The Secret to Selling More Service Contracts

This article first appeared in Field Service News on May 28, 2018

Field service executives often face challenges when it comes to generating additional service revenue for their companies.

They often face resistance from customers as evidenced by low contract attachment rates. The natural tendency is to blame the price as the reasons why customers aren’t purchasing more services contracts.

After all, this is the feedback they received from their sales teams and from the customers.

Being logical and rational business people, field service executives try to solve the problem by lowering the price, after all, if the customer says that the price is too high, it must be the reason why they are not buying, right?

To quote, the popular song by George and Ira Gershwin, “It ain’t necessarily so!”. While price may be a factor in the purchase decision, seldom is price the only reason why customers don’t purchase service contracts.

In market research studies that I have conducted for clients in a wide array of technology service markets, I have found that price is often low on the list of criteria that end-users consider when selecting and evaluating service providers. Criteria such as quality of service, knowledge and skill of service personnel, breadth of service offering, and vendor’s knowledge of their business are perceived by customers to have higher importance than price alone.

The truth is “your price is too high” will always be an objection that customers provide when they cannot justify the value of a service contract.

This is because they have no way of logically defending the value of the service being purchased. Stated another way; they are not able to differentiate the benefits of service contracts from time and materials service. The problem is that Field Service Organizations (FSOs) often attempt to sell service contracts without providing justification about why a service contract is better than simply paying for service on a time and materials basis.

A common saying among sales professionals is that customers buy emotionally and then defend their purchases logically. All too often, FSOs provide little emotional reason why a customer should purchase as service contract as opposed to T & M and even less logical supporting evidence about why a service contract is more valuable.

To achieve high attachment rates, FSOs must be able to articulate the value of their service offerings to customers as well as to their own salespeople. The value proposition must impact customers’ emotionally by addressing their fears, worries, doubts, and concerns about the impact of service or the lack thereof on their operations.

For example, fear of excessive equipment downtime, lost revenue, low machine utilization levels, or the possibility of quality defects. Of course, the FSO needs to provide logical supporting evidence why their service offering will eliminate these issues.

FSOs achieve this results by articulating, either through a sales conversation or marketing collateral, what’s included in a service contract that is not included in time & materials. This requires they do an effective job in defining the coverage, entitlements and resources available to the customer through a service contract.

They must be able to answer the customer primary question “What’s in it for me?”. If the only difference between a service contract and time & materials is that the customer can prepay for service, then there is no emotional value or logical contrast. However, if the service contract provides a preferred level of service (e.g., 4-hour response time, 99.9% uptime guarantee, 7 by 24-hour coverage, parts, etc.) or preferred price structure then the customer is presented with some real value and contrast.

Ultimately, FSOs must be able to help customers defend their purchase of service contracts. They do this by offering more value in a service contract than the customer could possibly receive through time and materials services.

Fundamentally, FSOs can deliver better service to customers under contract.

This is because the contacts provide data about the installed base and service demand requirements. As a result, FSOS can anticipate service events and be more effective at planning and allocating service resources. This, in turn, makes it possible for FSOs to provide a guaranteed level of service to their customers.

Honesty is always the best policy especially when it is supported by a guarantee and exceptional service!

Do you have any comments or questions?  Let us know by posting below !!

The Role of Data in the Servitization Journey

Data is becoming more important as we consider one of the most significant trends impacting the technology industry, "Servitization".

Several years ago, Blumberg Advisory Group worked with a company that provided hardware maintenance on film based photo labs found in big box retail outlets. Their service revenues and profits were declining because digital photography was replacing the need for film based photo labs. Although the client offered a new digital based technology to replace film based photo-labs, these systems were not being installed at the same rate as the older systems were being phased out.   Digital systems didn’t require as much service and support. They were less complex and easier to maintain than their film-based cousins.

Our client required a new strategy to offset their declining revenues and profits.  They needed a solution urgently or the parent company would shut down this division.  If we did not know the importance of data or the concept of managing the capability to serve, we would have probably recommended that the client lay off some of its field service workforce to reduce costs and improve profits.  This could have led to a downward spiral of layoffs, company morale and growth.

So what steps did we take?  We analyzed their data.  We reviewed their field engineer utilization rates, customer response times, field engineer skill levels, and the equipment on customers’ premises.  In conclusion, we found that their field engineers were not being completely utilized.  We found out that these engineers had further knowledge and expertise in supporting other types of equipment found on the customer site.  They were typically able to respond to a customer request within four hours even though the guarantee was for eight.  

