North American Tech Companies Engineer Bolstered Service and Support Spend
North American tech companies will shell out $1.4 billion in 2007 for service and support, according to "Service and Support Technology Spending--Market Sizing and Spending Plans for North American Technology Companies," unveiled by the Service & Support Professionals Association (SSPA) in December 2006. Additional findings indicate that 48 percent of those surveyed have service and support tech budgets topping $1 million, 17 percent of them have budgets of more than $10 million for new technology, and 33 percent have budgets within the $1 million to $10 million range.
The report, authored by John Ragsdale, SSPA's vice president of research, is based on the association's survey of vice presidents and director-level executives from 177 companies on their North American service and support tech budgets, spending plans, current technology, and satisfaction with technology purchases.
Much of the expected upsurge in tech service and support spending in 2007 is a result of deepened interest in the customer experience among technology companies, especially B2B outfits, according to Ragsdale. Many B2B companies "consider tech support and customer service as something customers pay for with a maintenance contract," Ragsdale says. But "they're slowly realizing that having interactions with customers is a very valuable thing for long-term profitability and for long term satisfaction and loyalty."
Not surprisingly, continued midmarket adoption also plays a significant role in forecasted uptake. Expenditures of SME technology companies (classified by the SSPA as those with $50 million to $1 billion in annual revenue) are expected to hover around $884 million, compared to their enterprise counterparts (those with revenues greater than $1 billion), which will spend about $565 million.
"We've been wondering how long [SaaS vendors like] Salesforce.com and RightNow are going to continue to grow fast," Ragsdale says. "They're going to have another good year because the midmarket companies are really trying to get their arms around that end-to-end customer experience and understanding how they can leverage service and sales together."
The report also examines how service and support technology budgets will be divvied up across four functional areas: e-service, CRM, contact center, and field service. Overall, the largest share--36 percent--of expected spend will go toward contact center apps, spurred by solid uptake in technologies such as quality monitoring, skills-based routing, and voice self-service. More specifically, voice XML-based voice portals, for instance, enable IVRs to leverage "Web content and access the same back-end databases and the same customer information," says Joe Heinen, vice president of corporate marketing at Genesys Telecommunications Laboratories. "It's so much easier now to add a speech front-end and to have access to the same things that are available on the Web."
CRM accrued the second highest percentage, with 26 percent, trailed by e-service (22 percent) and field service (16 percent). When segmented by company size, however, the spend landscape alters slightly. Contact center applications are clearly the most attractive service and support offerings to large North American tech companies, as enterprises are expected to spend $175 million on that functionality bucket. CRM technologies ($147 million) secured the second spot, albeit just slightly edging past e-service's $141 million, while field service is expected to pull in $102 million. But when it comes to SME expenditures, CRM trumps all other functional segments with $309 million, followed by contact center ($292 million), e-service ($177 million), and field service ($106 million).
"CRM is viewed now as a piece of a large corporate infrastructure and [companies] need to be very cautious about the order in which things are implemented," Ragsdale says. "Prioritize where your pain points are and where you want to start and make sure that you're buying the right version and the right product that's going to fit into where your needs are as opposed to what's the best fit for the technology vendor."
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