AUTHOR ARCHIVES: Kris Oldland

Value based pricing is a hot topic in industry today, but what exactly is it and why is everyone talking about it?

Is value based pricing simply about getting as much price from your customers as possible? Or is it about valuing your longer-term relationship with your customers, or perhaps improving your service? In fact it is each of these and potentially more. What is clear however, is that cost-plus pricing for services does not always offer the customer or the supplier the best value - yet there may now be options to combat this with value based pricing.

The following report co-authored by Dr Shaun West, Lucerne University and Dominik Kujawski, Arvik Bolting Solutions brings together good industry practices in a solid academic framework. The report provides business leaders with a guide on how to create a value based strategy to price B2B services - as such it is essential reading for all business leaders...

Why value based pricing?

During a conference we recently attended, a phrase that kept coming up in conversation was “We should all switch to value based pricing”. An increasingly topical statement in industry today, however, the approach of value based pricing is also one which is not being discussed any further. No one seems to be speaking about HOW to actually achieve this goal.

Pricing is not new- even Oscar Wilde said: “Nowadays people know the price of everything and the value of nothing”

Companies need to focus on customer value in developing pricing strategies as pricing pressure in the industrial B2B market has been increasing as a result of changing customer buying behaviors. In this article we’ll delve deeper into why value based pricing can be challenging and why it has a huge impact on companies’ business.

Is pricing really a strategic capability?

Pricing is an important management tool to help achieve the firm’s objectives and has a huge impact on the financial results. It is a multi-departmental activity influenced by several functions within the firm that may attach different importance to pricing and the value drivers of the business.

Every business manager needs to be aware that pricing has an impact on customer satisfaction and that pricing is not only dependent on price itself.

Pricing of services is dependent on situations in which a customer finds themselves in and the jobs in which they need to do at that time.

This relation of pricing to customer engagement in this process includes three strategies:

• Cost plus strategy;
• Competition/market base strategy;
• Value based strategy.

Cost plus pricing

The process of cost plus pricing starts with the firm determining the scope of their service. Here, a unit cost is simply calculated and a pre-determined margin is applied to set the price. This margin reflects the desired profitability of the firm. The customers are then told what will be ultimately delivered in exchange for the set price

Competition/market based pricing

This process begins with pricing based both on the scope and the costs, then additionally on what the competition charges for a similar service. Setting the price here has an influence on the market situation. Large competitors tend to have a scale advantage over the smaller ones since their fixed costs are mostly lower due to a larger customer base. The last step of this process is presenting the customer with the value that is being offered through the service.

Remember that data is in your CRM system and in the market – keep track of it.

Value based pricing

The value based pricing approach is based on analyzing each customer’s needs, pains and gains, and their willingness to pay. It depends on the customer interest and acceptance of price for a provided value. Here, the price is set for the offered value, and later the scope of the service itself is determined.

Calculating the costs in this strategy is also necessary as they used to make a reality check and afterwards calculate the margin achieved.

Listen to your customers

The process of pricing in cost and competition based strategies suggests to ask the question “why is the customer situated at the end of the process if all of the companies always state that customers are the most important?”. A juxtaposition to the truth, you will always hear stated that companies involve their customers in the co-creation of service value from the very beginning, but how can this be actually possible with a cost plus and competition based pricing strategy?

Now, how do we turn this approach around and place focus back on the customer? Straight away, let’s forget about pure cost plus strategy.

This ‘simpler’ pricing strategy shows that the supplier can have a lack of understanding of the customer value and as a result the customer offering can be weak.

In addition to this, the competition/market base strategy, which is endorsed by many companies, indicates that pricing is controlled by the market. As such, this removes focus from the customer and indicates that the supplier does not entirely understand customer value, showing that the resultant value outlined by the firms offering can also be low.

So, how should service companies price in order to bring the customer into the focal point? The answer is quite straightforward; by aligning pricing objectives, strategies and tools according to the holistic strategy of the company.

Note: pricing needs to be strategic… it must not be left solely to Sales,

Production or Marketing departments. It needs to be driven by management and agreed by all the departments influenced by pricing Companies should create more customer focused objectives to choose pricing strategies that consider customer value.