Based on our analysis, we recommended that they expand their service footprint to other types of equipment located on the customers’ premises, i.e. electronic cash registers and point of sale equipment.  We also recommended that they charge a premium price to customers who required faster (e.g., 4 hour) response time.  As a result, this client went from losing 20% of their profits per year to a 50% increase in new business within 24 months of implementing our recommendations.

Ultimately, the key to our client’s success lied within the data.  Data is becoming more important as we consider one of the most significant trends impacting the Technology Industry, “Servitization”.  This trend describes the transformation that many companies are undertaking as they move from primarily selling products to generating a sizable portion of revenue and profits from services.   Ultimately, the path toward Servitization leads companies toward offering anything as a service (XaaS).  In other words, their business has reached the stage of development where they are no longer selling products or solutions to their customers, but outcomes.   For example, instead of selling a copier machine they are selling their customer the right to use the machine to produce a certain number of copies over a specific period or time.

To deliver on this promise, the provider must not only have great people, process, and technology but access to data related in terms of machine condition and performance (e.g., alerts and notifications), parts availability, field engineer location and skill sets, diagnostics, etc.  With this data in hand, the provider can ensure resources are available when needed and that the customer receives the outcome it purchased.  The data is made available through technologies like the Internet of Things, Artificial Intelligence, Virtual Reality, etc.   Examples of companies that are along the servitization journey are Rolls Royce, ABB, Siemens, Kone, and General Electric. They have generated profitable income and know that a truly exceptional service business is built on four foundations – people, process, technology, and data.

Comments or questions? 

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Field Service Scheduling Software and What You Need to Know

Scheduling software has long been a foundational technology for field service companies allowing them to meet customer demands.

This article initially appeared in Field Service News – September 7, 2018

 

Michael Blumberg, President of the Blumberg Advisory Group lifts the lid on all of the key aspects of this crucial tool…

If you have spent any time in Field Service, you probably understand the importance of managing service delivery functions against key performance indicators (KPIs). Among the most critical KPIs in the Field Service Leaders track are First Time Fix (FTF), Service Level Agreement (SLA) Compliance or Onsite Response Time (ORT), and Mean Time to Repair (MTTR). These KPIs measure the effectiveness of a Field Service Organization (FSOs) in delivering quality service in a timely manner.

The inability to meet KPI targets may result in exponential costs, customer attrition and loss of revenue; whereas the ability to exceed customer expectations can result in customer appreciation followed by an increase in profit margins and sales. To effectively schedule/dispatch the right technician to arrive on time with the right parts and skillset plays a significant role in meeting these outcomes. This is definitely not a small feat for your typical FSO.

Scheduling and dispatching Field Service Engineers (FSE) poses a challenge for most FSOs, particularly those with more than 5 FSEs. The reason behind this is there are many variables and factors involved.

An FSO with only one or two FSEs and a few customers may not perceive scheduling to be a major challenge. The volume of service requests may be relatively low while the options of who, when and where to send them may be rather limited. Scheduling becomes more of a challenge as the volume of service requests (i.e., customers) and the number of FSEs increases.

Adding to this complexity are the business objectives and/or constraints an FSO must optimize to meet its scheduling requirements.

With additional constraints or objectives, the more difficult it becomes to produce a solid schedule. For example, if the objective is to only meet a response time commitment to the customer, then the decision is easy – assign the FSE who can arrive in a timely manner at the customer’s site.

If FTF, MTTR, and/or SLA Compliance targets are also part of the equation, it becomes even more difficult to produce that solid schedule. Adding a profit margin objective, high call volumes, multiple geographies, and a sizable pool of FSEs, the decision becomes even more overwhelming.

The reason why scheduling is so excruciating of a task is that there are numerous factors that an FSO would need to create and evaluate to determine the optimal assignment for each FSE.

This is a time-consuming activity that requires an extensive amount of computational power to achieve. Many companies have suffered from a loss of time and resources in dealing with confusion and potential human error. The solution is Dynamic Scheduling Software.

Dynamic Scheduling Software provides FSOs with the feature-rich functionality that streamlines, automates, and optimizes scheduling decisions.

