The FT Word – October 2005

The FT Word

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Welcome

Welcome to the October 2005 issue of the FT Word. Spread the word: feel free to forward it to your colleagues.

Topics for this month:

· making remote work successful

· support as a P&L: What is the “right” margin?

Making Remote Work Successful

Thanks to David Perrault for suggesting this topic.

Many support organizations get requests from staffers to work from home. It could be a one-time, ad-hoc request to accommodate the need to meet a delivery or a repair person. It could be a permanent arrangement to skip the commute once a week. Or it could be a full home office setup, perhaps for someone who is moving away for family reasons. Support managers are often worried about remote work. They fear that productivity will drop once the support staffer’s out of sight. And they wonder how a teamwork-based activity like support can flourish together with remote work.

In reality, remote work is well-suited to support. For starters, support is a remote activity, remote from customers that is. So customers are not impacted by remote work (provided it’s set up properly). And if your support center includes field service technicians it’s likely that at least some of them already work from home offices and spend more time face-to-face with customers than face-to-face with their manager or coworkers.

Even if remote work is a natural for support centers, it helps to define a reasonable process to ensure success.

1. Address managers’ concerns

Managers are often very concerned about remote work because they are afraid people will goof off when out of sight. Since support work is, or should be meticulously logged in the case-tracking system this is more of a control issue than a real issue. To start, some gentle readjusting of managers’ expectations will help. So will starting with a pilot program with no long-term commitments.

2. Make remote work a privilege

Only support staffers in good standing should be eligible for remote work. The privilege can be revoked if the support staffer becomes unproductive or unreachable. If only responsible staffers work from home it becomes much easier to manage the program.

3. Help the support staffer be realistic about remote work

Working from home is not a substitute for hiring a babysitter, especially with young children. Working from home does not mean that one can paint the living room while answering customer calls. Working from home can be lonely and isolating. Working from home can also be very productive if they can skip the commute and concentrate with a minimum of interruptions.

Self-discipline and a reasonable setup are the keys to success. Individuals who have never worked from home may benefit from a short-term experiment before taking the plunge. If they cannot stay away from the refrigerator or housework, they are not good candidates for remote work.

4. Check your legal exposure

Having an employee work from home may open issues with work contracts and liability. Expect to help define the setup of the home office to address ergonomic concerns, especially if the remote work is not occasional. Remember that many support centers use remote workers, including both hourly and salaried workers. Don’t let the HR group tell you it’s simply impossible. It may never have been tried at your company but it should not be impossible.

5. Address system issues

These days, accessing the support-tracking system from home should not be difficult, but it does require a broadband connection and a home computer. Most support staffers are not issued laptops so you need to find a solution for them. A rotating, shared laptop may be acceptable for ad-hoc needs, but won’t work for more permanent arrangements.

Phone issues can be more complex. For a permanent remote work arrangement it’s possible to tie in the home office to a (fancy) ACD. VoIP may be another option. Otherwise, figure out both how calls will be placed from the home office, often long-distance calls, and how calls will be received by the home worker. Don’t worry only about the remote worker. Put yourself in the customer’s shoes: will the arrangement be appropriately transparent, especially if the remote worker alternates between the central office and a home office?

6. Define the scope of the remote worker’s responsibilities

Will remote workers be expected to grab cases from the queue to meet SLA requirements? Will they attend case review meetings (by phone)? Will they be available to teammates for assistance on their cases? Are they expected to be available during set hours? Nail down the details early on. You may have to modify the regular routine to accommodate the remote worker. For instance, daily case review meetings may require a conference call. Weigh the extra cost against the expected benefits of remote work. The hardest part is often not the cost but the change in the process.

7. Keep in touch with the remote worker

If the remote work is very occasional (say, half a day per week) the remote worker basically needs no additional attention besides making sure that productivity and quality targets are met. If the remote work is frequent then you need a routine to check in. No doubt you have a way to check in with the support staffers in the office, perhaps by walking around the cubes a few times a day. Invent an appropriate method to touch base with the remote workers at least once a day. For instance, you can use instant messaging, or schedule a short moment to talk on the phone. For 100% remote workers schedule formal 1:1 meetings at least weekly.

Managers are often reluctant to authorize remote work because of the management overhead. If only responsible staffers are working remotely, it really should not be a big issue past the initial setup.