This means that when pricing services, you as a firm need to firstly understand how your customer creates value and secondly, where you and your equipment fit into this process. You need to know that pricing tools used also need to support the objectives of pricing and the pricing strategies. For example, a pricing tool supporting customer oriented objectives can be bundling as it is a way for firms to present the scope/price negations, thereby providing a different approach to customer value discovery and leading to improved customer experiences.

Source of pricing power

Here, a B2B example is given, showing that the source or pricing power comes from customer need states. Let me take you through the example of a simple bolt used in industrial equipment. Bolts are widely present in everyday life and more specifically, they are present in almost every technologically advanced machine or construction, from compressor valves and turbines, to the foundations of wind mills.

So, what is the price of tightening a single bolt? The price of a single bolt varies from market-to-market, from machine-to-machine and from company to company.

The most significant result of bolting, however, is the residual load that a customer requires from the bolting supplier. Now, to show where the pricing power of services come from, let’s imagine a situation where you exchange a single bolt worth a couple of dollars, in a compressor valve which is worth hundreds of thousands or install one in an offshore wind turbine, worth even

more. How much should the tightening of one bolt be worth to keep the compressor running or the turbine safe on its foundation?

In this case, bolting provides safety and savings on a huge scale however, the value of the service to each customer varies depending on the scope of the project. Here, not all customers are the same, so they should also not be treated with the same approach.

Customer value connection based on colors

Customer value connection shows that companies need to do what their particular customer values. If the value proposition you offer creates no customer value, it is then only a purely basic cost to your customer.

It is time to use the “knowledge” about your customers to move to customer value propositions and find ways to deliver what is really valued. Hence, what they are really ready to pay for?

Firms need to consider what is core and what is standardized.

It is important to be aware that pricing can be different for different modules. This means that the customer can pay a different price based on the “menu” or “á la carte”, and shows that there are multiple pricing points for services but what is really interesting, is that its components don’t change. So what is changing?

It is the location and more importantly the type of service provision together with the customer need state. In the first mentioned case, the compressor valve is available in a workshop where the bolt can be tightened with use of onshore equipment, in a quite friendly environment.

However, the tightening of wind turbine requires going offshore to harsh conditions with special trainings and guaranteeing the customer that a bolt tightened worth a percentile of the whole wind mill will provide safety from failing the whole project.

This clearly shows that the customer gets usage, location and utility from the supplier. And if a firm is able to segment customer needs states and purposes for buying. It is also able to find the right pricing points for it.

This helps to identify margin and revenue opportunities available to a company.

This shows that that customer value identification process work for product based firms too.

Pricing waterfall for value based pricing

A prototype of pricing waterfall diagram provides guidance towards value based service pricing. It considers the most important aspects of pricing, starting from benchmarking competitors to considering the customers’ willingness to pay. As such, it helps you to triangulate on the value based price that your customer is willing to pay.

The pricing waterfall presents that single, inflexible offerings can limit companies to sharing limited value. Whereas, flexible offerings respond to customers’ changing needs.

Also, flexible pricing based on all important factors helps to increase customer value. Offering flexible service dimensions that support customer choices, together with flexible pricing strategies can provide the supplier with additional pricing dimensions that can have a positive margin increase impact. The pricing waterfall also highlights the importance of triangulation of pricing based on market analysis, internal value creation and customer value.

Final comments

This article presents that pricing is a strategic capability and needs to be kept in line with the company’s overall strategy. There is a great need to focus on customer value creation during service pricing, and aligning strategies and tools to support the objectives set by the company. Understanding customer value rather than simply relying on cost-plus or market-based approach, is a key to pricing industrial services. Another very important step in the process of pricing, is margin calculation based on the identified costs and value price offered. It is essential to calculate the margins in order to assess the correctness and validity of the price.

To summarise, consistency in pricing is of great importance and needs to be maintained across all pricing objectives, strategies and tools used to determine the final price of a service offering. So after reading this article, ask yourself again, “Should I switch to value based pricing?”. The answer is not always, but one can learn to determine situations, locations, needs and pains to price according to value.

 

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Field Service News talk to Conor O’Neill from Red Hat Mobile about how they’ve seen the light - and it’s modular...

It’s been some 18 months since Red Hat purchased exciting Irish mobile platform developer Feed Henry. About a year earlier still Feed Henry had just released their first ever fully dedicated Field Workforce Management mobile solution.

Then for a while things seemed to go a bit quiet from the former Feed Henry team as they transitioned from exciting small start-up to part of one of giants of enterprise computing, at the forefront of the open source movement that is such a hot bed of innovation.

