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Global study predicts major changes to service workforce over next five years.

In addition to the smooth transition toward an outcome-based business model, the organisation-wide and bottom line benefits of automating asset and service data collection and utilisation are vast. The benefits are perhaps no clearer than when it comes to achieving minimal unplanned downtime, where over nine in ten (94%) respondents report that the automated collection and utilisation of asset service data will be absolutely fundamental or an important factor in actually achieving this asset specific benefit. A similar proportion (91%) report the same for improved first-time fix rates.

Plugging the Holes – Revenue Leakage

Further to this, 82% believe that automating asset and service data processes will be pivotal when it comes to lower leakages, and contract leakage is something that is causing a great deal of damage to organisations currently.

On average, respondents’ organisations are undertaking 187,470 work orders per year, but an estimated 8.34% (17,542 work orders1 ) of these work orders are left unaccounted for by engineers according to those respondents who know how many are carried out on a yearly basis. This can lead to huge financial deficits and wasted resources and is clearly a problem that organisations should be taking notice of if they want to remain financially viable.

The issue of contract leakage is proving particularly problematic for organisations in the oil and gas, and telecoms sectors – on average, respondents from the oil and gas sector report that their organisation carries out 228,261 work orders on a yearly basis, and those in the telecoms sector are undertaking 213,424 work orders. The level of contract leakage in organisations from these two sectors is staggering. The respondents from the telecoms sector who know the number of work orders being carried out per year, report an average leakage of 9.64% (26,321 work orders), and this is only slightly lower at 9.41% (23,093 work orders) according to those from oil and gas. It seems unthinkable that organisations are unaware of such a gaping hole in their business, and it raises the question of what else could they be missing?

The process of automating asset and service data practices will not only benefit those involved in keeping track of work orders but can have wider reaching benefits as well, exemplified by the 84% of respondents who agree that the successful utilisation of asset data can positively impact all areas of the business. The specific departments that are expected to benefit include, but are not limited to, sales (38%) and marketing (37%) who will be able to better leverage customer usage behaviour, finance (33%) who will be able to provide more accurate billing, and even corporate social responsibility (27%) who will be able to monitor the environmental impacts of assets more effectively.

Bottom Line Benefits: Double-Digit Revenue Growth

While these organisation-wide benefits are impossible to ignore, the truly jaw-dropping potential of automating the collection, aggregation and analysis of asset and service data comes from the bottom line benefits. On average, respondents estimate that this process and using it to drive new marketing, sales and financing models can increase their organisation’s revenue by 14.15% over the next 12 months. In addition, it is thought that operational costs could be reduced by as much as 12.03%, on average.

[quote float="left"]An increase in revenue and decrease in operational costs can only lead to one thing – increasing profit margins.[/quote]An increase in revenue and decrease in operational costs can only lead to one thing – increasing profit margins.

The figures around revenue and operational costs show slight variation by region, with those in the US and MENAT particularly confident about the revenue increases that their organisations will witness – average increases of 15.67% and 15.43% are forecast respectively. Furthermore, those from the MENAT region are almost equally as bullish about the prospects of reducing their operational costs, predicting an average reduction of 14.21%. This is likely to be at least in part down to organisations in the MENAT region starting with a clean slate – the region is currently booming with new business and they are less likely than their counterparts in Europe or the US to have existing legacy technologies in place which would slow down any transition towards the automation of processes. This, in turn, means that they can begin to witness the financial benefits almost immediately – exciting times for the MENAT region providing that any transition is rigorously planned and diligently implemented.

Predicted financial benefits over the next 12 months

Another key way of making money is to improve cash flow and automating the collection and utilisation of asset and service data can also assist in this domain – over eight in ten (83%) respondents believe that the automatic collection, aggregation and analysis of asset service data could have a positive impact on their organisation’s cash flow over the next 12 months.

But what about return on investment?

Ultimately organisations are going to have to spend a fairly significant amount of money on the automation of asset and service data processes which might put some businesses off, but if the reward outweighs the risk then this is surely going to be a worthwhile expenditure.