This technology ensures the FSO sends the assigned technician to the right job having the proper skill set and arriving on time. These applications typically leverage a scheduling engine that optimizes FSE job assignment. Scheduling engines vary in their complexity ranging from those based on business rules to Linear Programming (i.e. goodness of fit) techniques, Operations Research Algorithms (e.g., Quantum Annealing, Genetic Algorithms, etc.), or Artificial Intelligence (AI)/Self-Learning applications.

The complexity of the scheduling problem, number and types of resources involved, duration of tasks, and objectives to be optimized play a role in determining which scheduling engine is most functional.

Critical factors to consider may include whether the scheduling engine can handle:

  • Multi-day projects or short duration field service visits,
  • People and assets (e.g., tools, parts, trucks, equipment) or solely people,
  • The number and types of KPIs that are part of the objective, and
  • Route planning requirements.

In evaluating Dynamic Scheduling Software, FSOs are also advised to consider the following criteria:

  • Cloud versus On-Premise Deployment Options
  • Speed and Ease of Implementation
  • Integration with Back-office Systems
  • Availability of Real-time Visibility by the Customer
  • FSO Requirements for Best of Breed or Integrated Enterprise Solution
  • Total Cost of Ownership
  • Return on Investment
  • Vendor Industry Knowledge and Experience

There are over a dozen software vendors who offer some form of dynamic scheduling functionality for field service.

Obviously, no two Dynamic Scheduling applications are alike. Each one has their points of differentiation. The best solution is a function of the level of importance the FSO places on each criterion and how each vendor meets these criteria.

Regardless of which vendor is selected, the benefits of Dynamic Scheduling are clear.

In fact, industry benchmarks show that companies who implement these types of solutions can achieve a 20% to 25% improvement in operating efficiency, field service productivity, and utilization. The impact on bottom line profitability and customer satisfaction is substantial. To enable FSOs to provide customers with an Uber-like experience and significant profitability, FSOs should consider deploying Dynamic Scheduling Software as part of their service delivery infrastructure.

Is Now The Right Time To Replace Your Field Service Management Software?

 This article first appeared in August 20, 2018 online issue of Field Technologies Online 

The market for field service management (FSM) software market is large and growing. In 2017, the market for cloud- based applications was valued at $1.2 billion by Blumberg Advisory Group, and we anticipate that the market will experience a five-year compound annual growth of 22.8 percent. In other words, it will more than double by 2022.  

Given the size and growth of this market, it is no wonder that dozens of software vendors are vying for share. Each vendor claims that their software will help field service organizations (FSOs) transform operations, keep up with industry trends, adhere to best practices, increase profits, and maximize customer satisfaction.

These claims are prompting many field service leaders to evaluate if now might be the right time to replace their existing FSM solution.  Being rational business managers, field service leaders need logical reasons to upgrade or replace their software. Of course, there are many reasons but some are good and some are not so very good. With more than three decades of experience with this topic, let me share with you five good reasons why NOW might be the right time to make a change:

  1. Your current system is costly to operate and maintain. Lets’ face it, if you are spending too much to operate and maintain your existing system, then it is probably time to replace it. Typically, companies that operate antiquated, disjointed, and/or fragmented systems experience higher IT operating expenses than those who do not. I worked with one client whose IT operating expense were 12 percent of revenue (while best in class is 4 percent). The cost savings alone was enough to justify the purchase of a new system.  
     
  2. Your existing FSM software is hindering growth. Depending on its feature functionality, your FSM software can either facilitate or limit your company’s growth. A few years ago, I helped a client expand into a new service business. Unfortunately, their existing systems did not have the required functionality to manage the transactions and workflow of this new business. As a result, my client had to postpone the launch of the new business until they could replace their system.
     
  3. You can’t get good data from your current software. This is one of the most frequently cited reasons for replacing software. If you can’t obtain good data on your installed base, equipment service histories, field service engineer skill sets, cost of service, failure rates, etc., then your company is at a disadvantage because it lacks the business intelligence to effectively plan and manage resources. 
     
  4. Your current solution is impacting KPIs. Ultimately, the success of your FSO’s ability to meet financial targets and keep customers happy depends on its ability to manage service processes against KPIs. For example, first-time fix, SLA/response time compliance, MTTR (mean time to repair), etc. If your company’s performance trails significantly from industry average or best in class, then it is possible your FSM is to blame. Perhaps its time to consider replacing your current system with one that does a better job and drives performance gains?
     
