscape. From creating a blended workforce of permanent and contract
labor to efficiently managing customer demand, establishing a common
knowledge warehouse to facilitate centralized data capture and distribution,
and centralizing logistics functions to build economies of scale, the Best-inClass are taking action across the major elements of the service supply
chain: workforce, parts, and information.
Figure 3: The Strategic Actions of Best-in-Class Firms
Developingcommon
knowledgewarehouse
42%
Integratingregionalcontract
laborintolaborpool
38%
Developinglocal
servicemodel
35%
Centralizinglogisticsfunctions
31%
Establishpartsstocking
locationsclosertocustomer
31%
Implementorupgradetechnology
27%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
%ofBestinClassrespondents

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Aberdeen Insights Strategy

Best-in-Class organizations are more focused on, and outpace their less
mature counterparts in, the establishment of centralized management and
business process to handle global service. However, many of the top firms
still identify the lack of a consistent service strategy across all regions as a
top challenge to effective global performance. An interesting comparison
shows Best-in-Class organizations (27%) significantly less likely than all
others (45%) to look at implementing or upgrading technology as a
strategic action. The Best-in-Class organizations already hold a
commanding lead in the adoption of technology with global functionality
and interviews with global service executives for this report indicate a
Best-in-Class business practice is to focus on process as an initial step to
ensure technology investments pay off with significant performance gain.
The Best-in-Class can spend less in technology because of previous
technology investment and the progress theyve made toward a fully
integrated strategic service management model.
"Global service is a necessary

evil. Our customers demand it
and it's a qualifier for most
orders. We must have global
service or we go out of
business."
~ Logistics and Supply Chain
Engineer, Global
Telecommunications Provider
In the next chapter, we will see what the top performers are doing to
achieve these gains.

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Chapter Two:
Benchmarking Requirements for Success
The establishment of integrated business processes, supported by
technology that contains global functionality, can enable the effective
delivery of service on a global scale, leading to enhanced customer and
financial performance.
Case Study Texas Instruments
For Texas Instruments Education Technology Business Group, a leader in
the manufacture and sale of calculating equipment for the education
market, delivering customer service on a global basis requires a
combination of regional and global management - and heavy reliance on
trusted outsourced partners. To meet our differing customer
expectations and requirements as well as provide us with a view of how
service is operating at any given time, our service processes are regional in
execution but global in design," says Tom Shields, Manager of Logistics and
Supply Chain.
Fast Facts
Best-in-Class organizations
have improved contract
compliance by 53% since
implementing technology to
aid global service operations
Best-in-Class firms generate
nearly twice the profitability
from service than Laggard
firms
Shields, who is responsible for worldwide reverse logistics s and supply

chain design for the TI unit , says TI has outsourced most of its call center,
logistics, and service functions but remains heavily involved in the design of
appropriate processes and systems to manage the return and replacement
of potentially defective calculators to customers. Weve found that when
it comes to service, one size really doesnt fit all and customers in different
regions have different expectations and tolerances. But weve embraced
those elements that drive measurements to ensure that portion fits all. We
have metrics that we have agreed upon that we apply worldwide and we
stay heavily engaged in the process design, then rely on partners to execute
against those processes.
TI, which has been managing global service for more than 10 years,
manages reverse logistics functions locally but manages service-related data
around customer, product, and service performance centrally. They also
have implemented technology enablers across a wide area of the service
landscape, from service and asset management to a centralized knowledge
management system and performance management system, all with global
functionality. For this global service provider, the combination of welldesigned business process and technology has paid off in terms of
significantly increased customer retention, higher workforce productivity,
and improved part inventory position.
Competitive Assessment
Aberdeen Group analyzed the aggregated metrics of surveyed companies to
determine whether their performance ranked as Best-in-Class, Industry
Average, or Laggard. In addition to having common performance levels, each
class also shared characteristics in five key categories: (1) process (the
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business workflow driving global operations); (2) organization (the

correct infrastructure for effective operational management); (3)
knowledge management (leveraging information collection to deliver a
global view of customer requirements); (4) technology (the selection of
appropriate tools and effective deployment of those tools); and (5)
performance management (the ability of the organization to measure
their results both regionally and globally to improve their business). These
characteristics (identified in Table 3) serve as a guideline for best practices,
and correlate directly with Best-in-Class performance across the key
metrics.
Table 3: The Competitive Framework
Best-in-Class
Process
36%
26%
Single vertically-integrated global organizational reporting

