Industry Megatrend: Service Desk Consolidation

Service Desk consolidation is one of the key megatrends that MetricNet has identified in the support industry.  Consolidation holds the promise of lower costs, and higher customer satisfaction for service desks worldwide.  But the migration from many to few is fraught with peril when it comes to service desk consolidation.

In this article, MetricNet will discuss the factors behind the Service Desk Consolidation trend, and the benefits that can be gained from Service Desk Consolidation.

Many global and multi-national corporations have more than one service desk.  Some have more than 10 service desks.  And a handful of companies have even been known to have more than 50 service desks worldwide!  Why so many?  Well, most of these companies will tell you that they never planned to have so many service desks; it just happened.  Really?  How does it “just happen”?

As a company grows and expands, its IT infrastructure grows and expands along with it.  When this happens it is common for IT personnel and assets to become concentrated in business centers around this world.  So, for example, a global manufacturing company might have large IT groups in North America, Latin America, EMEA, and Asia/Pac.  These regional IT groups often evolve somewhat independently, as they support regional customer groups who have different IT needs and expectations.  Moreover, these regional IT groups almost always have a service desk.

Why?  Well, the most common reason given is that a local/regional service desk is needed to provide support in the local language(s), and that the applications and infrastructure for a particular region are unique.  While there is some justification for this logic, it often becomes an excuse for accumulating support personnel well beyond that needed to support the users in a particular region or locality.

As more and more companies recognize that distributed/decentralized service desks are costly and inefficient, they have turned to consolidation to remedy the problem.  Most consolidation decisions are driven by economic considerations: larger, centralized service desks have better scale economies than smaller, distributed service desks.  The economies of scale have been quantified in several studies showing that cost reductions of 5% to 12% per incident are possible each time contact volume doubles.  So, for example, two service desks that each handle 5,000 incidents per month at a cost of $30 per incident would have a combined cost of $300,000 per month.  Assuming a 10% scale economy, the cost per incident would decline to $27 per incident if the two service desks were combined.  The consolidated service desk would then have a monthly cost of $270,000, resulting in a net operating savings of $30,000 per month, or $360,000 per year.

The greater benefit of consolidation, however, is the quality improvement that can be realized in a centralized, consolidated environment.  MetricNet’s experience shows that it is possible to implement and drive best practices in a handful of consolidated, centralized service desks – IT support “hubs” – much more easily than in a decentralized, distributed environment.

Although not a comprehensive listing, some of criteria to consider when planning a service desk consolidation include:

Existing IT infrastructure, human resources, and support locations

Proximity to company management and facilities

Unique IT applications, platforms, and configurations in each region/country

Distribution of end-user population

Language requirements

Load Balancing and Call routing from location to location

Finally, it is worth noting that physical service desk consolidations, where personnel and IT assets are combined in a single physical facility, tend to produce greater savings, but involve greater risk.  While virtual consolidations, where service desks are combined electronically, produce lower savings, but involve fewer risks.

You can register for MetricNet’s free webcast on Service Desk Best Practices by visiting our webcast page.

MetricNet conducts Service Desk Benchmarking for organizations worldwide.  For more information, please visit our benchmarking store, or contact MetricNet.