Effectively managing the peaks and valleys in field service demand is one of the greatest challenges facing managers and executives across a broad array of market segments says Michael Blumberg, President & CEO of Blumberg Advisory Group, Inc. ...
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Effectively managing the peaks and valleys in field service demand is one of the greatest challenges facing managers and executives across a broad array of market segments says Michael Blumberg, President & CEO of Blumberg Advisory Group, Inc. Here, we publish the first part of extracts from his White Paper, "The Variable Workforce Model", on how the momentum for freelance service technicians is building and potential solutions for managing them.
The Field Service Dilemma
Typically, temporary or contingent labour was utilised to support periods of peak demand: when there was a spike in new product sales or when brought about by seasonal issues. For example, a surge in installations or refreshes resulting from new product purchases required that the service organisation employ additional field service engineers (FSEs) to complete the installations in a timely manner.
However, relying on a temporary workforce to handle emergency maintenance was historically viewed as anathema to service executives within companies that sell equipment. This was because the FSEs were typically viewed as an extension of the sales team and thus vital to keeping the equipment operating and the customer happy. The conventional wisdom was that if equipment failed to operate properly then the customer would become irate, blame the manufacturer or reseller, and stop buying their products.
FSEs were considered to uniquely possess the specialised knowledge and skills required to resolve emergency issues. These skills took years to acquire and were difficult to replicate. How could emergency service be trusted to temporary employees with limited knowledge or experience with the product? As a result, peaks in demand for emergency service were typically handled by asking FSEs to work overtime hours.
Setting the groundwork for the variable workforce
With margins declining, it was difficult for service providers to justify hiring additional personnel.
In the 1990s outsourcing of non-core activities became popular with a number of prominent original equipment manufacturers such as Cisco, NetApp, IBM, and HP who outsourced non-strategic field service functions to Third Party Maintenance companies.
The recessions of 2001 and 2008 led to layoffs and hiring freezes across a wide array of industries. Service providers could not risk having situations where field service engineers were not available to support customers’ requests. Rather than keep non-essential workers on the payroll, companies realised they could reduce operating expenses and lower overhead costs by hiring field service engineers on a per call basis; as consultants or freelancers.
The freelance model has now become main stream within the field service industry. It gives service providers the ability to manage field service delivery through a variable workforce model. Maintaining a field service workforce on a full-time basis represents a short-term, fixed cost for service providers. With field service experiencing its own peaks and valleys in demand, a service provider can now convert a short-term fixed cost into a variable expense.
Options for building a variable workforce
[quote float="right"]Field service companies have a number of options available to them for obtaining variable field service labour.
- Implement Master Service Agreement (MSA) with one or more companies. This usually requires the OEM hand-off all on-site service requests to the Field Service Organisation who is responsible for managing their own workforce. While this is one of the simplest ways to obtain access to a contingent labour force, it is often the most expensive; particularly if the FSO is using its own workforce to perform the on-site request. This is because the FSO’s price per service call usually takes into account direct labour costs, plus parts, overhead, risk and profit.
Furthermore, the FSO may not be able to provide their client with full visibility, accountability and control into the service delivery process. Basically, the client is alerted to when a call is dispatched and when it is completed, not to what occurs in between.
- Manage subcontractors on their own. Another option is for a company to build its own variable workforce through a “Direct-To-Tech” approach. This requires that a company hire independent contractors either directly or through a staffing company, or they can reclassify existing full time FSEs as independents. Reclassification could create problems from a legal and financial perspective.[quote float="left"]The Direct-To-Tech model can be very successful but only if the nature of the work is truly independent contracting, not a second class worker.
Companies who don’t approach this challenge strategically often end up with ad hoc systems and processes that are cumbersome and unscalable. All too often, companies end up blaming the subcontracted or freelance workforce when the real root cause of the issue is a lack of robust and scalable systems that lead to mismanagement.
- Adopt a “Sharing Economy” model. Companies who are willing and able to manage teams of individual workers can turn to a sharing economy model. In this scenario, a company would use an Internet platform, provided by a 3rd party technology vendor, to recruit, on-board, train, dispatch, manage, and pay individual contractors. There are substantial cost savings to a company who is willing to pursue this course of action. Improvements in service quality and productivity are also possible .Freelance contractors are typically more engaged and motivated since their income is directly proportional to the quality of work performed and number of assignments they accept. More importantly, it avoids the risk of misclassifying workers. Freelancers who make themselves available through this type of labour model have made the decision to become a small business. In their work as independent contractors they have the ability to decide how many companies they contract with and which types of jobs they select, how and when they go about performing their work and how to best use their own tools and equipment.
