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.

Innovation is a Given

This is a reprint of an interview which appeared on Core Systems’ website in their Field Service Management Blog.  Core Systems develops solutions and software for the Field Service Industry.

In this week’s interview we have spoken to Michael R. Blumberg, independent consultant and President of Blumberg Advisory Group, about the latest technologies field service businesses need to implement and what managers can do to create a culture of innovation.

You are consulting a lot of companies on strategic planning and efficiency improvement. What are your customers’ pain points?

I help my customers unlock value within their service supply chain like for example technical support, field services, services parts logistics or depot repair. For example, they may face challenges growing top line revenue or boosting profits. They may be trying to improve various KPIs associated with service quality and productivity. Others are focused on reducing costs, improving operating efficiency, or enhancing customer experience. One specific set of challenges I help clients deal with is validating their need to implement new technology to automated key business processes and functions.

What do you advise those companies to meet those challenges? 

I help them compare their current business processes and performance to best practices and industry standards. As part of this evaluation, I help them understand where there are gaps and how they can close them through process and systems improvements. I then make specific recommendations on what the new processes and systems should look like.

According to you, what are the top technologies that will change how businesses deliver service in the future? 

Every management guru and industry analyst wants to point to disruptive technologies like IoT, wearables, drones, and 3D printing as the top technologies that will change how service will be delivered in the future. No doubt these technologies will have a dramatic impact on the future of service. However, in order for these technologies to have any real and measurable benefit, they need to be incorporated into a company’s overall service business strategy, service delivery processes, and systems infrastructure.

More importantly, it may be a long time in the future until a company is ready and able to make these investments. In the meantime, there is lower hanging fruit they can pick off the trees that will help them achieve measurable gains in service performance, in a shorter period of time. For example, technologies like social collaboration, mobility, cloud computing, crowdsourcing platforms, or knowledge management. Businesses should consider implementing these technologies, if they haven’t done so already.

Do you have particular examples of companies that have innovated their field service? What results do they see? 

Most examples usually center on implementing some form of field service software. Either a basic system with dispatch, depot repair, and inventory management functionality or more advanced systems with capabilities for dynamic scheduling, spare parts optimization, field service mobility, and knowledge management. The results include greater control over people and parts, improved access to real-time business intelligence, better decision making, lower operating costs, improved utilization of parts and labor, and increased productivity of field resources.

Which features should a field service software ideally have? 

Businesses seeking to implement a field service software solution should consider features which automate critical service delivery processes and capture key data related to service transactions. In addition, the software should have the capability to produce performance reports in order to evaluate how well the processes are working. At a minimum, field service software should include feature functionality for work order management, parts usage, customer history, equipment history, time and cost tracking, and reporting & metrics. More advanced features might include mobility, contract management, and dynamic scheduling, routing, and knowledge management.

Do you feel there is a fear on the side of businesses to implement new technologies? Or are they open to innovation? 

I think most field service leaders today recognize that their businesses need to innovate in order to survive and thrive. Without innovation, they risk going out of business. This was not always the perspective of service businesses. Looking back, 15 or 20 years ago, there were more field service leaders who resisted innovation than embraced it. Technology was often perceived to be a threat to their existence. Now most field service leaders see innovation as a given. Sure business executives still have fears about innovation, its human nature. However, the fears are more realistic then in the past. Rather than an irrational fear about being replaced by a machine, the fear is centered around whether or not their companies are ready for innovation, whether the implementation will go smoothly, and whether the results will live up to the promise.

What would you advise managers to do in terms of getting everyone on board with innovating service processes? 

Managers really need to make sure that everyone understands and appreciates where the business is in terms of current levels of productivity and efficiency. They need to communicate this with all stakeholders and help them understand the risks associated with maintaining the status quo versus the rewards associated with pursing innovation. In addition, managers must create a well-defined plan for innovation and communicate the plan with key stakeholders. Most importantly, managers must create an environment which motivates and rewards people for embracing innovation.

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Big Data & Analytics – A Transformational Journey

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Last month I had the good fortune to attend the Reverse Logistics Sustainability Council (RLSC) and Warranty Chain Management (WCM) conferences.   Big Data & Analytics was a topic that gained much prominence at both of these conferences.  Indeed, this is a subject that is gaining much attention in business and academic circles these days.  Interestingly, there is a general consensus among academics and industry thought leaders that Big Data Analytics is one of the most misunderstood and misused terms in the business world.  For some business professionals, the term analytics applies specifically to performance metrics, for others it has to do with unstructured data sets and data lakes, while still others think it relates to predicting the future.