structure for all service operations
54%
Knowledge
Laggards
Global optimized enterprise-wide parts planning, pricing,

and procurement process in place
48%
Organization
Average
48%
34%
Centralized knowledge management process to store

customer data on global basis
71%
48%
39%
Selection and deployment of the following tools:
Technology
Performance
57% centralized
data warehouse
system
59% strategic
service
management
solution
62% workforce
management
solution
60% parts
pricing solution
49% centralized
data warehouse
system
54% strategic
service
management
solution
32% workforce
management
solution
57% parts
pricing solution
26% centralized
data warehouse
system
48% strategic
service
management
solution
36% workforce
management
solution
46% parts
pricing solution
"We are spending our effort to

create an efficient, global
service parts supply chain. This
is a critical step to successfully
integrating formerly disparate
service parts inventory planning
organizations that have unique
IT infrastructures.
~ Vice President of Supply
Chain Operations, Large HighTech Corporation
Service operational and financial performance evaluated

and compared on region-by-region basis
65%
63%
21%
Capabilities and Enablers

Based on the findings of the competitive Framework and interviews with
end users, Aberdeens analysis of the Best-in-Class reveals that leading

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organizations are embracing centralized management and information flow

as critical capabilities to efficient global operations.
Process
Management of the service parts supply chain, which includes parts planning,
pricing, procurement, forward and reverse logistics, and inventory
management, was identified as one of the top two overall challenges in
managing a global service organization by firms at all maturity levels. A
strong majority of Best-in-Class firms are aiming for greater efficiency by
adopting systems and business processes to manage the planning and
purchasing aspects of parts control on a global scale, with 48% claiming to
have the capability in place and another 43% planning to implement the
practice.
Organization
As service organizations adopt more centralized management of service
delivery elements, including parts management, data collection, knowledge
management and reverse logistics, the advantages of a well-integrated
organizational reporting structure that eliminates operational silos, speeds
decision-making, and offers the enterprise a global view of service
operations can significantly impact performance. Prior Aberdeen research
indicates that 6% of all organizations report having a C-level executive in
charge of service operations, a statistic that is likely to increase as the office
of the Chief Service Officer (CSO) begins to take shape.
Knowledge Management
Service organizations run on information. In most organizations the
information flow begins with the customer. As service operations become
more geographically diverse, information capture and maintenance becomes
more complex as customers often cross regions and contracts are written
on a global scale. Maintaining customer information in a common knowledge
warehouse, providing the entire service organization with readily accessible
data to drive operating efficiency and better decision-making, is a capability
that 96% of Best-in-Class firms have or plan to implement.
Technology
Based on survey responses, technology solutions play a strong enabling role
across all of the main aspects of global service management: workforce
management, data management, and service parts management. The Best-inClass organizations have and plan to adopt technology in all of these areas
to aid global performance - and are significantly ahead of Laggard firms in
most areas of technology adoption.
Performance Management
While service organizations are adopting business practices and technology
to drive global efficiency by taking advantage of economies of scale in
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procurement, vendor management and implementation or repeatable

processes, they still recognize the need to drive performance management
deep within their organization. Top organizations may have established
common service standards and practices across the organization, but most
still manage performance on a region-by-region basis to identify what is
working and what needs attention.
Managing Global Service Parts

Best-in-Class organizations favor the centralized management of nearly all
parts functions with parts, pricing, and procurement leading the list. Eightysix percent (86%) of the Best-in-Class surveyed indicated they centrally
managed parts pricing and 73% favor centralized procurement.
The top companies surveyed by Aberdeen for this study identified
challenges in managing their global service supply chain that ranged from
cost-centered concerns about managing logistics costs and suppliers on a
global basis to ensuring the proper integration of regional processes and
information flow into a common service-oriented knowledgebase (Figure 4).
Figure 4: Leading Supply Chain Challenges for the Best-in-Class
Globaldistributioncosts
25%
Integratingregionalprocesses
21%
Maintainingmulticountry
logisticssuppliers
17%
Maintaininglocalstock
tomeetSLAs
17%
0%
5%
10% 15% 20% 25% 30%
Source: Aberdeen Group January 2008
Case Study Juniper Networks

