Keeping Pace with New Service Contract Management Initiatives for Improved Revenues

Renewal opportunities, brand loyalty and better communication with customers and partners are just some of the benefits to extending the value of service contract systems


The advent of modular technology has created environments where thousands of technology products may contribute to an organization's success. Staying on top of the service contract lifecycles associated with these products is a challenge for the entire supply and demand chain, and it is a process that has become more complex than ever before.

With contract expirations that can take place on any given day, and coverage options that can change as time passes, it takes more than a simple spreadsheet to get the job done. Manufacturers must not only create new business rules and systems, but also put behavioral changes into effect if they want to realize marked improvements in service revenues. In addition, they must take into consideration the requirements of channel partner organizations in order to extend business processes beyond the confines of their own direct sales organizations.

The Shift toward Modular Technology

Over the last 20 years, the technology industry has experienced dramatic changes in the way enterprise technology products are bought and sold. In the past, individual unit-based purchases dominated the market. These purchases, typically for large-scale systems such as mainframes, represented milestone occasions that indicated major technology changes were afoot. To ensure the long-term success of such key investments, technology administrators carefully secured maintenance and warranty contracts at the time of purchase.

Conversely, in today's technology world, where technology infrastructure has become much more commoditized, the purchasing process has become less ceremonious and increasingly modular. New hardware flows into the enterprise on a regular basis, fitting into existing infrastructure without disruption. At the same time, this constant stream of new equipment has wreaked havoc on the management of service contracts. IT departments, once required to manage only a handful of service agreements emanating from only one or two vendors, must now track myriad contracts across a broad spectrum of manufacturers.

The impact of this evolutionary shift to modular technology is huge. It's significant for end customer organizations because it means that their purchases may be more at risk than ever before. It's also important for manufacturers and their channel partners throughout the supply chain because it means that a mountain of untapped service contract revenue exists. Yet it also signifies that important customer relationships are potentially in jeopardy. Indeed, every technology product sold without a maintenance agreement creates a potential liability for manufacturers as well as their customers.

Fortunately, new best practices for more effective service contract management are emerging. Many of these new practices are built around portal technologies that provide centralized, on-demand access to reporting, analytical tools and automated systems to deliver complete service contract management.

The Great Service Sales Opportunity

As purchase processes have become more modular, the industry has failed to keep pace with equally modular systems that manage service life cycles. Instead, the world's largest manufacturing organizations, as well as their supply chain partners, are relying upon an assortment of ineffective tools — some as basic as Excel spreadsheets. These tools, which were not built from the ground up for service contract management, fail to take into account the various data sources required to appropriately track service life cycles. Without knowing which customers have purchased service contracts, when those contracts are up for renewal and which customers possess uncovered assets (products not protected by service agreements), manufacturers don't have a proper handle on the service needs that exist within their customer bases. As a result, they are leaving substantial service dollars on the table.

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