Big Data refers to the volume, velocity, and variety of data that a company has at their disposal. Analytics applies to the discovery, interpretation, and communication of meaningful patterns in data.  The truth is that there are actually four (4) different types of Big Data Analytics that firms can rely on to make business decisions.

  • Descriptive Analytics: This type of Analytics answers the question “What is happening?”  In a field service organization (FSO) this may be as simple as KPIs like SLA compliance or First Time Fix rate.  The exact measurement tells an FSO how well it is doing when it comes to fixing problems right the first time and meeting customer obligations for response time.
  • Diagnostic Analytics: Understanding what is happening is important, but it is even more important to understand why something is happening.  This is how managers and executives can identify and resolve problems before they get out of hand. Diagnostic Analytics provides this level of insight, for example by pin-pointing why First Time Fix Rate is low.  Maybe it’s because the company is making poor decisions about which Field Engineers (FEs) are dispatched to the customers’ sites.  Or, perhaps selected Field Engineers do not have access to the right parts when they arrive on site and must return for a second visit.
  • Predictive Analytics: Ok, so now we know why something is happening. Wouldn’t it also be good to know what is likely to happen next?  Predictive Analytics provides this level of insight. In other words, it provides a forecast about what may happen if a company continues to experience a low first time fix rate.  For example, it could show the specific impact on customer satisfaction or the measurable effect on service costs and/or gross margins.   In this case, Predictive Analytics helps a company understand with a high level of statistical confidence how long it may continue to maintain the status quo before financial problems may arise.
  • Prescriptive Analytics: The final component of analytics is Prescriptive A This level of information helps a company understand at a granular level of certainty exactly what it should do to resolve a current situation and avoid future problems.  For example, Prescriptive Analytics may reveal that a company must ensure the field engineer has the right parts on hand prior to being dispatched to arriving at the customer site.  The Analytics can show which parts must be available and where they should be located.

In summary, Analytics takes the guesswork out of decision-making.  Instead of relying on intuition or prior experience, service executives can make sound business decisions based on objective analysis of data.  As a result, the probability of making the right decision increases.   Relying on Analytics to drive business decisions involves a transformational journey.  As innovative as it seems, a company cannot just start using Predictive or Prescriptive Analytics. It must first become proficient with Descriptive Analytics before it can leverage the power of more advanced analytic models.    This journey is not just about the data.  Many managers mistakenly believe that they must have enough of the right data to make Analytics work.  The truth is that we all have a wealth of data at our disposal.  Our challenge is finding the tools and technology to process the data, making Analytics a winning business proposition.  This begs the question: does your service organization have an optimal system in place to harness the power of Analytics?  If you are not certain, it may be time to conduct an audit and assessment of your infrastructure.  To learn more, schedule a free consultation today.

Leverage Geographically-Distributed Development

Mike Miranda is a writer concerning topics ranging from Legacy modernization to Application life cycle management, data management, big data and more. He’s had over 70 articles published in 2015 by many reputable tech sites.

Global-Networks

An impressive IT strategy model known as Geographically-Distributed Development or GDD, is becoming a valuable ally for businesses in industrialized nations all over the world. GDD is taking the place of archaic business methodologies that utilize one or multiple project sites, resulting in minimized efficiency and compromised success.

In order for GDD to operate at full-potential, substantial hindrances must be eradicated or maximally reduced within the GDD strategy. Businesses embedded in a globally-distributed market possess inherent and significant expenses associated with communication and coordination logistics. Businesses must find strategies that will combat those costs since they can oppose the very benefits GDD provides. On-going challenges include cultural and language differences as well as staff having little or no access to information that must be presented in a timely fashion to meet deadlines. All these issues endanger the success of distributed projects.

An Application Lifecycle Management (ALM) solution enables companies to successfully manage and enhance the breadth and quality of communication for all stakeholders in the change process. Challenges embedded in geographically-distributed environments are to be reckoned with, and include: language boundaries, cultural differences, dissimilar software-development methods, change-management requisites, security enforcement, adaptations regarding industry protocol, and client business mandates. The ALM solution very effectively meets these crucial areas.

