Microsoft Corporation: The Design of Microsoft Support Network 1.0

Microsoft Corporation:The Design of Microsoft Support Network 1.0Case Analysis by Group LSoftware is a great combination between artistry and engineering. Bill GatesAgendaCase FactsUnderstanding the problemDeveloping a StrategyIdentification of alternativesEvaluation of alternativesRecommendations & conclusionCase Facts - IMicrosoft the leader in microcomputer software industry was facing issues with its PSSThe major software lines (products & services) of Microsoft could be classified into the below:Application software (The office tools) (Lotus, WordPerfect, Borland, Claris)*PC Operating System software (Microsoft Windows OS) (IBM OS/2, Apples System-7)*Advanced Systems (Servers) -(IBM OS/2, Mac-X, UNIX Servers)*Development Products (Visual Studio, VB, VC++)Hardware (data input & control devices)Customer Segments:

* CompetitorsEnd UsersUsers of Microsoft applications for routine tasks

DevelopersSoftware companies, value added resellers,Independent service vendors

CorporateMIS GroupsHighly technical software needs

Case Facts - IIMarketing & SalesProduct ManagersPlanning & Implementation of marketing activitiesCo-ordination of promotional, advertising & sales activities

District ManagersAssigned to 17 geographic districts of U.S

Account RepresentativesResponsible for entire product line with in his/her territoriesCalls to resellers, corporate users, developers, selected end users boost sales through repeat & new purchase

Problems at Microsoft Support NetworkConfusion among customers about Microsoft Tech. support especially for those using multiple productsLack of Understanding of Products & its functionalityIntegration of software application with platformMicrosoft service not inline with its peersLarge no. of product offering (everything to everyone dilemma)Product service bundle not appropriately doneDifficulty in sorting services & providing easy to use interface tocustomers Lack of strategy to provide effective serviceLarge no. of offering, cross platform issues & large customer baseProblemProbable CausesAn increase in the customer service cost with an even more expected increase in the years to come was the concern for Product Service & Support (PSS) division of MicrosoftShrinking product margins forcing a cost cut with primary target for cut being customer support serviceCrux of Problem: How do we profitably manage a broad spectrum of customers from home users to global corporations with each group not only wanted more customized software but also more customized technical support?Problem at Microsoft Support Network - II

Novice CustomerHad simple questions for which sought answers

Will consider charging of additional fees for startup and installation as unethical

Also believe that if MS started charging for startup and installation, it will make systems more complex to earn more revenue from there

Service EngineerNeeded a good deal of understanding of: Microsofts 150 products (and their integration), competitors offerings (and their integration)Understanding of Industry specific product applicationHad to wait in a telephone queue for an average of 10 minutes, often behind novice end-users who had very simple questionsCorporate CustomerThey were ready to pay premium for highly responsive services on mission critical applications

Desired characteristics of Microsoft Support Network - servicesMicrosoft technical support services should reinforce and enhance the high quality of Microsoft products

Choice, Quality, and Simplicity should characterize all technical support programs

Technical support services should be a "cost center" for the Microsoft Corporation with ultimate objective to breakeven

The Microsoft Corporation should be the technical service provider of "last resort"Developing a strategy: Service usage patterns & costsInitial problems were more for the software users 80% calls came within 90 days of software acquisitionFew customers had large problems 15% of customers made 80% of callsExtended hours of service availability 15% of customers with 5% requiring 24 hoursProductCost percentage distributionOffice Family of Products5%Advanced Applications5.5%PC Operating Systems7.5%Hardware8%Developer Products10%Advanced Operating Systems12%Servers12.5%ComplexityCompetitor Service OfferingsLOTUS:Free & unlimited service for 90 days (following first service call)Pay $129 for annual contract or $2 per minuteBorland:Based on nature of service sought free for installation and startupMultiple options for advance service offeringsAldus corporation:Based on levels of customers: Customer First, customer premier etc.Charges not posted but determined based on what is doneOS: IBM & AppleFree basic support service via the telephone suppliers, advanced operating systems and serversOS: NovellTop end customer support @ $150 per hour premium priced and highly technical productsDevelopment SoftwareExpensive but optional support services, price range for support service: $1000 - $25,000Service offering Matrix - Alternatives4 x 4 matrix summarizing service groupings vs. products, customer segmentsThe four alternatives selected:Problem based services matrix: Charge based on the problem solvedEase of problem monitoringIn line with the ABC Costing ease of profitability and operations managementEase of conveying to the customers pricing structure etc.

