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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Strategies to make service more affordable

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In my last blog post I discussed the strategic importance of continually finding ways to reduce cost of operations while enhancing service quality. A company can benefit from their cost savings in the form of higher profits or by passing them on to customers in the form of lower prices. Most rational business owners and executives would probably choose higher profits over lower prices unless of course lowering prices is a matter of survival. However, cost reduction is not the only strategy for achieving this outcome.

As I mentioned in my last post, there are a number of market focused strategies that a company can pursue that can result in offering customers services at a more affordable fee. Let’s examine them:

  • Standardization The establishment of standard, well-defined service modules or portfolios can lead to reduced cost through the ability to control the human element and ensure consistency in the service delivery process. McDonald’s is a good example of a company that employs standardization in their service strategy.   In the High-Tech Service & Support Industry, standardization may take the form of offering the customer a bronze, silver, and gold service package.
  • Use of alternative delivery systems To reduce investment and operating costs a company can find alternative ways to deliver service to their customers. In other words, they can make it possible for customers to be more involved in the service delivery process. Electronic banking, including bank-by-phone and the use of ATMs, are examples of this type of service strategy. In the High-Tech Service & Support Industry, this may take the form of an internet portal that allows customers to issue work orders directly to Field Service Engineers or perform troubleshooting on their own.
  • Market segmentation and focus on price sensitivityThere are, of course, significant service sub-market segments, some of which are price-insensitive. However, price-sensitive service market segments also exist. In general, those customers who are more price-sensitive will tend to do a greater portion of the service themselves, including self-maintenance and delivery functions, which might normally be done by the external service vendor at an added cost. IKEA, a furniture distribution organization, is an example of service directed toward the low-priced customer base. As such, they leave services such as picking, delivery, and assembly up to the customer. Medical Device companies do this by offering parts only service contracts.
  • Changing service response and completion times. A final tactic that could be utilized to reduce costs or increase margins is to change or lengthen the service response time and delivery characteristics. In essence, some customers are simply willing to wait longer to reduce service costs), than others. (Some customers want and need rapid response and are willing to pay a premium for such service.

 

Companies seeking to make service more affordable to customers can pursue any or all of these options and still achieve healthy profit margins. Now it’s your turn. Do you have a segment of the market that is price sensitive? Which option would you implement to better serve them? Please share with me you thoughts or experiences you’ve had when it comes to this issue. Still searching for answers, schedule a free consultation today.

Four Principles for Overcoming the Biggest Challenge in Your Business

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We recently conducted a market survey among 250 service managers and executives on critical trends facing the Field Service industry. As part of this research effort, we asked respondents to indicate which issues where the most challenging to their company. Reducing the cost of service delivery was at the top of this list. Over two-thirds of the survey population indicated that this issue was either somewhat (40%) or very (29%) challenging for their organizations.

The truth is that taking a disciplined approach to reducing costs is critical to a business’ long term growth and sustainability.   One way to ensure high profits, year after year, is to consistently find ways to reduce cost by at least 10% per year. They are not simply cutting expenses haphazardly by laying-off people, taking short cuts, asking vendors for price concessions, or making do with less. Those tactics have negative consequences on morale, productivity, and quality which ultimately hurt rather than help a business.

Instead, world class companies take a strategic approach to cost – cutting. They pursue an approach that leads to long term growth, improved market share, and an enhanced reputation among customers and employees.   In other words, an approach that makes them the type of company that makes people want to do business with, work for, or invest in.