Companies can establish clear, repeatable, measurable and traceable processes based on best practices due to the simplicity ALM offers during every stage of application development. Point-and-click functions allow users to very easily create a portfolio of authorized processes which can automate assigned tasks and the movement of application artifacts.

Change management becomes simplified due to ALM’s streamlining regarding changes and required actions, enabling changes to be scrutinized and prioritized. The approval management functions demand that official verification be staunchly in place prior to any changes moving forward. ALM’s tracking of software changes are performed with ease by way of the ALM’s automated logging functions. Changes can be traced starting with a request being received up to a solution being presented to production.

Staff within the global development team would be notified of any assigned tasks as well as circumstances that could impact their efforts.

As the enterprise becomes increasingly interlinked, changes occurring in one system can also impact other systems. ALM’s multi-platform support means changes made on desperate platforms, among geographically-distributed teams, can travel through the application lifecycle, compatibly and collectively. A BOMP, or Bill of Materials Processor, serves as an on-board feature purposed to generate file portfolios that combine features from multiple platforms. As a result, file portfolios can to travel through the lifecycle as a combined unit. Also, various ALM solutions guarantee that parts integrated into the assemblies are situated within the corresponding platforms during every phase of the lifecycle.

General project plans must satisfy deadlines while enforcing accountability for agreed-upon deliveries. The ALM solution meets a variety of specific needs including: 1) tracking and verifying tasks and processes 2) ensuring assignments are properly performed and 3) assisting with meeting Service Level Agreement (SLA) demands within an outsourcing contract. Assigned tasks to developers are flawlessly coordinated with tasks that are a part of a project plan; and this optimizes the tracking of targeted achievements. An additional ALM feature allows reports to be generated which dependably track response and resolution times. Service level workflows provide flexibility and automate service processes. In turn, this results in a quickening of processes to respective resources which helps meet project deadlines. An assortment of reports and dashboards efficiently track performance with service level agreements.

Reaping the full benefits of GDD means the caliber of communication and coordination must be enhanced. When this takes place, management strategies can be utilized to deal with obstacles that can compromise a company’s level of success. ALM’s centralized repository presents ideas, designs, dialogue, requirements, tasks and an array of other information at one’s fingertips. Development processes and tasks are automated, coordinated and monitored via ALM’s workflow capabilities with every bit of intellectual property being vitally protected within the central repository. Project management is impressively synchronized due to local and remote software development that is highly coordinated. Cohesiveness regarding monitoring, tracking, auditing of reports, and dashboards all function together, seamlessly, to satisfy crucial deadlines. ALM caters to organizations where mission-critical solutions meet mission-critical needs, head on!

For whom the bell tolls: examining the future of field service

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I remember attending a conference in the early days of my career, circa 1987, where service executives from leading computer manufacturers at that time (e.g., Digital, Control Data Corporation, Burroughs, Univac, etc.) were predicting that field service would become extinct by the beginning of the 21st century.  Their prognosis was based on an observable trend that the equipment was becoming more reliable and easier to support remotely. Thirty (30) years later Field Service is a booming industry.

Indeed, many of these predications have come true. Technology has become cheaper and more reliable. Product life cycles are shorter, making it more affordable to replace older systems.  M2M and remote support make it possible for many companies to resolve an issue remotely and avoid dispatching a field service engineer. Self-service options also make it possible for the consumer to manage the repair process themselves.  It has also become an accepted fact that field service is a low margin business and extremely competitive in selected markets (e.g., IT).

Do these trends support the argument that field service is going the way of the dinosaur?  Market data points to a different conclusion. According to the research firm Markets and Markets, the Global market for Field Service Management (FSM) software is expected to grow from $1.58 billion in 2014 to $3.52 billion by 2019, at a Compound Annual Growth Rate (CAGR) of 17.3%.  Certainly these figures do not suggest that field service is going to disappear anytime soon.

