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Dr Christian Kowalkowski, Professor Of Industrial Marketing at Linköping University outlines how two of the biggest trends amongst manufacturers, digitalisation and servitization, are in essence two sides of the same coin and why digitalisation requires more, not less, service and customer centricity than ever before. 

The growing digital disruption is blurring industry boundaries and altering established positions of firms. While manufacturers are investing strategically in data gathering and analytics capabilities and in cloud-based platforms, many firms remain concerned about how to best address digital disruption and enable digitalisation.

Last year, General Electric cut expenses by more than 25% at its digital unit responsible for Predix, its software platform for the collection and analysis of data, which previously has been hailed as a revolutionary driver for Industry 4.0. This move highlights the difficulties involved in adopting digital technology in an industrial business. Having worked with B2B firms in diverse industries on designing and implementing service-growth strategies, I have seen both highly successful and unsuccessful cases of what I call ‘digital servitization.’

Why is it so that even many firms that run a profitable field service organisation struggle to implement digitally-enabled services?

Before looking at some key challenges, let us first define what we mean by digital servitization. As a start, we need to distinguish between digitisation, which means turning analogue into digital, and digitalisation, which refers to the use of digital technology to change the business model. A tech-savvy firm with a product-centric mindset may have little difficulty in implementing digitisation, as when record companies moved from selling LPs to CDs.

However, rather than embracing the new digital opportunities that changed the way we interact with music, most record companies then clung on to a product-centric business logic of selling CDs.

Instead of developing business models based on Internet distribution they promoted new physical media like the Super Audio CD. Ironically, their defensive stance—manifested in such things as copy protected CDs—forced many people to illegal downloading in order to conveniently access MP3 music, thereby undermining their product-centric model even further. Digital servitization, then, refers to the utilisation of digital technologies for the transformation whereby a company shifts from a productcentric to a service-centric business model.

Of course, digitally-enabled services are not new; for example, Rolls-Royce’s archetypal solution TotalCare begun in 1997 and BT Rolatruc (since 2000 part of Toyota Material Handling) created its software system BT Compass in 1993, to help its customers improve their performance. Digital technology can be a double-edged sword however. For example, many manufacturers have been carried away by the technical possibilities of telematics without having a clear service business model in mind.

Rather than crafting a compelling value proposition based on enhanced customer performance, it was tempting to give the service away for free with the hope that customers eventually would discover the value of data access and be willing to pay for it.

There are however at least three problems with such a technology-centric approach. First, as the connected installed base grows and the costs of collecting and managing data increase year by year, it becomes increasingly difficult to defend the model unless service sales start to materialise. Second, giving services away for free always reduce the perceived value of the offering in the eyes of the customer. Why should they pay for something that was previously free of charge and that competitors may still be treating as a commodity and giving away?

Third, customers typically do not have the time nor the skills to interpret and act on the data collected. The real value of Big Data only comes once it is processed. By collecting and analysing data from multiple customers, a supplier may know more about the customers’ equipment and operations then they know themselves, which creates opportunities for new advanced advisory services.

The digital dimension of service growth requires purposeful and coordinated effort. As we know, while manufacturing and conventional R&D activities can be centrally managed to achieve efficiency and standardisation, services require increased local responsiveness and closer customer relationships.

"The real value of Big Data only comes once it is processed..."

 

During digital servitization, however, the central organisation must take a more proactive leading role to ensure platform consistency and data quality, to provide the requisite data science skills, to support local units, and to address cyber security issues. The 2017 large-scale cyberattack (NotPetya) on Danish shipping giant Møller-Maersk, which shut down offices worldwide, illustrates the dangers of inadequately managing the latter issue.

A service manager at Toyota pointed out over ten years ago that service development “is very much IS/IT. Instead of sitting and discussing how to be able to quickly change oil in the truck, there has become very much focus on data.”

Viewing data as “the new oil” is a claim oftentimes heard. Like oil, data is a source of power. It is a resource used to power transformative technologies such as automation, artificial intelligence, and predictive analytics.

However, unlike oil, data also has other properties. We are currently seeing a shift from scarcity of information (data) to abundance of it. Data can be replicated and distributed as marginal cost, and competitive advantage can be achieved by bringing together new datasets, enabling new services. But this also creates new tensions between companies regarding the issues of generation, collection, and utilisation of data. If a customer is generating massive amounts of data that the supplier is collecting, once processed, it can be used for better serving also the customer’s competitors. In other cases, we are seeing completely new companies emerging and collecting data on behalf of their clients.