Here are a couple of key principles to keep in mind when  applying a cost cutting strategy to your service operations:

  1. It never ends – Just because you were able to find a 10% savings today doesn’t mean that costs will remain the same next year. Your operating expenses will always find a way to creep up on you. There will always be a learning curve associated with rolling out new technologies and launching new services. Even when it comes to delivering existing products and services, waste and inefficiencies will multiply if left unchecked
  2. Know your numbers – There are two old adages that you need to remember when managing a service business – 1) quality is not free and 2) you can’t improve anything that you can’t measure. That’s why it is important to keep an eye on key performance indicators that impact both quality and cost such as First Time Fix Rate, Utilization Rates, Repeat Visits/Repairs for the same problem, No Fault Found, and Dead on Arrival. Continually find ways to improve your performance in these areas and cost savings will follow.
  3. Pursue process and systems improvements – It goes without saying that cost savings can be achieved by streamlining processes and deploying technology to automate manual processes.   For example, a company can achieve a 25% or more improvement in operating efficiency by implementing a disciplined approach to call management, remote resolution, and technician dispatch through reliance on advanced technology such as knowledge management tools, mobile communications, and dynamic scheduling solutions.
  4. Seek alternative delivery models Outsourcing has traditionally been viewed as an effective alternative for reducing costs without jeopardizing quality. However, new advances in crowdsourcing platforms and sharing economy business models offer another alternative for companies to gain economies of scale, improve operating efficiency, and maintain high levels of service quality by contracting directly with independent contractors. In effect, take out the middle man and enable a self-service model. Check out Essintial Enterprise Solutions, an independent services organization (ISO) who uses a Freelancer Management System (FMS) developed by Field Nation to make this type of business model possible.

 

These four principles focus on the internal operations of your business. Follow them consistently and deliberately and you are guaranteed to reap rewards. There are of course market focus strategies that you can pursue to control or reduce the cost of service which we will explore then in our next blog post. In the meantime, schedule a free consultation with me today if want more ideas on where to find cost saving in your service business.

Is it time for a mid-course correction?

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The summer is here and with it brings the beginning of the second half of the year. This is great time for re-evaluating progress in meeting our business goals.  It represents a half-way point to determine if we are on track for the year, if we need to change course in direction, or simply act with greater resolve and urgency to achieve our outcomes.

One thing that we uncovered in our recent Readership Survey is that a large percentage (47.7%) of subscribers desire to learn about strategies for achieving better results. The most frequently occurring response when respondents were asked about what they want to achieve in their business over the next 3-5 years in “growth”.  I think that it is safe to say that many of our readers can benefit from strategies that will help them achieve higher levels of growth.

In my attempt to provide readers with more of what they want, let me give you some action steps to follow if you find that your actual growth for this year is not in line with your original target.   First, remember that the trend is your friend.  This means that you need to periodically evaluate your market to determine if the trend is working in your favor.   You’ll want to get a handle on the size and growth rate of the market you serve, the level of competition, industry dynamics, buyer behavior, and purchasing criteria.   You can uncover this information through internet research, market surveys, analysts, and other secondary sources of data such as articles, press releases, annual reports, etc.

Assuming you’ve concluded that the market you serve is large and growing, then you need to ensure you have the right marketing strategy in place to capture your share of this opportunity.  Think of your marketing strategy in terms of a triad.

market strategy triadAt the base of this triad is your company’s performance.  The ability of your company to deliver on its promise is critical to keeping customers. If they are happy with your service, they will tell others and you will gain word of mouth referrals.  The second side of the triad is the value your company provides to customers. Is it defined in a way that the value is clear and compelling to current and potential customers?  Value is often defined by the quality of your offering and the little things you do to win over the customer.  For example, are you providing them with options so they get exactly what they want?  It also includes offering great service and support before they buy.

The third side of the marketing strategy triad is your tactics.  You want to make sure that you are implementing tactics that will drive customers to you and encourage them to do business with you.  Tactics to consider are pricing, social media, advertising, promotion, etc.  Most importantly, the tactics you use must be consistent with the other elements of your triad.  In other words, your advertising and pricing tactics must align with the value you provide and the performance you deliver, and vice versa.