Indeed, we were just beginning to approach the point in time where were fearing that the original Feed Henry team’s focus on field service - which had yielded some impressive early customer success stories including a major European rail infrastructure provider, had either been swallowed up by Red Hat’s focus on the bigger pie of generic Enterprise Mobility, or that the team themselves had got lost somewhere in the belly of the enterprise beast never to be seen again - as sadly happens all too often in the technology space.

As such it was with much interest and anticipation that Field Service News headed out to meet up again with Conor O’Neill, former Director of Product Management with Feed Henry and now Product Manager with RedHat Mobile to discuss their latest offering for field service.

And whilst the job title may be different, O’Neill’s relaxed manner, coupled with an infectious enthusiasm for his work remained unchanged from the last time we had the pleasure of his company.

What has changed however, is the approach that O’Neill and his team have taken to developing tools for field service management.

 

“We’re not building an app. That’s whats very interesting about this.” he asserts as we begin discussing the new Red Hat Workforce Management (WFM) modules.

“Two and a half years ago we built what we hoped would be a solution that would somehow address all of the requirements of all of the customers everywhere and would just take a little bit of tweaking depending on each individual requirement – we were completely wrong and so we took a step back and started looking at all of the consulting projects we’d been doing, building very custom apps for customers who needed this type of field workforce application.”

“What we saw was yes every app is unique and every customer’s requirements were unique, but the individual things that they needed often had lots of commonalities.”

“So we started last June and said lets not build an app, lets not build a solution, lets build a set of modules where each module addresses each of these points and then build out from there.” he added

“The Red Hat platform gives us tons of stuff out of the box – working offline, forms for drag and drop development, actual app development itself , app building, app distribution. The platform already gives us those, which allowed us to focus on what companies in field service need.”

“Things like work orders, workflows, users, user groups, messaging alerts, location based information and so on. We have built modules for all of these areas with a common framework.”

 

“So we now have this set of modules, and we are in no way saying this is a complete set of modules - this is our first set and they are open source so if the customer doesn’t like them they can change them, they can improve them they can push improvements back to us - they can create new ones and share them with the community.”

Of course, as mentioned in the introduction one of the key things about RedHat is their commitment to open architecture. O’Neill explains that the wider open source community, including partners and customers, is likely to be a strong generator of new features and functionality found in the commercialised product.

Such an approach also will inevitably lead easier integration into other systems and this is a major USP of the Red Hat mobile WFM modules.

“What we don’t expect people to do is change what they have, which is unlike a lot of traditional mobile platforms and point solutions out there. We work with you and with your existing tools.” O’Neill explains.

“We are NodeJS based which is our integration layer and it is supremely good at connecting to disparate systems, we can take the data no matter what format it is, no matter how old it is, no matter how slow it is, and turn it into something a mobile device can actually consume easily and then fire that over the air to lots of different devices.”

As well as easier implementation,an additional benefit of such easy integration is the reduction of pressure on legacy systems as once integrated you can reduce them one component at a time, taking advantage of strangler application pattern - something which also sits well with the modular approach RedHat believe is the key to WFM in the future.

But is the modular approach proving to be successful in the real world?

“We had a great example of one of our customers who have taken our modules and within two months have built their own MVP [minimum viable product] for exactly what they want to do,” O’Neill revealed.

“They’ve done this by using our WFM modules but it is not a case of saying there is this app that I have to customise - they’ve actually assembled it in a way that suits their particular needs.”

 

So are the Red Hat WFM modules capable of delivering solutions truly tailored to individual organisations?

“It’s unique to everybody” O’Neill explains “but if you want something that works really well for your organisation the work has to be put in to put it together exactly the way that you want it,” he warns.

“We’ll never claim that in a week you can somehow magic up an app. Lets work out your business requirements and then lets pull together what you need,” he adds.

Sounds good, however, it also seems like an approach that may be reliant upon having a crack team of savvy developers on board which many be prohibitive for some smaller field service organisations.

So are the Red Hat WFM modules aimed specifically at enterprise level field service organisations?

“I don’t think so,” O’Neill replies “the customer that I mentioned earlier on are a hundred thousand employee organisation, but actually the group that was involved in creating the app for that was just four people.”

