AUTHOR ARCHIVES: Kris Oldland

In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

In the first instalment of this topic our experts answered the question "It is often said service technicians are the greatest salesmen – what are your views on this?"

and now onto the second question of the topic...

 

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Is there a difference between selling service and selling products?

 

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Yes, there is an enormous difference.

Selling products requires the salesperson to focus on the form, fit, and function of the product and how it meets the customer’s needs. Selling products is about selling the tangible.

Selling services requires the salesperson to focus on how the service can help the customer solve a problem, improve their situation, or achieve a better outcome.

More importantly, it is about selling the intangible.

 

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In general yes, but not always.

If a service is very tightly defined in terms of the value proposition and delivery, then it can follow a very similar feature/benefit selling process of a product. In other words selling against a tightly defined customer specification. An example of a service sold in this way might be an extended warranty.

The difference comes when the customer need is less well defined. Here the selling process moves towards addressing a business problem and involves an element of co-creation between the customer and supplier.

The more co-creation that is required, the more business orientated the discussion becomes. Not only is the sales process very different in terms of the discussion and detail, but also the management level at which the decision maker sits tends to be more senior. So yes, the more co-creation is required, the greater the difference.

 

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In technical terms, there is a difference between selling service and selling products. You can touch and feel a product. You can see and hear it operate. You can see the craftsmanship in its features.

Selling a product often involves helping the customer see the benefits in the product’s attributes and purchase decisions rely on both the trust built by the seller and the product’s features and track record.

A service, on the other hand, may not necessarily be seen, felt or heard. Good service may even result in the absence of something (fewer unexpected outages, less downtime or fewer complaints for example). Selling a service is more about helping the customer see the benefits of the experience the service will create for them. Success in selling tangibles depends on the salesperson’s ability to help the customer envision the experience the service will provide. Purchase decisions for services tend to rely more heavily – if not exclusively – on the customer’s trust of the seller.

In practical terms I don’t think that this difference is very important when a field service professional makes a recommendation as a trusted advisor. In most cases the field service professional has high levels of trust from both a personal and a professional perspective. The approaches that he or she uses to justify the recommendation will be the same whether product or service.

 

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Look out for the next part of this series when we ask our panel "Is incentivising service technicians to 'sell' opening up new revenue streams or putting their “trusted advisor” status at risk?

 

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It has now been ten months since GE Digital acquired field service management solution provider for a cool $915 Million. Even against a backdrop of constant M&A activity within our industry, it was a deal that made the wider world sit up and pay attention to the field service sector. But how have ServiceMax slotted in two the GE Digital fold and how big a part will they play in GE’s vision of how best to serve the industrial markets of the future?

Kris Oldland, spoke exclusively to Scott Berg, COO, ServiceMax just before he participated in their first major outing as a GE Digital company at the Minds and Machines conference...

With the Minds and Machines 2017 event just days away it was an opportune time to reconnect with Scott Berg, COO of ServiceMax.

The last time I spoke with a member of the senior executive team at the Californian based Field Service Management Solution provider was when I spoke with their CEO Dave Yarnold, literally a few hours ahead of the announcement that ServiceMax was being acquired for a figure just shy of a Billion dollars by General Electric (GE) and would become part of their expanding GE Digital portfolio.

And whilst field service management is undoubtedly a hot ticket for investment at the moment, with the list of acquisitions within the market being a veritable who’s who of FSM vendors including ClickSoftware, ServicePower and IFS amongst others, nothing has come even close to matching the size of deal between GE and ServiceMax.

But then no one in the field service sector has really come close to matching ServiceMax in terms of their success story across the last decade either - growing from a three man start-up in a rented office in San Francisco to an industry leader worth close to a Billion Dollars within ten years takes some doing, yet when I spoke with Yarnold back in November last year, it wasn’t achievement I heard in his tone, but yet further ambition.

 

He talked excitedly about the reasons why he had decided GE could be a suitable home for ServiceMax, outlining hugely ambitious plans to work with GE to build out a working IT platform for entirety of the industrial sector, something that connected people, assets and workflows together to drive business forwards in the twenty first century.

Indeed, it is often hard to not get caught up in Yarnold’s enthusiasm, and sometimes the trick is to separate the passion from the plans, the hyperbole from the reality - although in fairness he and the ServiceMax team do tend to have a habit of meeting the ambitious plans he puts forward.

But has that ability to rise to the challenge been hampered or enhanced whilst being taken under the wing at GE?

Just ahead of the Minds and Machines conference is a great time to sit back and assess that question, whilst Scott Berg, is perhaps the perfect barometer.

Like Yarnold, Berg has been on the ServiceMax journey from Day 1, and whilst he undoubtedly shares much of Yarnold’s passion not just for their product but for the service industry at large as well, with Berg one also gets the feeling that, that passion is tempered just a tad by a keen analytical mind, that is acutely aware of not only the size of the opportunity but also the size of the challenge, and as Chief Operating Officer, it is his job to overcome that challenge.

 

As such he is a perfect foil for Yarnold, the two compliment each other well, (in fact that is trait that seems to be apparent throughout the whole ServiceMax family, there is a shared ‘something’ in the DNA and it seem that at all levels the team members feed well off each other) so who better to discuss how the integration with GE has progressed and whether the roadmap for Servicemax as part of GE remains on a similar course, to that which Yarnold described?

“This is really the first opportunity for us to be a GE Digital company and showcase some announcements of what we are planning,” explains Berg when we catch up to discuss what we can expect to come out of the event.

“I think this is the first time that we’ve made a public announcement where people can start to see some of the synergies across the GE Digital portfolio and the big news for us is the integration between the ServiceMax Field Service Management (FSM) Solution and Asset Performance Management (APM) within the GE portfolio. It’s big news and I think it’s a first proof point around GE’s thinking around the Industrial Internet and what role services and assets will play within that world.”