Strong RoI

When taking into account all of the benefits that their organisation could experience, respondents believe that for every $1 they invest in ensuring that they can automatically collect, aggregate and analyse asset service data they would expect a return of $4.44, on average. Respondents from organisations in the US are even more convinced about the possible returns that they could experience, believing that this figure could soar as high as $5.29. The potential returns dwarf the initial outlay and it is hard to imagine a stronger case for investing in this process in order to guarantee a better future for organisations.

These financial benefits all culminate in enhanced competitiveness within the industry, and 87% of respondents agree that the automatic collection and utilisation of asset service data will have a positive impact on their organisation’s ability to remain competitive in their sector.

This is crucial because the more that organisations across the globe begin to realise the value that this process can bring the more that asset and service data will be used, explaining why the vast majority (86%) of respondents agree that the more asset service data is used, the more value it brings to the organisation.

A success loop will inevitably be created, opening the door for those who are brave enough to take those initial steps to get a jump on the competition and put themselves out there as leaders in their industry.

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Asset and service data will be a crucial element of making this transition to a more outcome-based business model. However, at present, surveyed organisations are not accessing the full potential of this data due to their inconsistent use of digital tools and technology. While 98% of respondents report that their organisation uses automated digital tools and technology to aid the collection and utilisation of asset service data, only around half or fewer state that these tools are used in the collection (51%), aggregation (43%) or analysis (52%) stages of the process.

This intermittent use of automated technologies is not only opening the door for inefficiencies but is also directly leading to difficulties with data collection and utilisation. Around four in ten respondents report that when it comes to the management of access to asset service data in real time (40%), aggregating asset service data in a structured way (39%), analysing asset service data (41%), and sharing asset service data analysis with the rest of the business (42%), their organisation either needs huge improvements in these areas, a complete overhaul or that they simply do not do this at all yet.

The difficulties regarding asset and service data are exasperated further by the 59% of respondents who agree that their organisation is held back from the successful analysis of data because the quality of it is usually poor.

Struggles are rife throughout the entire process, right from who is collecting it and how they do this, down to how it is being analysed and shared across the business. How can these organisations possibly expect to make any informed, strategic decisions using the data that is readily available to them if the process is so disjointed, outdated and underdeveloped digitally?

Lack of Data Confidence

And these struggles have led to a distinct lack of confidence among surveyed decision makers and their colleagues, with only 50% of respondents reporting that they or other service leaders in their organisation completely trust the asset service data that they have access to. But this will need to change because asset and service data is becoming an ever more integral part of organisations, and this is summed up by the 85% of respondents who agree that service asset data should be central to strategic decision making.

The requirement to boost trust levels is especially pertinent in those organisations where the C-suite is already using asset service data today (39%) or have plans to in the future (34%) because they will need to be able to trust in the data in order to make well-informed decisions for the business.

The use of asset and service data by the C-suite will also serve to set an example for leaders across other departments that this is the best way forward for the organisation.

Glaring Skills Gap

However, it is not just these deep-lying trust issues that are a concern for organisations, which is clear from the fact that only 22% of respondents are willing to admit that the IT and field service functions in their organisation work together completely effectively to achieve the goal of better data utilisation.

This lack of collaboration is compounded by a glaring skills gap whereby over three quarters (77%) of surveyed decision makers concede that the pace of data intelligence digitally collected by their organisation’s assets is outpacing the skills of those responsible for actually utilising the data.

Further to this, more than four in ten respondents report that the skills of engineers (45%) and the skills of management (44%) are a cause for concern when it comes to using data produced by advanced technologies (such as a digital twin) meaningfully. This should set alarm bells ringing for organisations because they are struggling with skills among both their employees on the ground and those higher up the organisation as well. It seems that even with the implementation of the appropriate technology for the collection and utilisation of asset and service data, there will still be work to be done in order to extract as much value as possible – this will likely need to be in the form of a rigorous training program.

