The Value of SLM (3 of 3)
Pollock: ...the value proposition that you are offering to the marketplace is very comprehensive. It focuses on the bottom line, boost on the denominator in terms of cutting costs and on the numerator in terms of increasing revenue, for example through contract management. So, between that and customer satisfaction, are there any other marketing advantages that you believe PTC now offers to the marketplace that ties everything together and makes it easier for them to run their services business? 12:33
Berutti: Yeah, I think there is. First, there are best in class solutions to serve the individual needs of an aspect of service, such as parts management, field service, technical information. Then, there is the value of having the complete SLM suite, which we've talked about as well. I think that the additional value that PTC has the potential to provide is the connection between product development and service. Many people know the history of PTC is that we've been in the product development business as well as SLM for a long time and because of that knowledge of product development, we have the opportunity to bring together product development and service. And, this creates two big opportunities. One is to make sure that we’re designing products for service so that a service executive knows that the product that gets built is one that will be easy to service and meet the expectations of the marketplace in service. And then to connect and keep connected engineering and service throughout the lifecycle so that as things change we understand the nature of that change. (13:36) For instance, if there is a part change that occurs in engineering we need to understand the parts supersession complications that it creates within the service parts business. Then there’s an opportunity on the other end coming back when the product is in service and we begin to understand what parts are failing, under what conditions are they failing, what suppliers provided those parts to me? Are those parts and system going to be incorporated into a future design? We can begin to take that information from the service executive's perspective and feed that back to engineering to look for continuous product improvement. And, I think that special opportunity that PTC has to partner with our clients to get at that value. (14:17)
Pollock: And, one of things that we’ve seen over the years in conducting surveys is that the OEMs want to–they are always talking about a connection between the collaboration between product and service. Everyone says it's important, but very few organizations are able to actually have that collaboration because they don’t have the tools. So, PTC has those tools, and I think that’s an important advance in the marketplace.
Berutti: Well, I think, Bill, the point that you made that market is looking for solutions like this, I think comes down to two things. One, the point that I made that the service businesses have exploded, but do not have mature infrastructure to support them. You know, the mature technology and processes to allow them to optimize the way that they run their service business. So, that is a big opportunity that we can help OEMs address. The other things that happened, I think, is that these business haven’t just exploded, but they become more important. OEMs have realized that service isn’t just an afterthought. It's not just something I have to do. It’s actually fundamentally strategic not only to my P&L, because it might represent the biggest opportunity in revenue and profit growth. But, it’s also a key differentiator for me in the market. If I want to win on selling new products and retaining customers over time, I have to have the best service, as well. So in addition to being a big P&L benefit, it’s also a critical competitive requirement to staying at the top of your business. And, because of that, OEMs are starting to treat service more strategically. They’re starting to think of themselves not as product companies, but product and service companies, or, product as a service companies. And, they are putting a new management team in place in many cases to run these services businesses, and those people are looking for solutions of the likes of which you and I have discussed. 16:17
Pollock: What you are seeing in the industries are the same things that we are seeing. In one of our surveys, for the first time ever, we got a majority of responses from OEMs saying that they are running their service operations as a profit center with its own P&L. It has been hovering between 45 and 49% over the past several surveys. We finally clicked over the 50% line and that’s what you are seeing too. I think that that is why it's even more necessary, more helpful now for a good, strong SLM offering to support the OEMs in meeting those needs.
I’d like to thank you very much for this conversation. I enjoyed talking with you, and hopefully, all of you learned something from this about what PTC has I’d like to thank you very much for this conversation. I enjoyed talking with you, and hopefully, all of you learned something from this about what PTC has to offer in the general marketplace. It has been our pleasure to have this conversation for all of you. Thanks, again. Berutti: Thank you, Bill. 17:12
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