Indeed, when ServiceMax launched their Connected Field Service offering in the beginning of last year the vision was very much to bring the install base to the forefront of an FSM system, rather than just being focussed on the mobile workforce - which had traditionally been the primary focus of industry tools to date. Connected Field Service of course leveraged IoT, and from my limited understanding of AMP this was a solution that could build on that?

“Yes, it is a really interesting evolution on the concept,” Berg says helping fill in the gaps of my own understanding.

 

“If you think about our field service strategy it was about getting data from the machine and the asset. Basically, letting the machine become the sensor rather than the customer being the sensor when something goes wrong.”

“That is still very much part of the on-going strategy, what APM adds to the process is a significant amount of additional intelligence around preventative maintenance.”

“The concept has always been about avoiding unplanned downtime and in terms of providing preventative maintenance there is a rapid evolution going on where we are moving quickly from interval based maintenance i.e. perform this maintenance every 6 months or a year, to condition based maintenance - which is perform maintenance every 1,000 cycles of a machine. But now with APM combined with IoT we basically have data from the machine itself, embedded into a sophisticated analytics engine in APM, combined with the finance and the strategy to optimally operate an asset and to do so in the most profitable manner.”

“So what APM adds, fed by this IoT data, is basically recommendations and intelligence of when maintenance should most optimally be performed. For example right now, or next week or next month. It can even do things like suggest the maintenance shouldn’t even happen at all. It may be that the best strategy and profit outcome on a particular asset would be to let it burn out its useful life - it might be more profitable to replace it than it is to make the repair. And if so that is what APM will suggest.”:

“It is an evolution in the concepts around maintenance. From interval, to conditioned and now to predictive analytic schedules. And when combined with the power we already had in ServiceMax, which was taking this IoT feed from the machine and suggesting when service can happen, it becomes a very powerful tool indeed.”

One thing that is of particular interest with APM is how the solution can work from fleet level through to sub-component level.

“We are definitely down at the component level now if we look at the areas such as the Power industry or Oil and Gas - vibration sensing, the speed things are rotating at, the temperature of bearings and how do those factors impact performance behaviours or how do they impact output or throughput of a machine. It could be the volume of fluid passing through something, It could be on a grander scale, the level of power production from a thermo-nuclear plant that is converting fossil fuels to electrical output,“ Berg explains as we discuss the importance of being able to see the health of various levels of both components and assets.

“But, the important factor with APM is that it can also can apply it to systems of assets as well. You could have a situation where you have multiple assets, each with sub-components and you want them all performing hopefully in unison - or at least in tandem, to produce an overall outcome so you can ‘zero’ in on where maintenance should occur to optimise the output. It could be on one asset , it could be on one sub-component of an asset.”

 

Essentially this is perhaps where APM can deliver the most value, in helping make the vast streams of data from assets connected to the IoT, truly useful.

As Berg alludes to when he comments: “I think one of the big struggles people always have with IoT is that they basically drown in the data. You’re being sent all these readings but how do you make sense of it?”

“What APM does is make sense of that data in light of maximising the uptime and the output of an asset and its components. It’s that added layer of intelligence that IoT on it’s own doesn’t have. It’s making that data useful essentially,” he adds.

Of course, one of the big benefits of FSM tools such as ServiceMax is allowing the service organisation to empower their field service technicians by putting such rich layers of customer information, ultimately being able to put the core intelligence of the organisation itself, into the hands of the field service technician.

Given that the integration between ServiceMax and APM is geared towards increasing the efficiency of preventative maintenance strategies, I was intrigued to see how much of this intelligence would be filtered down to the engineer. For example if he was on site fixing asset A would he be able to see that in fact Asset B was due to for maintenance in the next few weeks and therefore potentially undertake the second maintenance job whilst on site to save an unnecessary future truck role?

“I think that layer of insight is there on two different levels,” Berg responds when I put this point across to him.

“From a back office standpoint certainly, APM will suggest maintenance should occur on machine number one based on a threshold that’s been reached, but more importantly than that, it will also look at the fleet of the assets and see anything else that is approaching that same level of wear and tear (or that same maintenance condition) and alongside what we’ve already created within Connected Field Service - where we are pushing that machine data down to the technician, we can use our install base management capabilities to identify the fleet of assets that are at his location and highlight those near the warning condition or those that would approach it soon.”

“This data can then be fed to the technician who can make recommendations whilst on-site with the customer to say ‘well I’m here for pump number six but whilst I’m here I can see that also pumps number three and four are in a similar condition so I’ll go ahead and fix those in advance, or perhaps even explain to the customer “well, this one I’m going to leave run as it is for a bit longer because the recommendation is to push this a little bit further before we do the maintenance activity, to allow you to get maximum output.”

 

One interesting if indirect result of giving the technician this level of insight is that by being able to relay such information to the customer, he can also reestablishes the importance of the maintenance visit in the first place.

In today’s markets as we see companies moving to outcome-based services and preventative maintenance strategies in ever greater numbers, there is the new challenge of the workload of the technician perhaps going unseen by the client. In the old traditional break-fix model there was the theatre of the service engineer being the superhero, coming in to rescue the poor Ops Manager who has had to put an exasperated call in to say - “Hey! I can’t produce anything!’ Then the engineer comes in, meets his SLA and makes everything work again. Going above and beyond and generally being a hero.

In today’s world of outcome-based contracts there is a challenge to make sure you are effectively communicating the work your technicians have done for the client, to demonstrate the value your service provides them.

With the tools Berg is discussing, it seems there is the potential to almost move the engineer into something more of a consultative role. Someone who can say I’ve come to undertake the maintenance on ‘a,b,c’ but I can also advise you that ‘x,y,z’ could be also be done today and this will improve your output by ‘n’.