All things being equal, we believe the sharing economy model offers the optimal solution for obtaining access to a variable workforce. This is provided the company using this model is prepared to engage in the necessary leg work required to manage teams of independent contractors through a Freelance Management System (FMS) platform.
Watch out for Part 2 of this White Paper. Download the version here
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President and CEO of the Blumberg Group, Michael Blumberg, takes a detailed look at the tablet repair market...
President and CEO of the Blumberg Group, Michael Blumberg, takes a detailed look at the tablet repair market...
Adoption of tablet computers among consumer and enterprise customers is growing at an incredible rate across the globe. Though the concept of tablet computing was introduced unsuccessfully in the early 2000s with the Microsoft Tablet Computer, the launch of the original iPad in 2010 ushered in the boom era in which we’re currently living. Computer industry giants and young upstarts alike design and sell tablets in an ever-increasing variety of shapes and sizes, with features ranging from basic touchscreen functionality to complex integrated networks of sensors and input/output options, and at a wide variety of prices.
Issues involved range from front-line customer support challenges, to costly testing, screening processes to the geographic distribution of quality repair facilities.
In a new market research study of OEMs, Retailers and Wireless Carriers in the tablet repair market; respondents highlighted key factors in selecting a tablet repair vendor. In this feature we discuss how the booming tablet market makes choosing a 3rd Party Reverse Logistics vendor critical to increasing associated forward and reverse logistics velocities and cost efficiencies, which ultimately affect the bottom line.
We emphasise the market and benefit of “optimised” screening and cleaning for retailers and wireless carriers (with generous customer returns policies), as well as the manner by which functional testing can augment the speed and quality of the return, repair, and/or replacement, of tablets. Additionally, we describe the characteristics of the ideal tablet 3rd Party Service Provider (3PSP) and the business benefits with this approach. Finally, we take a look at the multi-tablet testing system, global facilities and IT infrastructure of one particular vendor, CTDI, illustrates some of these concepts. New Developments in Tablet Computer Repair
The tablet computer market
The Tablet Computer market is young, already large, and very much still growing. Even in North America, which leads the world in early adoption of tablets, the market is far from saturated. Tablet computer shipments in North America will have nearly doubled between 2012 and 2014, to almost 120 million units shipped this year. North American Tablet Installed Base is on a similar trajectory, doubling from 104 million in ’12 to a projected 220 million this year. Continued rapid growth is projected over the next several years, as well, with the installed base projected to double again to more than 320 million units in 2017.
We can trace this exponential growth to a number of trends in the consumer and enterprise spaces, including the continued evolution of both technology and usage habits away from desktop machines and towards mobile devices. As tablets become cheaper, better and faster, users are replacing ageing PCs with sleek new slates. This trend is now commonly referred to as the dawning of the “Post-PC era.” New Developments in Tablet Computer Repair
This trend is now commonly referred to as the dawning of the “Post-PC era.” New Developments in Tablet Computer Repair
Current support models
Organisations involved in the tablet support market are first and foremost affected by the high return rate currently associated with retail sales. Generous return policies often allow buyers 15-30 days to return a tablet even after opening the box and using the device. As such, buyers’ remorse has become a significant cause of return. Often times tablets returned due to buyers’ remorse exhibit little or no defects - however small - but become liabilities due to insufficient reverse logistics supply chains. This is because these units still need to be processed so that the seller (i.e., retailer, carrier, OEM) recovers maximum value.
Another problem with the current tablet support market is a lack of front-end screening and diagnostics to resolve end-users technical issues and challenges with the devices. Sufficient telephone-based or remote screening of tablet problems would greatly reduce the number of units returned through the reverse logistics supply chain, often as easily as walking the end-user through some simple knowledge-acquisition to “fix” their device problems. Similarly, not enough troubleshooting occurs post-return, before the units are shipped back to the manufacturers or their authorised repair providers. Roughly, consumers return 5% to 10% of all new tablets sold in North America, with retailers usually sending those units directly back to the manufacturers without screening or diagnosing the units themselves.
