ARCHIVE FOR THE ‘servitization-2’ CATEGORY

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

What was it that drove his thinking on this?

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

 

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Click here to access the research report

 

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Click here to access the webinar

 

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As a leading figure spearheading the servitization movement Professor Tim Baines of the Aston Centre for Servitization Research and Practice has seen manufacturers begin to focus far more heavily on service as a revenue stream in recent years...

Over the past few years servitization has become a topic of hot debate.

Several years ago, when I talked to businesses about my work on servitization, managers would look at me blankly and ask what it was all about.

Often they would get hung up on the spelling, or simply say ‘what’s new here? We offer services anyway’.

The concepts of advanced services, IOT and Industry 4.0 were largely unheard of, and the term servitization was often dismissed as ‘a bit too academic’.

Now the world has changed, and servitization has become more mainstream. I’ve always taken the view that servitization is simply ‘manufacturers growing their revenues and profits through services’ and that ultimately we are looking at a paradigm shift in our ideas about manufacturing.

Relax this definition a little and you will see that servitization is all around us; it might be Goodyear implementing proactive services in commercial trucking, GE following through on their digital industrialisation strategy in power generation, BMW offering a new MINI on a Personal Finance Plan with a package of services, or Brompton Bikes being offered to hire by the hour in the high street.

Servitization is happening in many guises, and technological innovations are helping to bring about rapid change.

Industry 4.0 is popular today, while just yesterday it was IOT and before that Big Data. Innovative use of technology is attractive, and understandably so for people within manufacturing who come from a technology background.

 

However I think there is also an element of fear; we’ve all witnessed the rise of IT giants, whether it’s UBER, Apple, Facebook or EBay- many businesses are anxious about the next innovation from Silicon Valley and what it might mean for them and I have heard IT vendors countless times pushing businesses to invest in IT and develop ‘the killer app’.

A word of warning here: remember that service is not an app or a new technology. Take a step back before you invest and think: How can you really make money through technology? What outcomes will it help you deliver to customers?

So my conversations about servitization have moved from ‘what is it?’ to ‘how do you do it?’ My team at Aston Business School and I have now worked with over 100 manufacturers helping them to discover and implement servitization.

There are four fundamental stages through which every company must go; Exploration, Traction, Acceleration and Exploitation.

Today, most want help with the first stage, and to those business leaders who want to get started with servitization we suggest three steps:

Step 1: Think clinically, and understand servitization as an innovation: 

The recent popularity of servitization has inspired some business leaders, consultants and vendors, to re-brand their older offerings and muddy the water in the process.

This can significantly undermine your chances of success.

Go to established sources such as the Aston Business School Servitization website (short url - fs-ne.ws/FOwP304KRAq) to tap into the wealth of critical and rigorous knowledge that exists in this field.

Understand that servitization embraces business model innovation, organisational change, and new technology adoption. That services exist in various forms, and represent differing values to both the customer and provider.

Also understand the limits of our knowledge, for instance large scale surveys will help to give you a sense for how the world is changing, but don’t expect any to tell you exactly how the revenue and profits will change for your own business.

Step 2: Allow yourself to imagine an advanced service proposition but only a little:

Imagine what types of services you might offer, but don’t get too drawn into the people, processes and technologies you might need to deliver these, in the same way that a design engineer will conceptualise the form and function of a car, rather than be constrained by design of the production line.

Keep it simple, don’t yet begin to think that these ideas will ultimately transpire into ‘the’ customer value proposition, just try to give your ideas a sense of realism.

Step 3: Explore, benchmark and validate your ideas:

Identify a business in your wider value chain that has moved forward with services- this might be a distributor, competitor, or one of your own suppliers that is asking to do more for your business.

Alternatively you may need to look to an analogous market sector which has some similarities to your own. In each case visit both the service providers and customers, and try to get a sense of how each collaborated to form a proposition, and how they have behaved to make services a success.

 

Compare your own thoughts on services against these, and use this insights to inform your own ideas, and so test whether your own thoughts are indeed realistic.

The outcome of these three steps is simply a better understanding of servitization and what it could mean for your business. They are elementary but they will improve realism and confidence.

After this, the hard work really begins, as you will need to develop new relationships with customers, innovate you customer value propositions, form new value chain relationships, adapt your business model and much more- and even these are still only part of the exploration phase.

 

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In 2015 Field Service News and leading FSM software provider ServiceMax teamed up on a research project to assess the appetite for IoT as a tool for improving field service delivery.