Although the High-Tech Industry has experienced a number of trends which challenge the need for field service, there have been a number of trends which will allow field service to continue to survive and prosper:

  1. Increased use of advanced technologies:  Tools such as dynamic scheduling, mobility, knowledge management, and spare parts planning software enable Field Service Organizations (FSOs) to optimize the coordination of resources (e.g., parts, labor) required to support the field service delivery process resulting in more satisfied customers, increased revenue, reduced cost and higher profits. Furthermore, disruptive technologies like IoT and Big Data provide FSOs with the tools to expand their service offerings and be more proactive in managing service delivery. As a result, customers are more dependent on FSOs than ever before for continued support.
  2. The advent of on-demand platforms: On-demand and SaaS based applications enable FSOs to obtain critical service applications required to manage the field service dispatch on a subscription basis. This permits FSOs to quickly acquire and deploy state-of-the art Field Service Management Systems (FSMS), which at one time required a considerable capital outlay. This means that FSOs can expense the costs associated with the new system into their operating budgets and profits and avoid building elaborate ROI justification models. As result, the economics associated with maintaining a Field Service workforce have improved.
  3. Greater complexity and convergence of technology: Every major technology sector ranging from information technology, to telecommunications, to plant automation and building controls, has experienced a trend of equipment becoming increasingly more integrated with microprocessors, hardware and network operating system software, broadband communications, and network connectivity equipment. This complexity has led to new requirements for fast, reliable, and high quality field service in many segments.
  4. Acceptance of trade-off between remote support and field service: Manufacturers now accept the fact that there are trade-offs in cost and customer satisfaction in attempting to resolve all service requests through remote support tactics. Although remote support can be very effective in lowering operating costs, and eliminating the need for field service dispatch, there is a point in every service call, where it becomes more effective to dispatch a Field Engineer. The greater the complexity of the service problem, the longer it will take to resolve remotely resulting in longer downtime for the customer and higher support cost for the service provider. Field service dispatch can mitigate these costs and help to resolve the issue sooner.
  5. Growth in Servitization: Manufacturers continue to look for opportunities to generate income through the provision of value added services such as installation, integration, configuration management, training and process improvement. Field Service Engineers represent the most likely resource for delivering these services. Furthermore, many Servitization business models have their foundation in IoT and connected devices. Manufacturers are of course turning to their FSOs to roll-out and deploy these solutions.

Why were the service executives in the late 1980s so far off in their predictions? I think it was because they could not anticipate how innovations in software and technology could go on creating new revenue opportunities. Conventional wisdom at that time viewed innovation as a way of cutting costs, and of course, the biggest cost, was people (e.g.., Field Service Engineers). More importantly, most companies viewed Field Service as a cost center, not as a profit center. As a result, they were not thinking strategically about innovation. It is amazing how things have changed. To quote the old Virginia Slims commercial, “we’ve come a long way baby.”

Now it is your turn. Please share with me your ideas on the future of field service.   Let me know if you remember any predications from the past that are no longer true today. Tell me about your vision of the future. Will field service continue to thrive or will field service engineers become irrelevant? I’d love to get your thoughts on this important topic.

5 New opportunities created by IoT and the challenges they present

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There has been some excitement in the media these days about the Internet of Things (IoT) and the promise it creates for businesses, consumers, and governments.  John Chambers, the CEO of Cisco, said on CNN’s GPS with Fareed Zakaria that IoT will create approximately $19 Trillion in economic value over the next 5 years.  As an example of the opportunities that are possible, Chambers points to the fact that the city of Barcelona created 40,000 new jobs through its connected city initiative.

While the upside potential is great, there are still many who believe that the disruptive force of IoT will have a negative impact on certain industries; eliminating jobs and destroying businesses instead of creating them. The proponents of IoT remind us that similar claims were made about the internet in its early days. However, according to a 2014 study by McKinsey and Company, 2.6 new jobs were created by the internet for every 1 job it eliminated. Will the same be true for IoT?

To answer this question, I think we have to look at how IoT will impact specific industries.  For example, let’s look at five (5) new opportunities that IoT creates for the High-Technology Service & Support Industry and the challenges they present.