Of these returns, some 30 to 40% are classified No Fault Found (NFF), and another 40% are Cosmetic Repair. The remaining 20% or so suffer from cracked screen and broken board issues that require more costly repairs. However, the repair yield on defective units is typically in the range of 50% to 60%.
For some OEMs, this cost is too great, and results in selling the defective components for scrap value. In other words, more than three-quarters of returned tablets are either fully functional or in need of only minor, topical fixes before being repackaged and placed back in finished goods inventory. But almost all of these units are immediately sent back to a 3PSP where they are screened, tested, cleaned, refurbished, repackaged and then resold. Even when it comes to devices covered under warranty, consumers send their defective devices through the same reverse logistics supply chain in exchange for a new, replacement device. These activities, especially those related to testing & screening, have inherent challenges. For the most part, they are largely an inefficient, in terms of both cost and time as they are often extremely labor intensive and may not take advantage of advanced technology for automating the process.
Furthermore, the time spent transporting tablets to and from centralised return and facilities adds to the overall inefficiencies when processing returned units.
The optimal solutions is to move towards a regionalised reverse logistics model with several facilities located strategically throughout a region (e.g., North America, Europe, etc.) for screen, clean, and repair. This offers the shortest time between out-of-service tablets and those either returned and in use again; remarketed as is; utilised for maintenance replacement; sold as a refurbished unit or for reclamation, etc. Very few vendors operate multiple facilities across the world, let alone high volume regions like North America. As such, the screening and repair process suffers from reverse logistics inefficiencies based largely on too many devices having to travel too far for problems that could be solved locally.
New Developments in Tablet Computer Repair
Volume of tablet returns is expected to rise over the next several years. In turn, the volume of devices needing test, screen, and repair activities will also increase. For 2013, tablet returns in North America were estimated between 7.6-14.3 million units. By 2015 the volume of returns could rise as high as 20 million units. Those numbers will continue to increase in the near-term following 2015. New Developments in Tablet Computer Repair
Alternative solutions pros & cons
Clearly the tablet repair market operates inefficiently. As things stand now, everyone loses: retailers, manufacturers, service providers and consumers alike. A variety of alternative solutions to the current methodology offer benefits, but these are not without their downsides as well.
Improved front-end diagnostics is the first line of defence that could aid efficiencies. Diagnosing the problem with a tablet before its returned by the consumer - and subsequently returned to the manufacturer by the retailer - would significantly reduce the number of devices needlessly returned, tested, and repaired. The problem here lies with both retailers’ and consumers’ attitudes towards adding a layer of remote support. Many retailers currently offer a “No Questions Asked” return period of 15-30 days on tablet computers. Consumers like this policy because it gives them the chance to try a new device in their real life workflow with the safety net of getting their money back should buyers’ remorse set in. Retailers, of course, are reluctant to do anything that might drive their customers away to a competitor.
This undoubtedly includes revoking existing policies. Moreover, adding a layer of remote diagnostic support will introduce an additional cost to retailers’ tablet sales operations. Even when it comes to in-warranty repairs, manufacturers are more likely to issue an advanced exchange unit then attempt to diagnose the problem remotely. The defective unit is then sent back through the reverse logistics supply chain and added to the costs and liability associated with warranty support.
As suggested earlier, a second way to improve reverse logistics efficiencies is to move the return & repair facilities closer to the customer/retailer through a regional service model. Many 3PSPs currently offer only one, centralised US-based repair facilities. This practice directly contributes to inefficiencies in the reverse logistics supply chain - i.e. Increase time and fuel costs associated with shipping tablets great distances for testing and screening work, and then possibly on to other facilities for refurbishment and liquidation. Performing critical reverse logistic functions in strategically located facilities throughout the United States would cut transit time, resulting in increased velocity associated with turning distressed inventory from a liability into an asset. Of course, the downside associated with this solution is cost. Opening additional facilities on American soil, if ones do not exist already, is costly, both on its own and as compared to running offshore operations.
More effective device testing and screening prior to repair is a potentially viable alternative solution. Various methods of testing exist and, again, each carries with it pros and cons: New Developments in Tablet Computer Repair
Inexpensive and fast to implement but subject to human error and costly in the long run.
