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Welcome to the fourth edition of our Field Service News podcast. This month we are joined by Noventum Service Management consultant Nick Frank. 

In this exclusive interview Nick talks extensively about a recent study he and his colleagues have made into what are the key drivers for growth for businesses and the role service plays in this.

This podcast is also accompanied by a great article written exclusively for Field Service News by Nick which you can find here

Nick will also be joining Field Service News in the Field Service Solutions Theatre at this year's Service Management Expo being held in London's ExCel on June 17th, 18th and 19th. So if you want to here more from Nick then make sure you get your complimentary 3 day pass by clicking this link

‘Congratulations! You grew your service business by 25% last year…but how much money did you make?!’

This is the dilemma we often hear when talking to disappointed and frustrated managers.

In our experience this is especially true for organisations undergoing rapid change or growth through acquisition. Their Service Delivery Processes have not been built on a solid foundation and they experience large variations in how services are delivered from the excellent to the appalling.

Increasingly there are many new service management and mobile solutions on the market that bring transparency to the operations. Although they are a critical ‘enabler’, they do not address the root cause of the problem. We know that for a company to successfully industrialise its back office and deliver a consistent customer experience, it is key to have a clear vision of the:-

• End to End business processes
• Service management practices
• People competencies
• Performance management systems
• IT requirements

These building blocks are not only the basis for ensuring the existing service delivery model can be profitable, they will also de-risk the introduction of new service offerings.

Take one of the company’s that has featured in this blog series, Bobst SA.

Stephan Maerz, Head of the Service Business Unit faced a classic post acquisition situation. Bobst were working with seven different brands globally, all functioning under different management models; services weren’t aligned, standards and pricing were disparate. If the answer to growth lay in their services, they needed a global plan.

In March 2012, the Bobst executive team decided to create a single One Bobst brand. In July 2012, they started to define and execute a global service transformation programme. The brand-driven strategy they developed required a globally consistent customer experience, and that meant standardisation.  But unifying operations however, wasn’t so simple. The solution? Create a Book of Service Standards, a global undertaking requiring agreement from every regional and functional head. Modes of working were so variable, the project could have taken years. But by working with a 3^rd party with access to proven models and best practice, it took only three months to agree on one model.

A lot of people said it couldn’t be done and that a global service strategy would not work on a local level. Bobst demonstrated that by using a component based service factory model, it is is possible to take a fragmented operation and build a common documented vision of how the business should operate. In this way Bobst has built the basis for a sustainable and profitable service business. The next challenge is to build a completely new IT architecture to make the book of standards an operational reality.

If you would like to know more about this case study or the Component Based Service Factory, use this link to go to the Noventum website at www.noventum.eu.

Or you can meet us in person in May at the Servitisation Conference at Aston Business School or the Service Management Expo at the the London ExCeL where we will be sharing more experiences on how to achieve business growth through services.

Nick Frank is a service specialist with Noventum Service Management

Nick Frank, Consultant with Novetnum Service Management continues his exclusive series looking at building revenue from services...

Selling services, how difficult can it be? Talk to a product sales person: ‘Piece of Cake, but…’.     Talk to the Services Sales specialist about their product colleagues; ’They don’t understand…. all they care about is the big deal’

In truth it’s not black and white, which is why it’s not so easy. Product Sales people can be very successful at selling services, if they are packaged as a product. For example I have seen great results for well defined service maintenance contracts, sold up front with the product. But I have also experienced complete frustration with some product sales people, as they struggle to sell managed services to more senior decision makers.  Generally this because they do not fully understand the strategic growth issues the boardroom faces and focus on service features.

To find the best path for your business requires an in depth knowledge of your customer’s buying processes, your own service propositions and your people. Get the answer right and it’s possible to create tremendous momentum, where you can start to see growth rates of between 20-40% per year in your services business.

Easy words, but what about the reality. Lets look at the experiences of a world leader in packaging equipment, Bobst SA based in Switzerland. The Head of the Service Business Unit, Stephan März saw the opportunity to transform the Services into a sustainable engine for long term growth. Two years in and Parts & Service is starting to push past 6% annual growth. This growth has been led by a focus on services where contract penetration has doubled. Although he is mid- journey, some of the lessons Stephan has learned about energising service sales are a good guide for anyone making this transition:

1. Technology leadership is not enough anymore: Spend time with the product sales force repeating this message. ‘Good Services are key to selling more Machines’. They will get it in the end, especially when you look at their incentives!
2. Focus, Focus, Focus: Creating a separate service team gave service an identity and motivation. Bobst had gone as far as creating a separate Business Unit, which allowed Stephan to demonstrate who was making the money…and it was not the products! Dedicated marketing, sales and supply chain allowed him to develop and implement very effective service proposition quickly. A focus on sales people skills; who were hunters or farmers. And often a successful approach for complex equipment manufacturers, leveraging  the customer perception of Regional Service Managers as trusted advisor’s, and using their skills to drive Service Sales.
3. Communicate, Communicate, Communicate: It’s a major cultural change, but change does not happen overnight. Even though Stephan had 100% commitment from the CEO and the Executive team, he still had to work through the silos issues, dealing with jealousy, finger pointing, remuneration, profit & cost allocation and yes, car policy. Bobst worked very hard on team work with their product Sales colleagues, making sure roles and responsibilities were clear; and its beginning to work!
4. Patience, Patience, Patience: Business is impatient for results, but service sales is in fact part of a long term transformation programme, where the business model, processes and people all need to be challenged. It takes time commitment and management skill to achieve the desired relationship and results.

If you are interested in how to sell service more effectively, why not look to attend Noventum’s next Service Sales Course or look at our article on ‘How to boost Service Sales at this link

Nick Frank, a specialist service management consultant with Noventum Service Management continues his series of case studies outlining best practices in field service...

Previous case studies showed some of the steps companies can take to understand the value of service to their business. Companies have deep dived into their customer’s journey, gained insight into what the customer’s perceive as value, as well as determined what their own corporate strategy is to make money. Secure in this understanding they are ready to implement their GO To market strategy. And the first step is to develop and deploy service propositions that speak to the customer.

What is he talking about you may be asking yourself?  Go look at your website or those of your competitors and see how the services propositions are described. I looked at a company I used to work for and found what is typical for many. Descriptions of what they do!

If you are an engineer or product guy, it kind of makes sense, because its what we do! But think from the customer’s perspective. Managers are interested in outcomes. In most commercial organisations this is how they are paid and what they do.

So if you are really a customer led organisation should you not also focus on the outcomes? This is what Yokogawa did. In our previous blog we talked about how they developed a clear view of the value their customer’s perceived they could offer. Well they took this view and designed their propositions around it.

They literally tried to design service propositions that would speak to their customers.

So if you look at their vigiplant (http://www.yokogawa.com/vps/vps-index-en.htm) service offering, you will notice that the language they use to describe their portfolio has a very marked customer orientation. They group their services in terms of outcomes:

• Opportunity Identification Services
• Solution Implementation Services
• Lifecycle Effectiveness Services[/unordered_list]

They try to use a language that describes the value. In other words they talk of ‘Production Excellence’, rather than how it is might be delivered through ’Software Products’.

Now this is quite a different approach and one that took me a long time to really appreciate. That the words we use are a reflection of our own values. So if we look at how companies describe their services, what we see is their true culture and attitudes towards their customers and clients.

At Noventum we call this ‘Service Thinking’. To learn more about this and how to successfully deliver service propositions that really speak to your customers, why not look at this case study on Service Thinking (http://www.noventum.eu/cases/believe-in-service-thinking)

Nick Frank is a service specialist with Noventum Service Management

Read part one of Nick's series here

Read part two of Nick's series here

Read part three of Nick's series here

As we come to the end of January, Nick Frank, consultant with Noventum Service Management looks a little further ahead at what the rest of the year may yield. 

At the backend of 2013, did you notice that the field services community was increasingly talking about the critical role of knowledge in creating a thriving and profitable services business. Solution providers were all telling us about analytics, transparency and the benefits of working in the connected world. Buzzwords such as ‘Big Data’ and ‘The Internet of Things’ were being bandied around as if we all should be experts.

Companies started talking openly about their development of remote solutions to improve their customers OEE and create new revenue streams. This ‘enlightenment’ I am sure will continue into 2014, but with it I believe will come the realisation that it’s NOT AS EASY as purchasing the latest IT system or implementing some workshop/training programmes.

No, I think that although companies will increasingly see the possibilities that future corporate growth will be in a large part enabled by new services, they will realise that to participate, they must do something different! More and more we will hear companies talking about the need for a step change or transformation.

This is because to gain the full value from these technologies, companies need a fundamental shift in their People, Culture and Processes!

Knowledge savvy People and Culture:

The bulk of the value to be won lies in the customer’s process and operations. Developing services that help the customer’s business be more effective requires a shift to an OUTSIDE-In culture. The customer’s processes and how they experience our Brand must be at the heart of our own product and service strategy. Easy words, but not so easy when you consider that most of us whose careers have grown through products, do rather have an INSIDE-Out view on technology, manufacturing and making things work.

But in developing this understanding we have to change our whole view of knowledge and how we manage it. The first step is to appreciate its importance to our own organisation and customers. What is important to protect, and what can be shared. I say this because to achieve change in an increasingly complex technological world, the concept of co-creation and partnering is becoming stronger. We are seeing companies and customers coming together to form eco-systems to solve complex problems. But this requires the management of knowledge and knowing what and how it can be shared; a capability that many businesses struggle to deal with.