  1. Facilitation of Remote Monitoring & Diagnostics: IoT makes it possible for manufacturers to implement remote monitoring and diagnostics solutions on a low cost and rapid basis. Of course, these solutions are as effective as the knowledge management tools behind them. Nevertheless, remote diagnostics can eliminate the number of emergency dispatches which in turn could have an impact on Field Service Engineer staffing levels. On the other hand, it is likely that new jobs will be created to monitor and analyze the data collected by these solutions as well as respond to the actions that are generated by this analysis.
  2. Greater integration with the supply chain: One the largest beneficiaries of IoT will be the service supply chain. By monitoring service related events, the service supply chain can have more visibility into the demand for spare parts and be more effective in planning and forecasting inventory stock levels. In addition, supply chain mangers can be more proactive in anticipating demands on forward stocking locations and depot repair & refurbishment centers. The net impact of IoT on the supply chain is an enhanced level of productivity and efficiency which is great for profits and job creation.
  3. Creation of barriers to entry: It is very possible that IoT will create new barriers to entry for service competitors. That is because once you control access to a device, you control the device itself. Manufacturers will need to think through how their channel partners participate in IoT solutions. Will channel partners participate in the revenue stream that comes from managing connected networks or will they simply resell the solution on behalf of the OEM? What options will be available when it comes to service & support? Will manufacturers implement open systems which make it possible for anyone to service the network or will be a closed solution keeping out competition?
  4. Collaboration between business partners: It is also likely that IoT solutions will be comprised of products and components from multiple suppliers. This will require greater collaboration between business partners. Manufacturers will need to establish new business protocols and rules of engagement when it comes to supporting IoT solutions involving third party products. This is likely to result in new job creation.
  5. Need for new business models:  IoT makes it possible for manufacturers to offer new added value services to their customers. At issue, these services are most likely to be monetized through subscription based models. New financial KPIs will be needed to manage these models. Instead of focusing on attach rates and gross margins, manufacturers will need to pay attention to monthly recurring revenue (MRR) and customer churn rates.   Revenue ramps up slowly under these scenarios and customer attrition rates are high so manufacturers will need to create marketing and onboarding programs to facilitate growth of MRR and reduce churn.

 

In summary, IoT will have a positive impact on the High Tech Service & Support Industry in terms of job creation and financial returns.  Indeed, IoT is likely to create multiple new jobs and businesses for everyone that it replaces.  While some companies and individuals may be at risk, they can mitigate the downside by taking a proactive approach to strategic planning.  Furthermore, companies who stand to benefit from IoT the most can ensure maximum returns, and thus double down on their investment, by incorporating fundamental strategic design principles into the development of IoT solutions.  To learn more, schedule a free consultation.

Strategic forces shaping the deployment of IoT & M2M

The Internet of Things

News about the Internet of Things (IoT) is everywhere. Indeed, IoT is one of the largest and fastest growing segments of the Information Technology industry.  The number of deployments of connected devices is forecasted to increase by 30% in 2015 from last year, according to The Gartner Group, with the total number of connected devices to reach 25 billion in 2020.

Those of us who have been involved with the High-Tech Service & Support Industry for some time will tell you that the concept of IoT and its cousin Machine to Machine (M2M) are nothing new. Remote Monitoring & Diagnostic tools have been around for decades.  As early as the mid-1980s, capital equipment manufacturers like Honeywell, Texas Instruments, and AT&T had deployed these solutions to improve the troubleshooting and maintenance of their systems.

At issue, it is only within the last couple of years that the number of IoT and M2M deployments has begun to sky-rocket.  Let’s look at some of the forces that are making this possible:

  • Social Forces: One of the reasons why I believe we are seeing a surge in connected devices within the High-Tech Service Industry is the recognition that data drives business. For service providers, it is no longer just about finding ways to reduce the time and cost associated with troubleshooting and maintenance. In order to optimize productivity and efficiency, and to facilitate innovation in a service business, you need data. While service executives have understood this for some time, end-customers now understand and appreciate that they also need access to this same data in order to optimize the operations and processes that comprise their enterprise. In essence, data about the condition of assets and machine performance is part of a larger system of systems which need to work in tandem to ensure that that the entire system works smoothly and efficiently.
  • Economic Forces: The cost of implementing IoT and M2M solutions has reduced significantly over the last decade. In the past, remote monitoring was achieved through dedicated land line data communications which were very costly to implement and maintain. Today communication is much more accessible and affordable through technologies like Internet Protocol, ZigBee, and Wireless. Furthermore, the cost of collecting data has improved significantly. Earlier solutions required expensive and clunky Programmable Logic Control (PLC) platforms. Now data collection is possible through low-cost, disposable sensors. Furthermore, the financial justification for IoT has improved. Not only is access to investment capital cheaper than ever but manufacturers are now finding ways to monetize IoT solutions resulting in a profitable revenue stream, higher ROI, and faster payback period. More importantly, the financial model associated with IoT deployments is changing. In the past, manufacturers would first attempt to sell individual customers on the benefit of adding remote monitoring to their capital equipment purchase. In turn, the customer needed to incorporate the cost of a Remote Monitoring solution into their capital expenditure and cash flow projections. The economics of IoT have now made it possible for service providers to make IoT solutions available as a subscription model, thus enabling end-customers to turn a high fixed cost investment into a variable expense.
  • Technology Forces: As noted above, the technology (e.g., data communications, sensors, etc.) associated with IoT and M2M is becoming cheaper, easier to implement, more secure, and flexible. In addition, we now have access to much more robust, cheaper, and flexible data repositories. Not only has the cost of storage improved but the advent of Big Data solutions enables us to leverage information collected by IoT in ways we have never known before.

