ARCHIVE FOR THE ‘future-of-field-service’ CATEGORY
Aug 07, 2019 • Features • Augmented Reality • Future of FIeld Service • Workforce • IFS • skills • The Big Discussion • OverIT • Librestream
In the final part of our forum on Augmented Reality, contributors including Stephen Jeffs-Watts, Senior Advisor Service Management, IFS, Francesco Benvenuto Product Marketing Manager, SPACE1 by OverIT and John Bishop, President, Librestream offer their advice on what service professionals should ask an AR vendor when considering an AR solution.
What is the one key question you would advise a field service director to ask an Augmented Reality vendor when potentially seeking a solution to implement within their business?
JOHN BISHOP, PRESIDENT, LIBRESTREAM
There will be many questions the field service director will be asked by colleagues, customers, or supply chain partners. Addressing the questions upfront is very important and the AR vendors should all be able to answer them. For example, you need the answer to questions like ‘how do you handle privacy issues’? Or, more basic than that, ‘when I move beyond the pilot phase, will IT let me deploy?’
We felt it was important to identify the common challenges we’ve experienced with customers during deployment. We worked with customers and analysts to develop the Remote Expert Industry Guide.
Our longevity in the AR space has made it clear that sharing video or capturing data digitally can be a touchy subject, especially when end customers are involved. Field service directors and their colleagues need reassurance that the vendor they choose can provide the solution.
FRANCESCO BENVENUTO, PRODUCT MARKETING MANAGER, SPACE1 BY OVERIT
I would like them to ask: “Do you provide an AR App or an Augmented Reality product?”
An Augmented Reality product, such as SPACE1, is a no-code authoring platform, which allows non-technical users to create intuitive and visual work instructions, making them virtually available to any technician. Furthermore, it enables collaboration for training and maintenance purposes.
Any company, looking into AR, should consider only products offering crossplatform support for handhelds, desktop and AR wearables where both realtime remote assistance and access to pre-built AR work instructions can be
served simultaneously, in one single application.
Moreover, decision-makers should select only solutions providing secure data handling in compliance with IT requirements and online/offline capabilities which make the information technicians need available, regardless of any potential connection issue.
Last but not least, features to capture images, annotations and screenshots, add documentation and record live support sessions under the expert guidance (both verbal and supported by visual annotations) are particularly useful in view of future use and sharing.
STEPHEN JEFFS-WATTS, PRODUCT MANAGER, SERVICE MANAGEMENT, IFS
“What areas of my service delivery organisation will be affected by deploying AR technology and how do I manage change effectively to ensure successful adoption of your product?”
You can read the first instalment of this Big Discussion here, the second here and the third part here.
Jul 31, 2019 • Features • Augmented Reality • Future of FIeld Service • Workforce • IFS • skills • The Big Discussion • OverIT • Librestream
In the third of a four part series on Augmented Reality, our panel including Stephen Jeffs-Watts, Senior Advisor Service Management, IFS, Francesco Benvenuto Product Marketing Manager, SPACE1 by OverIT and John Bishop, President, Librestream ponder AR's future role in service. Will it be ubiquitous as a rugged device?
Do you think AR will become a mainstream/commonplace part of field service operations within the near future?
JOHN BISHOP, PRESIDENT, LIBRESTREAM
This question is an interesting one. AR is a large bucket. If you look at proven capabilities such as remote expert guidance and digital work instructions, AR is already a mainstream capability for market leaders.
Other AR capabilities such as 3D modeling and cognitive services, while important parts of the digital transformation journey, are further out in maturity. For these proven AR tools, we’ve experienced a shift from Operations to IT led sourcing to deploy at scale across an enterprise.
At scale, these enterprises report strong operational results such as:
• 30% Productivity gain from ‘just in time’ mentoring of field techs;
• 5-10% Increase in asset up-time;
• 50% Reduction in support call duration;
In addition to these tangible results, our customers describe how AR also provides them with competitive differentiation, worker safety, premium service offers, and worker retention opportunities.