Automated but reliant on device/API/OS-specific software wrappers. New tests may need to be created with new releases of a device, an API or OS.
BOARD LEVEL TESTING:
Testing the devices in developer or engineering boot mode. This process can be automated. The problem is that it does not address the problems with the device from an end-user perspective and, as such, real-world functionality problems may be missed.
OPEN UNIT TESTING:
The device’s screen and cover need to be removed in order to test the board on a bed of nails. This breaks the integrity of the tablet’s seal and adds time to the process, resulting in increased cost.
EMBEDDED DIAGNOSTIC TEST:
This type of testing can query the hardware, but not stress its functionality.
AUTOMATED TEST EQUIPMENT (ATE) OR “BED OF NAILS” TESTING:
This type of testing, leveraging the investments the OEM or their contract manufacturers make in end-of-line manufacturing testing, is costly, difficult to duplicate and locate regionally, and may require considerable labor in terms of the finished product and the multiple stages of testing implemented. It is also generally slower, due to it being an end-of-line test, and geared for manufacturing facilities, not repair facilities. Furthermore, Bed of Nails tests the connectivity between components as opposed to their functionality.
As evidenced, current test methods for tablets possess significant shortcomings, though testing on the whole unit does offer efficiency improvement over the “just send it back” handling of returned tablets. New Developments in Tablet Computer Repair
LIQUIDATION IS ANOTHER OPTION.
Liquidating returned tablets for their asset recovery value may seem like the most expedient approach for extracting value out of returned devices. However, it is a money-losing proposition in the long run given the high rate of NFF and cosmetic repairs, combined with the increasing volumes in the industry. Furthermore, it does not address issues associated with defective or failed components. As such, the manufacturer and its 3PSPs loose valuable intelligence that can be utilized to improve the design and/or engineering of tablet devices. Though tablet liquidators persist, this approach in the current market will have limited benefits as volumes increase and consumers hold onto their devices for an extended length of time. New Developments in Tablet Computer Repair.
Optimised test & screening solution
An optimised screening system can maximise efficiencies while avoiding many of the shortcomings exhibited by the aforementioned testing methods. Screening systems able to test 10 or more tablets at a time can offer increase speed and reduce costs associated with testing. Consistency of process and results will also rise thanks to the use of automated and semi-automated testing systems. Thus, “Screen and Clean” promotes the cost effective recovery of good units with minor cosmetic refurbishment to be processed for resale. Additionally, they can be used as maintenance replacements, or for the dispositioning of products into other markets at the best return for the retailer.
Functional testing of device circuits may take the form of “parametric” testing, which leads to an even greater level of reliability and quality of results.
A regionalised approach to testing, screening, and cleaning the units can also speed up the reverse logistics flow. Performing these functions in strategically located facilities in high volume areas within miles of major metropolitan areas will improve efficiencies as described in Section 4 above. Authorising these facilities to handle key activities like repair, refurbishment, and liquidation will reduce costs for retailers while improving asset recovery values and the speed at which tablets are returned back into consumers’ hands. This increased efficiency has the added value of making retailers’ extended warranty plans more economically viable. Furthermore, the regional model described here will also fulfil OEM's requirement to minimise costs and deliver superior customer services as measured by repair turn-around time. New Developments in Tablet Computer Repair
Vendor Selection Criteria
We surveyed a cross-section of OEMs, Retailers and Wireless Carriers regarding their needs and attitudes towards the tablet repair market. The majority of respondents surveyed indicated that their customers are required to mail in defective units to an Authorised 3rd Party Service Provider (3PSP). Many of these 3SPSs are managed by OEMs and/or their subsidiaries, speaking to the OEM lock on the still-nascent tablet repair industry.
Survey respondents spoke to a number of criteria important in choosing and sticking with a vendor. The most important factors in choosing a vendor, ranked in order of priority, are:
- QUALITY OF REPAIRS
- COMMITMENT TO QUALITY METRICS
- ABILITY TO MEET TURNAROUND TIME (TAT)
- REQUIREMENTS (2-5 DAYS)
- WILLING TO INVEST IN TRAINING
- QUALITY & THOROUGHNESS OF REPORTS
- QUALITY OF IT INFRASTRUCTURE
Clearly repair quality is paramount in vendor selection. Qualified vendors must be able to meet OEM specifications and otherwise offer consistently high quality test and repair services. Long-standing, standardised processes across a vendor’s network demonstrate commitment to quality metrics.