 

For service executives who are dissatisfied with service being an afterthought in their organization, now is the time to look toward M2M and IoT as platforms for innovation and new sources of profitable revenue.    To achieve this outcome, service providers need to develop an overall service business strategy around IoT as opposed to merely a technology plan for connecting devices with back-end systems.   While addressing concerns with respect to security and risk are critical to any IoT deployment, the optimal strategy must incorporate a service centric philosophy, receive full endorsement by C-suite executives, and be formulated with active participation of the service leadership team.  Strategic design is critical to IoT success. For more information, schedule a free consultation.

Predictions for 2015 and their impact on Lifecycle Services – Part II

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In Part 1 – my last blog post on this subject, I discussed some of the trends that are creating uncertainty for companies who participate in the IT Service Supply Chain.  This uncertainty stems from conflicting data with respect to market drivers in the IT Industry in general and Lifecycle Services Market (e.g., hardware maintenance, asset recovery, depot repair, services logistics, etc.) specifically.

For example, more than three quarters (78%) of workloads will be processed by cloud data centers and almost a quarter (22%) by traditional data centers according to the Cisco Cloud Global Index.  In addition, public cloud and hybrid cloud will grow dramatically faster than traditional datacenters.  Most of this computing power will be housed in mega data centers.  However, IDC predicts that by 2017 industry consolidation will lead to a market comprised of only 6 to 8 mega global players.    The strategic implication is that there will be less IT assets distributed throughout the world resulting in less demand for onsite maintenance.

On the other hand, IDC predicts that IT spending on big data will grow 30% in 2015.  In addition data volumes will exceed 6 trillion terabytes.  Furthermore, data created by Internet of Things (IoT) will nearly quadruple by 2018 from 2013 creating twice the amount of data end users transmit to data centers and it will be 47 times greater than total data center traffic that exists today.  This means that there will be increased spend on data storage and network management.  As a result, services associated with the installation, management, and maintenance/ repair of storage devices and network equipment may increase.

Given these conflicting perspectives, what can companies involved in Lifecycle Services do to ensure profitable revenue growth in 2015 and beyond?   Here are six (6) things that service providers can do to achieve long term success:

  1. Have a clear understanding of your planning horizon: Remember the impact from the trends described above will not be felt immediately. They are likely to occur over a 5-10 year horizon. You need to anticipate where the market will be in the future and create a road map to get you there.
  2.  Focus on micro economic business trends: While it’s always a good idea to review market data from industry analysts, this macro level data may not reflect the actual dynamics, buying behavior, or purchasing decisions within your target market. That’s why primary market research is so important to your planning process.
  3.  Decide on where you are going to play: This requires asking critical questions about the condition of your target market today and where it is headed in the future. Will you continue to sell into a down market? Do you expand into new markets that are synergistic with your existing capabilities? Do you develop new capabilities and diversify into higher growth markets? These decisions require that you take a structured and disciplined approach to market research and strategic planning. You can no longer rely on top of the mind pontification or gut level decision making to plan for your future.
  4. Have a clear exit strategy: Regardless of your decision about your future growth, it is important to plan with an exit strategy in mind.   As a business owner or executive, you probably have good idea of the financial objectives your company needs to achieve before it exits the business. If not, you need to establish these targets right now even if your service business is a division or subsidiary of a larger company and there are no immediate plans to sell in the next 5-7 years. Exit planning will force you to consider what your business needs to look like, how it needs to operate, how it needs to go to market, what type of growth rate it needs to achieve, and how much profit it needs to generate in order to exit. The actions you take to achieve these outcomes will benefit your company whether or not it actually exists.
  5. Maintain a highly efficient infrastructure: One thing is for certain, end-customers will continue to seek operational efficiency when managing and maintaining their IT assets and related operations. It is inevitable that they will continue to place downward price pressure on their service providers. A highly efficient infrastructure and service delivery processes is an imperative for winning and keeping customers as well as maintaining healthy profit margins.
  6.  Market on all cylinders:  Your customers face these same challenges that you do when it comes to planning for the future. They are likely to be confused by all the options available to them. The way to win their hearts and minds, and share of spend in a competitive market is by positioning yourself as an expert in their market. It requires that you implement an education based marketing strategy. This approach builds trust because you demonstrate that you understand your prospective customers’ needs. When implemented effectively, it defines the criteria that your customers should consider when choosing a service provider and establishes your company as the standard by which they should consider.