“I think there is a great opportunity here to improve the lifestyle of the technician themselves,” Berg comments as we bring the conversation onto this point. “Sure, there is the heroic experience of saving the day but that is also a high anxiety moment as well. When we consider the psychology of the technician, the challenging bit is to go out there by yourself, with no one to help you, then when encounter a really bad situation hopefully you’re the one that can resolve it. It can be a life with a lot of tension, which is sometimes overlooked.”

“Alongside that I also think that customer expectations are shifting as well,” he continues.

“There is the classic metaphor that people don’t want to go out and buy a drill they want to buy a hole and the concept is largely about outcomes. I think more and more customers of the machinery don’t really care so much about the details of the machine. They don’t want it to break down, they want it to produce what they bought it for, and they want to extend and maximise its life so that it produces more of what they bought it for.”

 

“So now you put a technician in the position to not only be the hero by just fixing something retrospectively, but to be the hero that proactively maximises the customers output and production from an asset they acquired? I think that is not only going above and beyond but it is catering to more of the outcome-based mentality that companies now want to consume output rather than buy a set amount of machines.”

So it seems at least on the technology side of things there is already progress being made between the two organisations coming together, although it could be argued that this is the result of the two separate existing technologies just being plugged into each other.

The real fruits of the union are likely some way off, although how far could largely depend on how quickly and easily the ServiceMax team are integrating into the wider GE group. I mentioned Yarnold’s views at the time of the acquisition about the two organisations having a shared understanding and a similar DNA in terms of the view they both held of what ‘good service looks like’ - as well as the importance of service within industry as we move further into the twenty first century.

And of course, I was keen to see if that was holding out now the ServiceMax is fully embedded within GE.

“I think it is and I think it was very prescient of Dave to be highlighting that right at the start of us coming together,” Berg replies.

“There are several things here. Firstly, we’ve always served markets that I would largely classify as OEM manufacturers or industrial companies and certainly these are the companies and sectors that GE is already working amongst. As a direct result of that we are already seeing great energy and sales momentum by our alignment with GE business units around Oil and Gas, Energy, Power - as these were the industries we would have sold to anyway.”

[quote]I think with GE being largely a company and culture built around engineers, we have both shared an asset centric perspective on service.

“Secondly, I think with GE being largely a company and culture built around engineers, we have both shared an asset centric perspective on service. For us, it was always about a system of assets in the field that customers wanted outputs and outcomes from - we were never about being your typical field service, scheduling only solution. For us it was an awareness of the people, the schedule and the asset. And certainly GE‘s culture is grounded in engineering, machinery and assets - so we are on the same page.”

 

“The third thing that I think is interesting is that GE was one of our largest customers and if you look at GE as a company, I like to call it the largest field service company in the world. There are tens of thousands of technicians, and the vast majority of revenue at GE is derived from service contracts - so there is definitely a kindred spirit and a kind of alignment with GE because of these vertical focussed, asset centric mentalities. Plus then there is a shared passion for service which is such a big contributor to the GE business.”

Of course one would think that as one of their biggest clients, having the GE team on hand to add weight to their cause could also add some heavy kudos and gravitas at times that they need to call in the big guns.

In particular GE have been early adopters in the move towards outcome based models in a number of verticals. Is that helping the ServiceMax team when they go into conversations with prospective customers?

Of course, the move to outcome-based services is heavily tied to the use of the cutting-edge technology that ServiceMax provide, so it is in their vested interest to be avid promoters of such shifts in thinking.

But the reality is a move to outcome-based contracts can be a hard sell for service businesses to their own clients, whilst many still may need some convincing that a shift away from recurring spare parts revenue within the break-fix model is indeed the future of the Aftermarket sector.

However, having the back story of now being part of GE, who have already taken that path and who are able to say we believe this is the future because we’ve already gone out and done it in our own business, that must surely be a powerful tool when it comes to talking to those companies who are more reticent to make such a switch?

“This is actually one of the core themes at Minds and Machines,” Berg replies.

“The concept our chairman will be talking about is how our digital transformation at GE from an industrial company to a digital industrial company is really focussed on three different markets.”

“Firstly there is GE for GE, which is how we help ourselves go through this digital transformation towards outcome-centric models. Secondly, we have GE for Customers and this is looking at the business units which GE serves and the companies they sell to, and we want to help and advise them - sharing what we’ve learnt from our own experiences with them.”

“The final one is called GE for the World. What has been interesting with this and what has truly surprised me is the amount of times we’ve been speaking to companies who are traditionally staunch GE competitors, but they are curious about what we are doing.”

“The whole idea behind this is to share the experience GE has had broadly around digital transformation of industrial businesses.”

 

Given this experience and the broad touch-points Berg has access to I was curious to find out what his take on the shift to servitization was. Is it becoming as prevalent as it seems from behind my admittedly sometimes magnified field service lens? Indeed, are there many companies still in need of persuading that outcome-centric models are the best way forward, or has acceptance of the need to move towards servitized business models become widespread?

“It is interesting because I’ve yet to see much real push back on the concept,” Berg comments. “It is a as if everyone has come to accept that an outcome based model, i.e. a Service as a Product model - is the essential thing to do.

I think that value GE plays in those conversations is more geared towards telling these companies what is the first step to take on a journey like that. Sharing what our experiences have been, how we’ve done it and what our accomplishments have been.”

“It’s really interesting that in practical selling situations to potential customers one of the most impactful people we can bring into a scenario like that is someone like a CIO form one of the GE business who has made these investments, made it happen and can show you the results. I think the door is open but I think people are perhaps a bit confused as to how and where to start and that’s what GE can help them. We can outline how to start their journey and how best to stay on the right path.”