An Appetite for Automation

A lack of collaboration between teams, an ever-increasing skills gap and an inconsistent use of the appropriate technology, leading to trust issues could become a recipe for disaster in these organisations if not addressed quickly.

The need for automated digital tools has rarely been clearer, and respondents recognise this. Only 7% believe that automating the process of collecting and utilising asset service data is not at all required because all data manually entered by service engineers is structured and entirely usable. Whereas over four in ten (43%) report that the automation of this process in their organisation is required to a huge extent, or that it is completely required because manually entered data never/rarely provides value.

Organisations will need to utilise automated digital tools more consistently if they are to progress, but they will also need to upskill their workforce and address any collaboration issues internally. These three areas are crucial if asset and service data is to be utilised to its full potential and this will ultimately underpin the successful transition to an outcome-based business model.

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Adopting IoT as part of the greater service and business environment involves keeping up with industry changes as they take place. That means incorporating better measures when needs arise in any business area and keeping cost-effective solutions in mind for future progress of the company as a whole.

By 2020, there will be more than seven connected devices for every person alive. Service providers must anticipate this new reality, the speed at which it’s emerging, and its impact on business models explains Joe Kenny, Vice President Global Customer Transformation & Success for ServiceMax, a GE Digital company.

The global economy is in the middle of the most disruptive period in all of human history. Companies that have been fuel for the global economic engine that powered the late 20th century are quickly disappearing from the global stage.

According to the Olin School of Business, 40% of today’s Fortune 500 companies will be gone in the next 10 years. Much of this business transformation is due to the accelerated advancement of technology. We are, in effect, making better and cheaper things that enable us to make better and cheaper things. Organisations that do not recognise this reality, and adapt to it, are going to face incredible challenges, much faster than ever before.

While many people are amazed at the success of Uber, few consider the consequences to Uber’s competitors.

While many people are amazed at the success of Uber, few consider the consequences to Uber’s competitorsIn New York City, a taxi medallion cost $1.3m in 2014 and two years later they were selling for $250k (Business Insider – 12 October 2016). That same article noted that the total share of all taxi rides for medallion owners in New York fell from 84% in April 2014, to 65% in 2015; A 20% market share decline in 12 months. Those that invested, over generations and decades, in N.Y.C. taxi medallions, will eventually see those medallions lose all of their value.

Ray Kurzwiel, futurist and author of the book, “The Singularity is Coming”, states that based on our current rate of change that, “from a historic perspective, the 21st Century will experience 20,000 years of technology advancement in 100 years”. What is driving this “Age of Acceleration”? The information and communications revolutions of the late 20th century. So, what does all of this have to do with how we service our corporate equipment and assets? Better, cheaper, and faster technology allows for a fundamental paradigm shift in how service providers approach customers and their markets.

Leveraging the technical revolution allows for machine to machine communication, remote asset monitoring, preventive maintenance planning, and predictive analytics. This is not something that is coming, it is something that is already here.Leveraging the technical revolution allows for machine to machine communication, remote asset monitoring, preventive maintenance planning, and predictive analytics. This is not something that is coming, it is something that is already here.

Major markets that have embraced these technology advancements include aviation, transportation, and power generation. Aviation Week reports that an average twin-engine plane can produce over 850 terabytes of data over 12 hours of flight. That data informs on everything from temperature, vibration, oil pressure, basically every aspect of that asset’s performance. It informs service providers of the exact status of that asset over time, when it will need maintenance, and exactly what maintenance it will need.

That level of information will shortly be available on almost every asset in service. Currently, there are approximately 28 billion connected devices on the planet. In the next three years, that number is expected to almost double to more than 50 billion.

That is more than seven connected devices for every person alive in 2020. Service providers need to anticipate this new reality, and more importantly, the speed at which this new reality is emerging. Positioning a service organisation to leverage these capabilities, access these technologies, and drive efficiency, effectiveness, and technologically advanced service will be critical to their survival in the market. It’s one of the main factors driving the exponential rise of field service.