 

“Similarly, we worked with one of the largest insurance companies in the world but again a local division trying to create a very specific mobile app for a very specific slice of their workforce, again a tiny group in a much larger organisation and it delivered a massive result for them, 100% paper replacement, they had an entire flow that was all paper based and every single person in that division is now using this digital  workflow.”

“Because it’s open source anyone, even a one-man band can come along and take those modules and go off and build their own solution,” he added.

 

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For many field service directors the opportunity to develop a brand new service organisation would sound like a fantastic opportunity to be relished. Ian Cockett of Cygnet Texkimp, who is in the process of doing just that, tells us what the process is like in reality...

Ian Cockett, Product Director, Spares, Service and Maintenance holds up a blank piece of paper. This is the opportunity I was presented with he says.

An opportunity to build a service operation completely from scratch. How could I resist?

Cockett is talking to a room full of around 50 field service managers and directors at a service community gathering and looking around the room at the nodding heads and wry smiles as he begins his presentation, it is clear that a number of those in the audience not only undersood the challenge Cockett was facing but also the lure of such a proposition.

Having spent some thirty years working in service, primarily within the domestic heating market, Cockett certainly has the pedigree for such an undertaking. He spent many years working for Bosch, one of the most respected organisations in the sector, having direct responsibility for the aftermarket team in the UK with responsibility for around 300 field service engineers, a contact centre of 80 people working 7 days a week and a technical support team of around 40 people.

 

More recently Cockett was Service Director for Domino Printing Sciences a company providing equipment used in print processes within the production environment. Here service was in constant high demand as if a printer goes down then production facilities are not working - so their clients would be directly losing a lot of money and therefore needed a highly efficient service operation to keep them onside.

However, just over two years ago Cockett moved to his current role with Cygnet Texkimp - a business involved in technical fibre processing.

A family owned company that has been in operation since 1974, Cygnet Texkimp operate in the fibre processing industry and design, manufacture, install and now maintain equipment that goes into technical fibre processing servicing sectors as diverse as carpet manufacturing through to aerospace and the automotive sector.

Having experienced significant growth within the last ten years the company now comprises of six main areas with a view to offering a complete turnkey solution for their sector - including the aftersales division which Cockett has been tasked with developing.

However, it hasn’t all been plain sailing as Cockett has looked to introduce the concept and culture of a service oriented organisation into an organisation focused on delivering high quality engineering solutions but without the service support structure or established KPI’s and processes that an established service organisation may take for granted.

“It has had more challenges than I thought we would have. When starting a service organisation from scratch in an established organisation, the challenges are broader than just generating a service business.” Cockett explains.

 

“I am used to organisations where you’ve got a service team that’s an inherent service team, with KPIs in place, with scheduling systems in place, and with engineers all across the UK - so I was there to manage that team and then to drive continuous improvement.”

“This is a completely different beast I’ve found and it’s definitely given me some personal challenges, but nevertheless it’s an exciting opportunity we can work with and hopefully help the business to grow through delivery of excellent service.”

The challenges that Cockett faces are split into two main areas. The first is actual business development and the second is around developing a culture within the organisation that compliments an aftersales division.

The key challenge is that, as with many similar sized companies, whilst the business is growing it is all too easy to focus solely on the here and now, on delivering custom solutions for clients that meet expectations but without a forward vision of how these solutions can be maintained efficiently via a service division that is yet to even exist.

 

As Cockett explains “We are moving to standardise on our products more and more where this is possible and implement process improvement across the organisation as the business continually develops.”

Another additional challenge Cockett faces is that Cygnet Texkimp operates as a matrix structured business.

“In one sense it’s s great “ Cockett comments “it’s good for the business in terms of flexing through peaks and troughs and that is great in terms of the business and providing a stable platform.”

“The challenge I’m faced with on a service basis however, is that I have to go begging, pleading and robbing to get people to provide service support.

I’ve gone form 300 service engineers at Bosch to 1 here. We do have other organisations that we own which we can utilise – for example mechanical and electrical installation and service companies that we are part of so we can draw on that resource but because it’s not my resource the challenge I have is getting the right person at the right time to go attend a service call.”

In addition to this the other significant challenge Cockett faces is that most of their business is outside of the UK where they are based.

With no service team as such just where does Cockett start in order to begin building a service operation that can become a profitable element of the company?