Digitalisation is beginning to have a profound impact on even the most stable businesses. Customers increasingly expect that a single provider will integrate the system of which the products are part, and that they will do so through one digital interface. Whether the platform provider is one of the established OEMs or a new software entrant might not matter. Competition may come from unexpected sources, as for example when one of the leading international standards organizations in the marine industry recently moved into platform-based services.

Oftentimes, the most formidable threat comes from disruptive innovators outside the traditional industry boundaries. An executive in a leading incumbent firm stressed that her main concern was not the competition from any established player. Instead, what kept her awake at night was the prospect of Amazon entering—and reshaping—the market. While many share the concerns of being overrun by new competitors, the threat is most imminent to those firms that lack service leadership and a clear road map for service growth.

To conclude, no firm can afford not to strategically invest in digitalisation. However, as firms compete in the digital arena, there is a risk that focus shifts too much away from service and customer centricity to new digital initiatives and units. Ten years ago, many executives sang the praises of servitization.

Today, digitalisation is the poster boy for business transformation. Given the rapid pace of innovation, it may be tempting to launch new concepts as soon as the technology is available, rather than waiting until the they have been properly piloted and customer insights gained. To reap the benefits, firms also need to understand the interplay between back end and front end, investing in both back-end development for enhanced efficiency and better-informed decision-making, and front-end initiatives to enable new services and closer customer integration.

Correctly designed and implemented, digital servitization provides benefits for companies, networks, and society at large. Successfully seizing digital opportunities, however, requires more, not less, service and customer centricity than before.

Dr Christian Kowalkowski is professor of industrial marketing at Linköping University, Sweden, and the author of Service Strategy in Action: A Practical Guide for Growing Your B2B Service and Solution Business. Find out more here. 

Marc Tatarsky, SVP Marketing of FieldAware outlines the increasing importance of business intelligence in field service management.


Without doubt the use of analytics is having an increasing impact in field service. In 2018 we saw more interest than ever from field service leaders wanting better insight into their business and they understand that analytics holds the key to this.
We are expecting a further shift in the way analytics is applied in field service so what are the main challenges that organisations face that analytics can address today?

The Evolution of Analytics
The early adopters of field service analytics were quick to realise that it was not simply data that mattered, but how the data was turned into information that was key. They focused on how data was aggregated from multiple sources to give a unique and unprecedented visibility into the end-to-end operations.

They took a basic understanding of the ‘what’ and ‘where’ and enabled the next leap of the ‘why’ with advanced analytics capabilities that truly enhanced the value of their data further still. Analytics provided business insight and allowed management to focus on taking action based on decisions made from the real-time information available. Operational issues can be more easily identified and rectified quickly and effectively. Business intelligence helps identify trends and creates context, so productivity can be improved, and efficiencies made, so field service organisations have reaped the benefits.

Learn More, Serve More, Grow More
As field service organisations mature in their use of analytics they demand more from business intelligence. There is a definite shift in the application of analytics from simply turning data into outcomes, to enabling leading companies to take a more strategic approach. Analytic driven organisations can learn more about their operational performance and the needs of their customers empowering them to address the trends that are revealed.

Going forward into 2019 we will see analytical data being used in unique ways to help field service organisations leverage the findings that are uncovered to drive innovation into their products and services. Forward-thinking companies will be able to apply these insights to help customise the service they offer to their customers more easily, deepening the customer relationship and improving levels of satisfaction.

The creation of new, unique, predictive and preventative services will help them to serve more. Ultimately this greater understanding of their customers’ needs and expectations, is what will help companies differentiate themselves from their competition and lead company growth.

This shift to a strategic use of data is becoming more and more prevalent in field service and leaders are making it a priority in their business drivers.

"As field service organisations mature in their use of analytics they demand more from business intelligence..."

An Integrated Future
As company leaders recognise that field service has the potential for becoming a more strategic driver within the wider business, the need for improved integration within the business becomes even more critical.

Service teams have, in the past, often been considered to be simply an overhead within the business model rather than adding value. However, the ability to leverage information across the organisation in real time and bring additional context to the broader business insights, empowers field service organisations to become value drivers in the business.