Your future can be bright as long as you are prepared to do a little work to prepare for it.  It is only a problem if you do nothing at all.   One way to ensure you and your team achieve optimal success is to seek guidance from an objective, independent advisor.  With over 25 years’ experience in completing similar assignments in the High Tech Industry and extensive capabilities in key practice areas (e.g., market research, strategic planning, service marketing, and productivity & efficiency improvement), we believe that Blumberg Advisory Group possess the skills to help you succeed.  To determine if we have a solution to meet your needs visit our website or schedule a free consultation today.

Predictions for 2015 and their impact on Lifecycle Services – Part I

tech-trends

I think everyone who reads this blog will agree that the IT Industry is undergoing a major transformation as end-users deploy a greater number of technologies like Cloud Computing, Mobility, Internet of Things (IoT), and Big Data solutions.  Prognostics from IT industry analysts point to an increased roll-out and deployment of these technologies in 2015.  Although these predictions bring good news for suppliers of these technologies, they bring with them some level of uncertainty for companies that provide Lifecycle Services such as onsite maintenance, depot repair, installation services, etc.

In essence, some trends suggest that there will be greater demand for IT Lifecycle Services in the future while others point to a reduced need for these types of offerings.  For example, trends which seem to have a positive impact include:

  • Internet of Things – Companies that design, build and operate networked eco-systems in industry sectors like transportation, agriculture, etc. will turn to Lifecycle Service providers for the provision of onsite and logistical services to support these platforms.
  • Big Data – The proliferation of these solutions will require additional storage which in turn will bring the need for installation and maintenance services.
  • Hybrid Cloud – Lifecycle Services are needed to support hardware refreshes and maintenance of on-premise technologies like networking equipment, storage, servers, etc.
  • Video – The use of video among consumers and enterprise is increasing and the roll-out of technologies which support this type of communication is increasing. As such, companies who deploy these solutions will continue to turn to Lifecycle Service providers for support.

The trends that could reduce the demand for Lifecycle Services include:

  • Data Center Consolidation & Virtualization – Although onsite service providers are needed to deploy these types of solutions, consolidation and virtualization means that there is less hardware to be supported in the field.
  • Pre-fabricated Data Centers – In their desire to operate efficiently, those companies that operate and maintain their own data centers will turn to pre-fabricated models which reduce the level of labor and material used in the design, build, and installation of new data center.
  • Software Defined Networks (SDN) – The transition to SDN means that network operators can build-out or enhance their networks without investing in new hardware. As a result, the need for Lifecycle Services may plateau.
  • Preference toward Public Cloud – According to the consulting firm 2nd Watch, private cloud computing is one of the least popular trends right now because it is very expensive to manage. As result, a large percentage of CIOs are opting for public cloud solutions. These will result in the reduction of end-user IT assets to be supported by Lifecycle Service providers.
  • Mobility – As enterprises continue to deploy mobile device in their workforce, we will see less and less demand for fixed IT assets like desktop computers and departmental servers along with the lifecycle services that are associated with them.

While this analysis of market trends is by no-means exhaustive, it does suggest that the market for onsite and depot repair services will remain volatile over the next several years.  This is because end-customers are in various stages of their lifecycle when it comes to the implementation of disruptive technologies.  As such, some end-customers will require more support from their lifecycle service provider while others will require less.  No doubt, end-customers will continue to seek the most cost effective provider when it comes to supporting their lifecycle service requirements.