“We have recently recruited a COO, which is now bringing in some of the structure, process and procedure that we need and also some standardisation to allow us to continue to drive through business and continue the growth pattern we are going on.”

“For example, one of our challenges associated with our progress with product standardisation is that of spare part naming and numbering conventions, which historically have been project led.”

“The challenge I face, is we have all these different bits of kit and same widget may appear with a different name or part number when used in lots of different pieces of equipment. So trying to manage that from an aftersales perspective will give you some real challenges, as anyone involved with service businesses will agree.”

 

In order to overcome this hurdle Cockett is now working with design teams going right back to the design process to organise things in a structured way.

“Now our electrical and mechanical design team both use the same language, we all structure the parts in the same way and if we have a part we have used before we give it the same name and part number as before.”

Although it may seem an obvious step it is a crucial one and Cygnet Texkimp won’t be alone in having overlooked such steps as they evolved at rapid pace.

However, as Cockett begins working with his colleagues across the wider business putting these foundations in place, he is able to see the service operation and the company as a whole moving forward.

This in turn has allowed him the opportunity to begin addressing his other key challenge - of developing service business.

“The opportunity is of course the legacy stuff - the equipment that’s already fitted and out there across the world - that’s my opportunity to go and sell spares and service.” he explains.

 

“It’s about getting the right service, to the right customers and we need to have people in the right places to do that,” he concludes.

However, the one thing that comes across clearly having listened to Cockett’s presentation is that he is a man that not only has the experience to know what service excellence looks like, he also is able to take the wider business view to ensure that service doesn’t just get added as a business unit in isolation, but is a central driver for the way the company evolves moving forward.

And whilst the challenges Cockett and the management team at Cygnet Texkimp remain numerous, there remains a genuine feeling that nothing is insurmountable.

The development of a service department is the natural evolution for Cygnet Texkimp and Cockett strikes me as a man that will ultimately deliver.

 

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Field Service News hosted a series of Chatham House rules roundtables in Amsterdam earlier this year to get a feel for attitudes towards Augmented Reality amongst service executives.

This is what the people had to say...

 

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On Augmented Reality as a threat to the labour force:

“That’s kind of the nature of technology in general - for example the big concern with robotics was you build robots and now humans on the assembly line are losing their jobs. But that’s the nature of technology - it does displace people but then it opens up other avenues -now technicians are fixing and programming the robots.”

 

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On AR as a means of delivering remote guided self maintenance and repair:

“We’re chasing vessels all over the world, oil tankers, luxury yachts etc but very often we have to send very skilled people to do very basic manoeuvres of our mechanical systems so I see a big, big advantage for us if we were able to get that installed. The problem I’m seeing is getting the camera there is as hard as getting a skilled technician there, so the question I have is what can we do with the vessels own employees and a smart phone?”

 

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On the transition to utilising Augmented Reality in our workflow:

“I remember when the automotive industry started putting computers in cars and everybody was saying that there would be no more mechanics, you just plug in a computer and it tells you what’s wrong - well all the mechanics are still here. I think this will be the same - it will be an adaptation, a transition and an improvement.”

 

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On Augmented Reality as a training tool:

“We spend a lot of money flying our top guys all over the world to give training to technicians but it would be nice to reverse it where you could do demonstrations where people are dialling in remotely.”

 

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On the power of Augmented Reality being magnified by other technologies:

“I really think we should be using all of these new emerging technologies such as Big Data, IoT, Augmented Reality in harmony”

 

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On the big barriers to Augmented Reality:

“My biggest problem is the connectivity side of things. Connectivity is probably the number one barrier”

 

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On Augmented Reality as a practical tool for hitting one of the most common KPIs in field service:

“I really look at the big advantage of Augmented Reality as improving the first time fixed rates. We’re still going to need really skilled technicians because our equipment has been designed in a way where it is extremely complicated to grasp, but it would help us to be able to fix it the first time and that would be worth it by itself.”

 

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On Augmented Reality entering into R&D thoughts already:

“ I’m starting to think ‘how do we build it into our product?’”

 

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On how Augmented Reality can completely change our approach to service delivery:

“What I’m tasked with is trying to improve efficiency in the field and I’m very keen [on AR] - in fact over ten years ago I had the vision of the engineer going to the site with some sort of camera, projecting that back to the network operations centre and then having all of the competency housed in that hub, de-skilling the field and allowing them to be able to just fix anything but by having the competence built into the remote assistance.”