Due to a rapid and significant increase in global demand for their high
performance network infrastructure, Juniper Networks found themselves
with a critical challenge: how to scale their customer service and logistics
to meet customer demand. Specifically, the leading provider of high
performance networking needed to improve the planning, procurement
and movement of parts and product needed to support a growing global
customer base. Manual planning systems were not able to scale as the
customer base expanded.
continued

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Case Study Juniper Networks

As an organization, Juniper is focused on enabling its customers to be
successful and build competitive advantage by providing secure network
infrastructure and applications. With 93 customers of the Fortune 100 as well
as government agencies, the top 40 service providers and research educational
institutions around the world, Junipers service supply chain represents a vast
and complex landscape. The Company maintains 182 worldwide service part
depots with 40,000 distinct service parts. They hold more than 40,000 active
contracts of which more than 2,900 require same-day service.
For Juniper, the solution was to implement a broad-based Strategic Service
Management solution to integrate a variety of functions across the service
supply chain and provide integration with their ERP, call tracking and
procurement systems. In addition to reducing overall inventory costs, Juniper
needed the solution to improve on-time delivery metrics, reduce the number
of customer escalation events, provide better global visibility into service
part allocation and automate parts replenishment as well as management of
the defective parts repair process with contract manufacturers and suppliers.
The solution implemented also had to perform basic part depot management
functions, manage the variety of service levels and customer types Juniper
had engaged and prioritize workflow based on product type, service level
and other user-defined business rules.
By investing significant time in identifying the right solution and selecting a
vendor with proven global implementation capability, Juniper has been able
to post significant results from the implementation over a very short
timeframe. Within three months of implementation, in addition to achieving
global visibility into service parts, the company has seen a 27% increase in
on-time delivery of parts, a 15% improvement in material availability and a
10% increase in customer satisfaction. At Juniper Networks, we believe
service is a real enabler for our customers, and it is a way of ensuring that
they are successful, says Steve Blaz, Vice President of Global Service
Operations. To be number one with customer service is extremely
important for us because we believe that enables customers to be
successful with the markets that they serve.
Global Workforce Management Challenges

A key challenge for all service organizations is proper planning and
management of technician workforce. As labor costs and customer demands
escalate, this has become a top management concern as it impacts both
customer satisfaction and profitability. Operating on a global basis (injecting
multiple languages, cultural differences, and variable performance expectations
into the mix) makes this a particularly difficult management challenge.
Best-in-Class firms favor a permanent full-time technician workforce across
all served regions with 44% claiming to have a completely captive workforce
and 36% deploying full-time technicians backed up by contract technicians
when necessary. Interestingly, the top challenges expressed by these firms
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seem internally focused, adopting common procedures, performance

standards, and staff training rather than dealing with language, cultural
differences, or labor costs. The challenges are, however, consistent with the
overall actions and initiatives Best-in-Class firms are engaged in throughout
their service organizations to provide more centralized and streamlined
business process and management.
Figure 5: Leading Workforce Challenges for the Best-in-Class
Training
27%
Adoptingcommon
procedures
23%
Creatingcommon
performancestandards
15%
0%
5%
10%
15%
20%
25%
30%
Technology Adoption Plans

A majority of Best-in-Class service organizations operating on a global basis
have installed or plan to adopt technology enablers across the service supply
chain to aid global data collection, parts and workforce management. An
average of 87% of Best-in-Class firms surveyed indicated that the adopted
technology solutions currently in place have specific global functionality.
Figure 6 shows the technology adoption plans of Best-in-Class firms.
Figure 6: Technology Enablers Among the Best-in-Class
CurrentlyUsing
Knowledge
Warehouse
PlanningtoUse
PlanningtoUse
48%
43%
Service
Management
59%
27%
Inventory(Parts)
Management
59%
27%
PartsPricing
60%
25%
Workforce
Management
62%
24%
Asset
Management
65%
0%
20%
40%
17%
60%
80%
100%

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Aberdeen Insights Technology