  5. Your current solution lacks flexibility and scalability. It is important that your FSM software can scale up or down without a massive investment in capital or labor. In addition, it should offer flexibility in terms of how workers can share and access data as well as flexibility or openness in terms of the ability to add on third party applications.     

There will always be software vendors who offer new and innovative applications to the field service market. The desire to keep up with industry trends and best practices will also drive purchasing decisions. Implementing a new solution can be costly and time consuming, even if the ROI exists. Therefore, the decision to switch should not be made lightly. You can use these five reasons to provide an objective framework for decision making.  

Avoiding the Four Biggest Mistakes FSOs make when using Contingent Labour

This article first appeared in the June 18, 2018 online issue of Field Service News.

Michael Blumberg, President of Blumberg Advisory Group  and founder of FieldServiceInsights.com discusses  some of the most crucial mistakes field service companies can make when utilising contingent or seasonal labour…

Field Service Organizations (FSOs) in North America, UK, and Europe are increasingly turning toward crowdsourcing platforms and subcontractors to augment their field workforce.

This type of outsourcing strategy enables FSOs to become more agile in meeting customer demands for service. As a result, they [FSOs] are able to reduce costs and improve service productivity. In addition, crowdsourcing and contingent labour helps solve the problem of finding skilled labour on a rapid basis.

However, turning to subcontractors and crowdsourcing platforms does involve relinquishing some level of control over the labour force. Naturally, questions emerge about the reliability, expertise, and quality of technicians that are sourced through these options.

Over the last two years, we have spoken with dozens of companies who have or currently utilize contingent labour to either augment their existing workforce or gain greater agility and efficiency over the entire field service delivery process. The majority are satisfied with their external providers and report positive results on key performance metrics such as First Time Fix and SLA Compliance/Onsite Arrive Time.   On the other hand, a few anomalies exist where the performance of contingent labour did not meet the FSOs expectations.

Quite often, FSOs who experience subpar performance make critical mistakes when retaining and managing contingent labour.

Here is our perspective on the biggest mistakes they need to avoid:

1. Failure to fully vet individual technicians doing the work

Don’t assume that every contract technician (e.g., subcontractor, freelance, crowdsource) you dispatch has the skills, training, and experience necessary to complete the work properly and in a timely manner. Insist on viewing background checks, certifications, and credentials of every contract technician assigned to your company.

2. Failure to train and onboard technicians

Quite often companies issue work orders without to contract technicians without training or guiding them on how they’d like the work to be performed.

For example, they do not explain how they’d like the tech to greet the customer and/or notify the customer when the work is complete.  Fortunately, Internet-based learning systems make it possible for companies to train and onboard contractors in a cost-effective and rapid manner.

3. Failure to communicate with contractors

This is the biggest mistake that a company can make is hand off work orders as if they were tossing a hot potato over a fence.

This will result in problem with respect to key service performance metrics such as SLA compliance, First Time Fix, and No Fault Found.  It is important that companies provide contractors with detailed and specific instructions about the activities they need to perform on each assignment.

At the same time, contractors also need to communicate with the companies that hire them on the status of calls, issues or problems they are experiencing, and results of their actions.

4. Failure to integrate contract or crowdsourced technicians into their service delivery process

Problems can occur when there is too much of an arm’s less relationship between the company and the contractor.  In other words, there is little accountability, visibility, and control between the company and contractors/technicians, and vice versa.

The key to success lies in treating contractors as an extension of your company.  Companies can achieve this outcome by leveraging communication technology, collaboration tools, and workforce automation software.  Relying on these systems will ensure the company achieves best in class service performance through its contractor network.

In summary, FSOs experience challenges to crowdsourcing when they underestimate the level of due diligence, systems, and processes they need to put in place when utilizing this type of labour. This does not necessarily mean that they must make huge capital investments.

Rather, they are urged to design and implement processes and procedures by leveraging existing infrastructure when they can.

Devoting the time and effort to this initiative will pay off. Our research suggests that FSOs who have an unpleasant experience with contingent labour do so because they rush into the decision without much thought, planning, and preparation.

Basically, they are looking to solve an immediate problem with no consideration to future. In other words, they are taking a tactical approach to labour shortages where a strategic solution is required.

