Champagne Support in a Bear Economy PlumChoice & Remote Support
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September 4, 2008Download mp3 | Read Transcript
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
Hello everyone and welcome to today's webcast sponsored by Bomgar Corporation. Our topic today is Champagne Support In a Bear Economy. Why the economy can't afford premium service and why you can't either. My name is John Ragsdale, and I'm Vice President of Technology Research for the AFSMI, SSPA and TPSA. I'm joined on today's webcast by SSPA member Rich Surace, SVP Operations from PlumChoice PC Services. Also today we have Nathan McNeill, VP of Product Strategy and co-founder from Bomgar Corporation. Thank you both for joining me today.
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Technology services during economic turmoil. If you have been living under a rock for the last six months, probably the only reason you wouldn't realize all the economic issues that are going on today. Last month we held our Fall Service Leadership conference in Vegas and we were very lucky to have, as a closing keynote speaker, Robert Wright former US Labor Secretary, who by the way was just tapped this week to be part of Obama's economic panel moving forward. So Mr. Wright gave us some very sobering information about how the economy got into this mess and how long it's going to take to get out of it. I would say whether you're a glass half full or a glass half empty kind of person, were in for at least 18 months of really difficult times moving forward. So how is this going to impact the service and support industry and how can we prepare ourselves for what lies ahead.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
For those of us who were around in the hi tech industry early here in Silicon Valley back in 2001 for the first hi tech crash some of this feels very similar and I keep asking myself is it 2001 all over again. Well I have some good news and bad news about that. Things for the service and support industry are definitely different in 2008 and looking forward into 2009. So I'm going to spend a few short minutes today going over some of this information and then I'm going to turn it over to our guest speakers.
So what is different in 2008? First of all, services are the economic engine of technology companies and that was definitely not the case back in 2001, and I've got some data I'll share with you on that. Another thing is that we clearly identify core versus context and by that I mean when support was not viewed as a very strategic part of the organization and before we really were the economic engine of technology companies, we ended up getting placed in the context bucket, which means we weren't that important, it was very easy to just off shore or outsources or make big cuts, and companies now understand the critical role that support plays in the customer loyalty cycle. So hopefully that means that we're not going to be hit with some of those kind of poorly thought out cost cutting moves that we saw at the beginning of this decade.
The third item here, and this is, I'm afraid to say kind of bad news, is that the low hanging fruit of cost cutting has already been picked, and you know, I talked to a lot of our association members and I think as an industry we have all worked smarter not harder, we've downsized, we've off shored, we've outsourced, we've consolidated, we've automated, we've streamlined. There's just not a lot of easy things left to do. So for this round of cost saving we're going to have to get a lot more creative in how we approach tightening the belt moving forward. So let's go into these issues in a bit more detail.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
So I did a blog post a while back, you're not familiar with my blog it's Ragsdale's Eye on Service and I published a post called "2009: A Bad Year to be a Cost Center". And by that I mean if we look back in ... to the customer loyalty cycle in 2001 and the role of the support group within companies, you know we started with the sales organization selling merchandise so you've got a purchase and then we have our professional services group doing the implementation, the integration, all of that work. And back in 2001 support was not tightly integrated into the development process or in the implementation process, support was performing primarily a break fix roll and as a result customers have their technology up and running and support kept fixing it if it broke, but we weren't really adding a lot of value to the process.
And as I try to show in this diagram, we ended up, instead of a tight arrow up to purchase and repurchase it was just kind of a dotted line. We weren't necessarily helping customers consume their technology and purchase more. But that is definitely changed since 2009. The service and support group is much more tightly aligned with development, there's a lot more cooperation today between support and professional services, and support has introduced a lot more value added services that are helping customers not just keep their technology up and running, but also consuming more of that technology, leveraging every feature, buying additional user licenses so that customers are constantly moving through the circle a lot faster and getting to that repurchase point much faster.
So let's give you some real data here. If we look at, back in 1999 hardware firms about 22 percent of revenue came from services, software firms a third revenue came from services, and right about then was when the tech crash hit in 2000, 2001 and I believe that that really was the driving force to seeing services take off. In fact I was a CRM analyst back then working for Giga Information Group and I remember we used to say really bad things about companies when their service revenue started getting above 40 percent, for software firms.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
You know, it may indicate maybe the technology's really hard to use and hard to implement. But Wall Street and the technology analysts definitely understand today that we're delivering complex technology platforms that require some work to get them finely tuned to really resolve those business processes that you bought them to fix in the first place, and as a result we had seen the percent of revenue from services continually rising. It's been leveling off in the last few years and I suspect that this current economic situation is going to give us another boost to these percent like we saw back in 2000. So currently in software firms, more then half of revenue is coming from services and for hardware firms well over a third of revenue comes from services. So Wall Street understands those, executives within technology companies understand those. So for that reason support is much better positioned going into a downturn because we are viewed as one of the primary means of generating revenue for the company.