 

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On the challenge of raising awareness of Augmented Reality at board level:

“We started some trials with Google Glass but it was a waste of time, but everybody thought something was going to happen and it didn’t and now the problem is getting the buy-in again and separating this out from those failed trials.”

 

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On Augmented Reality becoming a mainstream field service tool:

“Ease of use and implementations - look at the iPhone - it’s really easy to use, it’s not cheap but it is really easy to use. So for me it’s going to be who can deliver an AR product to the market with the simplest ease of use proposition.”

 

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Field Service News Editor-in-Chief, Kris Oldland talks exclusively to Graeme Coyne of Siemens about why an attitude of exploring continuous improvement is ingrained in the company’s DNA...

The Aston Spring Servitization Conference is a unique event in that it brings together both industry practitioners and academics to discuss the evolving trends in servitization – a key shift in business thinking that puts field service at the heart of a businesses success.

The presentations come thick and fast, and as would be expected by a conference hosted by a leading industry focussed university, there is reasonably heavy bias towards the academics when it comes to speakers.

And whilst the rapid fire format (around 50 presentations in two days) can foster a great deal of discussion and cover a wide and varied number of research areas across the spectrum of servitization, there is always a danger of death by power point when trying to cover so much ground in such a short period.

Therefore, when Siemen’s Graeme Coyne took to the stage armed with a presentation that featured just three simple slides, it was not only a bold approach but a welcome one.

 

Coyne, has two key qualities that are essential in a senior field service exec.

He is both genuinely approachable and easy to talk to, whilst having a deep rooted desire to continuously look for improvement.

After his presentation I caught up with him to talk through some of the key points that he raised during his 30 minute key note, which was well received by both the academics and the practitioners in attendance.

One of the first things that I wanted to pick up with Coyne was how the culture of Siemens as an organisation mirrored his own attitude towards adopting an approach that is all about continuous improvement, and how that translates across both product development and service delivery.

“We do it [focus on continuous improvement] across the company in every process we do – so it could be service coordination, how we deal with spare parts, and how we manage our service engineers. But we always look at it from the point of view of how can we do it better?” Coyne replied

“We use ‘plan, do, check, act.’ or GEMBA. We have two meetings every week within our department to ask ‘how can we do the service coordination part better?’ Somebody comes up with an idea, it’s discussed in an open forum, and if we think it is worth investigating we ask them to go out and develop the idea further.”

“We’ve had this philosophy for many years. It’s all about what exactly is the problem - can you define it? What’s the root cause and what are the options?”

 

“The main thing is to launch it, monitor it and then evaluate it. You have to keep going round in this loop and it is embedded in our culture.”

One area of Coyne’s presentation that particularly caught my attention, was when he spoke out quite strongly against the productisation of services.

Given Coyne’s experience this was an area that I was interested to dig a little deeper into.

What was it that drove his thinking on this?

“We are centrally controlled and have products that are developed from our headquarters and this can lead a view on services that begins with the product and then looks at what services can we develop for them. You then end up with product people devising a lead service and saying sell that service,” Coyne begins.

“My view is different. I’m in a region, and dealing with end customers."

"Essentially we know what someone like Unilever, Coca-Cola or Ford Motor Company want and come at it from a the reverse point of view and it’s very difficult to slot a productised service into the customer’s needs. It may not fit; it may not be what they want.”

 

Pushing a bit further on this I was keen to see if Coyne felt that this was an issue felt more keenly by multi-nationals, who all too often are further removed from their customers than smaller, more localised competitors.

In fact whilst Coyne does admit there is a danger for larger organisations to become disengaged from their client base, he also believes that if multinationals approach cooperation between different regions correctly there can be huge benefits in terms of knowledge sharing.

“What I’ve seen is people from the regions bringing in new perspectives and ideas. For example, twenty years ago I was based in Germany and I brought in a perspective from the UK, other colleagues brought in opinions from other countries like Finland and Italy.

“More recently we have begun to have regular meetings using video conferencing for up to an hour at a time, where we do best practice sharing."

"Basically we pinch with pride!” He says with a wry grin.

“For example, we’ve just found out our team in Belgium have an approach for a particular customer type and product type and we realised they’ve been doing what we want to do now in the UK for the last 17 years.”