Embrace Your Competition: A Critical Success Factor

A client was recently the target of negative advertising by one of his competitors. The two-page ad depicted a cartoon image of a shark in business attire wearing a Rolex watch with the caption “Some Suppliers need a Vice President of Service because they depend on Parts and Service Dollars…”  The second page described how the advertisers’ product engineers are measured on customers use of their parts and services including a 5-year warranty,

From my perspective, these types of claims are troubling for several reasons:

  1. These type of advertisements “trash the competition”.   Sales and marketing professionals understand that going negative is not good for business.  Most manufacturers would not use this approach when it comes to selling their equipment in their primary market. Yet some believe anything is fair game in the Aftermarket.
  2. It demonstrates negativity on the advertiser’s part with respect to the role and value of service to the customer.  Their claim overlooks the importance of service to KPIs like First Time Fix rate or Customer Satisfaction.  This implies that service is not necessarily needed and not strategic to the customer or the manufacturer.  This is just flat out misleading.

I have also seen negative advertisements and claims made against Third Party Maintainers (TPMs) and generic parts manufacturers, and I don’t like it either.  Trashing the competition is just wrong.  The quality and reliability of products and services from these third party suppliers can be just as good or better as those form the OEM.   Furthermore, many OEMs also market and sell 3rd party services of their own.

The bigger issue is not about whether OEMs are better than TPMs, or if genuine parts are better than generic, or even if creating a VP of Service and/or operating service as a profit center is good for business.  Rather, the issue is competition is good for both business and in the Aftermarket for several reasons:

  • Legitimizes the market– Markets are defined by the presence of competition. To win business, competitors must actively market their products and services. As a result, customers are aware of options available to them.
  • Creates choice– Competition offers customers the freedom of choice. The theories of capitalism and free trade are built on this basic premise.
  • Improves quality & efficiency– Competition in the Aftermarket forces third parties and OEMs to continue to find ways of improving the quality of products and services offered while at the same time finding ways to cut costs and improve efficiency.   In other words, competition raises the bar and results in better prices for customers.
  • Leads to innovation– In addition to raising quality and improving costs, competition drives service providers to become innovative. Without competition, it is hard to know whether service providers would focus on finding ways to add value. Would service providers be just as compelled to invest in new systems and technology like SaaS, Mobility, and IoT if not for the impact that competition has on innovation?
  • Leads to greater cooperation– OEMs have the choice to subcontract service to TPMs/ISOs. This helps them improve their cost structure, service delivery and obtain capabilities that they may not otherwise be able to build themselves. Under this scenario, OEMs and ISOs can gain knowledge from each other and use this towards driving innovation, reducing costs, and improving quality

In summary, competition provides benefits for the customers, OEMs and third-party providers. Technology vendors can also benefit from competition in the Aftermarket.  Based on my perspective, if a company resorts to trashing their competition, they are probably troubled in some way.  On the other hand, if a company is concerned about their competition, they should probably focus within their organization to find ways to leverage forces to their strategic advantage and develop a higher value proposition.

Post your comments or questions below!  

The Field Service Trickle-Down Effect

Why SMBs Should Be Embracing The Service Evolution

The following first appeared on June 25 and was written by Sarah Nicastro, publisher/editor in chief, Field Technologies

This column is for those of you out there in the SMB category that might be reading about how large Field Service Organizations (FSOs) have transformed their business thinking, “that’s nice, but not practical for me.” You’ve got that wrong! There has always been a trickle-down effect at play. The largest service companies are early adopters of a trend, shift, or technology – they lead the charge on embracing change and adopting new business processes and tools. Then that change trickles down through tier after tier of service organization, to even some of the smallest. Just because you’re running a small service business doesn’t mean you can’t – or shouldn’t – be innovative.

In fact, research illustrates the degree to which SMBs will embrace technology in the coming years. IDC reports that by 2021, SMBs are expected to spend an estimated $676 billion on IT, with business services and software spend growing the most rapidly from 2017 to 2021. This means that now is the time for you to be really looking at how you can use the innovation that’s occurring in the field service space to your advantage. Let me give you three compelling reasons why you should be embracing field service transformation now:

#1: The Technology Is Attainable

It used to be a valid concern that SMBs couldn’t have access to the same types of technologies to positively impact their businesses that a large company could. But present day, this just isn’t true. Software has moved to the cloud and there are a number of solutions geared specifically toward SMBs that provide real business value without breaking the bank. And unless your field service operation occurs in a rugged environment, you can use said software on an iPhone or Android phone with a protective case. Even more advanced technologies like IoT, AR, and AI are becoming more attainable for SMBs.