Analytics provides the means for field service organisations to realise their potential and companies that recognise this value, see the importance of a closely integrated and connected field service within the wider business.

Field service solutions have long had the capability to integrate into other business systems, such as CRM, ERP and accounting, to extend the power of these solutions and the combined information provided. Business leaders understand that the true integration of these technologies maximises the overall value beyond the sum of the parts. A comprehensive field service management platform integrated with a suite of solutions is where we are seeing the greatest application of analytics.

As field service becomes a greater part of a fully connected business, the empowered field workforce, armed with contextual insights, are enabled to creatively interact and work with other teams and departments. These new interactions further unlock the value for the company in terms of customer service, sales or product development to fuel competitive advantage.

The Analytics Advantage
Analytics will continue to develop and the potential in field service is vast. It is no surprise that research consistently shows that field service leaders see analytical tools as a priority for their technology investments.

Business insights elevate the field service operation, transforming it to a value-driving organisation within the wider company, that delivers real results: Increasing productivity, customer satisfaction and revenue, taking service to the next level of providing competitive advantage – a vital step in any business.

Companies should take full and rapid advantage of the critical role analytics has in field service.

Mark Tatarsky, is SVP Marketing at FieldAware and will be part of a panel at Field Service USA, discussing the latest developments in field service analytics. The event takes place from April 23 to 26 at JW Marriott Palm Desert Resort and Spa, CA and ou can register for the conference here.

For more information on how to take advantage of analytics in your field service, visit FieldAware's Insights page here. 

Big Data, the Internet of Things (IoT) and Sensors will be the technology trends most impacting mobile workforces over the next 12 months, say mobile technology buyers in research published by Panasonic.

When asked to rate the importance of technology trends for use by their mobile workforce, buyers rated Big Data (52%) the most important, closely followed by IoT (51%) and Sensor technologies (41%), including atmosphere, temperature and biological sensors. The main drivers for the technologies were improved business efficiency and productivity. 

Unsurprisingly, the mobile device buyers thought that the IT Department would benefit most within the organisation from every technology trend. However, looking at the second department to benefit most threw up some interesting insights. Respondents believe business management would benefit from Big Data, the IoT and Wearable technology. Sales would benefit from virtual reality developments. Logistics from drone technology and Research and Development would benefit from augmented reality, sensor technology, blockchain and artificial intelligence.

Looking further into the future, over the next three years, buyers could clearly see the impact on their mobile workforces of Big Data to improve service offerings, improve processes and reduce costs. With IoT, they saw the mobile workforce benefits as improving processes, improving service offering and helping to improve the functionality of mobile devices.

Considering how mobile devices will need to change over the next five years to take advantage of these new technologies, buyers prioritised improvements in device and data security (43%), processing power (31%) and communications for faster data transfer (31%).

Mobile device buyers also predicted the increasing importance of foldable tablets over the next five years and the continued rise of rugged devices as critical tools for mobile workforces. However, the largest group of buyers did not expect to change the type of mobile devices they were buying until two-to five years out.

However, the adoption of smart technologies for mobile workforces already looks well underway. Many buyers said that the implementation of smart watches, wrist bands and drone use had already been completed or was imminently planned for mobile workforces. 

Cost (27%) and reliability (19%) were the biggest issues preventing organisations from adopting new technologies faster. “Although a wide range of exciting future technologies are being watched closely, there is clear evidence from this research that businesses are adopting and looking to capitalise on the benefits of Big Data, IoT and Sensor technology for their mobile workforces,” said Jan Kaempfer, General Manager for Marketing at Panasonic Computer Product Solutions. “As these technologies are deployed, we move ever closer to the age of Edge Computing, where processing power is required at the edge of the network, much closer to where data is collected. This means the role of the mobile workforce computing device becomes even more critical in the gathering, analysis and communication of data, and the provision of services and in improving productivity.

A copy of the whitepaper, Future Technologies and their Impact on Mobile Workforces and their Devices, can be downloaded here. 

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In part one of this exclusive interview with ServiceMax COO Scott Berg we looked at the the similarities between widely differing industries, the rapid rise of ServiceMax and why the IoT hasn't quite got fully up to speed as yet.