Service organizations have adopted technology to support the management
of people, parts, and data within their global organizations. And these
organizations are reporting notable performance gains in the KPIs they
most often use to track their organization's progress. Companies across all
maturity levels are reporting double-digit improvements in profitability, SLA
/ contract compliance and customer retention as a direct result of
technology implementation.
As Figure 7 shows, however, Best-in-Class organizations, with a stronger
focus on adopting the business processes and best practices that drive
improvements, are seeing significantly higher returns from their technology
investments. Documenting, evaluating and, if necessary, re-engineering
business process for optimal efficiency as a first step in any major service
initiative generates much greater improvement than technology alone.
Figure 7: Improvements Since Technology Adoption
65%
Customerretention
24%
53%
SLA/Contractcompliance
26%
45%
Serviceprofitability
16%
0%
10%
20%
BestinClass
Others
Others
30%
40%
50%
60%
70%
%ofrespondents

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Chapter Three:
Required Actions
Whether a company is trying to move its global service performance from
Laggard to Industry Average, or Industry Average to Best-in-Class, the
following actions will help spur the necessary performance improvements:
Laggard Steps to Success
Begin measuring key performance metrics. More than 40% of

Laggard firms report they don't measure their performance in the
KPIs that address customer, financial, and operational metrics.
Without the process and discipline in place to measure
performance, improvement will remain a challenge for these
organizations.
Focus attention on SLA compliance. Laggard organizations
posted only a 3% improvement in this key metric versus the Best-inClass gain of 50%. Meeting contracted customer expectations is a
mandate for service improvement and builds a foundation for
additional revenue opportunities.
Accelerate global adoption of a common set of
performance metrics. Only 30% of companies in this maturity
class currently have common metrics in place to gauge service
performance. Especially for organizations performing service in
multiple geographies, a common set of metrics will result in better
performance measurement and decision-making.
Fast Facts
Best-in-Class firms are
nearly twice as likely as all
other firms to have
implemented a workforce
management system that
goes beyond scheduling and
routing to aid global
operations
Best-in-Class organizations
have produced 267% more
improvement in workforce
utilization (44%) over the
past two years
Industry Average Steps to Success
Centralize service performance data collection. Only 38% of

Industry Average firms have the ability to deliver on-demand service
information to key global decision-makers. Building and maintaining
systems that centralize the capture and maintenance of key
information on service operations aids necessary reporting and
decision support.
Build a centralized knowledge management system for
customer information. Maintaining proper information on
customers is critical to delivery of quality service. Less than half
(48%) of Industry Average firms currently have this capability in
place, compared to 71% of Best-in-Class organizations.
Implement an integrated process for parts supply chain
management. Industry Average firms identified service supply
chain management as their top challenge in operating a global
service organization. Integrating all aspects of service part
management into a common process used across the enterprise will
yield operating efficiency and lower costs.

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Best-in-Class Steps to Success
Continue work on a unified service strategy across all

regions. Common practices and measurements streamline
management and allow service organizations to leverage economies
of scale throughout their operation. Despite their advanced
performance, Best-in-Class firms still cite the lack of a totally
uniform set of service strategies and processes that span all regions
as a top challenge.
Leverage the ability to distribute on-demand information to
all international decision-makers. Fifty-two percent (52%) of
Best-in-Class firms have this capability, thus, top firms hold a significant
exploitable advantage over others in improving service decisionmaking through better information. Enterprise-wide CRM systems and
service-based knowledge management solutions that store customer,
asset, and service performance information can become the enabling
framework for information-based decision support.
Get a handle on part transportation and distribution costs.
With strategic actions centered on process and information flow
being taken by top firms, the Best-in-Class are well-positioned to
take advantage of large-scale contracts with parts suppliers and
logistics networks to better manage supply chain costs, a top service
delivery management challenge for 31% of Best-in-Class firms.
Technology solutions that enable service parts management and
third-party and fourth-party logistics providers can play a strong
role in effective cost control.
Aberdeen Insights Summary
The ability to provide post-sale service on a global scale is becoming a base

requirement for firms looking to move service to a strategic function. As
firms expand their sales and customer base to multiple geographic regions,
service operations must be able to accommodate the complexities of
international operations. Aberdeen has seen leading organizations address
this opportunity through implementation of centralized management and
business practices that improve information flow, leverage size and scope in
relationship-building with suppliers, and deliver a unified set of performance
standards on which to measure global impact.
Challenges remain even for the leading firms in managing a complex global
entity, specifically in implementing standard process and managing the parts
logistics portion of the service supply chain. The results posted by the Bestin-Class, however, clearly demonstrate that a solid centralized approach to
global strategic service management, coupled with the right processes to
ensure consistency of service delivery throughout the enterprise and the
right technology tools to automate data, parts, and workforce management
lead to better financial and customer retention performance.