Utilising technology to drive predictive maintenance, guaranteed uptime, defined service windows, and the move to defined service outcomes will be the price of admission to providing service and maintenance.Utilising technology to drive predictive maintenance, guaranteed uptime, defined service windows, and the move to defined service outcomes will be the price of admission to providing service and maintenance.

By way of example, GE already has 800,000 Digital Twins in operation that provide a digital mirror on the status and performance of equipment - covering assets from jet engines to wind turbines - allowing engineers to predict when they need servicing - helping field service engineers make sure that they perform the right service, right first time. Soon there will be more than a million Digital Twins in operation. If you are not positioning and preparing for this reality now, you may already be too late.

While there is always talk of the high cost of doing nothing, in the past there was a period of time for reflection, evaluation, and a window of opportunity to changes one’s mind. That will not be the case in the future. A missed opportunity will be gone before you know it.

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What will the impact of servitization and the move to preventative maintenance that it entails have on parts and inventory management? Erik Kjellstrom, Pre-Sales Manager, Syncron tackled this question at the Aftermarket Conference in Hamburg last October. Kris Oldland followed up with him after the event to find out more more...

As Erik Kjellstrom, Pre-Sales Manager, Syncron, stepped down from the stage having just given a presentation at this year’s Aftermarket Conference, I was looking forward to the opportunity to catch up with him for a number of reasons.

His organisation has been something of an anomaly in our sector of recent years. A pioneering lone voice that often were seemingly single-handedly trying to bring a dedicated solution to what was often the unloved piece of the field service puzzle – parts management.

Whether, it be pricing, inventory management or stock ordering, Syncron have successfully over the last few years been one of few brands to be associated with taking this part of the aftermarket conversation seriously. We’ve seen Syncron a lot at various conferences over the last 24 months and almost each time they’ve been armed with case studies and hard data that revealed just how much (and how easily) their solution has improved their clients P&L both in terms of top line revenue and bottom line profit.

However, this time around there was a twist to their approach. Having recently brought a new in module into their offering that is focused on predictive maintenance and based on IoT, were they shifting their focus - or was this development just a natural evolution that reflected the changing dynamics of the industry?

The central thrust of Kjellstrom’s presentation was that essentially there are a number of interesting trends appearing in the aftermarket industry – covering a lot of the ground that regular readers of Field Service News will be familiar with.

We are seeing futuristic concepts such as Drones, 3D Printing, Augmented Reality and Autonomous Vehicles all of which have all been on the horizon offering the promise of industry revolution for a while but are now really starting to come into the mainstream conversationTo begin with, coming from the technology perspective we are seeing futuristic concepts such as Drones, 3D Printing, Augmented Reality and Autonomous Vehicles all of which have all been on the horizon offering the promise of industry revolution for a while but are now really starting to come into the mainstream conversation. Alongside this with have already seen wide adoption of Mobile, Cloud and increasingly the Internet of Things amongst manufacturers and service providers.

However, the changes we are seeing in our sector are not just driven by technology alone.

Sweeping demographic change within the workforce, accelerated by the ageing workforce crisis being faced by companies across the globe and being exacerbated by the unprecedented differences between the incoming Millennial generation and the outgoing Baby Boomers, is of course another factor driving industry evolution forwards.

Finally, add into this mix our shift to a much more service and outcome orientated society as a whole - arguably itself the result of the generational shift alongside the technical advances referenced above and we are seeing companies turn their entire business models on their head.

Servitization has gone from fringe concept to buzzword across the last eighteen months or so as talk of ever decreasing SLAs and increasing First-Time-Fix rates has morphed into discussions around guarantees of uptime and the financial impact of unplanned downtime.

As such our industry is in a fascinating and exciting state of flux at the moment and it was this rapid development and the various drivers behind it that were at the heart of the Kjellstrom presentation in Hamburg.