Another angle on this is that the focus shifts from acquisition to retention and that is really good for the support and service organization. So when the economy starts to tighten, there are fewer companies buying new technology and there's a lot more competition for every one of those deals and what tends to happen is you got fierce competition to try to close a new deal and someone starts discounting in order to get the business and at the end of the day the purchase cycle is much longer and because of discounting the actual profit from new customers isn't as good during a down economy.
For that reason you see that a lot more attention shifts over to generating revenue from your install base, and if you're going to continually up sell your customers you've got to make sure that they're very, very happy with the technology and the services that go along with it. So you do start to see much more attention within companies on customer retention instead of customer acquisition. That means that support and services under a ... definitely a spotlight and I think we're ready for that. Again, with all the business process work that we've done, all the organizational realignments that we done, we're ready now to step up and be in the spotlight when the corporate attention turns to this customer retention.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
So yes, I do think that we're much better positioned as an economic engine. I don't think that we're going to see all of the cuts or the harsh cuts that we saw in 2001, but it doesn't mean that we don't have to tighten our belt. We ask for a show of hands at the conference and out of the 800 people there about 80 percent of them indicated that they're already in a budget replan for 2009. So we know that we're going to have to find ways to trim that budget, and you know, help be good corporate citizens. So I've got a couple of slides here about cost cutting from Price Waterhouse Coopers, who obviously helped a lot of large companies do reorganizations and realignments and according to PWC 70 ... 74 percent of CFO's admit that they get their cost cutting priorities wrong because they cut what's easy to measure rather then where it is most needed.
And that's not really good news for us because there's no organization within a company that uses a track and easy to understand cost and expenses and profit as the service and support industry. We have so many metrics. We have so much data about cost of delivering service and support. So it is you know, easy to say well let's just take 10 percent there because we know exactly what that is, where in development for example, it's always a little more vague. If you got 10 people out of development what is the actual impact. It may be unknown. So what PWC recommends is as a service executive your job is to, number one, identify your core competency and figure out ways you can become more efficient. So I'm very happy to report that service and support is now considered a core competency of most technology companies, which means it's not into the non-core functions, as bullet number two, which are going to be targeted for trimming and consolidation.
So I think that we've already been there. We've definitely trimmed, we've consolidated, but now that we're a part of core I think more the focus as to how we can finely tune those engines. And whatever the savings from both of those activities PWC says reinvest that into your critical business, strategic business assets. So you know, I'm the technology guy so I think that that fund ... those funds need to be reinvested into innovative technology because technology for a finely tuned, highly effective organization is the only way left for you to get that additional efficiency. So let's talk about some of the ways service and support are going to be able to find those additional cost savings through innovative technology.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
So the first thing is look at the key metrics that you want to improve. So compare your performance metrics against other companies in your industry and identify key metrics that you really need to change. Maybe where you're lagging behind your competitors, and just as an example here using our benchmark data to understand average number of incidents per shift, average number of issues resolved at level one versus level two. If I factor in the average cost per incident at level one and level two, just increasing first contact resolution by 5 percent in a 100 technical support engineer organization is a two million dollar cost savings. It's actually 2.4 million a year. So there is a huge amount of cost savings that we can find by targeting key performance metrics, which by the way are very important to your customers [...] hold time, average talk time, those sorts of things.
Another thing that we're hearing an awful lot about right now is virtual service centers, and the Wall Street Journal last month published an article in their business section that their number one advice for companies needing to save money, shut down the office. Thanks to IP Telephony it's easier for people to work from home, but it definitely introduces some risk and some management challenges that you haven't had in the past. So what technology do you need to use for your employees to be able to do their jobs from home? How are you going to supervise them? How are you going to monitor what they're doing? How are you going to make sure that they're complying with your privacy regulations, with all of your security profiles for example? So the virtual support centers is definitely a way to save cost, and I think you're going to see a lot more companies having their employees work from home, work remotely, but definitely you're going to have to do some investments in your infrastructure to enable that.