This triad provides a good framework for evaluating the results of your marketing efforts. Like most frameworks, they are only effective if use them as an analytical tool.  If sales are not where you want them to be then look at your marketing strategy triad. Use it to evaluate how effective your performance, value, and tactics are in attracting and keeping customers.  It will provide you with insights on how and where to improve.  If used consistently, it will enable to you win more than you fair share of business.

Seven Ways to Win at Service Marketing

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Revenue growth is probably the single most important objective for executives who are responsible for managing service as a profit center or strategic line of business.  “I want to double my service revenue in the next 3-5 years” is an incantation that I hear constantly from business owners and executives.  That equates to a 20% or more growth rate per year.  Sure, this type of growth is easily achievable if the market is growing at this rate or faster.  I’ve found that these high growth targets are often triggered by management’s desire to take back market share from competitors or increase the share of service revenue contribution to overall corporate revenue.

While high revenue growth in a low growth market is difficult, it’s not impossible. A little hard work is usually required to achieve this type of performance.  To understand where the emphasis is needed, let’s look at where service market programs may fall short:

  1. Service Portfolio not meeting customer needs: Quite often service providers fail to meet their revenue objectives because their service portfolio is no longer meeting customer requirements. In other words, they have failed to offer services tailored to their customer needs. For example, offering only next day response when customers require same day.
  2. Pricing not optimal: If your revenue is flat or declining, you might want to look at how you price your services. Perhaps you service prices are no longer competitive. On the other hand, you may be underpricing your services in relation to the value you provide.
  3. Failure to understand competitive threats:   Many service providers, particularly those that are divisions of manufacturers, fail to understand the competitive threat of “mom & pop” third party maintenance (TPM) companies and/or in-house service providers.  For example, they often under estimate the value that TPMs provide to their customer and/or fail to develop an effective value proposition to compete against them.
  4. Failure to articulate value: How well have you articulated the value of your service offering to current and prospective customers? Do they understand the cost of downtime or the pain points that your services help solve? It is important that you not only articulate value to your customers but make sure that your sales people understand it and provide them with the appropriate sale aides and marketing collateral to support it. 
  5. Lack of communication & follow-up: One way to increase service revenue is by improving contract renewal rates. These rates often decline though lack of consistent communication and persistent follow-up about the value of services provided, when contracts are up for renewal, special incentives for renewing, and information on when they are about to expire. 
  6. Not asking for referrals: Referrals are the best and least expensive source of qualified prospects. The problem is most service providers forget to ask for them. Remember your customers speak to each other. They may be involved in the same networks and trade associations, or call on each other for advice and guidance. Why not enlist them in your business development efforts? 
  7. Lack of customer appreciation:    Your customers will remain loyal to you and purchase more from you when you let them know how much you value and appreciate them. It’s the simple things like a courtesy phone call/visit, thank you card, small gift (i.e., rewards program), or special offer that let them know you value their business.

 

These seven areas have one thing in common, they all benefit from market research.  Whether its information that will help you redesign your service portfolio or modify pricing, market research provides you with an unbiased and unfiltered perspective on what your customers are actually thinking and saying. You will learn things that you may not otherwise from a sale’s call or courtesy call made by a company executive.

Before you conduct research or make any changes, it is important that you have a baseline assessment of how well you service marketing program is working. You may want to consider an audit from an independent and objective industry consultant.     Schedule a free consultation today to learn more.

Strategic Value Drivers of High-Tech Service

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In order for a business to succeed it must have a clearly defined strategic value that it provides to shareholders, stakeholders (e.g., customers, suppliers, employees,) and the market place at large.  It is important to clearly define strategic value since it is the precursor to developing a value proposition and mission statement.  Furthermore, it forms the basis for the strategies, tactics, and programs that a business puts into place.

Nowhere is strategic value more important than in the High-Tech Service Industry.  All too often, service providers, especially those that are divisions of product companies (e.g., OEMs, VARs, Distributors) fail to clearly define their strategic value.  As a result, they fail to make any impact in reaching their business goals and objectives.   They are like a ship on an ocean without a sail, drifting aimlessly in whatever direction the winds blow.