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Page 17
Appendix A:
Research Methodology
Between December 2007 and January 2008, Aberdeen examined business
intelligence and analytics initiatives of 180 post-sale service organizations in
a diverse set of industries.
Aberdeen supplemented this online survey effort with telephone interviews
with select survey respondents, gathering additional information on global
service strategies, experiences, and results.
Responding enterprises included the following:
Job title: The research sample included respondents with the

following job titles: senior management (15%), Vice President (10%);
Director (21%); Manager (36%); Consultant and Other (12%)
Industry: The research sample included respondents from a variety

of industries. Some of the larger industries represented were:
Computer and Office Equipment (31%); Telecom (20%); and
Industrial Equipment Manufacturing (15%)
Geography: The majority of respondents (55%) were from North

America. Remaining respondents were from Europe (24%), Asia
(11%), Middle East (9%) and South / Central America (1%).
Company size: Thirty-six percent (36%) of respondents were from

large enterprises (annual revenues above US $1 billion); 39% were
from midsize enterprises (annual revenues between $50 million and
$1 billion); and 24% of respondents were from small businesses
(annual revenues of $50 million or less).
Headcount: Fifty-three percent (53%) of respondents were from

large enterprises (headcount greater than 1,000 employees); 24%
were from midsize enterprises (headcount between 100 and 999
employees); and 23% of respondents were from small businesses
(headcount between 1 and 99 employees).
Study Focus
Responding service executives
completed an online survey
that included questions
designed to determine the
following:
The length of time and
degree to which service
organizations have been
conducting operations on a
global scale
The most significant
challenges faced by service
executives as they establish
or expand their operations
to a global footprint
The business processes and
strategic actions that service
firms are using to improve
global operations
The benefits, if any, that have
been derived through
technology adoption
The study aimed to identify
emerging best practices for
global service operations and to
provide a framework by which
readers could assess their own
management capabilities.
Solution providers recognized as sponsors of this report were solicited after

the fact and had no substantive influence on the direction of this report.
Their sponsorship has made it possible for Aberdeen Group to make these
findings available to readers at no charge.

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Page 18
Table 4: The PACE Framework Key

Overview
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and
enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:
Pressures external forces that impact an organizations market position, competitiveness, or business operations
(e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the
corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial
strategy, go-to-market, and sales strategy)
Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people, brand,
market positioning, viable products / services, ecosystem partners, financing)
Enablers the key functionality of technology solutions required to support the organizations enabling business
practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner
interfaces, data cleansing, and management)
Table 5: The Competitive Framework Key

Overview
The Aberdeen Competitive Framework defines enterprises
as falling into one of the following three levels of practices
and performance:
Best-in-Class (20%) Practices that are the best
currently being employed and are significantly superior to
the Industry Average, and result in the top industry
performance.
Industry Average (50%) Practices that represent the
average or norm, and result in average industry
performance.
Laggards (30%) Practices that are significantly behind
the average of the industry, and result in below average
performance.
In the following categories:

Process What is the scope of process standardization?
What is the efficiency and effectiveness of this process?
Organization How is your company currently
organized to manage and optimize this particular process?
Knowledge What visibility do you have into key data
and intelligence required to manage this process?
Technology What level of automation have you used
to support this process? How is this automation integrated
and aligned?
Performance What do you measure? How frequently?
Whats your actual performance?
Table 6: The Relationship Between PACE and the Competitive Framework

PACE and the Competitive Framework How They Interact
Aberdeen research indicates that companies that identify the most influential pressures and take the most transformational
and effective actions are most likely to achieve superior performance. The level of competitive performance that a
company achieves is strongly determined by the PACE choices that they make and how well they execute those decisions.