One year on we followed up with a fresh research project into the area to see what trends have emerged and now in a four part series we bring you the findings of this latest research. In part One of this series we explored the headline findings of this year’s research against the context of the previous year’s results. 

In part two we dug deeper into the study to explore what additional technologies are sitting amongst companies either planning to, or actively using IoT as a tool for field service delivery as well as what the cultural impacts of implementing IoT are and whether these are being considered by organisations.

In part three of this exclusive series we looked at the impact of servitization as a key driver for the adoption of IoT.

Now in the final part of this series we look at best practice for IoT implementation and some concluding thoughts on the research findings as well as hearing expert views on this research from Athani Krishna, Co-founder and Chief Strategy Officer and Dave Hart, Senior Vice President, Customer Success, ServiceMax...

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Click here to download the full, exclusive research report now...

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Best practice for IoT implementation:

Finally, let’s look at what we can learn from the group of respondents who have either actually already undertaken an implementation of an IoT solution as part of their field service management operations, or were currently actively in the process of doing so.

We asked respondents in this group to identify which steps they would take and in what order to make an IoT implementation as simple as possible whilst avoiding any common pitfalls.

The general consensus led to the following best practice steps:

• Research the concept - including attending trade-shows, reading relevant trade journals such as field service news etc
• Developing a business plan for how your service division will operate once IoT is implemented
• Identify relevant providers
• Seek professional advice (from either solution providers or consultants)
• Gain backing for the project from the executive board
• Select a solution provider
• Establish new business processes and role these out internally
• Connect assets in the field

What is particularly interesting about this set of findings is that the collected wisdom of those who have either gone through or are currently going through the implementation process is that there is a lot of work devising strategy and a sensible roadmap ahead of actually connecting assets out in the field.

Conclusions:

For those companies still not considering IoT there are some clear warnings here.

The general consensus is that those companies that fail to adopt IoT and adapt to a more proactive means of working are at risk of falling behind.

Indeed, even procrastination could be a risky game to play when we consider that there is a long suggested process in terms of best-practice implementations of which connecting assets (which could in itself be a considerable task depending on the size of your install base) sits right at the end of the road map.

And with 78% of field service professionals believing there will be significant competitive gains for those companies who become early adopters of IoT as a field service tool, with increased efficiency, customer satisfaction and profits being the three most anticipated benefits (each are expected by over 75% of respondents with 98% of respondents expecting increased efficiency) the rewards certainly appear to be widely accepted as both tangible and genuine.

 

IoT seems like a clear destination for field service operations. It seems it is now just a matter of who can get there first.

Expert View: Athani Krishna, Co-founder and Chief Strategy Officer, ServiceMax

The Internet of Things as a concept is nothing new. I’d wager most people have been familiar with the novel applications of IoT since Cisco started championing the “Internet of Everything” ads several years ago. Nowadays, IoT is infusing itself into just about anything, from oil rigs and proton therapy machines to municipal trash cans and elevators.

But novelties aside, we’ve had a front-row seat to where IoT is truly proving its value – field service. And in this survey gauging the IoT appetite among largely UK-based manufacturing leaders, we’re seeing clear hunger.

It makes perfect sense – in a world where manufacturers face stagnant product-centric margins and pressures to grow their businesses, service is the natural next place to look. But we’re not talking about selling mere warranties and service plans – the stuff of yesterday. We’re talking about investing in IoT to remotely diagnose machine issues, guarantee uptimes and move to an outcomes-based selling model. That gives manufacturers more predictability in revenues and customers predictability in uptime of equipment.

This isn’t a future dream. Our customers such as Elekta, McKinley Equipment and Medivators have all demonstrated real business results using our Connected Field Service solution to unlock new revenue streams and improve customer satisfaction. These companies are moving their service operations from a reactive scenario, where technicians are dispatched once a customer calls, to one where the customer never even needs to call.

 

But what’s interesting is that while connectivity is the greatest benefit, it’s also one of the greatest hurdles. For companies, opening up systems for a connection to equipment vendors can pose security challenges. Networking & IoT technology companies understand these hurdles very well, and are working to make security better everyday. For this new reality of outcome-based services model to proliferate, companies need to understand that this is all a partnership.

As technology gets better, and early adopters embrace this new business model, I do expect this increasingly become industry standard – companies won’t see customers & vendors anymore; they will only see partners.

Expert View: Dave Hart, Senior Vice President, Customer Success, ServiceMax

Moving from a product-focused business to a service-centric operation can unlock growth potential like never before. But getting there indeed requires a cultural shift.

