Customer success from the viewpoint of IFS customer Hexagon Agility
- A business value assessment and a customer success contract helped IFS customer Hexagon Agility achieve its goals when putting in a new S&OP system.
The term 'customer success' is one that's increasingly bandied about by technology vendors, but it has many different meanings. For most SaaS vendors, the main focus is how successfully a customer is adopting its product. There's been some pushback on this product-centric definition, with analyst Josh Greenbaum arguing that customer success should focus more on successful implementations, while my own stance is that it should prioritize helping the customer achieve their business goals. One vendor that's pursuing both of these more customer-centric definitions is IFS. At its recent Unleashed conference, I dug into what that means for its customers.
Hexagon Agility is a long-term IFS customer, dating back to 2014, using financials, maintenance, customer service and other modules across both manufacturing and distribution operations. Recent additions include WaDaCo (Warehouse Data Collection) which supports barcode scanning on iPhones and iPads for stock control, HR, and S&OP (Sales and Operations Planning), where a success contract has helped ensure a successful implementation. A customer engagement portal is planned for next year. It has not yet moved to IFS Cloud and is currently running the previous Apps10 version of IFS at a managed hosting partner.
I spoke to Matthias Jezek, Business Solutions Architect at Hexagon Agility, about its experience of the IFS customer success program during its implementation of the new HR and S&OP systems. The company manufactures and supplies storage cylinders and equipment to convert trucks and tankers to run on natural gas, reducing cost and carbon emissions compared to diesel and gasoline. The converted vehicles are also able to run on renewable biomethane. Customers are fleet operators in industries such as oil and gas, distribution, refuse collection and public transport.
A key element in its manufacturing process is the transfer of completed carbon-fibre storage tanks from the manufacturing plant in Lincoln, Nebraska, to another facility in Salisbury, North Carolina, where they are assembled along with the necessary controls and plumbing and fitted to a truck chassis supplied by the customer. The manufacturing schedules used to be managed using Excel spreadsheets, which made it very difficult to rearrange things if lead times changed. The visibility of the new S&OP system provides much more flexibility, as Jezek explains:
By implementing S&OP Planning, both factories, both planners, both schedulers, could see on-the-fly, in real time, any kind of demand changes, any kind of shop order changes, schedule changes ... We're relying on our customers to provide a chassis either to the installer or to us. Our system is useless if there is no chassis coming.
We know sometimes only three or four days in advance when the chassis is coming. We can show a lot of flexibility on rearranging which chassis is coming. Every chassis needs different brackets, different installation — sometimes even a model year between '21 and '22 is the difference. So it helps us dramatically from visibility, gives us more flexibility.
Customer success and business value
Signing a customer success contract ensured that the right IFS resources were available to assist with the implementation and provide the vendor's experience of working with customers in similar industries. Through the customer success program, IFS gives access to expertise across its 5,000 strong employee base, including R&D specialists, services specialists, and industry-specific directors. That was an important factor in Hexagon Agility's decision to go forward, as Jezek explains:
Since they know all their customers, through the partners or direct, best practices are much easier to understand, to get, and to have it communicated — especially on the S&OP Planning. IFS said, 'Look, we have done this many, many times. This is, in your industry, what we recommend is a good model.'
Another valuable ingredient was a Business Value Assessment (BVA). This is a process that IFS uses to establish the business outcomes a customer wants to achieve from an implementation, so that it can ensure the product is set up to help the customer achieve its goals and continues to do so into the future. Jezek elaborates:
Each department — sales, marketing, customer service, manufacturing, engineering, R&D — we spent about two hours in a Q&A with a specialist from IFS. Who asked standard questions of, 'Where's the problem? How do you do this? How do you do that?' At the end of the day, we got a report for all our departments ...
With this report, it was very easy for me to go to the executives and say, 'Hey, look, here's a report from an independent, from IFS, how are we performing compared to other customers. If we spend some time or some money in this area, we will see the benefits right away.'
That BVA opened the door for me to not only negotiate the customer success plan with IFS, but get immediately the buy-in, the approval, from my executives.
With the BVA in place, IFS has a good understanding of the strategic value of the implementation and can make sure not only that the technology works, but also that it is delivering the desired business outcomes. All of this is co-ordinated by a named project manager. Jezek adds:
We work directly with IFS with, depending on the project, different subject matter experts, but we always have a project manager. I love this guy because he's hardcore, he really says, 'Hey, look, we need to stay on time, we need to stay on schedule.' He keeps us very honest.
The project has met its targets in terms of measurable outcomes such as improved productivity, but one of the most impactful outcomes from Jezek's points of view was the word-of-mouth effect across the business. He says:
Several departments got more aware of what we're doing, or what IFS can do, and they got hungry. They want more. This 'want more', that is, to me, also a success. Because in the IT department, I see IT as the glue between all the different departments, because we are always involved in everything. If they want more, that means we did something right.
He also highlights the fixed price of the contract as a benefit, because it's a predictable expense that doesn't change, whatever else happens on the project. He sums up:
I was very happy about the results so far. We haven't even finished with the first contract, and we're actually ahead of schedule. But the two key takeaways, in my opinion, is that you have allocated resources, and you stay within budget. Trust me, who in finance does not like that everything stays on budget?
Customer success is the new name for customer support among technology companies and it reflects a growing trend towards seeing ongoing engagement as something that persists throughout the customer lifecycle rather than ending once the contract is signed. The underlying cause of this rising trend is the ability to remain digitally connected to customers, fueling what we call the XaaS Effect in customer engagement. The 'X' stands for 'Everything' as this effect ripples out to other industries from the Software-as-a-Service (SaaS) vendors who were among the first to experience and act on it.
SaaS vendors therefore became the first to form Customer Success teams, but the concept today is being shaped by other traditions outside of SaaS, where initially it was very strongly focused on product adoption rather than customer outcomes. As an enterprise software vendor with a heritage that predates the advent of SaaS, IFS draws on pre-existing traditions such as the use of Business Value Engineering, which vendors introduced in the 1990s to help build a business case for expensive and disruptive enterprise application projects.
Today, business value work provides a benchmark against which to measure success after the project has gone live — were those goals achieved? — and to take further steps if it falls short of expectations. With most customer implementations requiring more customized configuration than other SaaS applications, implementation success contributes significantly to that outcome, but also has a higher overhead, which therefore makes this a paid option rather than something that is included by default. Nevertheless, it's in the vendor's interest to encourage customers to take up this option. We heard at its recent conference that IFS is looking at the potential to add an element of payment by results, so that the price is directly related to outcomes.
There's some interesting thinking going on at IFS around customer success, and it's also a topic that its customers are starting to look at as they develop their own XaaS or servitization strategies. That's a theme I'll be exploring in a further article based on sessions at the recent Unleashed conference.