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Case Analysis Microsoft Corporation: The Design of Microsoft Support Network 1.

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B2B Marketing
Prepared By: Name Roll Number
Murali R Karan Sangar EPGP-04C055 EPGP-04C044

Organiza tion
Target Corporatio n Dell India Pvt Ltd

Role
Senior Delivery Manager Senior Business Advisor

Case Analysis Microsoft Corporation


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1. What factors suggest that Microsoft's PSS Division needs a more comprehensive and flexible approach for its service offerings?
There was an upward spike in customer service costs in periodic review of the division's Profit and Loss statement. It was projected that service expenditures would become an acute problem in three years. At the same time, a PSS market research survey discovered that customers, particularly those that used several Microsoft products, were very confused and frustrated with Microsoft's technical support services. Beside this, Microsoft's support services were not as good as those offered by some competitors. Several factors contributed to the nondescript nature of Microsoft services. Previous support service policy had been determined at the product level. Annually, each product manager negotiated with PSS over the type, extent, and pricing of services to be offered to customers along with their products. Because Microsoft had 150 products, the result was a hodgepodge of service offerings. Some products had no support services, some offered unlimited "free" service that was accessed by phone via a "toll" number, and still others provided extensive telephone service "for fee". For customers, particularly those that owned and used several Microsoft products, the service offerings were confusing because it was difficult to know which service came with which product. Moreover, expert users felt that they were paying for services they didn't need on basic applications. At the same time, they could not get sophisticated support services on some of Microsoft's newly introduced line of highly technical advanced systems, even if they were willing to pay extra. Because of all this factors it was clear that Microsofts PSS Division needed a comprehensive and flexible support service. Bill Gates advocated that new approach was needed and that company was ready to invest in the development of its support services. He expected innovative solution about this problem.

2. Based upon the guidelines that senior management has provided to Trish May, what product support strategy has Microsoft envisioned?
At first development of an overall strategy for support services were needed, that would be simple enough to understand, communicate, and execute. Second, they had to address several tactical concerns such as when and how to charge for these services. Early on in their analyses, the task force hit upon the idea of using a matrix to summarize the various service offerings. Members referred to it as the Microsoft Support Network 1.0. This was an innovative approach to the customer support problem that Microsoft faced. The concept of a service-offering matrix received enthusiastic and universal approval among Microsoft managers, but there was widespread disagreement over the make-up of the rows, columns, and elements, because there were some different ways available for its construction.

Case Analysis Microsoft Corporation


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3. How should the Microsoft Support Network 1.0 matrix be structured in terms of rows and columns?
The rows of the matrix would consist of major service groupings, while the columns would capture the differences in those services across product or customer segment categories. In turn, each element in the matrix would describe a specific service offering and include a fee structure. To avoid customer confusion, the group concluded that 4 rows and 4 columns should be the largest size of the matrix; however, no research had been done to confirm this. As was mentioned above there was disagreement about how to construct the rows and columns of the matrix. There were some different approaches: Problem-Based Service Rows, Responsiveness-Based Service Rows, Product Category Columns and Customer Segment Columns. Alternative #1: Problem-Based Services x Product Categories Alternative #2: Problem-Based Services x Customer Segments Alternative #3: Responsiveness-Based Services x Product Categories Alternative #4: Responsiveness-Based Services x Customer Segments

4. What implementation problems should PSS managers anticipate? How can PSS managers successfully overcome them?
Industry pundits speculated that it would be impossible to eliminate "free" Installation & Start-Up service on application, PC operating systems, and developer products. Customers would interpret "fees" for this period as an unethical way for software vendors to "pad" their profits. Many would wonder if suppliers deliberately made their software difficult to use so that customers would have no choice but to buy service. Managers would have a more difficult time designing Usage & Productivity assistance. While service engineers could address most problems associated with application software at a relatively low cost, they would incur significant costs for PC operating systems, development products, and hardware problems. In addition, problems that occurred after the first 90-days of ownership were particularly costly. Systems Integration and Customized support services would be quite expensive to deliver.

There are two solutions about this issue first is to include systems integration and customized support as standard and cover their costs via a hefty price premium on software or sell it as an option at a significant fee.

Case Analysis Microsoft Corporation


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If services were offered as a function of responsiveness, managers would have an easier time making fee decisions. They could offer Standard Support for free on an unlimited basis for desktop applications. At the same time, they would probably have to charge personal operating systems, hardware, and development products owners a fee after 90-days because such usage and productivity problems were often quite costly. They would also charge a significant fee for Priority and Premier Support due to staffing requirements.

The task force had to make a series of intriguing decisions concerning what services "not to offer". Given that most applications and PC operating systems software was being "pre-installed" by original equipment manufacturers (e.g., IBM, Compaq, Dell), some managers argued that installation and start-up problems should be handled by those firms. At the same time, some task force members argued that local computer dealers should be asked to handle basic usage problems, particularly those that occurred within 90-days of purchase. As for the high-end services, the firm would have to make some difficult choices.

The task force would also have to determine how to charge customers for support services, particularly those provided over the phone. Competitors were relying upon a variety of approaches. Some sent an invoice following the call. Others charged via 900# or had service engineers take credit card numbers. Alternatively, some competitors either included in software packages or sold separately "incident coupons" that entitled the bearer to make a number of pre-specified technical support calls. Adobe Corporation took a different approach. It provided customers with "service credits" as a function of the dollar value of Adobe software that they purchased. The more software purchased the more credits received. When needed, the customer could redeem service credits for technical support.

Given the large size of many developers and corporate accounts, PSS managers would have to decide how many individuals within a customer firm would be eligible to receive service under a technical support contract. Furthermore, managers would have to designate specific developer programmers and corporate MIS personnel as points of contact for service initiatives. For international companies, access from specific geographic regions would also have to be specified.

Communicating the details of the Microsoft Support Network 1.0 would be another challenge for Microsoft. Company wanted its customers to be delighted in their ability to choose from a variety of high-end services while concluding, "I don't have to pay for what I don't need!" It was not at all clear how these communications goals would be achieved.

Case Analysis Microsoft Corporation


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5. Which services should Microsoft offer; a) offer as free or standard, b) sell as an option for an additional fee, and c) not offered (but have a 3rd party service provider partner offer)?
1. Free: Installation and Start-Up service on all Application, PC operating systems, and Developer products. This is a mandate expected by user and provided by the competitors in the industry. 2. a) Nominal fee for Usage and Productivity assistance for all Application cost for initial 90 days. b) Moderate fee for Usage and productivity assistance for PC operating systems and Developer products. c) Premium fee for all Application, PC operating systems and Developer products. d) For systems integration and customized support, either price premium as part of the software, (or) premium fee after sale service 3. Third party support: Cross-platform and Integration issue with other vendor's products will not be supported by MS and redirected to third party ISVs or VARs.