FRANCESCO BENVENUTO, PRODUCT MARKETING MANAGER, SPACE1 BY OVERIT
Most consulting firms agree that by 2022 over 50% of field service providers will offer a specialized digital customer experience enabling both two-way interaction and workflow initiation through multiple human and non-human channels.
The prediction is confirmed by the fact that OverIT, as an AR product supplier, is no longer reaching out to potential customers to make them aware of the power of such technology, but instead is proactively contacted by prospects who have already developed a well-defined AR strategy for their business. OverIT with more than 85K active users on field have the expertise to guide them in this process.
We are facing the ROI era and Augmented Reality is no longer a proof-of concept.
STEPHEN JEFFS-WATTS, PRODUCT MANAGER, SERVICE MANAGEMENT, IFS
The current technology inflection point, where technologies like AR, Artificial Intelligence and machine learning will become pervasive, makes it one of the most exciting times to be working with service companies.
Many use-cases that, only a couple of years ago, seemed aspirational at best, are becoming more real and accessible every day.
We are certainly seeing more interest in this area from the industry as cost and complexity reduce – making the technology more accessible to a wider range of organisations.
The Feasibility of AR in Service report produced by the Service Council in 2017 found that 33% of respondents were already using AR, with 43% evaluating it. From what we see in the market, this upwards trajectory has continued and momentum is continuing to build.
The final part of the big discussion will be published next week. You can read the first instalment here and the second here.
Jul 30, 2019 • Features • Coresystems • Future of FIeld Service • manuel grenacher • remote service • field service • field service technicians • Internet of Things • IoT • SAP • Service Engineer • Service Management • Customer Satisfaction and Expectations
In today’s society whereas consumer’s we are becoming increasingly used to and expectant of instant results is an obvious challenge for field service organisations but can remote services help bridge the gap? Manuel Grenacher, CEO, Coresystems ...
In today’s society whereas consumer’s we are becoming increasingly used to and expectant of instant results is an obvious challenge for field service organisations but can remote services help bridge the gap? Manuel Grenacher, CEO, Coresystems discusses...
With the pervasiveness of the Internet of Things (IoT), everything from device performance to customer interactions has become faster and more connected. Devices that require maintenance and repair now operate on an accelerated timeline of immediately notifying the user when service is needed. Because of this, customers expect real-time responses, leaving little to no time for a field service technician to travel to the site, troubleshoot the issue and fix the device. Therefore, to maintain and improve customer satisfaction, technicians are exploring ways to provide the same level of onsite, but while remote.
The idea behind remote technicians stems from the technician’s ability to diagnose a problem, determine possible solutions, and lay out a plan for issue resolution - all before they take one step onto the worksite. In a perfect world, remote technicians essentially only have to leave their workstations once to perform tasks that require a high level of skill, or perhaps not at all for routine maintenance and repair. Naturally, this drastically cuts down the amount of travel cost and time and total project duration needed to solve an issue with a customer’s device, streamlining the entire service request from issue detection to resolution.
Field service technicians no longer need to blindly infer what is happening on the broken device based on descriptions from less experienced users, nor do they need to fumble through repair instructions over the phoneField service technicians no longer need to blindly infer what is happening on the broken device based on descriptions from less experienced users, nor do they need to fumble through repair instructions over the phone. Indeed, the remote technician takes full advantage of tools such as augmented reality, artificial intelligence, and even the IoT itself to deliver the same experience as a technician standing in front of the customer would.
So how does it work? It starts with putting the proper infrastructure in place to allow technicians to troubleshoot issues on devices and machines from afar. Taking issue detection as an example, remote technicians can use augmented reality to share a mobile phone screen with a customer for a visual walkthrough of the issue. From there, the remote technician can schedule an onsite appointment if needed and manage the parts orders needed for specific projects, ensuring all the necessary assets are in place well in advance.
To be fair, managing a workforce of remote technicians is no easy task. In order to optimize your field service operations, it is extremely beneficial to be able to automatically assign the most qualified and available technician for respective service requests, taking into account expertise, location, and availability. As a fail-safe, the onsite technicians should have easy access to online product specifications and other assets needed to complete service requests. Additionally, similar to how remote technicians use augmented reality to connect to the customer for issue detection, on-site technicians can connect to more experienced journeyman technicians back at headquarters to troubleshoot unforeseen issues. This creates a network of knowledge that will keep project duration to a minimum, improving efficiency for the technician while onsite.
