A Four Part Executive Webinar Series Part Two: Finding Hidden Money in Your Contract Renewals Claire Millsap Business Development Executive June 13, 2012
2nd part in a 4 part series - How to differentiate yourself from competition and lock in your clients - Finding hidden money in your contract renewals - How to build your annuity business and forecast next year’s services - How to help customers write a maintenance RFP that makes sense for youNext Quarter: Part Three: How to build your annuity business and forecastnext year’s services Maximizing tools to capture warranty exits and renewals Managing the different type of services billings Teach your clients how to provide you with actionable data that leads to new leads on un-owned renewals.
BACKGROUNDWhat MMI Does:MMI increases recurring maintenance revenue streams for IBM and their partnercommunity, without increasing cost, through our time tested discovery andimplementation methodologies.Claire Millsap:Business Development Executive Since MMI Inception in 2007Ten Years of Technology LeadershipIBM Maintenance/Warranty Expertise $200+ M in maintenance business currently being managed and negotiated 70+ years experience in maintenance management across the team of maintenance professionals Over 1 Million dollars in development of our proactive portal management software in the past 24 months
Today You Will Learn How To: Create more intelligent views of your client’s enterprise Design multi-year contracts that work Leverage amortization and revenue recognition strategies to build your company’s value
FUN FACTS Worldwide market for technology maintenance products and services exceeds $140 billion. In the US the number is $38 billion with annual growth of 6%. Aberdeen research on the topic of Service Revenue, showed that existing service contracts drive 31% of overall service revenue with new contracts and warranties making up 15% and 7%, respectively 1/3 of new products are not covered by contracts and ½ of original maintenance contracts are not renewed. Annual maintenance contracts contribute to 1/3 of technology OEM’s overall revenues, generating 70%-80% of manufacturer gross margins. 80% of total annual maintenance is from channel-driven sales. Market research show 61% of companies have no knowledge of their asset base or used spreadsheets and rudimentary discovery tools to track the information.
Problems reconciling assets for compliance OPPORTUNITYFrustration dealing with maze of personnel Difficulty tracking inventory Frustration with service-call denials Inability to accurately budget for maintenance Lack of single point of contactDifficulty reconciling invoices Inability to Difficulty managing Mine Data multiple services Lack of visibility Into key asset data
DiscoveryCompare and contrast their business processes with the industry best practices. Asset and Contract Management Contacts at the Client Target specific pain points Review any compliance regulations Determine a financial baseline Review the clients current methodology and practices Establish a Calendar of Study with targeted start and end dates. Review Client expectations and deliverables.
Data Collection A study of each individual contract. A study of all items on warranty A study of all line item detail on equipment noted as per call (exposed). Verify the contracted, paid and/or available SW Verify the contracted, paid and/or available SW and remotely delivered technical support services Integrate all financial data into the reports Work with the client to provide additional information on their assets.
Analysis / Impact Contract design and the impact of the to the client. Service level options versus choices made by client and their impact. Level of potential risk from possible exposures Current financial implications to the organization and possible alternative options. Measure Asset and Contract Management processes and procedures identified through client interviews against industry best practices. Current financial liabilities
Recommendations and ProposalExecutive Summary of Key Observations to increase recurring maintenance revenuegrowth. Including: Contract re-design that allows for contract consolidation and considerable cost cutting opportunities. Contract bundling options and “loopholes” that can assist the client in reducing their maintenance costs when necessary. Service level options for reducing cost. Suggestions for improving Asset and Contract Management policies and procedures to align with best practices. Positioning Multi-Year Contracts that offer you company the opportunity to build an annuity business and lock in future revenues Tools for the on-going management of the inventory, contracts and financial data. Internal Tools Client Facing Tools Channel Provided Tools
Increased Pipeline Management = Decreased Cost of Sales ProcurementHigher Revenues Continued Process Tuning and Net New Improvements Renewal Forecasting (Monthly, Quarterly, On-Going Consulting with customer Annually) Addition of WSU to be added Continuing Education on New Sales proactively with reduced Initiatives to be added to a contracts exposures A MORE VALUABLE BUSINESS WITH Addition of AAS SWMA to be GUARANTEED ANNUITY REVENUES added and managed proactively with reduced exposures and ALF.
Increased Company Values Annuity Streams that show guaranteed revenue streams on a long term basis for investors.. Decreased Liability for your company In the unlikely event of end-user contract cancellation or bankruptcy. Longer term retention of top sales people With compensation packages based on recognized revenues / profits (guaranteed income even on slower sales quarters) Less commission exposure when sales people leave prior to a contract end and renewal sales cycle begins. A MORE VALUABLE BUSINESS WITH GUARANTEED ANNUITY REVENUES
The vast capabilities of benefit, VAR and End-User alike. Manage warranty and maintenance end dates Lead generation Reduce cost of managing contracts Market and brand awareness Uncover exposed equipment Industry and channel performance Asset management (lease hardware and visibility software) Lifecycle management Rollout management Compliance management Full access to a comprehensive service and Service call tracking maintenance marketplace Preventative maintenance scheduling Data integrity and enhanced reporting Budget planning capabilities Obtain competitive price quotes Increase renewal and attach rates Opportunity forecasting
Better Warranty Management of Leading US Retailer byTechnology Manufacturer: Increased Warranty Capture Rate from 81.7% to 94.3% in 6 months. Three year warranty and maintenance contract value increased by 300%Streamlined Business Processes of Major US VAR: Reduced complexity and cost of delivering warranty and maintenance agreements. Created a 150% increase in new revenues from better management of current contracts. Created an on-going annuity pipeline to triple the business over 3 years.
Questions to Ask the Business How long will it take to build the process, develop the technology and train the people? Is it more cost effective to buy or build this capability? When will we see the impact of the business in revenue as well as our bottom line if we build it alone? How long if we buy it? What is the future of the business? Can I scale while keeping pace with the industry?
OneView (SAAS) + Services Private Labeled Client Portal Implementation Initial Data Review, Scrub and Load Help Desk User Training & Certifications Monthly Data Loads Monthly Updated Data ReviewsBusiness Partner Augmentation and Consulting Developing and Building an Annuity Business Organizing and Implementing Best Practices for an Annuity Business Sales and Renewal Management (Contract and Warranty Management) On-Going day to day contract management Complete Maintenance Sales Outsourcing How to Grow you already existing maintenance annuity business
Question and Answer SessionNext Quarter’s Webinar:Part Three: How to build your annuity business and forecastnext year’s servicesContact us at:email@example.com