And the final thing that we're hearing is there is just an all out war on eliminating on site visits. Those from a field service perspective and from a professional service perspective, and I have some data here on the right, we surveyed our AFSMI members back in July about the cost to roll a truck for a service visit and the largest percent, 44 percent of them said that it cost more then $500 to roll a truck. So those service visits on site costs are very, very high and the same is true for professional services. We've had a bad habit in the past of someone complains, you throw ten more consultants on a plane, just can't do that anymore. So technology that allows us to do more collaboration, to do more remote monitoring, remote fixing, it's just becoming more and more important that we find ways that we can stay at home or stay in the office and adequately take care of these customer issues, do the implementation, do the configuration, whatever, without having to get in a truck or get into a plane.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
So I think that those are the three things in the interest of green support, in the interest of cost cutting and the interest of really trying to make your folks as productive and efficient as possible. These are areas that we're going to see a lot of attention on next year. So let me close with a few recommendations. First of all I think it's really important to invest in the customer experience. So I think in 2001 there were some really bad choices made about ... for cost cutting, there were some, as an example, some really disastrous off shoring things that were done, not in the interest of the customer experience, but clearly just to cut costs. And as we saw there was a lot of customer turn as a result of this, a lot of bad publicity as a result of this. So it's important when you make your investment and your cost cutting decisions, think about the impacts of the customer experience, because as I said earlier, the focus shifts now to customer retention, not customer acquisition. So you definitely don't want to do anything to hurt the customer experience, ideally you're going to even try to improve it.
The low hanging fruit has probably been picked. I know that ITIL compliance, different sorts of like signet programs, we have very lenient service and support operations today. So if you have done that process realignment, done your consolidation, the next thing that you should do is start with benchmarking, identify areas compared to your competitors or others in your industry, specific metrics that you need to improve, and then look at the technology that you're using that impact those metrics and some other technology. About 30 percent in general of customer service and support technology within our member of companies is home grown, and I think that you're going to find that maybe you've been getting by just fine with the home grown remote support tool for example, but you can no longer do that when you're trying to get a little more efficiency, you've got privacy concerns with people working remotely, it's very important that you have best degree technology. So you got the latest and greatest, the coolest features and you are able to see a very positive ROI impact from that investment.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
And the final thing on that ROI, you know there are just a couple of areas within service and support technology that you see ROI not within two years, not within one year, but sometimes within 3 months, 6 months and 9 months, and those tend to be knowledge based investments and remote control investments and we're focused on remote control today with our sponsor Bomgar. So this is one area that it's hard not to get a full return on investment for your product purchase within the first year and that's going to be very important in 2009. Make sure that you've got that ROI up front when you're selling this internally to get the budget. You'll find it much easier to get budget for this type of technology when you can show that you'll get some money back within the same year. And also share that with your ... the vendors when you're sending out those RFP's. They need to understand what your expectations are and make sure that you can pick a provider with a track record for delivering those kinds of ROI results.
So I know that was a fast and furious trip through what's going on in our industry, but now I think it's ... would be a great time to bring in someone from definitely the front lines of this. We have Rich Surace, Senior Vice President of Operations from PlumChoice. So Rich if you're there, I'm going to turn it over to you.
Rich Surace, SVP Operations, PlumChoice PC Services:
Thank you John. As John mentioned earlier, there's a variety of factors that are affecting the service and support industry and I'd like to take a couple minutes, first of all to thank you for joining us today and second to give you a summary of our organization, how we've embraced the remote services solutions that we provide to a variety of industries and how effective we have been in enabling as well as taking the best degree of technology, and Bomgar being [...] and showing how it actually can enhance our operation and service delivery to your customers. Some choice, as everyone ... as John mentioned earlier, we're competing today's business for the customers and the customer today needs more help. They need solutions. They don't come to us with very simplistic issues anymore and as a result we've crossed pollination of multiple [...] product markets base or extension of wind fell platforms. We ... the customer is looking for a lot more than traditional support and has, you know, a complex set of issues that they're working with around their home and home office technology.
Some choice suspicion is to extend the market leadership in delivering high quality support and trusted technology services for the home and small office markets. A little about PlumChoice. We were found in 2001 and so far this year we have over 700,000 clients that we service, of which we have over two and a half million of the transactions delivered through our Safe Link platform. And we'll get into what our Safe Link platform is in a minute. Our customer satisfaction, as John mentioned earlier, which is one of the key benchmarks is that if you're competing for services revenue in the marketplace and the customer is willing to drive and their precious dollars today that they're going to expect the best support available. We have a customer satisfaction rate of 95 percent, and a quality ... one of our qualities of course that we're very proud of, is a [...] score of 79 percent. We have over 900 agents today that are used throughout the United States that are all W-2 based, no contractors, and the agents that we use are certified in many disciplines, as you can see listed ... listed below. We require this as we are providing a very high-end service and therefore we translate that to not having to have multiple service incidences being manager handled by multiple service operations.