#2: The Business Case Is Clear

If you’re still running a paper-based service business, the ROI on automation is incredible. From efficiency and productivity gains to a much more professional presentation to your customers, it’s a bulletproof business case. If you’ve gone electronic but your system is aging or not overly effective, think about researching what else is out there – the software industry has come a long way even in the last two years. You have more options at your fingertips than ever before. Keep in mind, too, that as this trickle-down effect occurs, more and more businesses your size will be adopting the technologies available. This means that acting now could give you a leg up on your competition.

#3: You Have The Benefit Of Learning From Those That Have Gone Before You

If you have a team of 15 field technicians, you’re not going to have as involved of a transformation as a FSO with 500 field technicians.  However. there’s a lot of valuable insight to glean from the experiences of those larger, leading service organizations even if their businesses aren’t the same industry, size, or scope as yours.  Research and benchmark  their strategies, methods, and lessons learned and choose what you think could be useful for your situation. It’s important to keep in mind that the real transformation that’s happening in field service reaches farther than just investing in or upgrading your software – it’s more of a business process transformation that typically involves revisiting how you deliver service and making improvements, training up and re-energizing your people, as well as investing in new tools.

In summary, the message here is that further innovation of service as a whole is inevitable – so it behooves you to embrace that fact and start determining how, as a small business, you can make changes to stay on pace.

Field Service: A Mid Year Review

Opportunities, challenges, and what lies ahead

Now that we are half way through 2018, I wanted to take some time to look at where the Field Service industry is right now.  Here are some of my thoughts on the biggest struggles facing Field Service Organizations (FSO), where some of the greatest opportunities lie, and what trends to look for in the coming months and years.

Field Service Organizations must continuously strive to maintain customer satisfaction while operating within various business constraints (e.g., cost reduction, revenue targets, labor shortages, etc.).  The challenge is these objectives are often in conflict. On one hand, companies must keep customers happy; on the other, they must find ways to lower costs and do more with less. In addition, they must keep up with innovations in technology and find ways to deliver an exceptional customer experience. At the same time, they must find ways to monetize technology investments without gauging the customer on price. Meanwhile, field service leaders in these companies are bombarded by data and information about where to invest their time, effort, and resources. This of course presents a challenge of its own.

In broad terms, FSOs should be seizing opportunities that make the highest and best use of their most expensive resources, namely talent and capital. What does this mean exactly? The answer is investments that simultaneously fulfill multiple objectives such as cost reduction, quality and productivity improvements, revenue generation, and profit enhancement. While this may seem like a tall order, FSOs can achieve this outcome by leveraging technology and being more effective in creating offers that customers value. For many FSOs this also means seizing on trends like digitization, servitization, and Uberization.

Digital Transformation has been a hot topic and big buzz phrase especially in Field Service.  I think it is one of the most important topics for FSOs. Companies who do not embrace digital transformation will become laggards at best or irrelevant at worst. Digital transformation is how companies develop innovations that lead to a better customer experience, improved operating efficiency, and increased financial value (e.g., revenue, profits, earnings, etc.) in the marketplace.   Digital transformation is what makes servitization and Uberization possible.

Many in our industry talk about IoT but the question is how does it fit into a successful FSO. As with many disruptive technologies, a small segment of field service is far along the adoption curve, while the majority is either in the early stage of adoption or just now beginning to consider it. At issue, IoT adoption in field service is a function of market penetration in the product/technology market. Adoption is the highest among large, Fortune 1000 companies and innovative start-ups in industrial automation, building automation, and home automation because these are the companies who are the furthest along in terms of integrating IoT into their product solution sets.

Many FSOs think that IoT is the answer to all their problems. They think it will solve all their labor, cost, quality, and revenue generation challenges. They need to understand that a great deal of planning is required to effectively roll-out IoT solutions. FSOs need to develop a vision, strategy, business plan, and road map that considers when, where, why, and how IoT will be implemented. They must consider which technology platform to use, what type of applications and analytics will be performed, what problems it will solve, and how to price and package it.

I have been talking and writing about Augmented Reality and Artificial Intelligence a lot because I feel that these technologies are a perfect fit for the field service space. I first became aware of them over twenty years ago and have patiently awaited their maturity and commercialization. I am bullish on them because they solve very real problems that FSOs face like labor shortage, first time fix challenges, requirements to reduce costs while improving productivity, etc. They also enable new possibilities. For example, the ability to anticipate, resolve, or avoid service events. I also like the fact they permit the creation of new income streams for service providers.