As we come to the end of our time together, a few things have become apparent throughout our conversation.

The first is that the technology seems to be a natural fit and combining ServiceMax with APM is a natural evolution, that is set to yield impressive results for those that are in place to put the two together.

The second is that Yarnold’s earlier prediction about their being a shared vision across the two organisations seems to be bang on target. As Berg explains their future plans to me there is a real sense not just of unity between the two organisations but also of continuity in terms of the original ServiceMax core beliefs that were so fundamental to their success.

However, one other thing that was apparent was the number of times Berg used the word industrial. This of course makes sense when we factor GE into the conversational mix - but one of the things that ServiceMax developed a strong reputation for pre GE, was for that every Sony, GE or Scheider they worked with - there were also the companies like Service2 - i.e. small local companies with less than twenty engineers.

Will these SMEs still be of relevance to ServiceMax or will they be forgotten as ServiceMax under GE goes hunting for a place amongst the industries enterprise elite?

 

“I think the conversation has changed a little bit for smaller companies but in a positive way,” Berg responds. “The GE brand credibility is really helping us send a positive message to smaller companies. We continue to serve all those markets and in fact one thing you will see from us is an expansion in the market at this level.”

“We see three separate groups of customers, one is the OEM manufacturers which has been a sweet spot for our business, people that make complex machines, such as medical devices or heavy machinery.”

“One expansion will be in what we call asset operators so you could think of in that realm are the power producers. Electric and Oil and Renewables who basically don’t make anything, they buy a whole bunch of assets and then produce something. Then the third group would be one that we’ve always focussed on, namely the service providers and that’s where you get a lot of these smaller companies.”

“The really interesting thing is if you take any one of the seven or eight business units in GE and think of it as an ecosystem of something like Oil and Gas then certainly you could be talking to someone like Shell or BP doing oil exploration and production but as soon as you take a step back from the centre of that industry, that’s where those relatively smaller providers are really important. What’s really interesting is that they are also really important to the GE verticals as well because there is an ecosystem of those service providers working with a GE - or maybe competing with a GE but supplementing the value in that market. So we will continue to focus on those types of companies and actually a lot of the companies we’ve historically sold to in those spaces are aligned to the GE ecosystems anyway.”

“We really think that effective field service execution is a combination of people, assets and outcomes,” Berg offers in closing.

“I think that our integration into the digital portfolio combined with the GE business experience puts us in an incredibly unique position to not only help our clients manage their people but also to help manage their install base of assets and make this shift to this outcome-based mentality around preventative maintenance a less painful and more fruitful path to follow.”

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Our world is changing.

Field service technology is evolving at breakneck speed. The role of field service within the wider business has grown from cost centre, to profit centre and is now rapidly shifting towards being the primary revenue source as companies leave behind them traditional break-fix models and adopt outcome based service solutions. SLAs are becoming replaced with guarantees of uptime. An asset in the field can request it's own maintenance call in advance of failure. Expertise no longer needs to be flown in it can now simply be dialled in.

So what does all of this rapid change within the field service sector mean for the field service engineer of the future? What exactly will the field service engineer of 2022 look like and how will he differ from the field service engineer we are accustomed to today?

However, with an ageing workforce crisis looming large as the existing last of the baby boomer workforce reaches retirement, it is perhaps one of the most important question field service organisations must address as they look to replace their leaving 'boomer workforce with a millennial workforce that have wildly different attributes, needs and skill sets.

 

With this in mind Field Service News is working in partnership with field service management provider ServiceMax from GE Digital on a research project that is seeking to establish what field service professionals believe the requirements will be for field service engineers and technicians in the not too distant future.

Now as we reach a half way point through the research we reflect on the interim findings and at the same time to turn to any field service professionals who have yet to take part within our survey and ask you to help us build an even more complete picture of what the field service technician of 2022 will look like?

Findings so far:

1. The predicted ageing workforce crisis amongst field service organisations is very much real

When we hear talk of an 'impending crisis' it may be only natural to think that there is a healthy dose of hyperbole within the headlines. However, in this instance an ageing workforce is certainly a looming problem and unless companies address this issue now it could indeed be a crisis for some.

Indeed, 81% of field service professionals that have participated in our research so far have indicated that the for their organisation an ageing workforce will pose some threat to their service delivery across the next 5 years.

Within that 81% of respondents 13% feel that the threat their company faces is severe stating that it is a 'major issue we are facing that could put our field service operations at risk.' Meanwhile, 45% of those who stated an ageing workforce was a concern stated that the risk was significant and stating that 'unless we address the issue quickly we are likely to face major disruption to our field service delivery.'

The same amount of respondents also stated that they see it [an ageing workforce] as 'a possible issue that we need to be aware of', whilst just 17% of field service professionals that have responded to the survey so far believe that the risk to their business is limited.

2. People skills are becoming increasingly more important in field service technician recruitment

The old cliche of a field service engineer being a reclusive creature often found in dark corners more happy in the company of his tool kit than with those dreaded customers who always just seemed to get in the way of him doing his job are now very much a thing of the past.

Indeed, over the last decade we have seen the field service engineer evolve from the character mentioned above into a role which regularly includes additional elements within the job description such as brand ambassador and trusted advisor. And as we move towards an ever more digital era - where often the field service engineer may be the only face to face contact your customers may have with your organisation - especially in business to consumer industries.

 

So it is perhaps little surprise that we see that 54% of respondents to our survey stated that they 'absolutely place people skills at the top of their list when recruiting new FSEs'.

In fact, alongside those that put people skills at the top of their list of skills for new techs a further 43% stated that they 'certainly pay more attention to people skills today than they would have done a few years ago,' whilst just a nominal 3% of respondents replied that 'whilst people skills are nice to have, technical skills are the major facet they are looking for in new field service engineers."

