Service Code Governance Is Broken. Here’s How to Fix It

You wouldn’t let five people describe the same job five different ways, yet that’s exactly what happens without proper service code governance.

If you’ve ever found multiple codes for the same task, with different vendors, prices, and unclear scopes, you’re not alone. For industrial and asset-intensive sectors, poor service code governance leads to uncontrolled spending, audit nightmares, and ERP chaos.

Let’s break down why managing service codes is 10x harder than materials and what you can do to fix it.

The 6 Core Reasons Service Code Governance Is More Complex Than Material Codes

Factor	Material Codes	Service Codes
Tangibility	Physical, measurable	Intangible, variable
Description standardization	Easier to template	Hard to scope accurately
Pricing	Fixed, known	Varies with execution
Duplication risk	Moderate	Extremely high
Approval process	Typically centralized	Often decentralized
Vendor dependency	Low	High, service-defined

1. Services Are Defined by Scope, Not Object

Unlike a physical part, services are defined by what needs to be done, not by a SKU. This means different departments often create overlapping codes like:

• “Routine Inspection – Pumps”
• “Pump Health Audit”
• “Quarterly Pump Checkup”

All three could mean the same thing or not. Without proper governance, this leads to redundancy and confusion.

2. No Visual Reference = Higher Ambiguity

With materials, teams can refer to a picture, drawing, or sample. Services? You’re relying on subjective description and historical vendor quotes.

3. Services Are Prone to Tailoring

Unlike materials, services are often tailored to specific sites or conditions. For example, offshore valve greasing in Qatar will differ from onshore greasing in Houston due to environment, tools, and compliance.

4. Stakeholders Are Fragmented

Material masters are often handled by the supply chain team. Service codes, however, involve:

• Engineering
• Maintenance
• Finance
• Procurement
• Local site managers

That’s a lot of cooks in the kitchen.

5. Complex Approvals and SLA Layers

A service code often needs technical vetting, scope sign-off, SLA linkage, and rate agreement. This can take weeks if workflows aren’t defined.

6. Service Codes Get Cloned Rampantly

Because it’s easier to clone an existing service than search for an appropriate one, duplicates proliferate. This kills data quality and makes spend analysis near-impossible.

Service Code Creation vs. Material Code Standardization

Case Study

One utility company we worked with had over 180,000 service codes in SAP—40% of them redundant.

How?

• Every regional team created their own codes.
• No naming conventions.
• No deduplication controls.
• Same scope, five different vendors, five different rates.

Result:

• Overspending on contracts
• Lack of visibility into performance
• Inability to negotiate consolidated rates

Within 4 months of implementing service code governance workflows and AI-based deduplication, they reduced their service master by 60%.

What Proper Service Code Governance Looks Like

Done right, service code governance creates clarity, compliance, and cost savings. Here’s what it involves:

1. Domain-Based Templates

Standard templates by domain (e.g., Mechanical, Electrical, Civil) ensure consistency in scope definition.

2. Scope Libraries

Use pre-approved scope libraries to define what a service includes, with parameters for:

• Tools
• Safety
• Man-hours
• Deliverables

3. Approval Workflows

Role-based governance where engineering, maintenance, and procurement sign off collaboratively.

4. Deduplication Engines

Use AI/ML tools to identify and merge similar services. This avoids clones and boosts visibility.

5. Rate Normalization

Centralize rate cards by service category. Apply logic based on:

• Man-hour benchmarks
• Regional costs
• Vendor tiers

6. Service-Vendor Linkage

Every service code must be linked to an approved vendor and SLA. No standalone codes.

Key Benefits of Getting It Right

When you invest in proper governance:

• Reduced Procurement Spend (10–20% savings)
• Improved SLA Compliance
• Better Vendor Performance Tracking
• Streamlined Audits & Reporting
• Cleaner ERP Migration or Integration

And most importantly, less chaos.

Why Most ERP Implementations Fail at Service Governance

ERPs like SAP or Oracle are great at handling structured material data. But when it comes to services, they rely heavily on human process discipline.

Without governance:

• Service codes balloon uncontrollably
• Workflows break down
• Reporting becomes meaningless

That’s why a platform like PROSOL (which integrates with your ERP and is available on the SAP Store) is a game-changer. It automatically enforces templates, manages approvals, deduplicates entries, and links vendors.

FAQs About Service Code Governance

1. What is service code governance?

Service code governance is the process of standardizing, approving, and managing service master data to avoid duplication, scope mismatch, or overspending.

2. How is it different from material code governance?

Material codes manage tangible items. Service codes handle intangible tasks—making them harder to define, control, and track.

3. How many service codes should a company have?

Depends on industry and operations, but duplication often inflates counts by 30–50%. A deduplication audit can help reduce this.

4. Can service code governance be automated?

Yes. With the right tools like PROSOL, you can enforce templates, auto-suggest scopes, and deduplicate in real time.

5. What’s the ROI of fixing service code governance?

Typical clients save 10–20% on annual service spend, improve compliance, and simplify vendor negotiations.

Final Thought:

If you’re serious about cutting costs, improving procurement agility, and ensuring compliance, start with the one thing no one talks about enough: your service master.