Rich Surace, SVP Operations, PlumChoice PC Services:
Quality control: 100 percent of all of our transactions are recorded, including voice, remote, chat, and email. Doing that really allows us to control the quality and also enhance our service delivery as we truly are in touch with what our customers are looking for. We also provide dispatch services nationwide as well, so as John mentioned, on-site is traditionally the most expensive form of support. With our 94 percent first time fix for customer issues we do not dispatch that often. But if we do dispatch we'll ... we have the ability to dispatch smartly. So we know who and where our customers are being serviced from and providing the right instructions accordingly.
PlumChoice is a company that has received a tremendous amount of industry press in the last couple of years ranging from editors choice in Laptop Magazine for our service being listed in Consumer Reports, throughout ... our name and our service has been tremendously covered by the industry, media industry as far as the quality and how we actually provide supports to the consumer today.
Market trends, as John said we need ... need we say more? Technology usage today is ever increasing in the home, small office. We have complex integration going on with customers that don't necessarily have the training to understand that technology, but they need to use it and how do you actually build all that through update and repair and how you actually manage those services as a service provider where multiple products are exponentially coming into the home and you have the need to actually have this type of support because of the technology usage. Customers have to use these different technology levels, whether it's PDA devices to Wintel devices to Macintosh devices, the complexity of all those technologies really creates a quandary if you will in the service support industry.
Rich Surace, SVP Operations, PlumChoice PC Services:
In traditional on-site today in call center models are not meeting those requirements because all that complexity whereas if you're support industry is supporting one set of products it may, what I call transfer or avoid the overall underlying issue, which may be not necessarily with the product, but with other interfaces. It actually gets in the way of actually solving or working that product for that particular customer. So there's an aggregation frustration out there because the models that are out in the work place today in the call center can't scale on the quality side as well as having the very skill sets necessary to meet those challenges.
So there is a virtual growth within remote service delivery. Directly implemented remote service delivery scales, it resolves labor model failure and on site visits by solving those issues up front and also enables new types of services that can ... that are created to meet the ever increasing technology challenges and new technologies that emerge in the future. So this is challenges today that PlumChoice as well as the industry is looking at today is you know, the national economical climate and uncertainty. Businesses are asking more to do more with less. As John mentioned, you know, cost cutting efficiencies. We're really kind of at the end of our proverbial line as far as what's the next level that we can cut costs in. Brick and mortar is one of those costs that you can cut and we'll get into that in a minute as to how and also when you can actually have the ability to do that as a cut over and what you can see as a result of the benefits of having a virtual support center.
IT network based convergence accelerates. Today all the roads lead to the Internet, whether it's through again, handheld devices, traditional desktop devices, there are so many different roads that lead to the Internet. Smart home technology actually is now building back into the Internet as well because through client technology people want to monitor all the different devices that are linked into their server based home environment and with the emergence of smart home technology again, another set of challenges where the consumer has a service and support quandary.
Rich Surace, SVP Operations, PlumChoice PC Services:
And then cross device enablement. We have a lot of challenges today with media entertainment devices, wanting to work with traditional TV's where TV's didn't have the ability to be the [...] home, home office. As mentioned earlier, the convergence of technology. We have on demand lifestyles. The fact that there's [...] knowledge device that exists today in that technology or understanding it. And then there's the general lack of quality of support on resolving those issues. Because traditionally training and usage are not necessarily built into product support, or if it is it's an ancillary traditional support through voice based enablement that assumes customer knowledge prior to actually calling out for support.
Also today too there's the new security front for families and businesses in the virtual world, identify theft. It is now in it's new latest and greatest form, which is basically robbing people of their worth as well as their identities, and also Internet predators. People in families are trying to protect themselves going forward and also what's added to the confluence is social websites. Combined these are areas that are new challenges for the support industry that they have to face today and this is where customers are looking for help in this arena.
Why did PlumChoice work and develop some of the tools that surround the Bomgar Technology? One, as John mentioned in the area of cost. It's a predictable pricing model. We're just better for growth. Is everyone is familiar with the way that traditional models are built around toolsets, concurrent license versus named. It's better for shifts. We have the ability to be flexible for growth. Remote access security. Again, session data, being able to have this consolidating security within a firewall. Automatic recording of session and interactions and also recording customer data, for the protection of the customer as well as our business. That if we have a true management security of information in working with our clients today.
