The service industry is booming, but is customer service improving? (page 1 of 2)

Market factors such as liberalization and increased competition, coupled with growing populations around the region, mean that services and the concept of customer service are coming under increased scrutiny.

In its deliberation around services, the Middle East can look to European market analysis for some compelling trends.

In the UK alone, the services industry as a whole accounts for approximately 70 per cent of overall economic output, (CIPS/Reuters purchasing managers' report, 1 June 2004). Worldwide, the services industry is undoubtedly a growth market.

In June 2004, Gartner, a leading provider of IT research and analysis, announced that the global IT services market expanded by 6.2 per cent in 2003. But is it really offering an optimum service to its clients?

A recent survey "The Effectiveness of S-Business," conducted by the Association for Services Management International (AFSMI), in conjunction with Oracle Corporation, has found that the European services industry is unable to effectively calculate the value its customers add to their business. This is due to a lack of real-time customer intelligence and companywide IT integration.

The independent survey by AFSMI, a not-for-profit, educational association for professionals in the technology driven services industry, represents the first in-depth study of the European technical and technology services industry or S-Business.

The term 'S-Business' refers to organisations that are services-focused, services measured, and indeed services-driven, regardless of whether they also manufacture and sell products.

The survey is based on detailed interviews with influential service executives across Europe, of which 70 percent either have decision authority over total service business strategy or provide significant input to strategic issues and decisions. Four areas critical to service success were investigated: strategy, financial, customer-centricity and efficiency/effectiveness.

The research found that more than 70 percent of European companies surveyed are unable to determine customer revenue and profitability in real-time. As a result, there is little appreciation within these companies of the value each customer represents to their business and therefore how service and commercial responses should best be directed.

Most companies still respond to the customer that shouts loudest, regardless of their value. The inability to identify the truly valuable customer can be seriously detrimental to any business. Businesses could be losing some quiet but highly profitable customers who are walking away in silence and disgust.

In order to rectify this problem, companies need to achieve real-time business intelligence through better integration. However, AFSMI researchers found that two thirds of companies are struggling with this 'because most company systems were not designed for integration and certainly were rarely designed to accommodate the information-intense nature of a service business system'.

Almost half the companies surveyed (45 per cent) still consider the utilisation of information about customer or product performance as poor, suggesting inadequacy of systems or processes or both. Yet the information architecture to provide that business intelligence is already here.

More often than not, organisations already have the necessary information on their customers, but do not have the appropriate systems and processes in place to utilise the available data.

Business intelligence tools cover data quality, data analysis and information access.