We have found that there are at least three (3) common strategic values that High Tech  Service  & Support organization might chose to pursue/adopt. These include:

  1. Directly influencing the sale and adding value – A company who adopts this strategic value recognizes that service is very critical to the customer in their final selection to purchase a product.   In other words, it’s a value-added feature influencing the purchase decision. Dell is a great example of a company who uses service as a way of directly influencing the sale of products.
  2. Generating revenue and profits directly – This applies to any company that operates their service business as a profit center or strategic line of business. These companies recognize that customers are willing to pay for service independently from purchasing equipment. More importantly, their willingness to pay is based on the value-in-use of the service not it terms of the perceived cost. Much of IBM’s success in the 1990s was due to their ability to generate revenue and profits from directly selling services.
  3. Providing market control – Companies who embrace this value driver provide a broad array of services in order to gain account control. In essence, they engulf their customers with an extensive portfolio of basic and value added services in attempt to establish a trusted advisor position and influence future sales. GE is a prime example of a company that has achieved this result by offering its customers technology assessments, strategic planning, and other types of professional and value added services.

 

When establishing your strategic value it is important to select one and only one value driver.  Otherwise, it will lead to inconsistent performance and confusion in the market place. Strategic value cannot be defined in a vacuum, it must take into account the needs and requirements of your key stakeholders and align with your overall corporate strategy. For example, a company focused on generating services revenues and profits directly may find this goal at odds with its objective to increase market share in its product market.  Basically, the service division would be competing with the products line of business for resources and investments.   More importantly, your definition of strategic value will determine where you focus in terms of Key Performance Indicators (KPIs), such as investment considerations, business constraints you must optimize, and possible market outcomes.

Strategic value when set into motion is difficult to alter since your entire service program and corporate objectives are based on this.  It often takes a commitment from the C-suite and/or board of directors as well as persistent and consistent follow through from management to successfully redefine your strategic value in terms of measurable outcomes.   This change should not be pursued lightly.  Those who succeed at redefining their strategic value often do so after very serious consideration, typically involving strategic market analysis, risk assessment, and scenario planning.

Strategic value is the DNA of your service business. If defined poorly, your strategic value maybe a liability and bankrupt your company.  If designed optimally and implemented effectively it can lead to unlimited upside potential.

Strategic Market Analysis – The Foundation for Smarter Business Decisions

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Strategic market analysis is the solid foundation from which to build your business intelligence. Having careful, objective and professional analysis of the market place, competition, internal resources and capabilities and assessing future trends built on hard data and evidence is paramount.

All Companies have a critical need for strategic market analysis. Strategic market analysis provides an understanding of the market in which you are competing. Here are a few of the questions where you can achieve insights:

  1. What’s the total market opportunity?
  2. What is our current market share?
  3. Who are our main competitors?
  4. Is this a market we should be investing in or planning to exit?
  5. Should we consider merging, acquiring or selling?
  6. What market trends can we take advantage of, or do we need to address to grow?
  7. Does our business plan reflect market wants?
  8. Are there market niches we are missing, or should be growing?
  9. What are the market segments that are growing, or declining?
  10. Are we missing any important market segment opportunities?
  11. Do we have a deep understanding of our competitors which will allow us to exploit their weaknesses?

 

Planning and Allocating Market Analysis Resources
Planning and allocating resources for strategic market analysis is essential whether your needs are for proprietary or off-the-shelf research. The value proposition in making a sound purchase decision should come down to the strategic value of the information vs. the cost. When trying to make decisions, the place to start is with the most accurate and up-to-date information you can get . Outdated or bad information will result in a cascading effect of bad decisions. Because of this, allocating sufficient resources for strategic market analysis and business intelligence is absolutely necessary. These costs are insignificant compared to the capital, assets, and business failure you risk by making bad decisions based on flawed or obsolete data.