Rich Surace, SVP Operations, PlumChoice PC Services:
Integration. Today Bomgar has open APIs that allow us to integrate fully within our ACD CRM and web-based platforms. And within that functionality multiple operating systems. The ability to be flexible and also the administration capabilities. All of this is wrapped together while maintaining speed and reliability of the access points and tools to deliver effective support in a very efficient manner without having delays or working across multiple systems to actually get the answers for the particular consumer.
Some of the benefits of Bomgar in our enterprise, which is the virtual service center is that it provides a cost savings, which increases utilization of the most expensive resource, which is our labor. It improves return on technology investments because the flexibility within it's platform allows us to do so many things that traditional remote tool providers do not provide today. Helps enable our first contact resolution combined with our policies and our support processes and our tools, we resolve customer issues faster thus increasing customer satisfaction.
Overall, increases agent utilization, which basically allows us to do multi lines of support, that allows us to work across the aisles so if it's a problem with two or three different vendors that's creating the issue we have the ability to work across those platforms without having to bring in another tool, bring in another provider. And it breaks the [...] the ability to do multi-line, multi-threaded work. Again, if delivered in the right manner it will reduce your overall costs and also upgrade in the efficiency factor.
And last but not least the customer experience. The customer sees a single view for issue resolution. We have the ability and do today to reduce call backs and customer frustration in this area especially, as everyone can imagine if you migrate from a tier one to a tier two issue, traditionally [...] support a call back or ... and then those details have to be rehashed again. With this experience you get a single flow of information that if someone does come in and comes in as the participant behind the scenes to actually provide the correct service in the event that they run into a challenge, but the customer doesn't see that.
Rich Surace, SVP Operations, PlumChoice PC Services:
What is a virtual service center? It's bringing ... it's helping improve SCR by bringing in the right people to solve your issues and problems faster. Whether it's not whether the end user is on top as you can see by the diagram and we invite ... have the ability to invite a mentor or coach into the front line reps. Again, not visible to the end user, but it can ... they can view the screen and chat with other reps behind the scenes and it minimizes the end user touch points. So again, this to the customer is an optimal experience, they're working through that same individual, yet that individual has a whole team of people behind them that actually are working in conjunction to help resolve the issue. In traditional ACDs have some more function of invite and bring in people with the voice session, but today's remote one of the benefits again of the Bomgar tool, it allows us to have a team in house, to be able to bring in folks to help assist and take over or provide coaching and the right expertise to quickly resolve the issue.
How we actually are Safe Link Service Platform in combination with Bomgar work? What is our Safe Link Platform? We service anytime, anywhere, anything service access. We're open 24 by 7, we provide support for in home, small/medium business or as the traditional road warriors that are out there that need the support at 2:00 in the morning, as I can imagine some of those people on the call are. Again, combining voice, chat, web, email, desktop, remote, on site through a seamless service delivery platform through Safe Link that we have the ability to deploy through the web as well as through different vehicles today and through our channels. What does it allow us to do? Secure advance and effective. It's the most secure approach. Best practices for today's world. We're finding the right balance of technology and people to manage this process as mentioned earlier. Again, low cost, highly skillable. If we're going to do ... for instance we have a 94 percent first time fix. We're dispatching very few individual sessions. So keeping the cost of support low.
Rich Surace, SVP Operations, PlumChoice PC Services:
Also, innovative services. Integrating remote in store and on site for instance. Creating a seamless experience through different channels through remote allows you to be very flexible. Having a virtual service center also allows you to be very flexible as far as disaster recover, as well as traditional brick and mortar centers. Basically do not allow the generalized recruitment capabilities, having a nationwide workforce brings to the table versus having a traditional brick and mortar location. Also, customer intelligence, customized services. We have the ability to be creative based off of our recording and monitoring of customers. We provide constant ... we receive constant feedback as to what they're looking for. It allows us to push the envelope as far as customized services. We continue to evolve our services to meet the market place and the ever industry challenges that traditionally pop up.
And again, industry leadership. We are the largest remote support provider in just the core of our business. Our safest service delivery platform, Bomgar being one of our technology partners allows secure data to consolidate within the firewall automatic recording, flexible integration and emerging functionality. Where you see the ... within our Safe Link service platform it provides a level of integration as well as updates that allow us to configure in and helps resolve the technology challenges that we are ... that have arisen across multiple service platforms today.