Just about half of those surveyed here admit that servitization - that is, delivering a service component as an added value when providing products – will have a disruptive influence on company culture. Now, understand there’s a spectrum when evolving service. Sometimes it’s limited to selling more warranties and contracts; that’s less what we’re talking about. What we’re talking about is leveraging IoT to get to an outcomes-based service model; indeed many of our customers have taken this approach or are starting to do. That’s where things get more complex.

From where I stand, having spent nearly three decades as both a field service technician as well as a service leader, the cultural impacts of infusing IoT are real and they are significant – and it’s likely, according to this survey, the impact will be greater than expected.

Think about it: an outcomes-based service model affects the finance team in the sense they need to plan for recurring revenue streams versus the days of on-premises software sold as a hard good once. Marketing and sales teams need to shift their focus from pitching product to selling the idea of service. Field service engineers themselves now can work with R&D teams more intimately to share specs on how products are performing – or not – in the field. And with IoT-laced infrastructures, it obviously has huge implications for IT departments as well.

 

All of this means the C-suite must be intimately involved in an outcomes-based approach. Migrating to this business model equates to effectively turning the organisation on its head, and that is a very difficult exercise that needs a holistic approach from the top.

Our customer IBA, which manufacturers proton therapy machines for cancer treatments, has noted it doesn’t necessarily expect its field engineers to become R&D professionals but that it envisions a reality where on-site technicians efficiently share product performance knowledge with those teams. That will require a shift in thinking and process.

At the end of the day, too, managers, directors and VP’s need to consult those actually performing the services – the field technicians. Thankfully, 80 percent of those surveyed said they are already consulting with their service engineers with regards to this transition. That’s a good first step.

Servitization is not necessarily and easy plug-and-play journey. Change is hard, but taking the right steps to align prior to implementation will save hurt down the road.

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Run by the University of Cambridge, in the Institute for Manufacturing, this two-day workshop is designed for engineers, managers and senior executives involved in any aspect of the design and delivery of services.

 

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Date: Wednesday 23 to Thursday 24 November 2016

 

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Overview

Making the shift to services is difficult and remains an aspiration for many firms. Arriving at a clear vision of the service offering is often the first stumbling block. What will be offered and how? What are the risks? How do we deliver and create – as well as capture – value?

Drawing on the latest work from the Cambridge Service Alliance, this thought-provoking and practical two-day workshop considers how to design the shift to services.

What you will learn

By the end of the workshop, you will be able to use tools to design new services and improve existing ones and support the successful integration of services into your organisation.

The workshop covers topics including:

• New thinking for service design
• Understanding the ecosystem – expanding your strategic horizons
• Defining the business model – focusing on your customers’ needs
• Planning your service strategy journey
• Innovating the value delivery system – aligning resources and partners
• Service emotion – identifying and managing the customer’s ‘emotion journey’
• The role of big data – optimising service delivery and designing better solutions

Find out more

See the Institute for Manufacturing website for more information and to book your place

Comments from previous attendees

[unordered_list style="bullet"]

• "A key learning for me was how to take a structured approach to fleshing out and refining a new service or existing service"
• "The collaborative work created opportunities to learn different perspectives"
• "The tool set provided is practical and useful"
• "Great overall process of understanding how to develop new business opportunities and understanding the customer perspective"

[/unordered_list] 

 

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In his leader for this issue, Kris Oldland discusses the challenge in finding a metaphor powerful enough to reflect the potential transformation that is happening in field service organisations across the globe...

 

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Click here to download a digital copy of Field Service News issue 14 now

 

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The title came to me easily enough and it is in evidence all throughout this issue. Advanced Services is a field/movement that is advancing at rapid pace.

 

But how best to convey this in the artwork?

In my mind the shift towards Advanced Services is growing in momentum and as it begins to hit the tipping point it will become an unstoppable force, driving into every corner of business, across every part of the global economy.

Why?

Well as ServiceMax CEO Dave Yarnold comments in our exclusive interview on page 24 “Of course outcome based services makes a ton of sense to customers. It’s far more balanced, it’s what customers want.”

Ultimately, this is why Advanced Services will flourish. Because it brings balance to relationships between service providers and their customers, and in doing so brings benefits to both. I remember someone telling me once that a good negotiation is where both parties feel like they have lost something. Where both have had to make some concession to the other.

Advanced Services is perhaps the first business model I’ve come across where that actually doesn’t hold up.