“They already know what works, how much it costs and what the benefits have been. So we can take best practice sharing and use it and implement it in our country to suit our customers needs.”

Given the setting of our conversation, I was also keen to understand just how far along the path Siemens is towards advanced services and servitization.

“In terms of the move from SLAs to performance based contracts we’ve done it from certain places, in the world,” he begins.

“Very often where the customer themselves doesn’t have the wherewithal to do it [manage the service chain] they may rely on us. They rely on our management skills to be able to deliver something where we can have KPIs based on the quality of product they’re producing, the volume of product and improving productivity.”

“For many years in Siemens now we’ve had an approach to customers that says we focus on four things. Firstly can we improve their turn over? If they can make more things they could possibly sell more! We don’t control their market in the service world but we can give them the ability to do that.”

“We also look at how we can reduce their cost base, their utilisation of people, spare parts management; there are many things you can look at in reducing costs.”

“The third part is asset availability and using new technology like real time condition monitoring services to predict when assets need to be serviced and maintained. In that way we reduce downtime and become proactive rather than reactive.”

“The final part is to do with sustainability. Let’s look at the water industry for example - a regulated business that has to guarantee the quality of the water that they give to their consumers, if we can do something like putting in instrumentation products and calibrate them so that they don’t get penalised by their regulator, it further adds strength to our role in supporting their business and gives us greater customer loyalty.”

 

Of course whilst the shift towards delivering advanced services is heavily reliant upon changing the culture both within your own organisation but also amongst your customers also, technology – particularly the IoT is playing a critical role in enabling companies to be able to deliver such solutions.

But how big a challenge is it for a company like Siemens, with well over 100,000 assets out in the field globally (and some of these assets are 30 even 40 years old) moving to IoT?

“It can be hard but a lot of the equipment that is thirty or forty years old tends to be power related. Its drives, motors and other individual items that were never networked in any way shape or form” explains Coyne.

“Industry 4.0 is allowing everything to communicate. We have a lifecycle information service we offer where we will take the installed base from the customer, analyse it, and point out where they might be at risk.”

“We get situations such as a ship turning up in port with a bow thruster that needs a service - it might be thirty years old and they still expect us to do it.

There is no way that, that is connected in the internet and in future we will be much better at supporting our products as they will be fitted with Industry 4.0 compatible connectivity”

“But that is the dilemma we have in terms of looking after legacy products, and then looking to the future and saying if you specify this in these systems we are going to be able to support you way, way better. Rather than an adhoc approach you can plan it and manage it better.”

 

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Having undertaken a detailed research project together assessing the use of IoT in field service and also the relationship between IOT and the growing trend of servitization, Field Service News and Gartner field service management magic quadrant leader ServiceMax delivered a webinar exploring the research findings.

You can find links to download the full webinar and the related white paper below but here as a taster is a brief section of the Q&A held at the end of the webinar featuring Patrice Eberline, VP Global Customer Transformation and Kris Oldland Editor-in-Chief, Field Service News

 

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Click here to access the research report

 

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Click here to access the webinar

 

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Field service management software providers Coresystems showed us a glimpse into the not too distant future, bringing together field service and consumer IoT.

As smart homes become more prevalent one of the key hubs leading the way in integrating a variety of disparate smart devices is Amazon's Echo which features voice controlled personal assistant Alexa.

Commands such as 'Alexa switch off the downstairs lights' or 'Alexa turn the heating up to 68 degrees' allow the Echo to control the heating lighting, security and much more in your smart home.

And now as demonstrated in this video by Philipp Emmenegger, Deputy CEO and Head of Sales EMEA with Coresystems Alexa can schedule a field service call for you as well. 

In the brief demonstration above, filmed at Field Service Europe held in Amsterdam last week, Emmenegger is able to schedule a service call on the day of his choice simply by telling Alexa "Alexa, tell coresystems to schedule a service call'.

After a brief exchange a day is confirmed and we can see the appointment added into a dispatch schedule.

Of course, further development would be required to make this a solution rather than just a gimmick, for example identifying exactly what it is I want the engineer to come and fix, however, it is an interesting glimpse into how we could be arranging our field service schedules in the not so distant future...

 

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With a view towards the looming new year the team at Bizness Apps have put together this fantastic infographic outlining some of the key trends in mobile to look out for in 2017...

