- Compare and contrast the operational challenges Computer Services Limited (CSL) would face in delivering IT solutions as opposed to its traditional business.
- Provide recommendations for how CSL should develop the required operational capabilities to deliver IT solutions.
The case at the end of chapter 6 says:
Case exercise: Computer Services Limited (CSL)
Computer Services Limited (CSL) was set up in the 1980s to provide a low-cost repair service for the customers of one of the large computer manufacturers. It was one of the first third-party or independent maintainers to compete directly with the service function of the original equipment manufacturer (OEM).Because CSL had lower overheads, it was able to compete effectively on price. It drew its workforce from ex-employees of the OEM’s service function and was able to find more than sufficient business from customers in the London area. At this stage, product lifecycles were relatively long and CSL was able to grow and sustain this business without a significant increase in complexity. It realised fairly quickly that it would be able to provide a similar repair and maintenance service for other makes of computer. However, this did mean the implementation of more sophisticated control systems to manage a growing workforce of service engineers and to ensure the purchase and provision of spares for a wider range of computer products.The OEM realised that it was losing a significant amount of profitable business. Original equipment margins were being squeezed and the aftersales market represented an important source of long-term revenue as well as an opportunity to build customer loyalty. The OEM responded to the threat of the independent maintainers by setting up its own service divisions, sometimes repairing competitors’ products at lower cost. CSL was being forced to compete on more than price. At the same time, customers were asking for a ‘one-stop shop’ where CSL would undertake to maintain all equipment in a given area of the customers’ business. This might include computers, peripherals and other office equipment such as photocopiers. CSL did not have in-house expertise for all this equipment and so developed alliances with service organisations, which provided the equipment maintenance while CSL managed the customer relationship.As computer equipment became more reliable, the revenue from repair and maintenance activities (sometimes called break/fix) fell, although customers still required CSL to provide this service as part of the total package delivered. On the hardware side, CSL is called on to provide a rapid response to its business customers to ensure high service levels. As CSL has grown, its customer base has extended from the London area alone to provide cover across the UK. At the same time, its customer base contains a number of national organisations that expect consistent service standards across a number of locations in the UK.To sustain this growth, CSL’s operations have changed in several aspects, including:
- •Service engineers now deal with a much broader range of equipment.
- •CSL offers standard service-level agreements (SLAs) to major accounts, offering consistent response to all customer sites across the UK.
- •CSL has invested heavily in control systems and IT to coordinate service engineers from its central contact centre in North London.
- •To improve response and increase the efficiency of its service engineers, CSL has established help desks with tight targets to solve an increasing percentage of customer problems without the need for a site visit.
- •Some CSL engineers have developed expertise to advise users on basic software problems, although, as yet, this is not included in the standard service offer. CSL is generating some revenue from this source, although it is unclear as to its profitability.
CSL needs to consider both the risks and benefits as it continues to grow and extend its portfolio of services. There is a danger that CSL will stray beyond its current operational competence, but because the changes have been incremental it may be that CSL is incurring more cost than is sensible because it has been somewhat reactive to its customer demands. In particular, CSL must consider how to deal with the increasing complexity of service provision.CSL is also facing competition from larger organisations providing outsourced IT services to major companies. Despite diversification, CSL continues to face both lower volumes of business from each customer and erosion of its margins. Until recently this has been offset by the acquisition of new customers, but this rate of growth is also slowing.It has been suggested that CSL enter the IT solutions market. This would be attractive to some of CSL’s major accounts, who are hoping to invest in significant IT solutions in areas such as enterprise resource planning (ERP) and customer relationship management (CRM).
Questions In order to identify the issues for CSL:
1Compare and contrast the operational challenges CSL would face in delivering IT solutions as opposed to its traditional business.
2How would you recommend that CSL develop the required operational capabilities to deliver IT solutions?
Clark, Robert Johnston and G. Service Operations Management, 3/e for Ashford University, 3rd Edition. Pearson Learning Solutions. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.
Use at least two scholarly sources, in addition to the textbook, to support your points.