And again, with our technology and process people build together you can see where having a technology partner like Bomgar allows your organization to be able to bring in the expertise that you have in your organizations and allows you to be able to enhance it and use it more effectively. Again, Safe Link as mentioned earlier is our service ... is PlumChoice's service delivery platform. Being able to fix, train, monitor anything that has the ability to be connected through the Internet. We have multiple connection times, we have the ability to do remote access, dispatch, phone assist, as well as traditional [...] mechanism, such as email as well as chat. And the Safe Link services are many as far as different product types that we've created, both for our partners as well as PlumChoice. We currently have over 84 different product services through Safe Link platform that are delivered today.
Rich Surace, SVP Operations, PlumChoice PC Services:
The Safe Link ecosystem. Again, we've been using the Bomgar Box. It allows us to bring it into our ecosystem that the end user has ... we have the ability to do many remote diagnostics within that single end user and at the same time they can receive that remote diagnostic, the agent and the end users are allowed to screen share collaboratively. If there is an issue that comes up they have the ability to be monitored as well as coached by different mentors, as explained earlier in the virtual model. And again, Safe Link with it's tools and processes delivered through the Bomgar tool allows us to create single support to the end user. Again, optimizing the experience.
And we again, maximize staff utilization no matter where the location. Whether it's a destination location or it's a virtual support center. Our service delivery platform allows ... and services distribution area in Safe Link, we currently provide retail Telco, OEM affiliates service and call centers and warranty service providers today with different branding options within the Safe Link services footprint. We have the ability to white label, co-branded or brand at PlumChoice. As I mentioned before when I started the presentation PlumChoice and Safe Link are needed in the space where secure remote access tool, predictable costs, leading edge functionality and flexible integration. Plus the reliability of 24 by 7 by 365. Enabling solution, Bomgar has allowed us to continue to create a leading edge functionality, flexible integration within our existing enterprise, which has resulted in first time fixed rates in the 90 plus area. An increased customer satisfaction of 95 percent, net promote of 79 percent. Also allowed us to increase our service offers and it extends the reach beyond Windows to other service delivery platforms in areas whether it's Macintosh, Linux, just well beyond the traditional Windows desktop platform.
I'd like to turn this over now to Nathan and from Bomgar.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
Okay and thanks Rich and John, and since is now the second time you've seen these slides I'll try to move through them fairly quickly and the topic we're covering is basically just how to do more with less with end support. How to supply champagne support in a bear economy. Congratulations by the way [...] or if not t-shirts maybe pens, depending on how our budgets go. Let me cover a little bit about where we are from an economic standpoint. When the Dow looks like this your budget is not going to be all that great and one of the things that has been interesting is when you look at the industry pundits about ... you know if you look at Gartner or IDC, Forrester or anywhere else and their commentary on where the market's going what you really gather is no one really knows.
Great uncertainty - we're not sure whether 2009 is going to look like 2008. It could be a lot worse, or possibly a lot better. It's interesting, there's a report issued every year from the President of the United States to the Congress and in 2008 the report said that it thought that the first part of 2008 would be pretty bad and then the latter part of 2008 would look pretty good. So here we are, end of 2008, things aren't so good yet. I'm sure they're working off the best information that they had at the time, and looking forward all that means is no one knows. It's not just us, it's not just the President, it's not just the Gartner or IDC or Forrester. Really no one knows what the economy is going to look like over the next few months.
So given that what should you do? If your budget is affected, how do you address that? What things do you focus on? Well, start out with, kind of things not to focus on and those are things that are those areas that you wouldn't address or you wouldn't cut if things were not looking ... if the economy was not looking poor. In other words, we want to find things that you would have cut if you'd been paying attention and even if the economy was good. The things that are waste no matter how good the economy is or how bad the economy is. So as you examine what you spend money on, this again is sort of like what you find with federal government.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
You can find a thousand different areas to cut the cost, but when you examine the three trillion dollar federal budget you find that 25 percent is spent on social security, 24 percent on Medicaid, Medicare and then 20 percent on military funding, and if you don't cut one of those three things you're not going to get far. The same is true when you look at support costs. You can cut a variety of [...] more effective, you're not going to get far. People are by far the most expensive resource you have in your organization, so that's the area we're going to have to spend your time and money, making those people more effective. And this is convenient in a lot of ways because you're people are also your most leveragable asset. They are the most expensive, you can also get the most out of them.