Of course, such dynamic changes within the sector need to be reflected within the solutions provided and it is the shift towards preventative maintenance (itself a major stepping stone on the way to servitization) that Syncron have focused their latest efforts on.

“We have been working very much to support more reactive service models in the past in terms of inventory management and pricing but what we are now doing, both from a product stand point but also from a service offering standpoint, is we are working towards an uptime supporting module.” Kjellstrom explained when we caught up.

In brief, Syncron are integrating a new module into their current service network optimisation capabilities.

These capabilities in the past had all been centred on the parts management area of the Aftermarket sector – pricing, inventory management, and ordering. However, their new module is a predictive maintenance module they call Uptime (makes sense), which Kjellstrom explains is intended to ‘blend together the aspect of inventory management and pricing etc with an understanding of the actual assets that use these parts.

It seems a natural alignment to bring the asset and the parts management together in the preventative management worldIt seems a natural alignment to bring the asset and the parts management together in the preventative management world. Indeed, much of reasoning behind this development from Syncron echoes a similar line of conversation that ServiceMax put forward when they announced their integration with GE Digital’s technology Asset Performance Management (APM).

Essentially both Syncron and ServiceMax are approaching the same central maxim - just from two different angles. In a world of IoT and sensor-led preventative maintenance the asset is King and everything else should fall in line around and work back from that one premise.

However, where one does feel that viewpoints will change between the two organisations is in how the ecosystem is built. Through their recent acquisition list including Servicemax, it is clear that GE Digital have their eyes set on building a comprehensive and all encompassing new platform for age of the Industrial Internet.

For Syncron however, the focus for the time being at least, appears to be in line with their best-of-breed heritage.

“I think that a product such as ours and a Field Service Management (FSM) system are complimentary products.” Kjellstrom explains.

“We have many instances where we will see a FSM system or a maintenance system that runs in compliment to the more Aftermarket focussed, parts oriented solutions such as ours. Perhaps what makes Syncron a little bit unique is the way we work and how we blend together the aspects of network optimisation and parts optimisation which is often natively something that belongs in a FSM tool.”

With so many technologies evolving at once a clear case could be made for establishing a comprehensive technology ecosystem across a service orientated business and Syncron is set to be an important part of that ecosystem.

Yet, in a world that seems to be in constant Beta, not all developments are equal and Kjellstrom believes it is important to understand how different technologies can impact the way we work when building out your own tech strategy.

Certain technologies will bring refinement whilst others offer revolution.

“We definitely see more potential impact from some types of the technologies than others,” he comments.

“What we are really interested in are the questions like will 3D printing totally replace a need for service part inventory management – and the answer is no it will not, it may enhance it but it will not replace it.”

Does the development of autonomous vehicles mean that we will begin to see car sharing across a team of engineers“How about autonomous vehicles? Does the development of autonomous vehicles mean that we will begin to see car sharing across a team of engineers” he asks rhetorically before outlining that such technology could lead to servitizing the fleet at which point automotive manufacturers concerns about spare parts really begin to truly change and evolve into an entirely new set of thinking and processes.

“These are the types of questions that we are interested in, in terms of the emerging technology.” He explains.

“What we are seeing is that some of these new technologies are really pushing towards a more uptime related world, whereas some technologies are more likely to become tools for us to simply improve existing processes.”

However, whilst he believes the shift to Servitization and outcome based solutions will continue to grow, Kjellstrom also insists that the traditional break-fix market and the aspects of pricing, parts management and inventory which that function drives forward, will never fully disappear.

“I am sure that the shift in focuses to uptime guarantees are growing rapidly and eventually break-fix is going to become less significant but there is always going to be the type of customers where uptime critical assets are not relevant.”

Indeed, whilst we wait for the weighting between the old and the new to do a 180 flip, one thing is clear, for the short-term at least we need to be able to accommodate both – which means looking to the future today – something Kjellstrom and his colleagues have embraced which is clearly evident by their introduction of the new Uptime module.

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