Difficult to implement primarily because customers would have difficulty in accessing what kind of problems they would face

Product Categories:DesktopPC OperatingDevelopmentAdvanced Problems-Based Services:ApplicationsSystemsProductsSystemsCustomized AssistanceSystems Integration andUsage & ProductivityInstallation & Start-UpGeneral InformationService offering Matrix - AlternativesResponsive based service rows similar to selling insurance policyAddress any-&-all problems within specified timesSet prices to recover costsTime to service price paid (inverse relation: More is the price, less is the time for service)Decision concerning product grouping was politically charged by managers

Product Categories:DesktopPC OperatingDevelopmentAdvanced Responsiveness-Based Services:ApplicationsSystemsProductsSystemsPremier SupportPriority SupportStandard ServiceFastTips & Electronic ServicesService offering Matrix - AlternativesCustomer Segment ColumnsCustomers increasingly bought software from across categories and the major problem starts during the integration of these softwareDivide customers based on the way they purchase softwarePrepare the support matrix with respect to customer segments

Customer Segments:NoviceExpert CorporateProblems-Based Services:End-UsersEnd-UsersDevelopersAccountsCustomized AssistanceSystems Integration and Usage ProductivityInstallation & Start-UpGeneral InformationService offering Matrix - AlternativesResponsive based servicesCustomer segments columns but classification on the horizontal based on the response times premium which they have paidDifficult to handle when a high paid premium customer gets a complex breakdown because he would expect service to be fast considering the premium he has paid irrespective of the nature of issue

Customer Segments:NoviceExpertCorporateResponsiveness-Based Services:End-UsersEnd-UsersDevelopersAccountsPremier SupportPriority SupportStandard ServiceFast Tips & Electronic Services Evaluation of Alternatives & selection of strategyHere there are two major customer groups which MS management needs to consider while designing the strategy:Employees or the service providersCustomers or service seekers

Based on the time and the complexity of the problem, it may happen most times that their interest may conflict customers look forward for a faster service which is simply not possible because either the service provider is not well trained or the problem is far too complex

The strategy should include a three dimension matrix:Identify the customer type & hence the threshold response timeIdentify the product category & hence understand the severity of problem, frequency of problem etc.Identify the problem type & hence learn who could solve the problem fastest!Understanding the strategyOnce the three are identified, priority number is calculated for each segment of customers, each segment of product and each segment of problem typeFor customers ready to pay a premium, provide services and ETAs based on the problem type instead of a universal ETA for all problemsFor customers which are facing installation and startup issues which are generally common have a multilayer interface starting with the first having to deal with least sophisticated issues, then graduating slowly towards top till issue is not solvedUnbundle product and services for highly technical and tech-savy products this are value destroying can charge a premium here!Understand the value which the customer creates using MS products, identify their BATNA and then put forward the value prepositionSince Microsoft is providing multiple kinds of software & IT products, it has to offer corresponding umbrella of support servicesWhen one customer is using a diverse range of products from Microsoft, identify the cumulative value which MS can generate from customer and offer service packages accordingly

Example of customer value creation using MS productsCustomer Profile #1:Cost of hiring & maintaining a consultantThey may not understand the IT Business but may need to work with it due to scale high value preposition with ability to sell moreOpportunities to cross sell more and more products leading to a full fledge MS establishmentProvide most premium service and maintain strict levels of SLAsCustomer Profile #2 and Customer Profile #3: Like customer profile #1 are again high profile but with different business needsCan create value preposition based on IT expenditures and cost estimates of each customer

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