The way in which field service technicians work has evolved and is continuing to do so. The next generation of technicians are prioritizing independence, autonomy, and flexibility, on top of foundational knowledge and customer service experience. As the IoT continues to grow, so will the need for remote technicians, and the field service industry assuredly has the infrastructure to maintain the high level of customer satisfaction that we strive for today.
What are your experiences experimenting with a more remote field service workforce? Feel free to share your thoughts in the comments section below!
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Jul 24, 2019 • Features • Augmented Reality • Future of FIeld Service • Workforce • IFS • skills • The Big Discussion • OverIT • Librestream
In the second of a four part series on Augmented Reality, our panel including Stephen Jeffs-Watts, Senior Advisor Service Management, IFS, Francesco Benvenuto Product Marketing Manager, SPACE1 by OverIT and John Bishop, President, Librestream discuss what role the technology can play in the challenge around an ageing workforce.
What role can AR play in helping field service companies overcome the ageing workforce crisis they may be facing?
JOHN BISHOP, PRESIDENT, LIBRESTREAM
As the ageing workforce continues to challenge field service operations, the need to transfer and harness the knowledge of these experts is undeniable. With statistics such as 10,000 workers retiring every day in the US market for example, it is clear why this trend is a major driver for AR within field service.
The ageing workforce challenge is also compounded by the introduction of millennial workers. One of our industrial customers shared that it costs up to $1M and nine months to train a new worker to the previous SME standard. With millennials staying an average of three years, doing things the old way is not sustainable.
Using AR to provide ‘just in time’ training instead of ‘just in case’ training is essential. This ‘just in time’ training is achievable with AR solutions like digital work instructions to step them through a process and remote expert guidance to access advice on the job.
FRANCESCO BENVENUTO, PRODUCT MARKETING MANAGER, SPACE1 BY OVERIT
AR makes it easier for companies to move from an employee-centric approach to a wider and constantly evolving enterprise-centric approach where knowledge and know-how transfer are the core elements.
Every company should aim at equipping both technicians and operators with a user-friendly solution which does not require any coding skills for generating new content but instead creates a collaborative working environment where knowledge is easily shared.
Customer satisfaction plays also a pivotal role when it comes to determining the success of a company and the ability to provide the technician with the expertise needed at the right moment helps to reach this ambitious goal.
The spread of consumers’ devices and user-friendly AR products is smoothing such transitions provide all employees, from millennials to more senior operators, with the essential skills required. An AR solution should always adapt to the company information architecture employed and each user should be able to access the data needed to augment the real world with rich and intuitive content.
Choosing an integrated platform, which is flexible and can be easily connected to the existing systems, such as ERP and IoT, will allow enterprises to quickly see the benefits AR can offer to pave the way for success.
STEPHEN JEFFS-WATTS, PRODUCT MANAGER, SERVICE MANAGEMENT, IFS
The key use-case in this area is the remote expert whose expertise can be leveraged across multiple field technicians to rapidly increase competency in the field.
This is critical in supporting the next wave of service technicians which the industry needs as more experienced technicians leave the workforce.
This use-case also provides a potential way to extend the career of some technicians, re-deploying field-based workers as remote experts whose specific objective is to increase competence and transfer their extensive knowledge, gained through years of in-field experience, to the next generation of technicians.
The third part of the big discussion will be published next week. You can read the first instalment here.
Jul 17, 2019 • Features • Augmented Reality • Future of FIeld Service • Workforce • IFS • skills • The Big Discussion • OverIT • Librestream
In the first of a new four part series, we turn our attention to Augmented Reality where our panel includes Stephen Jeffs-Watts, Senior Advisor Service Management, IFS, Francesco Benvenuto Product Marketing Manager, SPACE1 by OverIT and John Bishop, President, Librestream...
Why should field service companies deploy an augmented reality solution if they already have a peer-to-peer video tool (such as Facetime or Skype) already available and free to use?