Processes for a new paradigm:

Mind-set may start transformation, but it’s the execution of processes that will bring value. To really benefit from these emerging technologies, it’s logical that processes will be re-engineered for the new technology paradigm. And we are not just talking about the flow of activities. This must include the management rules that underpin the processes, the KPIs to manage performance, the competencies of the people, as well as defining the businesses functional requirements for it’s IT and support systems. Get this last factor wrong, and all the latest technologies and concepts will not help your business move forward.

Sounds complex and expensive. This is where some recent research findings from Noventum bring some interesting insight as to what is needed to move forward. Between April & December last year, we talked with over 150 business leaders and service professionals about which strategies were driving business growth and the role of services.

Two findings stood out in relation to this discussion:

1. Service is becoming recognised as a strategic solution to facilitating a company’s growth strategy.
2. Companies have an increasing desire to develop more advanced services that address their customer’s processes, but show a reluctance to move forward until Product related services are mastered.

We believe the insight these findings provide for 2014 is that, as companies recognise the role that Knowledge and Technology can play in their future profitability, they will get excited….

….and then there will be a sharp intake of breath as they start to evaluate the implications.

However, if they begin to see service as a strategic lever to support the company growth goals, then the investment implications actually becomes more manageable, and are probably smaller than for many product R&D projects.

Secondly by breaking down the transformation into smaller steps, and re-engineering their delivery process and functional requirements, they can harness the technology to achieve results today, but which are scalable to their future growth vision.

At the end of the day, time will tell if this view of the world will be true, but if you would like to get a head start and develop your own thoughts, Noventum will be running a series of events on this topic which can be found at http://www.noventum.eu/calendar

This is the 3^rd article in a series of case studies which examines how companies can improve their understanding of there own Value, create more effective GO-TO Market strategies and drive profitability through efficient Service Delivery models.

‘If you want customer insight to develop new services, go ask the sales force’….uh oh …probably not completely the right idea.  Sorry guys but customer’s talk to sales people in a different kind of way. So while sales input is essential, there are many factors that influence the accuracy of the feedback.

If you really want to understand what your customers value, probably its best to go direct to the customers themselves. That’s why many senior managers insist on visiting customer. But how many times have you heard the CEO call for a change of direction based on a recent visit to an unhappy customer.  A more balanced approach is needed to make informed decisions, if you do not want to fall into the trap of this frequently used quote, ’8% of companies think they deliver superior experience…….only 8% of their customers agree!’

The solution to a balanced & informed analysis is often to involve impartial 3^rd parties.

Take Yokogoawa,  an industrial leader in automation solutions for process industries. Back in 2010 they wanted to know what services their customers thought they should offer. They had talked to the sales force who came back with a pure price, price, price argument. To the Benelux service manager Ton van den Ham, this did not add up, and he felt that perhaps they were asking the wrong questions in the wrong way. So he engaged a 3^rd party to help structure a set of visits and interviews aimed at getting under underneath the skin of their customers. Why a 3^rd party. Well he wanted an impartial perspective that did not carry Yokogawa baggage.

The interviews were done jointly with the 3^rd party acting as a coach and sometime lead. To Yokogawa’s amazement they found that their customer’s really appreciated the technical competence of the application engineers. That the customer’s challenge, was not in fact lower prices, but to have more stable and predictable processes for their chemical plants. The customer’s wanted Yogokawa’s technical experts to be even more engaged at a much deeper level in their business to help keep their processes at the optimum performance.

Armed with this feedback Yokogawa, started to develop their services programme which has developed into what they refer to as ‘Vigiplant Services’

At a recent conference Ton described his his experience of this programme as:   ‘You don’t know what you don’t know. It’s worthwhile talking to your customers to get a different perspective’

So the moral of the story is that when you are developing your services business, forensically clean customer insight is key to truly understanding the value you offer. Don’t be afraid of getting outside people that you trust involved in this process as the results may be surprising. If you would like to learn more about this case study, you can see a video of Ton’s presentation at: http://smc.noventum.nl/smc2011/service-track-video-presentations-2011

Nick Frank is a service specialist with Noventum Service Management and can be contacted at nick.frank@noventum.eu

Read part one of this series, Creating value through services: Where to Start? here  

Read Part two of this series, Ouch! getting the profit/cost centre call wrong in your service business here

It can make or break your service business growth strategy, yet it’s surprising how many service leaders do not appreciate the impact a separate service P&L can have on changing the mind-set of their people.