With turnaround time being ranked second in priority, demonstrated high-velocity forward and reverse logistics is also a key criterion in choosing a vendor. Vendors who operate multiple facilities in high-volume regions and those who offer innovative time-saving services, such as in-field warranty services, excel at meeting and surpassing TAT requirements at scale. New Developments in Tablet Computer Repair 13
Also indicated are the quality of reports and IT infrastructure. Tablets have become highly complex pieces of equipment, and a vendor’s diagnostic system must be able to test many components, sensors and functions (e.g. Microphone and speaker, Cellular and WiFi connectivity, Accelerometer / Gyroscope / Magnetometer, and so on). The vendor must also offer a thorough and reliable methodology for reporting results in both high-level “Pass/Fail” and granular detail. New Developments in Tablet Computer Repair
Vendor spotlight – CTDI
One vendor whom we’ve worked with, and regard as a highly capable and qualified service provider, is CTDI. This company excels in all areas of tablet diagnosis and repair, including the specific factors identified as critical by our survey respondents. CTDI brings 39 years of technical expertise, innovation in service models, and global testing and repair capabilities to the market. They have the ability to test more than 75,000 unique model types and offer the most comprehensive repair service portfolio in the world.
CTDI’s NightHawk Test System, an advanced multi-unit tablet tester is a prime example of the company’s commitment to technological innovation in a rapidly evolving sector. NightHawk can test 10 tablets simultaneously, leveraging innovations like front-loading tablet trays that greatly increase test capacity and daily productivity. With NightHawk, CTDI has the flexibility to keep pace with the latest tablet models, operating systems and APIs while also leveraging extreme efficiencies that keep reverse logistics velocities high. NightHawk performs fully functional testing of tablets utilising CTDI designed and developed Apps tailored to access and utilise the Tablet API’s.
The purpose of these applications is to simulate the end-users tablet experience and will test the following tablet functionality:
- Touchscreen, Buttons, LEDs
- System Information
CTDI’s ability to offer fast, high quality screening and diagnosis of multiple brands and models of tablet devices couples with their OEM authorized repair and excess asset management services to provide a comprehensive portfolio of service offerings. CTDI employs over 350 engineers to develop testing for a variety of OEM technologies, ensuring ongoing innovation to keep pace with this fast-moving market.
CTDI has a network of 69 facilities operating in 15 countries, with 48 facilities in the US alone. This mature, global network allows CTDI to offer high velocity reverse logistics by cutting down on transit time to and from their facilities. The quality of CTDI’s infrastructure is outstanding, and efficiencies are further increased by way of CTDI’s innovative, scalable Web-based testing technology. The company’s proprietary Warehouse Management System (WMS) and eBusiness tools also allow customers to enter and track orders online 24/7. In summary, CTDIs’ state of the art technology, world class processes, and global presence allow for high speed, high quality in region repairs which supports customers’ demands New Developments in Tablet Computer Repair for immediate or very short interval repair or replacement as well as meets the OEMs’ requirements to minimise costs. New Developments in Tablet Computer Repair
The rapid growth of the tablet computer industry has created a demand for a highly efficient approach to diagnosing and repairing returned units. Our research findings show that a majority of tablet computer suppliers (e.g., OEMs, Retailers, and Carriers) waste time and money due to multiple issues in the current flow of reverse logistics. Specifically, too many devices are needlessly returned to the manufacturers’ 3PSP where time and effort is spent on testing the devices instead of screening via phone or at the retailer, and too many devices have to travel too far a distance for quality diagnosis and repair.
Factors ranking high on the list of criteria included quality of repairs, ability to meet turnaround time, willingness to invest in R&D and training, and quality of reports and IT infrastructure.
As analysed in the vendor spotlight, CTDI is one vendor who meets all of these criteria with their automated multi-unit test systems and deep roster of highly trained technicians and innovative engineering talent. CTDI is also uniquely positioned to leverage their global network of repair facilities, technical competencies, and logistics support services to increase reverse logistics velocities, add value, and drive costs down. Given the huge potential for cost savings, risk protection, and revenue gains, companies should seriously consider building a business case and ROI justification for investment in solution such as the one offered by CTDI. New Developments in Tablet Computer Repair
Resource Type: White Paper Title: 6 things you need to know when purchasing Service Lifecycle Management software About: Based on independent research Michael Blumberg provides critical information for anyone who is preparing to purchase Service...