3. There can be little better for training new field service engineers that the experience of older engineers

Indeed, it seems that this is the accepted wisdom amongst many field service organisations with 59% of our respondents confirming they have programs in place for older technicians to support younger technicians.

Further to this an additional 16% of our respondents stated that they are currently devising such a strategy whilst just under a quarter of companies stated that they didn't have anything in place to harvest the knowledge of their older technicians before they walk out of the door.

 

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How does this compare with your own experience?  If you haven't done so already please do take just a few minutes to complete our research survey.

PLUS! not only will you help us build an even clearer picture of what the key thinking is around what the field service engineer of 2022 will look like, but thanks to our partner on this project ServiceMax by GE Digital, we have a number of prizes to give away including three £50 Amazon vouchers plus a number of free tickets to Maximize Europe conference (worth $215 each!) - but you can only find the entry for the prize draw at the end of the survey so if you want to win - you better complete the survey ASAP!*

 

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Click here to go to the survey now 

 

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*Prize draw available only to field service practitioners and dependent entry is dependent on consenting to T&Cs

In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

So with three fantastic experts lined up lets dive straight into the first question of the series...

 

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It is often said service technicians are the greatest salesmen – what are your views on this?

 

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Service technicians bring a perspective and outlook that makes them great at sales in certain situations. For example, where the sale solves a critical problem for the customer.

Basically, customers appreciate the fact that service technicians are problem solvers and place the customer’s need first. As a result, the service technician has trust and credibility with the customer.

In turn, the customer is highly likely to act on the service technician’s recommendations. Sometimes, the only way a technician can solve the customer’s problem is by having them buy something new like a spare part, new piece of equipment, or value-added service offering.

In these situations, the sale is not viewed as a sale at all by the customer but merely as an attempt by the technician to solve the customer’s problem.

 

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To believe service technicians are the greatest salesmen is to misunderstand the true skills of sales professionals. These are people who have the skills, mind-set and drive required to identify and close new customer opportunities.

It is very different from the more nurturing and customer focused individuals usually found in field service. That said, selling is a team effort and many people are involved in to the GoTo market process. In some respect everyone sells the company and the service technician has an important a role as anyone else. Through being the person who sees the customer more than pretty much anyone else in the organisation, they are ideally positioned to advise the customer on services that can improve value, or identify new opportunities.

But playing an active role in the sales process should not be confused with the sales professional who is accountable for closing deals.

 

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I guess it depends on your definition of “salesperson”. If you mean the ability to recognise opportunities and be successful in helping the customer make a decision to purchase, then this statement is true.

Field service professionals are in a unique position. They understand the technology and where it is going. They know the equipment the customer has and what they are trying to achieve. They have proximity to the customer and generally high levels of trust.

However, I have concerns over the term “salespeople” when it comes to field service professionals.

I take the perspective that when a field service professional brings a product or service that will benefit the customer in some way to that customer’s attention, then that is a service rather than a sale. It’s part of the value that the field service professional brings. It is every bit as important as that field service professional’s ability to troubleshoot and repair.

Those field service professionals that recognise this are usually very successful because they see their role as helping the customer and the customer has confidence in the validity of their recommendations and trust in their motives.

 

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Look out for the next part of this series when we ask our panel "Is there a difference between selling service and selling products?"

 

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Kris Oldland, Editor-in-Chief, Field Service News talks to Mark Brewer, Global Industry Director for Service Management at IFS about the shifting changes within the field service management sector...

 

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Coen Jeukens, CSO, D-Essence, explores the developing world of Products as a Service and the increasing drive both from customer pull and vendor push towards outcome based business and service models...

When we need light, we buy a bulb. When we need a hole, we buy a drill. It is so engrained in our thinking to own products whilst we actually need the outcome. More and more we see upstart businesses cater to this “new” demand. They sell a product as a service (PAAS). How are you preparing your organisation to sell your product as a service?

We move water 

At the After:Market 2016 event in Wiesbaden a German manufacturer of pumps introduced his company with the words “we move water”.

With those simple words he set the stage for his PAAS business model. Selling the pump is not his goal; it is a means to start an outcome-based discussion with his client.

In doing so he enters in a conversation where he truly understands what drives his customer. Because the conversation goes beyond the pump, he has created a new business model where he earns money with moving water.

The additional benefit is for the environment. Instead of designing your product for repeat sales you will wind down a track where you deliver outcome at a minimal material/ energy footprint.

Transforming legacy businesses is possible 

Understanding the effort it takes to transform a legacy business, University of Cambridge professor Andy Neely asked the panel of the Field Service Summit 2017 in Warwick what successful transformation examples should encourage others to follow suit. Both Boeing and Philips demonstrate you can have best of both worlds.

They serve customers in a hybrid model.

 

Via one business unit customers can buy the product in a legacy CAPEX/ OPEX mode. Via another business unit customers can buy the output/ outcome of the product. Depending on his propensity, a customer can choose between a  jet engine and a “power by the hour” propulsion solution or a bulb and a “pay per Lux” illumination solution.

Why should you explore PAAS

It may scare corporate executives and sound very blunt but exploring PAAS is a “do or die” message.

If you don’t do it, somebody else will. At best it is your current competition and you can see it coming. For the worst, you will face competition from newcomers starting with a clean slate.

Record labels were so focussed on holding to their CD product revenue stream and deliberated so long on legal download options, they were decimated by services like Spotify.

How do you assess your organisation? Products are meant to deliver a solution.

Using a more positive approach: the more you understand how the outcome of your products generates value to your customer the more you establish yourself as long term partner in both a profitable and sustainable way.

Where to start

In the example of Philips Lighting, a small team beyond the radar of product based business model executives designed the “pay per Lux” solution.