Other important trends that Field Service leaders should watch would be service marketing and sales, cognitive and predictive analytics, 3D printing, and drones. There are of course many more including the use of block chain technology which lies out on the horizon.

Stay up to date and catch more of my insights by visiting Field Service Insights, a subscription-based, community site bringing you thought provoking perspectives on industry trends and best practices.

The Impact Of Impending Labor Shortages On Field Service:

Three practical solutions for the labor shortage problem

One of the most pressing concerns among field service executives is the impending shortage of skilled workers. These concerns are well-founded. The U.S. labor market is expected to face a shortage of approximately 8.2 million workers by 2027, reports Thomas Lee, head of research at Fundstrat Global Advisors.

This shortage is fueled by two trends. The first trend is referred to as the “Silver Tsunami.” This is a term that describes the enormous number of employees who are reaching retirement age over the next 10 years due to population demographics. Within the manufacturing industry alone, nearly 2.5 million will have retired between 2015 and 2025, resulting in a 2-million worker shortage by 2025, according to the Manufacturing Institute, an arm of the National Association of Manufacturers.

The second trend is due to that fact that millions of people have dropped out of the U.S. workforce due to factors such as disability and opioid addiction or because of prison records that make it difficult for them to find jobs. In fact, the percentage of the adult population that are working or seeking employment has dropped by 4 percent since 2000.

Meanwhile, the U.S. population and gross domestic product (GDP) continues to grow while the unemployment rate remains at a 17-year low. The net impact is that the demand for labor is outstripping the supply of labor in the United States. What will this mean for field service?

Blumberg Advisory Group and Field Service Insights recently conducted an economic analysis of the U.S. field service industry. The study examined the demand for field service labor in 16 different vertical market segments. Currently, these segments employ approximately 12.6 million field workers. However, an additional 2 million workers will be required by the year 2021 to meet market demand for service and support.

Considering every industry sector is facing a labor shortage, field service organizations (FSOs) will need to adopt creative and innovative solutions to overcome this gap. Fortunately, several viable solutions exist.

Using A Blended/Variable Workforce Model
FSOs can turn towards freelancers as a strategy for responding to labor shortages. Many millennials prefer freelance work because of the flexibility and autonomy it provides them, while retired baby boomers also appreciate the ability to generate additional income by working freelance. In a recent study, we found that 77 percent of FSOs are utilizing a variable workforce to handle shortages, and two out of three are using a freelancer management system (FMS) to source and manage talent. Users of FMS platforms boast that greater agility, reduced costs, faster time to market, and improved efficiency are the benefits of this strategy.

Reengineer Service Delivery Processes
FSOs will need to learn how to accomplish better results with fewer workers. One way to do this is by reengineering the way in which service is delivered. For example, the typical way that most FSOs handle field service activities is by assigning new hires to a telephone technical support capacity and dispatching the more experienced field service engineer (FSE) to resolve on-site issues. This is counterintuitive when you consider that more experienced FSEs are the ones who are best qualified to provide remote support and guided technical assistance to new hires. By switching these roles, FSOs can leverage their workforce for better results (i.e., remote resolution, first time fix, etc.) and improve the customer experience.

Utilize Advanced Technology
Many FSOs are realizing that digital technology can play a significant role in resolving the labor shortages. For example, IoT enables an FSE to save time in anticipating and preventing problems. AR provides a platform that new FSE hires and end-customers can utilize to troubleshoot and resolve problems on their own or through the help of guided troubleshooting. Initial pilots have found that FSOs can experience up to a 20 percent improvement in first-time fix rate after deploying AR. Lastly, artificial intelligence and predictive analytics can be utilized to diagnose problems, isolate the faults, and recommend and implement corrective actions. In short, digital technologies enable companies to reduce and eliminate the need for human involvement in the field service process, permitting FSOs to do more with less.

The impending labor shortage is not a myth. FSOs must be prepared to deal with it. Within every challenge lies an opportunity. This situation is no different. With a little planning and innovation combined with effective execution, FSOs can achieve remarkable results with fewer people.

Preparing for the Fourth Industrial Revolution

Antonia Kay gives a preview of WBR's upcoming event in St. Louis

Worldwide Business Research (WBR) will be hosting the Connected Manufacturing Forum on June 19-20, 2018 in St Louis, MO. I recently had the chance to talk to Antonia Kay, the Program Director, about a few emerging trends impacting the Manufacturing Industry.