JOHN BISHOP, PRESIDENT, LIBRESTREAM
Choosing a video chat product as a remote expert augmented reality (AR) solution can seem like an easy path to fulfilling an immediate need.
As AR platforms and capabilities like remote expert guidance have matured, enterprises have developed clear requirements for security, IT controls, usability and performance. Requirements that these kinds of tools are not able to meet. For example, how will the solution perform in low bandwidth environments? Can IT control how much bandwidth will be consumed?
How can I quickly engage supply chain experts and customers? How can I be sure my content is safe and meets privacy requirements?
We deployed the first AR remote expert solution in 2006 – long before remote expert guidance was part of AR. Over the past 12+ years, our enterprise customers like Rolls Royce, NOV, Colgate-Palmolive, SGS, and hundreds more have guided the development of our solution to solve these difficult challenges.
FRANCESCO BENVENUTO, PRODUCT MARKETING MANAGER, SPACE1 BY OVERIT
Augmented Reality does not imply the use of a mere Remote Support solution but of an advanced tool aiming at supporting field technicians in their daily tasks through advanced collaboration and content sharing features.
AR solutions, such as OverIT’s product SPACE1, offer both real-time remote assistance and access to pre-built AR work instructions simultaneously.
In this way, support means collaboration and remote problem solving, but with a groundbreaking concept in mind. When assistance was guided by standard videos, both field technician and remote operator had to rely solely on voice instructions. SPACE1 is one step ahead, allowing experts to make marks that stick where drawn and annotations to be displayed on the users’ point of view while supporting them. Moreover, it enables the sharing of digital twins to be set where the remote expertise is needed, thus broadening traditional field working modalities and creating a brand-new cooperative virtual environment. See it in action here.
By using AR products users can capture images, record live support sessions to retain and share the expert assistance (both verbal and supported by visual annotations) in the future or even generate reports and offer actionable insights into improvement opportunities while providing additional employee training.v
STEPHEN JEFFS-WATTS, PRODUCT MANAGER, SERVICE MANAGEMENT, IFS
AR is a far broader topic, with wider use-cases and implications than simply being used for video calls and ad-hoc collaboration.
One of the most compelling use-cases is in service call avoidance; where AR, when implemented in a seamless manner, empowers contact agents with enhanced diagnostics capabilities and tooling – being able to see and remotely guide the customer in triage with directive instructions, document sharing and image mark-up. These capabilities can reduce down-time, avoid the need to send a field technician to site and thus directly improve customer satisfaction. Additionally, compliance obligations can also be met through integrated session recording; which isn’t possible in the peer-to-peer space.
That same capability can then be deployed in the field; giving the technicians and the remote experts guiding them much wider capability with a resulting increase in effectiveness and efficiency. In this way, the technology increases first-time-fix rates, improving cost-to-serve and providing another dimension in improving the customer experience.
The second part of the big discussion will be published next week, when the panel answer questions on the role that AR can play in the challenges that come with an ageing workforce.
Jun 28, 2019 • Features • Cognito iQ • Data Analytics • Future of FIeld Service • Konica MInolta • David Bochenski • Dave Webb • Ged Cranny
It is often said that data will be the true currency of future businesses across all sectors, but have we already reached a point where the seamless flow of data within an organisation is now essential for effective service delivery?
It is often said that data will be the true currency of future businesses across all sectors, but have we already reached a point where the seamless flow of data within an organisation is now essential for effective service delivery?
Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Cranny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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In modern field service, it is impossible to ignore the power of data and its potential to drive businesses forward.
One company that has been able to harness that power effectively to push their own service delivery levels to new levels of efficiency, has been print and copy giant Konica Minolta and in a forthcoming exclusive Field Service News webcast we were joined by Ged Cranny, Head of Direct Service for Konica Minolta as well as Dave Bochenski and David Webb of Cognito iQ - the organisation providing Konica Minolta with the tools that have allowed them to fully embrace data-driven service.
Cranny often speaks about the importance of transparency that adopting such a data-centric approach has yielded and how such visibility has empowered important conversations around their service delivery in multiple layers across the organisation - and it is the seamless flow of data across an organisation that is crucial to being able to reach such levels of transparency across the various business units within an organisation.
