John Smith's service organization scaling issues and management solutions

Manufacturing vs. Service Delivery Orgs

Assessment of the Current Situation

Smith\'s current situation is that he built a business, but has scaled it poorly. What he is facing may in the past have been termed \"growing pains\" but they are actually scaling issues. Probably the biggest issue is that John himself is still doing far too much of the work. He appears to be handling all of the sales, and 50% of the applications. Furthermore, his back end is probably a mess. If he has been buying the \"lowest cost\" every time he expands, then his technology stack could have thirty different types of server. That\'s a big ask for his helpdesk. It does not help matters that he is trying to work with 50 applications and no managerial help. John has not scaled very effectively at all -- his flat structure isn\'t working. He has proven unable to provide critical oversight, especially on his service desk.

Nature of the Service Organization

John is running a service organization. He has to think of it as such, and that means having managers who can actively manage the service function. In manufacturing, one manager and a few staff can crank out a lot of product, but that is not the case with a service organization. Service is the product. That makes quality control substantially different. John has service level agreements (SLAs) with his customers, presumably. Those are the metrics against which the service is being evaluated. Yet, he has no systems or oversight in place to ensure that the SLAs are being met. Looking at the list of his problems, most are SLA-related (hardware platform availability, response times, notifications). In a service organization, the output of the staff needs much more direct attention than might be the case in a manufacturing organization. It may be that the workers are not adequately trained, do not have the jobs defined well enough, or that the overall design of the workflow is insufficient to meet the SLAs (Linton, 2016).

Solutions

There are a lot of solutions. First, John\'s organization is too flat. He needs a service desk manager, and probably a sales manager as well, just as a starting point. These roles will reduce the burden on him personally. John, as CEO of a company with over 100 employees, should not be updating software, either. There should be a specific tech for that, if it is a full-time job. So hiring people to handle very specific roles, leadership positions, is essential for John.

The second thing John needs to do is to simplify his stack. This means using standard servers and other hardware, so that the techs only have to learn one tool, instead of ten. The same can be said for the enterprise software -- he has targeted a broad range of businesses, but there must be some duplication on the software. There is no question that John needs to streamline both the hardware and the software to make it easier to keep things up-to-date.

There is also a disconnect on the pricing side. John has to have set prices. Right now he is negotiating prices with each company. He needs to price based on the service provided, so a form of activity-based costing will tell him what each activity costs. Then he can charge each customer on a per-seat basis for each activity. This is what is known as all-in seat pricing or per-user pricing (Continuum, 2016).

A further thing that John can do is to organize his own company better. The problem with his business model is that it was never going to be scalable, and John is finding that out now. Everything about the clients needs to be documented -- their software licenses and that sort of thing. So this way, when there are updates, anybody at John\'s company can reference a how-to-guide for best practices on installing updates and verifying them, and the company can learn when updates are needed because that information is recorded. One of the problems John is having is with respect to managing information -- that is slowing his techs down, slowing the updates down, and making it that much more difficult for SLAs to be met. John needs to improve his own tools, by investing in something like IT Glue that will help him to manage information for both himself and his customers.