The small to medium-sized business (SMB) environment is rightly focused on controlled profitable growth. With that in mind the Service Management benchmark was designed to look at businesses with a much broader scope than simply examining financial numbers. Data would include structure, and the opinions of senior officers on the steps they were taking or considering. These businesses were willing to disclose considerable detail of their operation. They revealed how close the senior directors were to the coalface and that decisions about customers and their loyalty were extremely important. They showed a more personal attitude than larger businesses can adopt but they still aimed to be highly professional.
Many of the businesses in the benchmarking study had legacy solutions that were modified and developed in-house. Changing systems proved problematic when current systems were part and parcel of their success. Financial constraints often forced businesses to look at small solutions, but these potentially posed the same issues as their bespoke solutions - that they would rely on a very small team for the on-going support of the system and the ability to scale up was always questionable. Many of the major suppliers of software have begun to recognise the SMB arena as a ready and rapidly expanding market. They have either adjusted their product to suit, or designed a product to sit within their suite of products specifically aimed at the needs of this market. Access to scaleable products has opened up the opportunity for smaller businesses to take full advantage of the technology now available.
The benchmark assessed businesses through a 'balanced dashboard', providing an insight into how these businesses are run, and most importantly what is driving them, and how they are achieving their twin ambitions of controlled profitable growth and improved customer loyalty.

The benchmark covers the following perspectives:

• Financial
• Customers
• Improvement learning and growth - culture and people
• Internal process - operations

It was apparent that service management businesses positioned themselves very closely to their customers and that early growth had often come from a few loyal customers. The business had often been set up to provide a specific solution, with growth coming from keeping close to customer needs and extending their presence through reputation.
In some cases these companies came quite late into providing service as a specific offering, although they had been providing a service component without recognising the real value that their total solution provided to the customer. In many instances it could best be described as a prototype for a specific total solution but, from this, a full service had grown. Sometimes there was concern that the service offering wasn't properly structured, was focused only on certain customers, and that the introduction of technology and process required  a lot of effort to get the most from the software without losing the essence of the existing service delivery valued by customers.
The challenges and opportunities for many medium-sized companies are listed below, together with the results from the benchmark that clearly demonstrates them.

Financial
Finding sufficient funds to put into technology and enough resources to ensure effective
implementation was a constant challenge. Many of the companies  struggled with financial constraints and were keen to be able to identify real returns on any and every investment.
The benchmark showed that gross profitability from service on average was in the order of 30%+ - much higher than manufacturing - and growth in service over the past three years (to 2006) was significant and rising. For some of the participants the growth had been as much as 40%+.

Customers
Flexibility and responsiveness towards a growing customer base demand efficiencies as the supplier's operation becomes more complex. The main measure, for the customer, is adherence by the supplier to the service level agreement (SLA). In many cases there are still no contracted SLAs, but there are best endeavour agreements with notional but important performance targets. The measures considered in this section focused on the performance delivered to the customer, against what are considered standard SLA target measures in the areas of:

• l problem fixed first time - 94% average
• l problems responded to in agreed target time - 89% average
• l problems solved within agreed target time - 85% average.

The average results of these measures indicate that they are considered important, but it should be acknowledged that alternative
interpretations are possible, so they may not be measuring what is normally understood by the definition. A good example is that the measure 'Fixed First Time' is sometimes used even if the engineer returns, claiming the first visit was diagnostic and the return visit scheduled to replace the part.
In a number of cases, service operations are using remote fixing to undertake a diagnosis, but this can be limited by the level of technical knowledge of the customer. The main issue for most customers is for the supplier to perform to  a level commensurate with the degree of the problem. This is the difference between the product not working at all and the product working, but only just. The timeliness of the fix is left to the the engineer or service manager, and underlines the need for a good relationship between the engineer and the customer.

Improvement learning and growth - culture and people
Recruiting, retaining and training skilled personnel with the necessary  technical skills is important, and this is reflected in generally available statistics showing that investment in technical service training now matches training in technology. This is particularly relevant in service, where it can take up to two years to produce a fully qualified engineer.
Service operations struggle with the growing complexity of equipment, (upgrades, firmware etc.). Tackling some jobs infrequently lengthens the time taken to become experienced and able to provide the high-quality personalised service customers expect. Some operations are getting around the worst of this problem by using remote fixing. They do this by using in-house second and third line support to provide the experience and familiarity with product failures, assisted by developments in telephony, such as Voice Over Internet Protocol (VOIP)] which enables engineers to work remotely  while appearing to the customer as business-based.
One area where training was considered light was in customer relationship development: the smaller businesses depended heavily on their engineers to build lasting relationships with customers, but often assumed that staff could intuitively act in this capacity. The focus tends to remain on technical skills, and some engineers were not able to fulfil the role of 'trusted adviser' and relationship builder, resulting in customer churn (through lack of customer information) as the business grew. Many of the participants were beginning to focus on this aspect during recruitment, reviewing job specifications and induction training of new staff.
The final aspect around people was the reluctance of smaller companies to use outsourcing as a means towards growth because of concerns over losing customers to a third party (which again shows the significance for the smaller companies of customer intimacy and awareness). The attrition rates of engineers in the service management businesses were lower, at an average of 6%, than the industry average of nearly 9%.

Internal processes - operations
During interviews with the participants it became obvious that many of the companies have grown successfully, but haphazardly, over the years. They have built processes around people and departments, but struggle, as the business grows, to retain control as the requirement to scale-up becomes apparent. Consequently, the technology tends to be bespoke but different for each of the departments, creating the classic situation of islands of technology, each relatively effective in its own area, but not able to provide the necessary visibility across the business.
Many smaller businesses have invested in best of breed solutions rather than full-blown service management solutions, as they considered their existing bespoke solution was adequate. In many cases growth exposed weaknesses in existing solutions, pointing out poor information about basic requirements. Participants could access productivity information about the efficiency of the operation (visits per day per engineer) but they had little or no measure of its effectiveness, such as cost of service by customer or accurate customer satisfaction information. Many operations were struggling to identify what they considered were real benefits of a full-blown service solution, and were concerned about the timescales required to implement them and the effect on profitability during that process. These concerns were also why solutions selected were those that could be bolted on without too much disruption. Many of these bolt-on solutions, however, were never fully assessed or deployed effectively. Their value had been dissipated.
Parts were always considered a problem and remain a challenge to using engineers effectively. Average service stock turnover is still relatively low with an average of four turns per year, and average spares shipment return-time from field to repair is still about 15 days. The integration between parts and people was rarely fully effective, particularly for same-day or four-hour response and/or restore fixes. In addition, recent research has highlighted that parts, inventory deployment and logistics are quite often separated from the service operation, or even outsourced.
A number of the participants had decided to use remote support as a way of improving service performance and reducing costs. Many had found it limiting, particularly as they tried to grow the business, unless it was part of the whole picture of delivering improved service to customers.

Summary
The participants all recognised that their path to long-term successful growth lay in service and that their confidence had been lifted through early success in the past couple of years. Concern now, was how to continue growth, in the knowledge that they must invest in people, processes and technology in order to ensure the stable environment required for growth.
Performance was significantly better than they anticipated and one of the biggest issues was to raise the perceived value of service within the company to at least the same level as that attributed to service by the customers, gaining the respect of colleagues in other departments and being recognised as generators of long-term revenue.
The most reassuring aspect of the benchmark was that successful companies correlated with a high degree of involvement of managing directors in service. This acknowledged the growing importance of service and the need to  establish it as the cornerstone of their business development to achieve continued growth and profitability. SM