To win in this new market, service providers must possess good market intelligence on what stage of the IT lifecycle their customers are in.  At the same time, service providers must use this information to develop and implement service offerings, delivery processes, and infrastructures that are optimized towards the needs of their target market.

In my next blog post, I will reveal in more detail the steps that Lifecycle Service providers can take to thrive under the new market realities described above.  In the meantime, please feel free to schedule a free consultation with me if you would like to get a jump start on preparing your company for future growth.

Strategy: The difference between surviving and thriving

Survival

As many of you know, I have been very interested in how Disruptive Technology (i.e., Cloud, Mobility, Big Data, etc.) impacts businesses involved in service and support. Several months ago I conducted a survey on this topic.  The survey was designed to examine which technologies are causing the greatest disruption to service businesses and identify strategies and tactics that companies are using to overcome these challenges. The survey findings reveal that the two technologies that are having the most disruptive impact are Cloud Computing and Mobility.  Over one-half (52%) of respondents expressed this concern.   Big Data/BI and the Internet of Things (IoT) are having less of an impact as expressed by over one third (38%) and one-quarter (25%) of the respondents respectively.

 

On face value, this data makes sense. While not quite considered a mature market, a large percentage of businesses have implemented Cloud and Mobility platforms whereas Big Data and IoT are in an early stage of market development.   Chances are that you feel reasonably certain how your company will respond to these challenges and continue to grow, or you are struggling to find an answer and are concerned about your own survival. The survey results suggest that companies who feel confident about the future have implemented one or more of the following strategies:

 

  • New Service Development: A majority of companies surveyed are generating new sources of revenue through the provision of new services offered to current customers. They are achieving this result by developing new capabilities or exploiting existing ones. Examples include strategy consulting, asset disposal and remarketing, network management, and cloud based services.

 

  • Market Expansion: On the other hand, many on the respondents have a service delivery infrastructure that is optimized toward the delivery of break-fix services. As a result, these companies are pursuing opportunities in market segments that will continue to require break fix services such as ATMs, Kiosks, Retail Digital Signage, etc.

 

  • Operational Improvements: A number of respondents indicated that they are making investments in their service delivery infrastructure that will enable them to operate at a higher level of productivity and efficiency, thus improving the quality and becoming more competitive in the market.

 

  • Market Penetration: These respondents indicated that they will continue to pursue business within their current market with their existing service portfolio. Granted, some of these respondents are providers of solutions which incorporate disruptive technology. However, others are traditional break-fix vendors who believe that beefing up their sales and marketing efforts will result in new sales.

 

I’ve also found from direct interviews with service executives, that companies who pursue a strategy of new services development tend to have a higher growth rate than those who pursued other strategies. My research also suggests that companies who follow a well-defined strategy have experienced service revenue growth rates in excess of 10% over the last two years. However, those without a clear strategy have experienced stagnant or negative growth in services revenue over this same timeframe.   And that’s the difference between having a thriving business and merely surviving.  Companies in survival mode find it difficult to achieve any traction in the market and experience a lot of uncertainty about the future. This is not a great place to be.

 

Unfortunately, companies in survival mode can get stuck there unless management takes the necessary actions to transform the business. This requires a shift in thinking, from tactical to strategic. It is not an easy task because it requires management to set aside the time to analyze the current situation, conduct market research, and plan for the future. It might feel uncomfortable if you don’t do it very often. Furthermore, the desire for immediate results often prevents companies from investing the time and resources to plan effectively. However, if you don’t exercise your strategic planning muscles you’ll likely remain stuck where you are for a very long time and possibly risk business failure. On the other hand, you’ll be in much better shape 90 days from now if you take the time to today to plan your work and then work your plan.

 

Building your strategic planning muscles is a lot like weight training. The more systematic, precise, and diligent you are about it the more likely you are to achieve excellent results.   Unlike weight training, which is a lifestyle choice, strategic planning is an absolute must if you are going to build a thriving business. To help facilitate the right environment for achieving a positive outcome, I’ve created a new online coaching program. You can learn more about it through this link. Please also feel free to schedule a strategy session with me if you have questions or need a personal trainer to help you achieve better results.