One note of caution, you should be of aware is that lower cost off-the-shelf research when not used for its intended purpose of broad view and general trend information will in the end cost more than proprietary research.

Proprietary Research or Off-the-Shelf Research
The important key to whether proprietary custom or off-the-shelf research is best for you depends. It depends upon answers to questions like these:

  1. Why do you need the data?
  2. Are you simply in need of broad trend data?
  3. Do you need it to plan and allocate operational resources?
  4. Do you need specific information on sub-segments of the market?
  5. Is having a deep dive on the competition required?
  6. Will you need data to enhance buying & decision making processes?
  7. Do you need strategic and market analysis?

 

Bottom line proprietary market research is the choice for comprehensive and specific information that allows you to make informed operational and tactical decisions. Also when you need more data points like:

  1. Market size and forecasts by product or region
  2. Deep dive competitive information
  3. Understanding market behavior, needs and wants
  4. Analyzing your capabilities to deliver against market needs
  5. The help of a market expert to leverage industry data from a proprietary databases

 

Off-the-Shelf market research is best for a broad view of the market without a lot of specifics. This type of market research attempts to satisfy the needs of most people wanting to gain a high level view of a market or industry.

When off-the-shelf or Internet research is used as the method for obtaining market data it is often referred to as a “Swiss cheese” approach. However, the problem, as we know with Swiss cheese, is that it has holes in it. This method is fraught with issues like:

  1. quality of the data
  2. old data, freshness of the data
  3. not getting the whole picture
  4. comparing apples to oranges

 

This approach is like trying to build a jig saw puzzle with pieces from different puzzles. Is this what you want as the foundation for your decision making?

Take Away

No matter the type of market research, the important point to remember is that no successful business goes to market without all the market research it can obtain and continues to utilize market research on a consistent basis to remain successful.

The building blocks to Servitization

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The “Servitization” of Manufacturing is taking the High-Tech Industry by storm!  By definition, Servitization is a transformation from selling products to delivering services.  It typically involves two components:

  1. The idea of a product-service system – an integrated product and service offering that delivers value in use.
  2. A “Servitized” organization which designs, builds and delivers an integrated product and service offering that delivers value in use

In more practical terms Servitization turns the product–service offering into a “utility” that the customer pays for on a subscription basis.   Under this model, the customer pays a monthly or annual fee equal to the amortized cost of the equipment plus the value of services provided for a specified period of time.

The concept of Servitization is nothing new. As early as the 1950’s, manufacturers provided their customers with the option to lease equipment with services attached to the lease agreement.  In the late 1990s and early 2000s, companies like ABB and GE begin to offer tperformance based service contracts to their customers.

Servitization is more than just a pricing strategy.  It is an overall business model that attempts to maximize and monetize value in use to the end-customer. This requires a manufacturer to proactively identify all the services that an end-customer may require over the lifecycle of equipment operation, understand the value that the customer assigns to these services, build this value into the subscription pricing model, and then deliver on that promise.

The trend toward Servitization has picked up steam in recent years for a number of reasons. First, market participants (i.e., OEMs and End-customers) have a greater appreciation of the strategic value of service to their overall business models.  Second, manufacturers recognize that service can generate more revenue over the lifecycle of the equipment than the actual purchase price of the equipment itself.  Third, the Great Recession forced many manufacturers to rethink the economics associated with how their customers justify the acquisition of new equipment.  Fourth, service tools and technology are now available that facilitates the design and operation of an integrated product-service system in a cost effective and real-time basis.

Ultimately, it’s the technology that is having the greatest impact on advancing Servitization business models.  There are some basic building blocks that any company will need to implement in order to deliver on the promise of Servitization. First, they’ll need a state-of-the-art service management system. It needs to perform the basic activities involved in managing a service organization (e.g., dispatch, scheduling, parts management, etc.). Second, they’ll need to have a way to connect with and monitor the condition of equipment within their serviceable installed base.  They will also need to integrate this information into to their back-end service management system. The third step is a mobility solution to communicate with people in the field. Finally, analytics are needed to evaluate what’s happening. Most companies will probably benefit by using a big data solution, as well, so they can look at unstructured data from their installed base and the customer’s environment at large, and start to analyze, predict and forecast.