Here in this second section of the interview we begin with the another key significant technology trend, Big Data and why it was the at the heart of the headlines coming out of the ServiceMax CIO summit a few months earlier.

As our conversation turns to this Berg begins nodding agreement.

“We think we are in quite a unique position to make Data actionable.” he says. A pretty bold claim.

He begins to expand further “These Data lakes and all the other terminology around Big Data, all this predictive stuff and data science is all great but somebodies got get it into the hands on a technician in order to benefit from it. To maybe direct their next step or predict their next move. There will always be people involved in the chain, so we think its really our unique place to play as we make Big Data actionable.”

 

“We have a configurable process, we have the mobile device, so if there is going to be any directing or leading or sharing and tapping into knowledge its probably going to be done on a disconnected mobile device under ground at the top of a scaffolding or something like. So our interest in it is trying to connect data science and Big Data into that actionable footprint that you can put in front of the technician.”

This focus on the end user leads us to another current topic of conversation in software circles – is customisation the root of all ills or an acceptable process to refine off the shelf solutions?

 

“I think the whole nature of customisation has changed” answers Berg as I put the question to him “As you know we are on the Salesforce.com platform, and I don’t think that customisation is necessarily a bad word because its so controlled and its such a configurable and extendable experience anyway.”

“We certainly do stress configuration to the extent that this year we’ve really tried to repackage our implementation and delivery offerings. For small businesses we have something called Express, which is an out of the box ‘trust me this is what you need’ solution. If you work with us in three weeks you’ll be live and it’ll look just like the demonstration.” He says

“So we’ve tried to get certainly more prescriptive about it but I do think that peoples notions of customisation are ERP. So obliterated unrecognisable sets of code that drop you off at the road map and that quite frankly it’s a large part of our success I think. Because there is so much of that in Siebel today, one of our big customers has three versions of Siebel all of them deprecated so their off support and they’re faced with this problem its unrecognisable, its un-upgradeable they may as well just go buy another solution.”

“I think that the Salesforce platform has really changed everything. The way that we have to operate in that platform as an independent software company on someone else’s cloud means everything has to go through vulnerability, security and compatibility automated checking. So anything your customer would do on top of that, or anything we would do for a customer, basically inherits that stability. I think that’s just a radically different technological model than traditional ERP”

 

Of course Salesforce.com ended up proving a lot of their far bigger competitors wrong and now it seems that this is a rush to catch them up. It’ll be interesting to see if in the future all companies will follow their route.

As Berg himself outlines “ I think you’ll see a lot of the vendors out their trying to follow Salesforce’s lead and trying to follow some of Salesforce’s approach and try to become that platform as a service provider. You see them all launching market places and trying to attract people. Microsoft have been making a lot of noise around this and trying to launch the Dynamics platform. “

“But as somebody who jumped into the Salesforce.com bandwagon early on and as someone who every year we periodically reassess our situation I can say that nobody has really built the breadth and depth of a business application platform that those guys have.”

It is obvious to all that the connection between Salesforce.com and ServiceMax is particularly close. But is it too close? How reliant is the continuing success of ServiceMax on the Saleforce platform I ask.

“Having been involved with several start-ups in the past I think that they [Salesforce] were extremely critical for us especially in the early days.” Responds Berg.

 

“If you think of what it would have taken for us to launch a data centre and secure it, to build all the platform capabilities and redundancy, also that some of our first 12 customers were in the Middle East and Europe and there we were with two founders selling everything themselves out of northern California… how could that be right?” he pauses leaving the question hang for just a second before continuing.

“All because of the global reach and the global acceptance level of the Salesforce.com platform. So yes it was very important early on.” He concludes.

However as Berg explains the relationship has changed overtime as ServiceMAx themselves have grown to stand on more of an equal footing.

“Overtime I think that the value of the relationship has shifted a bit.” Berg concedes “Salesforce has become much more of a platform, and we don’t tend to get as many outright business referrals from them as before.”

“And it is certainly a big credibility statement to pass our EU safe harbour framework certifications and things because we’re in it but we’ve expanded so much in our own intellectual property investments around the mobile devices, iPad, and frameworks for our configurable workflow that I think when you stack up all the functionality in our product today, its heavily tipped to us now.” He admits.

Look out for the final part of this exclusive interview coming next week... 