 

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As we continue our series decoding the language used by rugged hardware manufacturers we turn our attention to one of the most widely cited certifications MIL STD 810G

Almost every rugged device you see will proudly boast the magical code MIL STD 810G somewhere in the specs but what exactly does it mean and why is it just so important?

Well as you may well have guessed MIL STD is actually short for Military Standard (the artwork was probably a give away wasn’t it?) In fact it is an American military standard that although has it’s origins with the US Air Force is now upheld in a tri-service agreement between the US Army, US Navy and US Air force. However, the standard is widely adopted amongst commercial products that need to be able to hold up to rigorous environmental tests.

The G if you were wondering relates to the current revision of the certification document and we have been at G since 2008.

General Program Guidelines

The first part of the MIL-STD-810G is a set of general guidelines that describes management, engineering, and technical roles in the environmental design and test tailoring process.

It focuses on the process of tailoring design and test criteria to the specific environmental conditions an equipment item is likely to encounter during its service life.

Laboratory test methods

The second element of MIL-STD-810G is focussed on the environmental laboratory test methods to be applied using the test tailoring guidelines described outlined in the general program guidelines.

With the exception of Test Method 528 (Mechanical Vibrations of Shipboard Equipment), these methods are not mandatory, but rather the appropriate method is selected and tailored to generate the most relevant test data possible.

Each test method also supports the test engineer by describing preferred laboratory test facilities and methodologies. These environmental management and engineering processes can be of enormous value to generate confidence in the environmental worthiness and overall durability of equipment and material.

 

However, it should be noted that there are always limitations inherent in laboratory testing that make it imperative to use engineering judgment when comparing lab results to how a device may cope in real world environments as in many cases, real-world environmental stresses (both singularly and especially when combined with other stresses) cannot be duplicated practically or reliably in test laboratories.

That said the MIL STD 810G is accepted as a global standard when it comes to the robustness of rugged devices.

The tests themselves are varied across a range of different environmental stresses which include:

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• Temperature ranges
• Shock
• Vibration
• Humidity
• Salt fog
• Explosive atmosphere

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As well as a number of other environmental stresses. However, a device can be tested and certified as MIL STD 810G for each and any of these tests individually and they are not mutually dependant on each other. So for example a device could be tested to MIL STD 810G for shock (test 516) only without having to be able to pass any other MIL STD 810G criteria.

In terms of rugged devices suitable for field service perhaps the most important of these tests (and the most likely you are going to see in manufacturers spec sheets) are Shock, Operating Temperature, and Vibration. There are MIL STD 810G tests for sand and dust ingress as well as contamination by fluids but generally most manufacturers stick with the IP rating system for these areas.

Test 516: Shock

Almost certainly the most widely cited of the MIL STD 810G tests by rugged manufacturers, this test method is often referred to as the “drop” test as it gauges how well a device holds up to impacts while falling from certain heights.

The tests are designed to find out just how much general physical abuse a device can take while in operation and there are eight different procedures to choose from that each use different ways to cause shock or impact but of these the most common is procedure IV.

 

Just how extensive the test is down to a devices weight but generally tablets, phones and laptops all fall into the first category (weights of less than 100 pounds and lengths of less than 91 cm). The devices are dropped from a height of 4ft onto each of it’s six faces 12 edges and 8 corners onto two inches of plywood over concrete (which apparently is the most common surface a device is likely to land on). Testers then visually inspect for damage and determine whether the device still works after each drop.

Tested to. Vs. Engineered to

One problem with MIL STD 810G testing is that it can be very expensive and it’s important to remember that MIL-STD-810 is not a specification per se but a standard. A specification provides for absolute criteria which must be satisfied to “meet the spec”. MIL-STD-810 as a standard provides methods for testing material for use in various environments but provides no absolute environmental limits.

Therefore, some OEMs will skip the whole second part of MIL STD 810G (the actual testing part) yet still claim their devices are engineered to meet MIL STD 810G standards.

Whilst such devices may well be more than capable of surviving the rigours of your field engineers toughest day, the simple fact is that they haven’t been actually tested to do so.

That said most of the dedicated rugged players within the space such as Getac, Panasonic and Xplore et al will all have their own internal testing facilities and will also often engage with a third party to validate their findings.

What MIL STD 810G does do however, particularly when it comes to the ‘drop test’ is give you a base line understanding of what you can expect your field service engineers shiny new tablet etc to withstand.

 

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