So is this smooth movement of data across different divisions within an organisation the fundamental building block of modern service excellence?
Have we now reached a point where it is imperative for field service businesses to break down the data silos that often exist within their systems in order to remain competitive?
“I think transparency of data is important in the service world because service can often be viewed by the rest of the business as something of a dark art,” explains Cranny.
"Transparency of data is important in the service world because service can often be viewed by the rest of the business as something of a dark art.."
This is indeed true for a vast majority of organisations. Whilst for those of us engaged within the sector, we can absolutely see the key strategic importance of having an effective and efficient field service operation, which increasingly can become a significant contributor to overall revenues, the fact remains that within many organisations field service is all too often still viewed merely as a necessary evil and something that is a huge red line on the P&L sheets.
However, by being able to clearly outline the various complexities and benefits of a field service operation, supported by robust, accurate data that can be viewed in real-time, it is far easier to make the case as to why field service should be a key area of strategic focus within any customer-centric organisation.
“One of the most important things for me when we got the data from Cognito iQ during the trial phase, was that we were able to show it to our Financial Director and Managing Director and straight away they were able to see the value of that data across the business. Essentially it took away the ‘dark art’ element of what we do,” Cranny continues.
However, it is not just at the exec level that such visibility into the data can have an impact. Right across an organisation, there are wins to be had from being able to share data-led insights with various different stakeholders.
“We’ve actually opened up the data to anybody who wants to look into the top level figures within the business. For example, our CX manager can see the information relevant to customer satisfaction levels. In fact, anybody can see how we are performing on any given day, in terms of how well we are meeting our SLAs. That openness has led to much more informed questions to us in the service department, which in turn raises the level of both our service engineers and our service managers,” Cranny explains.
“It is absolutely key that service organisations are able to harness field service teams as a whole and that they really encourage collaboration around the data,” concurs Webb.
“I think that is the nature of the world that we are operating in now. It is no longer the preserve of the management teams to manage the customer experience, to manage the performance of the business and to worry about all the dimensions of success for an organisation - it is now down to all contributors.”
"Openness and transparency are key, but also the way in which you engage teams in the discussion around that performance is critical..."
Field Service engineers are the people that interact the most closely with the customers and the old adage of the customer advisor is absolutely true today. Therefore being able to share with the engineers the impact that their contribution is having on the overall performance of the operation, to ensure that you have that openness of communication is hugely important.”
“What I’ve seen Ged and his team at Konica Minolta do so effectively is to make that performance discussion about the process in the operation. It is far less about people and far more about their contribution to the process and identifying those aspects of a process that are failing or that could be improved.”
“So openness and transparency are key, but also the way in which you engage teams in the discussion around that performance is critical.”
“If you use good data badly, then you’ll only get to use it once, if you use it well then the reality is it becomes a self-fulfilling prophecy, you get to see a continuous performance improvement mindset emerging within your teams - which makes a huge difference to the overall business.”
This of course also frees up management teams who can then offer a huge amount of value in other areas of the business as well such as new business development, key account management and other more strategic aspects of the role.
Essentially by freeing these key personnel up from the day to day service delivery, they are able to focus purely on management by exception around the operation and then really focus on where the next business development role is coming from and how they can contribute - essentially making the service operation come alive for their business development colleagues when they are dealing with prospects and customers.
Of course, this is the optimal end goal. However, it is not necessarily a simple path for an organisation to follow. It is clear that the relationship between Konica Minolta and Cognito IQ is one which is well grounded in a level of trust and openness and there is a clear willingness from both sides to work in tandem to help Konica Minolta unlock the insights held within their data.
But how much weight falls on the shoulders of a solution provider to be able to guide their clients on that path, and how much responsibility does the field service organisation have for plotting their own path themselves?
“I think the answer ultimately here is that it really depends on the dynamics within the relationship in any given scenario and either can have contributions on that level,” comments Bochenski when the topic comes up.
"If you can harness the data then the rewards are absolutely there..."
