Microsoft Corporation:

The Design of Microsoft® Support Network 1.0

1. What factors suggest that Microsoft's PSS Division needs a more comprehensive
and flexible approach for its service offerings?
There was an upward spike in customer service costs in periodic review of the
division's Profit and Loss statement. It was projected that service expenditur
es would become an acute problem in three years. At the same time, a PSS market
research survey discovered that customers, particularly those that used several
Microsoft products, were very confused and frustrated with Microsoft's technica
l support services.
Beside this, Microsoft's support services were not as good as those offered b
y some competitors. Several factors contributed to the nondescript nature of Mi
crosoft services. Previous support service policy had been determined at the pr
oduct level. Annually, each product manager negotiated with PSS over the type,
extent, and pricing of services to be offered to customers along with their prod
ucts. Because Microsoft had 150 products, the result was a hodgepodge of servi
ce offerings. Some products had no support services, some offered unlimited "f
ree" service that was accessed by phone via a "toll" number, and still others pr
ovided extensive telephone service "for fee". For customers, particularly those
that owned and used several Microsoft products, the service offerings were conf
using because it was difficult to know which service came with which product. M
oreover, expert users felt that they were paying for services they didn't need o
n basic applications. At the same time, they could not get sophisticated suppor
t services on some of Microsoft's newly introduced line of highly technical adva
nced systems, even if they were willing to pay extra.
Because of all this factors it was clear that Microsoft s PSS Division needed a
comprehensive and flexible support service. Bill Gates advocated that new appr
oach was needed and that company was ready to invest in the development of its s
upport services. He expected innovative solution about this problem.
2. Based upon the guidelines that senior management has provided to Trish May, w
hat product support strategy has Microsoft envisioned?
At first development of an overall strategy for support services were needed,
that would be simple enough to understand, communicate, and execute. Second, t
hey had to address several tactical concerns such as when and how to charge for
these services.
Early on in their analyses, the task force hit upon the idea of using a matri
x to summarize the various service offerings. Members referred to it as the Mic
rosoft Support Network 1.0.
This was an innovative approach to the customer support problem that Microsof
t faced. The concept of a service-offering matrix received enthusiastic and univ
ersal approval among Microsoft managers, but there was widespread disagreement o
ver the make-up of the rows, columns, and elements, because there were some diff
erent ways available for its construction.
3. How should the Microsoft Support Network 1.0 matrix be structured in terms of
rows and columns?
The rows of the matrix would consist of major service groupings, while the co
lumns would capture the differences in those services across product or customer
segment categories. In turn, each element in the matrix would describe a spec
ific service offering and include a fee structure. To avoid customer confusion
, the group concluded that 4 rows and 4 columns should be the largest size of th
e matrix; however, no research had been done to confirm this.
 As was mentioned above there was disagreement about how to construct the rows
and columns of the matrix. There were some different approaches: Problem-Based
Service Rows, Responsiveness-Based Service Rows, Product Category Columns and Cu
stomer Segment Columns.
Alternative #1: Problem-Based Services x Product Categories
Alternative #2: Problem-Based Services x Customer Segments
Alternative #3: Responsiveness-Based Services x Product Categories
Alternative #4: Responsiveness-Based Services x Customer Segments
4. What implementation problems should PSS managers anticipate? How can PSS man
agers successfully overcome them?
Industry pundits speculated that it would be impossible to eliminate "free" I
nstallation & Start-Up service on application, PC operating systems, and develop
er products. Customers would interpret "fees" for this period as an unethical w
ay for software vendors to "pad" their profits. Many would wonder if suppliers
deliberately made their software difficult to use so that customers would have n
o choice but to buy service. Managers would have a more difficult time designi
ng Usage & Productivity assistance. While service engineers could address most
problems associated with application software at a relatively low cost, they wou
ld incur significant costs for PC operating systems, development products, and h
ardware problems. In addition, problems that occurred after the first 90-days o
f ownership were particularly costly. Systems Integration and Customized suppor
t services would be quite expensive to deliver.
There are two solutions about this issue first is to include systems integrat
ion and customized support as standard and cover their costs via a hefty price pr
emium on software or sell it as an option at a significant fee.
If services were offered as a function of responsiveness, managers would have
an easier time making fee decisions. They could offer Standard Support for fre
e on an unlimited basis for desktop applications. At the same time, they would
probably have to charge personal operating systems, hardware, and development pr
oducts owners a fee after 90-days because such usage and productivity problems w
ere often quite costly. They would also charge a significant fee for Priority a
nd Premier Support due to staffing requirements.
The task force had to make a series of intriguing decisions concerning what s
ervices "not to offer". Given that most applications and PC operating systems s
oftware was being "pre-installed" by original equipment manufacturers (e.g., IBM
, Compaq, Dell), some managers argued that installation and start-up problems sh
ould be handled by those firms. At the same time, some task force members argu
ed that local computer dealers should be asked to handle basic usage problems, p
articularly those that occurred within 90-days of purchase. As for the high-end
services, the firm would have to make some difficult choices.
The task force would also have to determine how to charge customers for suppo
rt services, particularly those provided over the phone. Competitors were relyin
g upon a variety of approaches. Some sent an invoice following the call. Other
s charged via 900# or had service engineers take credit card numbers. Alternati
vely, some competitors either included in software packages or sold separately "
incident coupons" that entitled the bearer to make a number of pre-specified tec
hnical support calls. Adobe Corporation took a different approach. It provided
customers with "service credits" as a function of the dollar value of Adobe sof
tware that they purchased. The more software purchased the more credits receive
d. When needed, the customer could redeem service credits for technical support
.
 Given the large size of many developers and corporate accounts, PSS mana
gers would have to decide how many individuals within a customer firm would be e
ligible to receive service under a technical support contract. Furthermore, mana
gers would have to designate specific developer programmers and corporate MIS pe
rsonnel as points of contact for service initiatives. For international companies,
access from specific geographic regions would also have to be specified.
Communicating the details of the Microsoft Support Network 1.0 would be
another challenge for Microsoft. Company wanted it s customers to be delighted in
their ability to choose from a variety of high-end services while concluding, "
I don't have to pay for what I don't need!" It was not at all clear how these c
ommunications goals would be achieved.