Upon demonstrated success with a launching customer the new PAAS solution was put in the spotlight.

Setting up a sandbox environment with servitization minded people is essential, as you will be in for a paradigm shift:

[unordered_list style="bullet"]

• When you sell Outcome there is no title passage of the Product. This means the product remains on your balance sheet.
• As supplier you will be responsible for and remain in control of all CAPEX and OPEX cost components.
• You need to understand your customer to define a “pay per use” earnings model.[/unordered_list]

Understanding cost

In the Philips Lighting dialogue the customer asks for a Design, Build, Finance, Maintain and Operate solution.

This DBFMO framework (in the image above) can be used to understand total cost of ownership. Design and Build lead to the commissioning of a Product.

Maintaining the Product safeguards the Output of the Product. Operating the Output provides an Outcome. The Outcome generates Value. Maintain and Operate are stated in terms of OPEX. When adding Finance services to your portfolio, you can transpose Design and Build CAPEX into OPEX too.

Design-for-Operation

With PAAS the total cost of ownership shifts from customer to supplier. As a result the supplier is incentivised to throw in all his expertise to continuously optimise product, output and outcome.

In order to make pay per use profitable all cost elements of DBFMO need to be designed in unison. Call it design-for-operate. Where design-for-service supplements design-for-manufacturing, design-for-operate augments the former two.

 

Remember: business models based on breaking products should not be accepted.

Pay per use

Where design-for-operate drives towards minimising waste and cost, engineering the right pay per use model determines your revenue. This is where entrepreneurship and partnership kicks in.

Pay per use is a bi-directional handshake between supplier and customer that takes it to the next level compared to a typical sales-purchasing relationship.

Instead of a cost/ revenue conversation about products and output your dialogue will evolve into an outcome based profit/ value handshake.

Your customer will help you define the pay per use drivers. If you really understand his business and you are confident in the capabilities of your own organisation to generate outcome that makes your customer succeed, your customer will be inclined to enter into a partnership to make you succeed as well. As a result de pay per use drivers will be fair, sustainable and durable to both parties.

Don’t own, enjoy

Ownership comes with responsibilities. Why should a customer have to carry the risk whilst the supplier is the expert in both understanding and influencing risk. A PAAS model is the ultimate form of “back to core business”. The supplier managed DBFMO, the customer uses the outcome to generate value.

In return the customer pays for use.

Does pay per use really work for both parties or do words like partnership, fair and sustainable sound altruistic? The IT industry does give us insight into what is to come. Because SAAS solutions are available for consumers as well, first hand experience is changing our perceptions, attitude and decision-making regarding cost and value.

 

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“Philips Lighting – a PAAS dialogue – “pay per Lux”*

Customer: “I need light in my office.”
Supplier: “How many bulbs do you need?”
Customer: “I don’t know. You are the expert. What do you advise?”
Supplier: “Our proposal contains 100 bulbs of model abc. This is an investment of xyz.”
Customer: “I want the energy bill of the bulbs to be included in your proposal.”
Supplier: “Our renewed proposal contains 90 bulbs of our newest energy efficient model.”
Customer: “I want you to design, build, finance, maintain and operate the solution.”
Supplier: “We have developed a special lighting solution for you. Low on energy, sustainable in materials usage and easy to (de)install. We name it ‘pay per Lux’.”

 

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Whilst some were heading out to the desert to watch the likes of Radiohead and Lady Gaga at Coachella 2017 early this year, others were in Palm Springs for perhaps the lesser known but equally fantastic Field Service USA.

Field Service News sent Michael Blumberg along to talk to the USAs largest collection of Field Service professionals in one place, find to out what were the biggest challenges being faced by the industry at large and how we can overcome them...

In April this year I attended WBR’s Field Service 2017 in Palm Springs, California. While I was at the conference, I spoke to several Field Service leaders about their biggest challenges and the strategies they will pursing to overcome them.

I was expecting to receive a myriad of different answers when I first thought about asking conference attendees about these issues. After all, business executives often think their problems and challenges are unique to their specific situation. However, I was surprised to learn of the common thread that ran through my conversations with field service leaders.

 

Basically, four different themes emerged from my conversations. Rather than keep you in further suspense, let me share what I learned from my discussions:

Key challenge #1 - Keeping up with advances in technology:

Field Service leaders understand that their customers expect the same experience they do with using consumer electronic products. In other words, they expect an always on, always connected, always available service experience.

Strategy to overcome challenge - Develop & Implement an IoT Strategy:

Field Service leaders recognise that that IoT improves the customer experience in very much the same way it does with consumer electronics.

While field service leaders I spoke to agree that conceptually IoT is the right technology to achieve this outcome, they also admit that the real challenges lie in competing for capital resources to implement service led, IoT solutions and prioritizing where these investments should be made.

Key Challenge #2 - Determining which technologies enable an improved service experience:

Field Service leaders are faced with a myriad of choices when it comes to selecting and implementing technology to improve the customer experience.

For example, there’s various categories (e.g., AR, IoT, mobility, etc.) of technology to choose from as well several different vendors in each category segment.

It can be an overwhelming and taunting task to learn about every technology on the market.

Strategy to overcome challenge - Due Diligence and Planning:

Field Service leaders understand that they must adopt an objective approach to identifying, evaluating, and prioritising investments in technologies as well as vetting and selecting vendors. This means they must find the intellectual bandwidth and manpower to complete this strategic work of their organisation.

Key Challenge #3 - Keeping up with the skills gaps

Let’s face it, millennials are not lining up in droves to accept field service positions. In addition, the baby boomer generation in retiring from the workforce as a rapid rate.

As a result, Field Service leaders are under pressure to implement creative strategies to overcome the current and growing shortage of skilled technicians.