”It is certainly true that data is the new arms race within business and being able to marshal and gain insights into that data is really what can drive benefits and opportunities for you to beat your competition. If you can harness the data then the rewards are absolutely there,” he adds.
“That then comes into the two sides. You can have some insights yourself, but it also helps to have someone from the outside also looking at things that perhaps you might not have seen within your own data - sometimes companies can become a bit tunnel visioned about their data without that external viewpoint.”
“I see the role of service providers being to help with platforms to bring that data into a place where meaningful insight can be drawn from it - to establish one place where companies can access all of their data through APIs etc.”
“Then, when we have that the flow of data from different parts of the business available, a solution provider can not only help you access it, but also glean additional insights that you might not have necessarily got yourself.”
“Another benefit is that the data is also available to other parts of the business and often I find that when you have established this kind of structure within your data, you have emergent things happen that you may not have initially anticipated.”
“Essentially, if you have two different people looking at the same piece of data, very often you can find something that neither of them would have seen were they only looking at the data on their own.”
This is a hugely salient point as often companies are able to unearth unexpected value within their data - sometimes that can help them improve their own processes, but equally it can be insight that is intrinsically valuable for their clients as well - leading to ways to further increase an organisations stickiness with their customers, or even opening up completely new revenue streams entirely.
Indeed, the benefit of breaking down information silos within a business does appear to be perhaps one of the most crucial tasks field service organisations must undertake in today’s world of data-led field service.
By working alongside CognitoiQ Konica Minolta certainly seem to be an excellent example of a company that has achieved that and they are now positioned to reap the rewards of that forward.
Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Cranny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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Jun 21, 2019 • Features • Cognito iQ • Future of FIeld Service • Dave Webb
Dave Webb, COO, Cognito reflects on what he thinks are the key challenges that field service companies are facing in today's business landscape and outlines how and where he believes technology can play a role in overcoming them
Dave Webb, COO, Cognito reflects on what he thinks are the key challenges that field service companies are facing in today's business landscape and outlines how and where he believes technology can play a role in overcoming them
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Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Cranny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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In my experience, most field service organisations are striving to deliver exceptional service, a complex, dynamic endeavour where few things remain constant for long, and decision making needs to adjust constantly to changing conditions.
"In spite of the effort that organisations place on data capture, few of the management teams that I deal with feel the data is delivered to them in a form which adequately supports the complex operational decision making they have to perform daily..."
- Provide holistic, real-time insight into those dimensions of performance that influence the overall service delivery and
- Help to guide proportionate operational response in ways that collectively engage the entire operational team.
"Technologies such as machine learning and data analytics are proving capable of identifying underlying patterns of performance in the field service operation that was too complex for traditional applications to identify..."
Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Cranny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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Jun 14, 2019 • Features • Augmented Reality • Cognito iQ • Data Analystics • Future of FIeld Service • GDPR • Mobile Technology • Video • wearables • Cloud computing • IoT • David Bochenski
The world of field service and the world of technology have been intertwined for a long time now. In today's world of IoT, Artificial Intelligence and machine learning it could be put forwards that Data is not the fundamental building block of field...
The world of field service and the world of technology have been intertwined for a long time now. In today's world of IoT, Artificial Intelligence and machine learning it could be put forwards that Data is not the fundamental building block of field service excellence. Field Service News and Cognito iQ have explored this concept in a new series and here in this first instalment David Bochenski, CTO Cognito iQ outlines how field service companies can the data within the organisation and why they should be doing so.
Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Crannny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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"Being told these days by a provider that someone may arrive between 8 am and 6 pm and "by the way can you make sure someone will be around to let them in" is not even close to an acceptable level of service..."
"Field service companies were putting mobile devices into the hands of their engineers and receiving real-time data live from the field long before Steve Jobs, and Apple had put the Internet in everyone's hands.."
Want to know more? There is a video with Konica Minolta's Head of Direct Service, Ged Crannny outlining how they have revolutionised their business through data analytics available exclusively to fieldservicenews.com subscribers on the link below...
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Apr 15, 2019 • Features • Future of FIeld Service • BigData • Christian Kowalkowski • Digitalization • Servitization • The View from Academia
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...
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.
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