8. Devise a way for remote workers to participate in team activities

This is the real challenge with remote work since much teamwork occurs in unplanned ways: at the water cooler, in the corridors. Make sure that both the remote worker and coworkers are not afraid to pick up the phone or to use instant messaging to ask questions and get help.

Staffers in highly interactive positions may not be good candidates for remote work. For instance, line managers can probably work from home from time to time when they have to write reviews or something like it, but it’s hard to imagine that they could be effective from a remote location without having to reinvent the way they work. (For instance, if everyone is working remotely then a remote manager starts to make a lot of sense.)

9. Consider designating in-office days

If remote work is common having all staffers work from the office on a specific day and holding a staff meeting on that day will go a long way towards alleviating teamwork issues. For remote workers who live far away from the office, have them attend specific training days or team-building activities.

If you select the right people to participate in remote work, you should find that they can be more productive when working away from the office. They will also be more loyal since it’s unlikely that another employer would offer them the same deal, at least as a new employee. Give remote work a try, at least with a privileged few and for limited amounts of time. You may find it’s the best experiment you ever tried.

Support as a P&L: What is the “right” margin?

Thanks to Darach Beirne for suggesting this topic.

More and more support centers are being asked to function as profit-and-loss (P&L) centers. Naturally, they wonder what margin they should shoot for. What’s the right target? As with all difficult questions, the short answer is “it depends”…

Expect negative margins in a startup. Charging for support does not mean that support is profitable. With a small customer base, high demands for (free) pre-sales support, and required investments in support tools startup support organizations consume cash rather than generate cash. It’s rare that an organization under two years of age can leave the red zone.

Mixed free and fee support organizations lose money. If you have a basic “free” support offering that involves assisted support and you also have value-added offerings that are fee-based, do not expect to pay for the free support with the proceeds from your paying customers. Exception: if your free offering is self-service only and you have a sizable customer base you may be able to break even since the marginal costs for self-service are very low.

You need to get money to make money. Support organizations that are profitable pay close attention to their revenue stream. You need a solid marketing program for support. You need to train the sales force on selling support. You need to aggressively renew support contracts following a solid renewals process. You need to cut off customers who do not pay on time. The more solid the top (revenue) line the better the bottom line.

Get ready to compare apples and oranges. Vendors are not required to report the financials of their support line of business, therefore it’s very difficult to make comparisons. (Vendors often publish financials for services, including Professional Service and Training, but that’s not detailed enough.) It’s possible to obtain unofficial numbers by chatting up your counterparts at support conferences, but even that may not be very helpful. Without a specific mandate from the accounting board, different organizations may or may not include the cost of creating hot fixes, facilities, even the cost of support tools into the margin percentage. Don’t blindly compare numbers without knowing how they were derived.

Large, mature support organizations make lots of money. Support organizations that have a large customer base, growing reasonably slowly (new customers cost more to support), and that enjoy loyal customers can enjoy juicy margins. If we include the cost of support tools and facilities, but not the cost of Engineering into the expense figure it’s not unusual to see margins of 70%, even 80%. A solid target would be 60% and above.

Poorly-run support organizations struggle to deliver profits. If you’re serious about making money from support, you need to run the group as a business. This means: no freeloaders (support is mandatory and free support is tightly controlled, perhaps for evaluations only); support people do support work (if they also teach classes or deliver consulting, that’s fine, but there should be some financial compensation for it); financial goals are important (every manager has a financial target in his/her goals; the margin goals are increased each year; each project is evaluated on ROI); people management is tightly bound with compensation management. There’s often a difficult transition time since many support managers have little financial experience or mindset.

FT Works in the News

Sbusiness published an article I wrote entitled “Selecting and Implementing CRM Systems” in its July-August issue.

SSPA News published an article I wrote entitled “Practical Ideas on Conquering the Knowledge Maintenance Monster in its September issues. You can read it at http://www.thesspa.com/sspanews/September05/article4.asp

Curious about something? Send me your suggestions for topics and your name will appear in future newsletters. I’m thinking of doing a compilation of “tips and tricks about support metrics” in the coming months so if you have favorites, horror stories, or questions about metrics, please don’t be shy.

Regards,
Françoise Tourniaire
FT Works
www.ftworks.com
650 559 9826

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