So one of my first thoughts around the artwork was something like a tidal wave or tsunami. A great unstoppable force of nature that would sweep everything before it, leaving space in it’s wake for rebirth - rebuilding and replacement of the old ways with something new.

However, I felt that this imagery was to destructive, to uncontrollable, to urgent. One thing about the Advanced Services movement is it has been patient. Patiently waiting for cultures and technologies to catch up since at least the mid 60s when Rolls Royce were forced by American Airlines to come up with a new business model because the old one wasn’t working.

So now that the time is finally right for Advanced Services to take hold it will be much more of a steady march ever onwards than a flash in the pan incident.

 

Which lead me to the imagery that I settled on, although I still had considerations around whether the image of an army walking across a battlefield was right to convey something that as I mentioned previously, is a movement that brings balance to the force provider/consumer relationship?

After consideration I realised that of course an advancing army isn’t always one of invasion and oppression but alternatively can be one of liberation and freedom.

OK maybe I’m taking the metaphor too far here, but essentially the companies that have pioneered the SaaS model in the software industry such as Salesforce absolutely broke the chains of monopoly that were restricting all but the biggest players.

Whilst the likes of IBM, Microsoft and Oracle mocked the Cloud, innovative start-ups were getting a head-start, reinventing the game so both they and the customer had more control and freedom than ever before- which ultimately pushed the need for innovation across the whole industry, leading to mass disruption.

You can bet that large manufacturers and others have watched this development across the last decade and a half keenly and are looking to see how they can be sure they are on the Advanced Services train, so they don’t get left behind playing catch up, like the big players in Software had to.

Of course, that’s the other flip-side of the cover image I opted for. Ultimately it does invoke thoughts of a battle or war and in such conflicts there are always winners and losers.

I can’t help but feel that right now we are at a pivotal time in the history of enterprise.

I see us at a fork in the road where those companies who take the right path now, those that embrace technologies like IoT and business concepts like Advanced Services will truly flourish across the next decade.

And as for those companies that don’t... I have just one word of advice.

Kodak.

 

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Click here to download a digital copy of Field Service News issue 14 now

 

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In 2015 Field Service News and leading FSM software provider ServiceMax teamed up on a research project to assess the appetite for IoT as a tool for improving field service delivery.

One year on we followed up with a fresh research project into the area to see what trends have emerged and now in a four part series we bring you the findings of this latest research. In part One of this series we explored the headline findings of this year's research against the context of the previous year's results. 

In part two we dug deeper into the study to explore what additional technologies are sitting amongst companies either planning to, or actively using IoT as a tool for field service delivery as well as what the cultural impacts of implementing IoT are and whether these are being considered by organisations.

Now in the third part of this exclusive series we look at the impact of servitization as a key driver for the adoption of IoT...  

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Click here to download the full, exclusive research report now...

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Servitization as a key driver for IoT adoption:

Having established that companies are generally aware of the cultural impact that an IoT implementation could have within their organisation, is this also a key indicator that they are beginning to look towards IoT as an enabler that can help them move towards offering advanced services?

Amongst those field service companies that we spoke to, this does indeed seem to be the case within many organisations. Over half (55%) of companies stated that one of the key drivers for implementing an IoT element into their field service delivery structure was that it would ‘enable them to change business strategy to a servitized/outcome based solutions model.’

Yet, whilst this is an important end goal it appears that those implementing IoT are not just thinking of the long term strategic vision - there are short term benefits being targeted simultaneously.

Indeed, the most commonly cited reasons why companies were seeking to embed IoT within their field service delivery were ‘increasing efficiency of the field service division’, ‘to improve customer loyalty by improving the service levels we deliver to our customers’ and ‘reducing costs by moving towards a more preventative service model’. Each of these were cited by 87%, 75% and 73% of respondents respectively.

 

One reason why we may be seeing both short term and mid-long term drivers for the implementation of IoT is that the concept of servitization is a lot harder to comprehend than the more tangible benefits of how IoT can improve a companies bottom line by simply reducing the number of emergency truck-rolls, meaning service is delivered on a far more manageable, preventative planned maintenance (PPM) basis.

Evidence of this can also be seen when we asked our respondents of whether they felt they had to ‘sell’ the benefits of servitization into other departments. Almost two thirds (62%) of field service professionals felt that this was indeed the case.

Interestingly (although perhaps unsurprisingly) it appears that the greatest resistance towards the shift towards advanced services and servitized business models comes primarily from sales closely followed by product development.