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As companies capture more data through mobile devices, remote sensors and telematics, the opportunity to increase the efficiency of field service operations has never been better argues coresystems CEO Phillip Emmenegger... 

This year, at tennis’ US Open, we got a glimpse of just how pervasive the idea has become of big data’s transformative power.

Thanks to cameras and remote sensors trained on the every move of the tennis players, we learned from the estimated 41 million data points collected how important it is for tennis players to return the ball to their opponent in the least amount of moves. Or, as the new “must-know” tennis stat that tracks the average distance a player travels on the court for each point is called, “Feet (meter) per point”.

It’s obvious that it’s better to expend less energy chasing down a ball, but now there’s tangible proof. The two men’s players to make the finals, Marin Cilic and Kei Nishikori, both despite their different styles of play, racked up the least amount of distance per point. Cilic averaged 42 feet per point; Nishikori, 52. In contrast, Roger Federer came in at 57 feet per point, and Andy Murray at 70 feet.

But what does the data crunching at the US Open have to do with field service? Just as in tennis, so in field service: those with the most efficient delivery win. Moreover, just as collecting the seemingly mundane data of the average distance a player ran per point is now being used by tennis coaches to re-examine their player’s games, so a company can now collect the most specific data to be transformed into meaningful analytics to eventually give companies an edge.

Indeed, according to the Aberdeen Group, companies have a strong belief that the proper use of big data will give them a competitive advantage. In the consultancy’s report, “Big Data Perspectives: Users vs. IT,” 43% of IT personnel believe that faster, more complex analytics will give them an edge over other companies.

 

Moreover, providing superior customer service has been show to impact a company’s bottom line. According to business consultancy the Aberdeen Group in its recent study, “Secrets to Optimize Field Service for Better Customer Experience,” those companies that hit a 90% + customer satisfaction were also able to achieve an annual 6.1% growth in service revenue, a 3.7% growth in overall revenue, and even more importantly, an 89% current level of customer retention.

But how can field service companies harness big data? And, what exactly is “big data”? Big data – as opposed to just data – usually refers to the entire process of capturing, storing, managing and analyzing massive amounts of various types of data, according to the Aberdeen Group. Typically, the amounts are in the terabytes or petabytes, stored in multiple formats, from both internal and external sources, and with strict demands for speed and complexity of analysis.

Here are three ways your company can get started:

Collect and Capture Data: Within field service, there are a number of ways big data can be used. The first place to start is to assess the data that your organisation already collects. Using a field service software solution will allow you to collect data quicker and more easily. A field engineer using a tablet-based solution could seamlessly collect the time the technician was dispatched, the time to fix the job, whether or not the job was fixed the first time, if a technician had to return, what reason they had to go back, and what part was needed. What other data does your company collect? Is there fleet management of telematics data available? Would placing remote sensors at certain locations to collect data make sense?

Analysing Data: Once you have captured the data, it’s time to make sense of it. You could compare it to historical data and analyse it for patterns. For example, real-time data from service engineers can show how long a job took on average, giving managers guidance on the right amount of time to assign future similar jobs. In turn, this would impact the accuracy of arrival times, and reduce the amount of jobs that have to be rescheduled, improving customer service.

 

The next place to look is across departments in your company. Could shared data from different departments lead to more efficiencies or opportunities? For example, could data shared between the field service department and the sales department end in more sales opportunities? Managers could also see if one particular area has a higher need for service technicians, and hire accordingly.

Predictive Analysis: More exciting examples could happen when companies get more sophisticated with remote sensors and machine-to-machine communications. The term “predictive analytics” is usually spoken of in marketing as the ability to track the behaviour of prospective buyers to help sellers understand the right time to engage them. But now we’re beginning to hear the term “predictive maintenance”, referring to the ability to foresee when a part or piece of equipment is near the end of its life span. With remote sensors, it would be possible to begin gathering data on whether a particular part is more prone to breaking down by monitoring a machine’s changes over time; or within a certain use case, and what its average life span is. The data could help predict the best time to schedule a pre-emptive service call.

It’s no secret that customer demand for better service has increased and that its success now contributes or takes away from a company’s bottom line. Ironically, as technology helps organizations deliver better customer service, the expectation for even better service just keeps rising. It’s up to companies to use every single tool they have, including the most minute details, to turn them into their own competitive advantage.