1. What are the biggest challenges facing the Manufacturing Industry today, specifically when it comes to Industry 4.0?

We are at the beginning of the Fourth Industrial Revolution, which will fundamentally change our lives. Things that we deemed impossible or futuristic as children – artificial intelligence, human-like robots, drones, self-driving cars – are quickly becoming an everyday reality. As fascinating as it may sound, these technological advancements translate into a lot of uncertainty and hard work for industrial leaders tasked with “giving a facelift” to their manufacturing ecosystems.

The biggest challenge most executives are facing today is mapping out their digitalization journey, making first steps towards connectivity and automation, and adapting their company culture to the drastic change that comes with the digital transformation. As of today, there is no one-size-fits-all approach to connected manufacturing, but top global industrials are investing in IoT, cloud computing, advanced analytics, robotic process automation, and 3D printing in order to capture opportunities early on and secure their competitive edge in future.

2. What do you see as the most important trends and opportunities with respect to Industry 4.0?

The Industrial Internet of Things (IIoT) is the word of the day.

Global manufacturing organizations are investing in predictive maintenance and condition monitoring – the move from don’t fix what’s not broken to making sure things don’t break through continuous, smart monitoring and maintenance of the factory equipment.

Augmented reality (AR) and virtual reality (VR) are big too, as they can drive equipment optimization and productivity on the factory floor and beyond.

And, of course, there is an ever-present talk about Big Data and advanced analytics – how do you collect and secure your data assets, how do you leverage it for informed decision making, product/service innovation and, eventually, improved customer satisfaction?

The opportunities that come with connecting people, processes, and assets are endless. The question is, how do you do it?

3. What is the Connected Manufacturing Forum and why should people attend?

Connected Manufacturing Forum is a networking and learning platform for Industry 4.0 frontrunners who are ready to move past fear of the unknown and revolutionize their business, one step at a time.

4. Can you give an overview of what people will get?

Connected Manufacturing Forum will offer a comprehensive coverage of the main Industry 4.0 trends and will help manufacturing leaders find answers to their toughest digitalization questions.

We have a good number of real-life case studies focused on Industry 4.0 blueprint development and implementation, projects that have helped companies like Johnson & Johnson, LEGO, Intel, Boeing, Coca-Cola and more start their connected manufacturing transformation, align teams around the same goals and prepare for future industry advancements.

Cultural change and workforce management is a big topic this year – executive leaders from Georg Fischer, Kuhn Krause, Subaru, Nature’s Variety will share best practices in preparing your organization for the Industry 4.0 revolution, delivering required training to your existing employees and expanding your talent pool by attracting new, highly skilled workers who will drive the future of your company.

Lastly, we will be discussing innovative technologies – IoT, augmented reality (AR), 3D printing, robotics, sensor technologies, human machine interface (HMI), predictive analytics – that can help companies improve processes and optimize efficiencies.

5. Why did WBR choose to produce the event, and how will it be different from other events focused on Industry 4.0?

Our in-depth market research indicated that there was a high need for an Industry 4.0 conference that would help industry leaders benchmark their connected manufacturing strategies and find solutions to the toughest digitalization challenges.

While there are many smart manufacturing events out there, the quality of our content and the seniority and experience of our topnotch speakers by far outweigh competition and what other events have to offer. Our program was developed through in-depth interviews with Fortune 500 executive leaders and is packed with case studies, panels, roundtable discussions, and interactive workshops focused on real-life challenges that manufacturing executives are trying to overcome on a daily basis. Our goal is to help them do just that and progress to the next digitalization level.

6. What will people be missing if they do not attend?

They’ll miss out on top-quality, real-life content and outstanding industry networking opportunities. If your company is going through a digital transformation, you simply can’t miss Connected Manufacturing Forum!

7. If they must come up with one reason why to attend, what should it be?

Connected Manufacturing Forum is your one stop shop for all things Industry 4.0. Have questions about digitalization? Don’t know how to roll out an IoT initiative and deliver on it? Want to learn from the best in the industry and meet the most innovative solution providers? Then hurry up and register today!

Register to join 150+ executives in a collaborative debate on the emerging Industry 4.0 trends in Manufacturing, Technology, Operations, and Advanced Engineering.

And as a bonus to my readers, use code CM18BLUMBERG to save 25% on your ticket!

REGISTER NOW