In summary, Servitization is a transformational process that requires manufacturers to rethink all aspects of their business from marketing and sales, to pricing and financial management, to service delivery infrastructure.  The benefits of Servitization are great including the ability to build a multiyear annuity stream, gain account control, and create deeper and longer lasting relationships with customers.

I’d love to get your thoughts on Servitization.  Let me know if your company is pursuing Servitization.  What benefits do you expect to achieve? What obstacles remain in the way to realizing these benefits?   Last but not least, if feel free to schedule a strategy session with me if you want to discuss how Servitization could impact your business.

Key Performance Indicators and their impact on your business

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I gave a presentation a couple of years ago to a group of service managers and executives on the subject of key performance indicators (KPIs).  I was surprised by the fact that most of the audience could not give an accurate explanation of what a KPI is.  Most people thought it was a data point that was used to measure business performance.   However, this is not entirely accurate.

The true definition of a KPI is that it is a quantifiable measure of how successful an organization’s strategies are in meeting their goals.   To be effective, KPIs must be specific to your business needs, align with strategic goals, and bring overall benefit to your business.  Most importantly, it must inspire you to set new goals.

Unfortunately, many service managers confuse KPIs with industry performance benchmarks.  They are not the same thing.  In contrast to a KPI, a benchmark is a point of reference against which things may be compared or assessed. While a company might want to benchmark their KPIs against competitors in their industry, they shouldn’t assume that they must adopt the same KPIs as their competitors.  They might want to do this if their goal is to outperform competitors on every KPI they measure.  This may be neither practical nor feasible if their business needs and strategic goals differ from those of their competitors.

Let’s look at this from another perspective.  While there maybe dozens of different field service or reverse logistics activities that your company can measure, you’ll find that there are only a handful that ultimately drive the success of your company’s business strategy.  You’ll want to make these specific measurements your KPIs.   For example, your strategic goal may be to consistently meet your customers’ expectations for timely service.  There could be multiple factors to consider when measuring this outcome like response time, wait time, resolution time, call drive time, etc.  However, you may determine that SLA Compliance is the KPI that best measures your success or failure in meeting this strategic goal.  On the other hand, your strategic goal might be to deliver high quality service to your customers.  While this could be determined through factors like trunk stock fill rate or calls closed incomplete due to lack of parts, you determine that First Time Fix Rate is the best KPI measuring service quality.

When establishing KPIs, it is important that you answer these four questions:

  1. How will I know when my goals are reached?  This is a quantitative target that you want to establish for your KPI. It could be expressed as a raw number (i.e., 4 hour average response time), a progress measure (e.g. 98% SLA compliance), or incremental change (i.e., 10% improvement in Customer Satisfaction).
  2. What are the key success factors in reaching this goal?   A description of the core functions, activities, or business practices that must be performed in order to reach this goal.
  3. What critical actions do I want to take from the KPIs? It is important to anticipate how your company will react to the KPI measurement that it actually achieves. What steps do you take if you miss your target? What if you meet or exceed it? For example, hire more resources, retrain personnel, improve processes, implement new systems, etc.
  4. What results do I achieve through these actions?  Examine how these actions will impact your business.  In what timeframe will they impact your KPI and at what cost?  Are there other aspects of your business that will be impacted?

 

By answering these questions, you’ll have a strategic road map for achieving operational excellence in your business.  It’s all about getting clear about your goals, making sure you measure the right things, tracking results on a consistent basis, taking corrective action when needed and, of course, celebrating success. Do you want to learn more about how to achieve geometric results in your field service or reverse logistics business?  Schedule a free strategy session today.

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.