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Telephone: 617 723 7890

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Page 19
Appendix B:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report includes:
Strategic Service Management; May 2007
Optimizing the Service Supply Chain; September 2007
Getting a Seat at the IT Table: Service Steps Up; July 2007
Service on Time, All the Time; April 2007
Driving Service Revenue; December 2007
Making Money via Mobile Field Service; July 2007
Underpinnings of Service Excellence; August 2007
Information on these and any other Aberdeen publications can be found at

www.aberdeen.com.
Authors: Micky Long, Research Director, Strategic Service Management,

micky.long@aberdeen.com; Sumair Dutta, Research Analyst, Strategic
Service Management, sumair.dutta@aberdeen.com.
Foundedin1988, AberdeenGroup isthetechnology drivenresearchdestinationofchoicefortheglobalbusiness
executive. AberdeenGroup has 400,000researchmembersinover36countriesaroundtheworldthatboth
participateinanddirectthemostcomprehensivetechnologydrivenvaluechainresearchinthemarket.Throughits
continuedfactbasedresearch,benchmarking,andactionableanalysis, AberdeenGroup offersglobalbusinessand
technologyexecutivesauniquemixofactionableresearch,KPIs,tools,and services.This documentistheresultof
primary researchperformedby AberdeenGroup. AberdeenGroup'smethodologiesprovidesfor objective factbased
research andrepresentthebestanalysisavailableat thetimeofpublication.Unlessotherwisenoted,theentire
contentsofthispublicationarecopyrightedby AberdeenGroup,Inc.andmaynotbereproduced, distributed,
archived, ortransmittedinanyformorbyanymeanswithoutpriorwrittenconsentby AberdeenGroup,Inc.
AsaHarteHanksCompany,Aberdeenplaysakeyroleofputtingcontentincontextfortheglobaldirectandtargeted
marketingcompany. Aberdeen'sanalyticalandindependentviewofthe"customeroptimization"processofHarte
Hanks (Information Opportunity Insight Engagement Interaction)extendstheclientvalueandaccentuatesthe
strategicroleHarteHanksbringstothemarket.Foradditionalinformation,visitAberdeen http://www.aberdeen.com
orcall(617)7237890,ortolearnmoreaboutHarteHanks,call(800)4569748orgoto http://www.hartehanks.com

www.aberdeen.com
Telephone: 617 723 7890

Fax: 617 723 7897

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The Impact of Globalization on the

Service Supply Chain

The Impact of Globalization on the Service Supply Chain

39% profitability as a percent of service revenue

4.2 (on a 1 to 5 scale) customer retention performance

88% overall workforce utilization

50% two year Service Level Agreement (SLA) compliance

43% two year asset uptime improvement

Competitive Maturity Assessment

They are three-times more likely than Laggard firms to evaluate

They are almost twice as likely as Laggard firms to store customer

They are almost twice as likely as Laggard firms to have a global

Measure key operational and customer-facing metrics monthly

Adopt global common practices, reporting structures, and metrics

Centralize knowledge management across service operations

2008 Aberdeen Group.

"The value of having a global

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

2008 Aberdeen Group.

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

Figure 1: Pressures Driving the Need for Global Service Operations

10% 20% 30% 40% 50% 60% 70%

Source: Aberdeen Group, January 2008

As Figure 1 indicates, a significant number of organizations place paramount

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

The Maturity Class Framework

Mean Class Performance

Service profitability as a percent of service revenue: 39%

The Best-in-Class PACE Model

Global optimized parts

Centralized data warehouse / knowledge management

2008 Aberdeen Group.

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

Source: Aberdeen Group, January 2008

In addition to implementing centralized management and reporting of key

Source: Aberdeen Group, January 2008

2008 Aberdeen Group.

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

Aberdeen Insights Strategy

"Global service is a necessary

2008 Aberdeen Group.

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

Shields, who is responsible for worldwide reverse logistics s and supply

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain

business workflow driving global operations); (2) organization (the

Single vertically-integrated global organizational reporting

Global optimized enterprise-wide parts planning, pricing,

Centralized knowledge management process to store

Selection and deployment of the following tools:

"We are spending our effort to

Service operational and financial performance evaluated

Source: Aberdeen Group, January 2008

Capabilities and Enablers

2008 Aberdeen Group.

Telephone: 617 723 7890

The Impact of Globalization on the Service Supply Chain