Strategy to overcome challenge - Implement Augment Reality (AR)

Many Field Service leaders perceive that AR solutions provide an effective solution for dealing with the shortage of skilled labor. By utilising this technology, field service organisations can do more with less. Basically, they can leverage the expertise of a limited number of skilled Field Engineers and distribute this knowledge remotely to a broad number of people.

Key Challenge #4 - Becoming a customer centric organisation:

Field Service leaders understand that if service business is going to thrive and grow then their organisations must become more customer centric. Unfortunately, some companies still have a product focused orientation.

They are more concerned about feature on the feature functionality of their products then the quality of service and its impact on the customer experience.

 

As a result, they are not making the necessary investments or resource allocations for the field service organisation to remain profitable and competitive.

Strategy to overcome challenge - Influence senior management on the value of service

Basically, Field Service leaders realise they must exert greater effort in influencing senior management on the benefits of becoming a customer centric organisation.

This means they need to build a strong business case as to why their companies should invest in technologies that make their companies more customer centric such as IoT, AR, FSM software, mobility, etc.

The business case must consider the impact of technology investments and process improvements on customer satisfaction, product sales, and the overall financial performance of the company.

Interestingly, the comments that I received were very consistent with the overall themes of the conference. Obviously, WBR has a good pulse on the industry.

Nevertheless, it is always great to speak to people one on one at industry conferences. I find these conversations provide so much more insight and context then sitting through a “canned” presentation.

The common thread between all these issues is that they involve the use of technology to optimise and improve field service delivery. This makes perfect sense as field service is a technology intensive business.

However, it is important that field service leaders do not fall into the trap of viewing technology as panacea for all aliments facing their organisation. The best technology is of little value without solid management, effective planning, and strong leadership behind it.

 

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IFS’ new ownership private equity firm EQT are standing true to their promise to accelerate the growth of the Swedish firm as they make to key UK acquisitions...

ERP provider IFS have further enhanced their offering into the field service management sector this month with two key UK acquisitions.

Both announced on the same day the Swedish organisation took ownership of both field service management system provider mplsystems and also implementation specialists Field Service Management (FSM).

Whilst the latter acquisition perhaps had an air of inevitability about it as FSM have been working as resellers and system integrators for IFS for some time now, it was the acquisition of mplsystems that will have raised eyebrows within the industry perhaps the most.

However, the acquisition also makes perfect sense from a technology point of view as mplsystems, who have only just launched a new genetic algorithm based scheduling engine themselves, (see page 8), are more widely acknowledged for their omni-channel contact centre technology which has earned them recognition from Gartner as a visionary within the CRM Customer Engagement Magic Quadrant.

Indeed, IFS’ move to bring this technology into their own, gives them a truly end-to-end service lifecycle solution, following a similar path to Microsoft in terms of how they have brought CRM and Field Service together under one platform.

 

“It’s quite specific why we’ve acquired mplsystems” Mark Brewer, Global Industry Director, Service Management told Field Service News as the announcement went to press. “It is very directly a recognition on IFS’ part that we have a gap in our end-to-end offering in the customer engagement area.”

“We were looking to acquire some IP, and in the case of mplsystems, some very strong IP, to plug that gap in the customer engagement piece, at the centre of which is their omni-channel contact centre capabilities.”

In fact, the acquisition of mplsystems and the integration of their contact centre technology within the IFS solution, is in perfect line with the roadmap that IFS appear to be continuing down, and sits perfectly alongside the introduction of the embedded CRM within their ERP solution that was introduced at their last significant roll out (IFS Applications 9).

“There has been a lot of conversation recently around the convergence of CRM and FSM and when speaking at Field Service Management Expo a couple of months back I alluded to this then also.” Brewer commented.

“We see now both technologies sitting under the customer experience space, and there will be three prongs to our offering in this area moving forward.”

 

“Firstly, we will continue doing what mplsystems have done very successfully across the last few years which is to offer a Contact Centre as a Service (CCaS) capability to many organisations with large contacts centres - people like Aviva and ALDI. The two other prongs to the offering then are that it will integrate with our IFS FSM solution so it will form the customer engagement capability of that offering. It will then also form the customer engagement capability of IFS Apps.”

“So whether you are taking down a service request, whether you are taking a return material authorisation, whether your taking a feed from an IoT connected device or even if you are utilising social or chat-bot technology, whatever the medium of engagement you choose we will go through the mplsystems customer engagement solution.”

So how do IFS see this new ability to manage the entire customer experience lifecycle? Is this something they feel gives them an advantage over competitors or are they getting themselves back on a level playing field? Is the inclusion of this technology a USP that they can push as vendors, or is it something their customers have been demanding for some time now?

“I think there are two points to that question,” Brewer replies.

“I think there is definitely a customer pull because we are seeing the focus that is evolving from productivity improvement and operational excellence to a model that is more focussed on revenue enhancement. In its most simplistic terms people are seeing service as a growing opportunity from a profitability perspective.”

 

“However, we do also see this as a USP as we believe we have best-of-breed capabilities in a number of our separate offerings and in our standalone FSM solution now we have the capability to run a world class contact centre, we have the capability to do world class optimisation and scheduling. We have the capabilities to deliver a full return material/reverse logistics operation and we have the capability to do very strong contract and warranty claims management as well.”

“All of those elements are what we perceive to be best-in-class, and by filling in the gap with the customer engagement capability, via the acquisition of mplsystems, we now genuinely have a unique offering as it is not just a broad set of capabilities, it is a number of complimentary best-in-class solutions that can feed into and off of each other.”

Finally, with the acquisition of FSM Ltd it appears to essentially be a case of bringing a very successful outsourced operation into the IFS fold.

