NetApp improves customer service and support and gains client confidence

Helping customers manage a valuable asset: data
In highly competitive industries, excellent customer service is often the only differentiator and a key to sustained growth. Alternately, bad customer service can increase costs, reduce revenue and stifle opportunities to capture new market segments and introduce new products.

NetApp (www.netapp.com ) is a data storage company that delivers a broad range of hardware devices and data management software to customers in virtually every industry, in just about any size business.

Today, data is everything—and NetApp’s clients are highly dependent on their storage systems and software. Many NetApp storage devices consist of complex configurations—even the small data storage systems. That’s why it’s critical that NetApp provide ongoing product support to help customers maintain—and derive maximum value from—their storage environments.

Until very recently, NetApp employed a distributed model for providing product and customer support consisting of internal resources and a network of seven individual third-party maintainers (TPMs) in the United States and dozens of TPMs worldwide. The strategy was born of necessity during a rapid growth phase from its founding in 1992, but in the long term it spelled disaster.

“There was nothing about this part of our business that was working,” says Rusty Walther, senior vice president of global support for NetApp. “The costs were out of control. The performance was bad. Support training was bad. There were no incentives to do well and no penalties for poor performance.”

Located around the world, including some of the biggest technology providers, the TPMs each had their own contracts and essentially operated independently. They used different processes and different cost structures, and the lines of responsibility were often blurred, leaving customers in the middle—and NetApp’s customers noticed.

“On a daily basis, we would get angry messages from customers telling us what a bad job our TPMs were doing,” Walther says.

Operating in constant crisis mode, the NetApp support team could not effectively support the current install base, and the lack of adequate support made it difficult to sustain new and future product plans.

Wiping the slate clean
Part of the answer was to centralize support and responsibility under a single vendor. But simply handing over the existing environment to a vendor would not result in success. Walther says, “We took a holistic approach to this. In fact, we first considered what we wanted the end state to look like before we determined how to get there.” But he needed a trusted resource that understood this vision and could collaborate with him to make it a reality.

In this industry, it is uncommon to have a single-source service vendor for a company the size of NetApp. Steve Petruk, IBM’s director of transition and complex solutions, knew that assembling the right team for request for proposal (RFP) response was important. The solution had to be virtually foolproof because when you have sole responsibility for client operations, there is no room for error. Throughout the RFP process, IBM leveraged its thought leadership, industry knowledge and best practices as well as its extensive experience in analyzing business problems and building the right solutions. The sheer complexity of such a massive support infrastructure overhaul was daunting. In addition, IBM knew that both companies would need to make significant investments if such a relationship were to succeed. For NetApp in particular, this would also mean an investment in change: It would need to hire more people; invest in additional training; and reevaluate roles, workflows and processes.

When IBM developed the comprehensive solution, it proposed an extremely short and challenging implementation window of just six months. The proposal was met with skepticism because a typical industry timeline for such a large undertaking was 12 to 18 months. Nonetheless, the IBM team understood the business drivers and the difficult environment NetApp would find itself in after announcing the RFP winner—and it knew that to succeed, the transition had to be fast. The strength and depth of detail in the IBM transition plans, as well as the comprehensiveness and appeal of the overall solution, left no doubt in NetApp’s mind that IBM was the right choice for the job.

“The way a company manages an RFP tells me a lot about how they’re going to perform once they get the business,” Walther says. “IBM did a stunningly good job during that phase. They worked closely with our team to understand what we needed, and they really articulated their value proposition.”

After a rigorous selection process, NetApp awarded IBM Global Technology Services a contract to provide IBM Managed Support Services – managed technical support beginning in December 2006. This began an intensive transition to realign and integrate the service processes between the two companies and gear up for the massive changes and training required as part of the solution.

IBM’s comprehensive managed technical support services emphasize service delivery management. IBM and NetApp have integrated their customer relationship management systems, allowing IBM service representatives and engineers to respond to technical support calls and requests for onsite support. Providing a single point of contact and a single workflow for all calls reduces the number of interactions while improving their quality.

The solution also emphasizes reporting and review of services, with consolidated performance data and support cost, allowing both IBM and NetApp executive teams to monitor performance in the field and continually improve service delivery processes. IBM is also providing availability management, tailored invoicing, vendor management, inventory management and change management services.

An innovative feature of the IBM solution is a “gain share” pricing and contracting model that drives both IBM and NetApp’s behaviors. Incentives are in place for IBM to meet or exceed parameters for service response and resolution time with a service credit program for monitoring performance and a service failure tracking and escalation process. The model also includes incentives for NetApp to improve its products and processes to reduce the number of dispatches and drive growth of the install base.

NetApp is so impressed with IBM’s creativity and flexibility in developing and managing this innovative approach that it has adopted this model for other service provider contracts worldwide.

“Our contract is a win-win for everyone,” says Petruk, who oversees the IBM steady-state service delivery. “As their business grows, our business will grow as well. The managed services we’re providing plus the ongoing and expanding OEM partnership has solidified the IBM-NetApp relationship.”

A relationship big enough for the job
In addition to comprehensive services and a mutually beneficial financial arrangement, speed was a critical element of the IBM solution. In an environment where customers were already complaining, NetApp feared that the quality of service from the other TPMs would drop further after it announced the IBM contract. That’s why IBM proposed a gradual transition, moving from supporting 5 percent of products to supporting 100 percent in less than six months—a monumental task, considering hundreds of engineers underwent extensive training in addition to performing all the process work and dealing with resistance to change from within NetApp and some of its clients. While many considered the likelihood of success negligible, the IBM team confidently guided NetApp through the transition and its inevitable challenges.

“IBM moved very quickly, and in fact they were pushing us to take on more even before we asked for it.” Walther says. “Usually it’s the other way around. But they were actually ahead of us during the transition.”

The IBM team did so well, in fact, that it was recognized by IBM’s National Competency Center and won the Global 2007 Project of the Year award for superb handling of complex service transition.

In the words of Walther, who provided testimony during the award nomination process, “This was the smoothest running major project I’ve ever implemented in my 30 years in this industry. [IBM] executed flawlessly and in true partnership form across the board and without exception.”

Service for today and tomorrow
With the transition to IBM Managed Support Services completed in mid-2007, the strengthened IBM-NetApp relationship began delivering results immediately. The service delivery cost savings for the first year was approximately US$8 million, resulting in an ROI in only two quarters. It’s estimated that the cost savings over the life of the five-year contract could exceed US$40 million.

An improved, more accurate service response contributes significantly to savings. Simply put, better service requires less service. NetApp’s cost per RMA has also been reduced by about 10 percent annually.

“NetApp was certainly focused on reducing their costs, but to their credit they understood that these cost savings are really an investment,” says Petruk. “The savings becomes ‘found money’ for reinvesting in things like the development of job-aid tools, enhanced training and other improvements in customer relations management.”

All cost-saving, service-level numbers are important, but for Walther, the most important number is zero. “After the transition, my number of complaint calls went from at least one a day to zero and it’s been quiet, absolutely quiet,” Walther says.

For more information
To learn more about IBM Managed Support Services – managed technical support, please contact your IBM sales representative or visit: ibm.com/services/maintenance