 

Amongst those field service respondents surveyed 23% and 22% identified Sales and Product Design respectively as the business units that they felt they did not have sufficient buy-in from with regards to a move towards a servitized business model.

In contrast over two thirds of respondents felt that they did have buy-in from both operations (69%) and IT (66%) and perhaps most importantly almost two thirds (58%) of respondents also feel they have buy-in from their senior management.

Barriers to adoption of IoT as a field service tool:

Of course, whilst a significant amount of companies appear to be viewing both IoT and Servitization as attractive routes forward for service businesses in the early twenty first century, there are still those that feel that the technology isn’t right for their organisation.

So what are the key barriers holding such companies back from adopting IoT as part of their field service delivery mechanisms?

 

Amongst the various answers put forward there were four that clearly stood out as concerns greater than most. These were costs, the sheer volume of assets that would need retro-fitting, security fears and connectivity issues.

All of these were fairly evenly placed in terms of the number of respondents identifying them as potential barriers to adoption with the sheer volume of assets and connectivity issues being the joint highest cited concerns (both being at 47%), closely followed by costs (45%) and then security fears (43%). The one other potential barrier that had just over a quarter (28%) of respondents selecting it was that the ‘technology still isn’t mature enough’.

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In 2015 Field Service News and leading FSM software provider ServiceMax teamed up on a research project to assess the appetite for IoT as a tool for improving field service delivery...

Now one year on we return to the topic to see if the clear desire for IoT based field service delivery has turned to reality and if so what impact is it having on the growing trend towards servitization as a business model...

When we looked at the potential of IoT in field service last year we were confronted by what can only be called a genuine phenomenon beginning to emerge. One that could potentially change the way companies approach field service delivery entirely.

Indeed, whilst field service technology has been evolving at great pace across the last decade, much of the developments that have arrived - such as enhancements in artificial intelligence driving ever more sophisticated scheduling engines or mobility tools enhancing field service technicians workflows and eliminating unnecessary paper based administration, have been focussed on improving efficiencies and boosting productivity.

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IoT on the other hand has the potential to completely revolutionise the processes and methodologies of field service delivery, and in doing so shift the service model into a new paradigm where contracts involving tightly adhered to SLAs are replaced by guarantees of uptime.

 

In this brave new world of servitization, service is no longer the supporting player there just to add value to a product. Instead, the product is now the facilitator for companies to deliver advanced services.

And this is largely made possible by the IoT giving us the ability to monitor assets in the field and react to fluctuations outside of accepted working parameters, delivering proactive maintenance to ensure that the asset continues to deliver its set outcome.

The benefits of such an approach are a more consistent and reliable solution for the customer and a more profitable business which is closer engrained to customers for the service provider - a win-win if ever there was one.

But whilst the theory may sound great, how is this translating into reality?

This is what this year’s survey set out to understand. Building upon last year’s research project which was predominantly focussed solely on IoT this time we have widened our focus somewhat to understand not just if companies are now actively adopting IoT, but what is their motivation for doing so and just how closely is that linked to the shift to servitization or outcome based business models?

What we already know:

To begin with let’s just have a quick recap on the findings of last year’s research project.

The most obvious place to start when reviewing whether business is ready for an IoT revolution is of course to ascertain whether companies feel they have an asset base that is suited to sensor based monitoring. Here we found that just under half of companies (42%) felt that they already had an asset base that was suitable.

Given the relative infancy of IoT in field service at this point, with the general understanding of what is and isn’t possible amongst service professionals understandably relatively low, this was indeed an impressive starting point to build upon.

However, it was in the next round of questioning that we really began to see the huge appetite for IoT to appear.

We asked our respondents to rank the technologies they felt would have the biggest impact on field service within the next five years.

 

IoT was the clear winner here - with more than twice as many people stating they felt IoT would be the big technology in the short to mid term for field service, than those who cited the second most popular technology, Big Data.

This belief in IoT was further evidenced when over half (55%) of our respondents stated they thought “IoT will become a fundamental part of field service operations in the future” whilst a further 21% went further stating that “IoT is critical to any field service organisation’s strategy".

Further findings in last year’s research, which also pointed to a rapid rise to prominence of the role of IoT in Field Service, included the fact that almost three quarters of respondents (74%) felt that IoT based field service strategies were applicable to companies of all sizes and that well over two thirds of respondents (71%) felt that IoT would be common place amongst field service companies within the next three years.