Another fun cocktail party fodder piece of information is that in 1947 ... between 1947 and 2007 productivity rose by something like 380 percent, which means that you sitting in your chair right now or in 2008 probably did roughly four times the output of the same you sitting in your chair in 1947. So you've had this massive increase of productivity over the course of 60 years and our question is basically just how do you do that in a shorter amount of time? How do you leverage the time of your reps, the skill of your rep and the capability, the kind of undisclosed abilities of your reps in a shorter amount of time then 60 years?
Well, this is sort of a complicated question at 30 thousand feet, because at 30 thousand feet things look fairly serene, that I would propose that once you get down into the weed, once you go into the trenches and understand what your reps are actually experiencing that you find a lot more areas where you actually can get massive productivity through [...] that once you look at the different things that are impacting the rep at the front line, as he actually provides support there's much more opportunity for improvement. So we want to think first about what the problem is and then a little bit about what is unique and then what is the same across your incidents. In doing that I want to propose sort of a thought experiment.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
Think about this, if you could make ... imagine this, let's say you walk in tomorrow morning and suddenly your users, your customers, all the end users stop having problems. They just stop. They stop calling you, they stop having issues, stuff stops breaking, applications all work, everything works for your end users. But your reps start having all sorts of problems. In fact, they have all the problems, all the issues, all the application mess that used to happen on your user's systems. And I would propose in that that if everything happened as it happened on your reps screen versus on the users screen then it can get solved faster, because you don't have a lot of stuff in the middle with the rep navigating to the end users screen or walking through something with the user on their screen. They could just solve it directly.
That is sort of ... has been the thought experiment that Bomgar has gone through in our application. So it's not always a simple thing to get the rep on the screen of the problem. It can involve a lot of different areas, and that's been what we've developed out over time. One thing we focused on is getting the one rep in front of any location with any screen, any operating system. So you really can basically bring your user's problems to the rep's screen. The rep controls you directly, instead of having to go through all the rigmarole in getting to the screen and starting to trouble shoot the screen after a longer process.
So what this means is you can boil it down. If you take the thought experiment to it's conclusion what you want to end up with is a virtual center where the rep works on the screen, works on the screen of any system that comes in from any user. You want to transfer the load of troubleshooting from your users or from them having to explain stuff to your reps, to the rep himself or herself. And what we mean by virtual support center is just that, kind of a fancy way of saying the rep is going to work on the screen directly versus physically go on site or work over the phone.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
I want to explain a little bit more as well, when you think about ... 'cause it's not merely that this is more efficient, it's not merely that if the rep works on the screen he'll save time, it's also going to improve the customers experience. It's also a more premium form of support in a lot of ways. Because for a lot of us, because we're involved in all the details we understand all the factors, and so we can think about a lot of different areas and how they affect customer experience.
With the customer I would propose they think about this a lot more simple terms. They think something on my screen broke, it doesn't function, it doesn't perform as I want it to and I want to get it fixed. And so if the screen is working, if it's doing what I expect it to do then I'm okay and I'm happy. If it's not then I'm not happy. So stuff breaks on a screen, stuff has to get fixed on the screen and the faster you fix the screen, the faster you can sort of fix the user, the better the user's experience is.
Again, this may be a little bit of an oversimplification. I understand there's more factors that are involved, but I would suggest this is a very ... a major factor in the customers experience and a major factor in the reps overall productivity, that the screen, working directly on the screen is the best use of your tech's time and if you examine how much time they're working on that ... on the screen currently you'll find a lot of extra time that can be allocated in a more efficient fashion. A lot of time spent explaining to the user where the start button is, a lot of time spent going on site, a lot of time spent just working on the VPN to get things connected. Sometimes if you're using legacy remote access solutions. There's room for a lot more improvement in this area.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
The results here are fairly predictable. It's higher utilization rates and PlumChoice is a great example of this, and we have a lot of other customers as well who are doing virtual support who sometimes get two or three times utilization rate from the same rep. So the same rep, same skills, they're just not sending him on site and getting three or four times the amount of productivity from that worker. You also get half your customers, they don't have to get instruction from the rep. So what this boils down to is you're able to do more what your customer cares about, getting the screen fixed and less about ... less of what costs you money, which is kind of everything in the middle.
Again, this is just one aspect, I think it's an important one, and it's a simple one too. It's a simple equation to say how do you eliminate the stuff that's not on the screen. How do you get your rep focused on the stuff that kind of shows up on the scoreboard, the process of fixing the screen.
