In the digital age, we are transitioning into business models where traditional products are starting to be delivered as services. Mainstream trends such as cloud, IoT etc. have altered consumption mechanisms; the evolution of social and mobile has created new channels for customers to interact and consume support in real time. 80% of customers use at least three channels expecting immediate and cohesive experience across all of them. Service (or support) functions always touch the customer and is a critical ingredient of customer experience.
In the M&A integration world, services are moving from being a value driver of cost synergy towards creating revenue synergies. In several business models, services are already a profit center hence paying specific attention to M&A integration would ensure protection and creation of transaction value.
During my experience in integrating service functions, I have come across multiple value drivers - in order to realize the value, multiple questions need to be answered. I have provided a non-exhaustive list below:
1. What are differences in service models (level of automation, self-service vs individual touch, method of service consumption etc.)?
2. What are key operational similarities in the way services are provided between the two organizations i.e. service quality, service levels, delivery mechanisms, KPIs etc.?
3. Where are revenue synergies being created e.g., combining products and services, expanding portfolio of services or enhancing customer experience/service quality or complementary/supplementary services etc.?
4. Are there services, delivery processes or technologies that can be rationalized in the combined entity?
5. What are key differences in SLAs, pricing, and contracts?
6. What are key customer touch points? What interaction models exist at those touch points? What aspects of the touch points need to be preserved and which ones need to be enhanced?
7. Are there opportunities to migrate to service based business models e.g., software licenses to SaaS or infrastructure to IaaS and platforms to PaaS etc.?
8. Are services configured as cost centers? Are there opportunities to migrate to profit centers or vice versa?
9. If professional services are involved, what are similarities and differences in leverage, rate, margin and utilization of resources?
10. If call centers or customer support is involved then understand channel capacity i.e., mobile, chat, email, phone etc. Can combined company maintain capacity and channel harmony or will imbalances be created impacting staffing levels?
Of course, don't forget the usual synergies from headcount, process, contracts, and asset rationalization.
Given multiple industries are transitioning to 'as a service business model' in the near future, the service function will be a key driver of value. Integrating the service function to deliver value is going to be of paramount importance.