Many just focus on what they believe is the best way to maximise their corporate value. Yes it’s important to ensure we have the systems to manage the value of our enterprise, but we also need to consider the impact of measures on the performance of our people.

Take Textron Fastening Systems who were a $1.8bn global manufacturer of nuts, bolts, rivets, screws and plastic clips. Their European business became the sole supplier of fasteners to the Ford Fiesta, providing an integrated solution consisting of manufacturing, purchasing, logistics and engineering services. As far from their manufacturing core, it was set up with it’s own P&L and dedicated team. They succeeded due to their focus and separation from the main manufacturing business.

But once this $30million service business was stable, we decided to re-integrate it back into the core business. So a dedicated team, was re-deployed back into the operational silo’s of Engineering, Logistics, Purchasing , IT and Sales. What a disaster and I say that as this case study is from my own experiences. We lost focus, drive, energy and sales. Our biggest competitor, who set up a separate service business, grew to 5 times our revenue, from exactly the same starting point in time and experience. 15 years on the Textron Fastening Systems no longer exists, having been bought by Private Equity and then broken up. Ironically the remains of the service business have survived but without growth.

For me this was a very salutatory lesson about the importance of focus. But its not so simple as saying that for an industrial company to succeed you must have a separate P&L or Business Unit.

It depends on the strategic goals of the business and also where it is in the transformation process. For example companies such as Rolls Royce & BAE with over 50% of their revenues from services see it as such an integral part of their business model, they do not have a stand alone services division.

So if you are pondering how best to manage your corporate value and looking to make the profit/cost centre call, you might ask yourself 2 questions:

1. In your future business model how integrated will be your products and services offering.
2. Is organisational focus the key challenge facing your service transformation programme.

Having a sound service strategy is key to make the transformation to a sustainable high growth profitable service business. If you want to read  more about how real companies achieve this goal, you can look at the Bobst case study on www.noventum.eu

Read part one of this series, Creating value through services: Where to Start? here  

Read Part Three of this series, Finding nuggets of customer gold here

When talking about service, we often hear senior managers asking the question, ’But where do you start?’

It would be lovely to call out, ‘At the beginning!’, but most of us know that is a bit simplistic. The thing is that successful service companies align all aspects of their business to their goal. But business is complex and to address change on a wide front is costly and risky.  Instead business leaders understand where their priorities are, address these first and then move on to the next part of the puzzle. Effective decision making means defining priorities within the context of an overall vision or blue print of how their services business should operate.

We thought it would be worthwhile sharing a series of blog articles based on real life experiences to help paint this picture. The blogs will illustrate 4 key areas to get right![ordered_list style="decimal"]

1. Understand the Value you can deliver to the customer and your own business
   
2. An effective GO-TO Market strategy that defines what service offerings you need to develop and how to sell them
3. Efficient  Service Delivery to ensure profitability
4. Have a Plan

Lets first look at a good way to improve your understanding of Value by analysing your Customer’s Journey to your services. We are not just talking about how they came to choose your product. We start way before that activity and move all the way through to the touch points of the service delivery model.

Many of you will recognise the customer journey map below as being similar for the lifecycle of your equipment.  It is a high level summary of just one part of a customer journey scenario that was mapped out for the premier manufacturer of injection moulding systems, Husky SA. It shows how a customer perceives the brand at different stages through the product life cycle within different touch-points and activities.

But why bother mapping out what seems intuitively obvious. In this case it allowed cross functional teams from Husky Service & Sales to understand what were the critical points in the products lifecycle at which they:

a)    Had to work together: For example in the selling process, especially where negotiations revolved around total cost of ownership commitments.

b)    Where the service organisation could have a significant impact on the customer satisfaction and loyalty. For example by reacting quickly to start up issues, a difficult situation for the customer could be turned around to be a positive experience, if solved quickly and professionally.

c)     Where the use of 3^rd party contractors for providing the service might be appropriate.

d)    To identify systems that could be targeted for different refurbishment and upgrades, so as to maximise revenues through the product lifecycle.

Detail can be added to this high level journey. For example Husky decided that all calls for all technologies should come into the same call centre. By drilling down into more detail at the call centre level and looking at how the customer journey through the organisation changed for different customers, the organisation was able to design a more effective process, to communicate appropriately with its customers and ensure the correct level of training for its employees.

From these examples we can see that being intimate with your customer’s journey is so important to understanding the value they might be seeking from us. Why not look at  www.noventum.eu for more ideas and discussions on the Customer Journey.

In our next blog in this series, we will look a how service change dramatically slows, when we make the wrong decisions in the profit centre / cost centre debate, because we have not understood how are business wants to make money.

Read Part two of this series: Ouch! getting the profit/cost centre call wrong in your service business here

Read part three of this series:  Finding nuggets of customer gold here