“FSM has been a very successful in the UK and Ireland in securing some very big customers for us, they’ve got a great track record and ultimately with the new ownership of EQT we now have a much more aggressive growth strategy and in key geographies including Europe West (which includes UK) the investment is there to bring companies like FSM on board to support our capability to grow our market-share further."

 

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The management of parts has been for a long time a little unloved in terms of field service technology. Kris Oldland talks to Gary Brooks, CMO, Syncron to find out how and why that is changing...

KO: There finally seems to have been a quite perceptible shift in the number of companies beginning to pay attention to the importance of good parts and inventory management. Are you feeling this?

For example every-time I come across your team at various different events I see you having a lots and lots of conversations at busy, busy booths.

Are you finding that whereas, perhaps a few years ago you were having to evangelise the importance of tools like yours, today people are actively looking for them?

GB: You’re absolutely right. There are so many things going on socially, politically, demographically, economically that are really putting pressure on the field service organisation to not only deliver maximum uptime - we are really moving away from the traditional break/fix aftermarket model, towards moving towards being much more proactive and preventative, and technologies are enabling us to do that.

Manufacturers around the world are waking up to the fact that the market has changes - from the volatility in the orders of durable goods, to millennials taking over the workforce, to the movement to ‘power by the hour’, so a lot of them are looking for low hanging fruit.

They’re asking “what can I do to my service organisation to increase revenue” because a lot of companies now view the product that they sell as something that can they can put in the field to leverage high margin service revenue for an extended period of time - in heavy equipment we’re talking 25 years.

 

So they are looking at this, they’re saying how can I improve revenue? How can I improve margin? How can I have a more predictable service business and then how can I deliver a wow level of service - or prevent that service call from having to actually take place over time because of the use IOT, machine learning and smart parts.

Our friends at The Service Council established that 50% of service attempts fail because of not having the right part, and even if the right part is available then companies are not maximising the revenue correctly because they are not pricing correctly. 

So, for a lot of organisations they are saying lets get the parts side of the business right - because the financial gain that can be harvested is significant. 

When you look at the inventory side, we see companies increase service parts revenue by up to fifteen percent, increase gross profit margins up by as much as forty percent and taking forty percent of inventory whilst taking their fill rate up above ninety percent.

So, mathematically, the financial value creation really works and then if those parts are priced appropriately- we are seeing companies take up their service parts revenue by as much as five percent and gross profit margins by as much as seven percent.

If you have several hundreds of millions of dollars, or even close to a billion dollars if you’re in a sector like Aerospace, five percent here and seven percent there suddenly becomes a very sizeable figure.

So in Answer to your initial question, yes we are now seeing a much bigger customer pull, and I think whilst it may be partly due to the Syncron being much more visible in the sector, but it is also a matter of demand from the market - increasingly companies are now coming to us.

KO: You mention outcome based services as a significant shift that is happening within field service across multiple regions and verticals.

What impact is that having on the spare parts/aftermarket and consumables markets - is there a direct adverse impact on this?

GB: Yes, I would think that it is very much having an adverse impact on this side of the market.

Manufacturers will increasingly sell service level agreements much like you would see in high tech.

In high tech there is not a lot of sales of parts. If your servicing a piece of high tech equipment whether it be in medical or whether it be in the IT space, you have a service level agreement and you have certain requirements whereby it needs to be back on line within an hour or two - so there is no buying of parts.

I think as more industries begin to adopt the service level agreement approach rather than buying a part it will have an impact on parts revenue as having that part available to perform that repair or maintenance in advance of the asset failing becomes even more critical.

 

In my car for example, I have an app that tells me when there is something going wrong with my car.

Today, it doesn’t tell me when a part is about to fail but in the future I imagine that it will and so when I do have to bring the car in for service it will say well this part, this part and this part are all close to failing so why don’t we replace these all now?

It becomes preventative maintenance, we prevent the failure from ever happening. This is changing the way businesses approach the value of parts and indeed service. It is certainly an exciting time to be in the field service business because of all these economic, social and political changes that are driving the attention on the service business but also the emergence of all these new technologies.

KO: Given this new wave of interest in Field Service as a something more than mission critical, but also fundamental to revenue streams - are you seeing more companies you work with getting involved with such conversations from board level?

GB: Yes, I absolutely think field service is really garnering executive level attention now.

I think a lot of that is driven by the demand and the shift that we are seeing amongst the customers. Customer-centricity has always been a bit of a buzz word in the industry but I think it is becoming hot again and I think that’s because by 2030 around 75% of the workforce will be comprised of Millennials.

Their service expectations have been informed by the likes of Amazon, Uber and TaskRabbit. Their mindset is “What do you mean I can’t have it fixed now?” And that is definitely driving the demand side.

[quote]Service expectations have been informed by the likes of Amazon, Uber and TaskRabbit. Their mindset is “What do you mean I can’t have it fixed now?” And that is definitely driving the demand side.

But then also when you look at the margin side and at the revenue side, I think a lot of executives that are in the C-Suite came up from the manufacturing or sales side - so they sometimes have a biased view of their business. I call this the street light effect - they can only see what is in the light and that for them is looking at the product side of the business.

 

But for many of them, they’re starting to look beyond the street light and are saying wow - this service business is pretty darn exciting.

And in a lot of cases it’s often just held together with bubble gum and banding wire. So the thinking goes “if we make some upstream investments, we can deliver some pretty healthy downstream dividends.”

So I think that executives are just beginning to expand there point of view. For many years it’s been a case of “it’s [service] kicking up great margins, it’s not broke, let’s not fix it.”

But now companies are seeing with declining lures on the product base side of a business. They’re faced with dwindling margins and if they put even more effort on this side of the business they can only get a limited return.

I think companies are starting to see that similar investment in time and resources on the service side now is going to deliver a lot better returns.

 

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