Resource Type: White Paper
Title: 6 things you need to know when purchasing Service Lifecycle Management software
About: Based on independent research Michael Blumberg provides critical information for anyone who is preparing to purchase Service Lifecycle Management (or Service Management) software.
Download: Download the white paper by clicking here.
As President of the Blumberg Advisory Group, Michael R Blumberg is widely acknowledged as one of the world’s leading consultants across field service, aftermarket services and reverse logistics. He is also a prolific commentator on industry and an accomplished author of many white papers. Field Service News is pleased to bring a selection of his white papers to you. The first of these is based on an exclusive research conducted by the Blumberg Advisory Group which was a yearlong market research study sponsored by the CSDP Corporation which looked at the experiences of hundreds of companies when purchasing Service Lifecycle Management (SLM) software.
As Jerry A Edinger, CEO of CSDP corporation comments “An ideal SLM solution puts terms and conditions of the contract at the heart of the system and builds on that system with solid experience in service delivery.” “There are many Niche players in the SLM space. Decades of experience and trusting your provider is key to everyone’s success. We treat all of our clients as a trusted partner. By doing this, it creates a Win-Win for everyone” In this white paper “6 things you need to know when purchasing Service Lifecycle Management software” Blumberg distils the knowledge found in this research into six key findings for organisations looking purchase enterprise standard service software. These are:
What to expect in the sales process?
Whilst you are almost certainly going to be doing a lot of research prior to even speaking with any software providers (like reading this feature and then downloading the white paper for further detail) when you do reach the point where you are contacting providers what can you expect? Well first of all most software provider’s will give you a top level demonstration of their software either during your initial call or soon after. Typically this is just meant to give you an idea of how the software works and a more detailed, a second demonstration, customised to your own specific company’s requirements will follow. Often the software provider will request that you fill out a demo prep form ahead of the next demonstration so they can tailor the demo to your needs.
What to look for in a Software Lifecycle Management software vendor?
The service management software market is a crowded niche, there are a number of software vendors available to you and understanding the different offerings can be a confusing if not overwhelming. In this section Blumberg looks at what were the common features that companies sought from software providers. The top three factors were software feature and functionality, technical competency of vendor, and vendor flexibility, with all of the respondents rating these factors as either the most important or second most important factor they considered when purchasing service software.
How important is price?
Interestingly price is far from the dominant factor when purchasing service software with only a quarter of companies indicating that price was the most important factor when purchasing SLM software. In fact over half of respondents selected a software solution that was somewhere in the middle in terms of cost.
How important is the role of discounts in the buying decision?
As in many industries discounting is reasonably standard and common place when pricing software so there is often room for negotiation in the purchasing process. Blumberg reveals that 83% of those who purchased an enterprise software solution in the past 24 months received a discount and 89% of those planning to purchase in the next 24 months expect a discount. However, remember to be wary of software providers who drop their price too much without concession. The lower price may just come to haunt you when it comes to implementation.
CRM, ERP or best of breed service software?
For service lifecycle management software there are often three choices; buy your service software form your CRM provider, buy from your ERP provider or choose a best of breed service software provider. Whilst it may be easier to go with the CRM or ERP providers who you already know, best of breed providers specialise in service and their products are designed to contain all the functional requirements to support the full service lifecycle management process in an organisation.
What happens after the sale?
Perhaps the most important aspect of the white paper, understanding what you can expect after you have purchased the software is of course an essential piece of insight that will shape your decision on choosing the right vendor. It is important to understand exactly what the vendor’s expectation are of you during the implementation as well as understand the level of resources the vendor will commit to you during the implementation and for post implementation support. In this final section of the white paper Blumberg provides some excellent guidance on getting this detail correct. Buying any kind of software can be a daunting, this is magnified when it is for business and when it comes to mission critical software such as Service Lifecycle Management software the stakes are even higher. Understanding the buying process is an important element of getting the right product, at the right price, with the right level of implementation support that your company needs. Drawing on the insight of hundreds who have been through the process this white paper is therefore a great resource for those considering SLM software.