So a little bit about Bomgar, and then I'll turn it over to questions. We are one of the ten fastest growing software companies in the US. We have over 4,500 customers. We deploy through an appliance, it's on premise, which means it is a very fast return on investment. Three months has been ... we've had customers who've done it, had a return on investment two months, three months or six months, very, very quickly. Because it is an appliance it is in house versus hosted. We offer a concurrent license, so it's only the number of people using the product at the same time and we are one of the only pure play vendors in this space. We focus on support virtualization exclusively and this means we're able to add functionality at a faster clip. So sorry for rushing through some of those slides, but I've got us in with a few minutes to spare, so I'll turn this over for questions.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
Thank you, Nathan and also thank you to Rich. Both of you have some really great contents. If you [...] question. We have a few in cue and if we don't have time for your question we'll follow up with you after the event. Before I ask a question I just have to say first time fix 94 percent. Rich, are you serious?
Rich Surace, SVP Operations, PlumChoice PC Services:
Yes, I am.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
The industry average, which I just looked up is 46 percent, so you are more than double the industry average.
Rich Surace, SVP Operations, PlumChoice PC Services:
Well in the ... it's interesting John, because in the ... if you are grading service revenue opportunities or revenue generation opportunities in your environment, as what you mentioned earlier in your presentation about creating new lines of service ... service revenue and that's a growing market. Customers are expecting, if they're going to spend money, that they get their issue resolved and they're not going to be willing to spend money if you're having, as the economy is it's a very tight economy, people are wanting to keep their technology longer, therefore not having to go out and reallocate or respend.
So if they're spending their dollar they're truly going to want that support experience to be the highest quality available as well as, and this is what we found in our business, the measurement of the 94 percent first time fix, as I was going through the different collaboration components, through our virtual service center, as you can see if utilizing the tools properly you can effectively leverage a very good experience to your customers. Especially, as I mentioned before though, if a customer is spending money they're going to want that experience. If you're not providing it then you're not going to be as successful as we found in this service arena.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
Another impressive fact was 79 percent net promoters score. A couple of people ask what net promoter is, could you just briefly talk about the net promoter concept?
Rich Surace, SVP Operations, PlumChoice PC Services:
Net promoter is a discipline by which companies grow focusing on the customers. A successful net promoter program includes five elements. One metrics driven around link to growth. Two, leadership practices that instill customer focus and passion and values. And three, organizational strategies to ensure option. Four, integration with core business practices and five operational systems to support that initiative. All of that is wrapped up in how you essentially ... how you take feedback, how you run your business by it. It becomes your business. Essentially six sigma is also a very similar program.
Net promoter really, truly ties those different areas together and really, it's how you actually look at the consumer or your business as a whole and what you do in response to request changes and satisfaction that vendors and customers list against those services, either by trying your services or using you as a particular vendor [...]. It is the standard for Fortune 500 companies today to measure themselves by. It's the new quality standard that's out there. Our net promoter score is based off of a 100 point scale, there's adopters and detractors and space on a ten point scale and it takes all the facts that I mentioned before into account and it truly has a measurement criteria that PlumChoice is very proud to say that we're one of the few service organizations that actually has this type of promoter metric of 79. That's a very high level of a score that says we're valid ... the industry is validating what we're providing to them.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
Yeah, definitely, it's really a great story. Nathan, I've got a question for you. There were a lot of questions coming in about the challenges of virtual support and someone wanted to know how does your solution really enable support service teams to be virtually located and do you have customers today who are using virtual support?
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
Yeah, absolutely. First of all the rep can log in from anywhere. So they can be at home or they can be at the office, they don't have to be in a particular location. And then we allow the end point to be behind the firewall without complication. So you can have someone who's dialing in from a coffee shop in Tokyo, you can have back end server, separate office, or hundreds of thousands of other systems, without having to deploy any infrastructure. You can still get access to the systems seamlessly. And then obviously our multi platform support with Mac and Linux, Windows Mobile ...
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
And I would add supervisors silent monitoring.
Nathan McNeill, VP of Product Strategy, Bomgar Corporation:
Yeah, absolutely.
John Ragsdale, VP of Technology Research for AFSMI, SSPA & TPSA:
I think that is huge. I talked to a lot of our members who they can't really afford you know, a full quality monitoring system for you know, like high level, high volume contact centers use, so seeing features like that to collaborate with other people and their supervisor I think that's great to see that embedded in the platform. Well, unfortunately we are at the top of the hour. I want to respect everyone's time, so I'd like to thank Rich Surace from PlumChoice and Nathan McNeill from Bomgar for joining me today and thanks to all of you for tuning in. This has been John Ragsdale for the AFSMI, SSPA and TTSA. I look forward to seeing all of you at our next association webcast.