Such a wealth of positive data seemed absolutely conclusive - IoT was going to be playing a big role in field service. Indeed, in our research report of last year’s findings we concluded:

“The Internet of Things is set for widespread adoption amongst field service companies and we can expect to see that adoption occur at a fairly rapid rate”

Look out for part two of this weekly series where we will find out if our previous hypotheses have been bourne out...

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As the worlds of academia and industry came together once more at the annual Aston Spring Servitization Conference the message was clear. Servitization has moved from concept to reality and now it is time to start moving the conversation beyond the theory and into real world applications...

The concept of servitization, whilst still fresh to many is not actually particularly new.

Indeed, many of the often cited examples of servitization such as Caterpillar, MAN UK and Xerox have been providing advanced services and outcome based solutions business models to their clients for many, many years.

Rolls Royce, the much celebrated poster boys of the servitization movement have been delivering ‘power-by-the-hour’, their own brand of servitization, ever since the late sixties when they were given an ultimatum by American Airlines to offer a new business model or lose their business.

From an academic standpoint, the first reference to Servitization as a concept is widely accredited to a paper published by Vandermerwe & Rada entitled “Servitization of Business: Adding Value by Adding Services” which appeared in the European Management Journal in 1988.

Yet here we are some 28 years later and still the terminology is foreign to many, outside specific circles of industry and academia.

 

But at the same time, we are seeing a growing number of examples of servitization by significant companies.

Last year in Field Service News, we reported how John Cooper at Sony Professional Services had moved their business towards what was essentially a servitized business model in their broadcast services division by equipping Tele-Madrid with an entire new TV suite on a cost per usage basis, an agreement that puts the full onus on Sony to ensure they delivered 100% uptime.

Yet at no point in our conversation did the word servitization come up.

Then there is Air France KNB.

When Field Service News interviewed him at last year’s Aston Spring Servitization Conference, Harman Lanser of AirFrance KNB admitted that he hadn’t come across the concept until he saw Prof. Tim Baines give a presentation at the Aftermarket Conference in Amsterdam, whereby he immediately identified with the concept as exactly the process he was trying to take the MRO unit of the world’s 2nd largest airline through.

So is there this disconnect between the theoretical world of academia and the world of industry, especially when the evidence would seem to point out that they are indeed both heading in a similar direction?

 

What hasn’t helped is that academics in the past have used a number of interchangeable phrases like ‘life-cycle through services’, ‘advanced services’, ‘outcome based solutions’ and ‘servitization’ when discussing the topic - which has weakened the focus somewhat. Add to this that the research community has tended to focus very much around isolated individual companies in many instances, and the type of benchmarking that makes industry sit up and listen more attentively has been somewhat lacking as a result.

This sentiment sat very much at the heart of the opening keynote presentation of this year’s conference given by Prof. Rogelio Oliva, of Mays Business School, Texas A&M University.

“We’ve basically got stuck in a research mode,”began Oliva

“We like to go out and work with companies, do a case study, write it up and then we’re very happy with it.”

“The problem with doing that is that it is very difficult to aggregate and come up with a theory  that is realisable across several industries or even across several companies.”

“What you end up with is a whole bunch of anecdotes. ‘Company A did this and Company B did that and it’s very difficult to make progress under theoretical developments.”

“I think we as academics, have fallen short of delivering a set of theories, a set of concepts and a set of principals that managers could actually use.”

 

“Of course they [the theories and concepts] are going to need to be modified to a particular  situation, but overall there ought to be some overarching principals to navigate this and we have failed to do that.”

A similar sentiment was also offered by Prof. Tim Baines, Aston Centre for Servitization, Aston University when he gave us his reflections at the end of what was a busy two days.

“I think what we have to accept that the lens that we are using to look at the different adoptions of services throughout the world is imperfect,” admitted Baines.

“It’s useful to reflect on services gaining traction, but as yet we haven’t got the techniques to say with certainty economy A is competing more on the basis of servitization whilst economy B is competing more on the basis of productization.”

However, that is not to say that the move to servitization is floundering, in fact the opposite is very much true. It is now in a stage of evolution where it is beginning to move from the fringe slowly towards the mainstream.

That said, there is still a long way to go towards more widespread understanding. Currently there is a very specific type of company that is suited to servitization, especially when it comes to doing so hand in hand with the academics.

“There are three types of companies,” explains Baines.

 

“Firstly there are those companies that are doing incredibly well selling products and they don’t want to talk about servitization at all. Then there are the companies that are struggling financially and they are prepared to look at servitization because they are prepared to look at anything that can help them get out of the mess that they‘re in and then there is the third set, which are companies that are competing but are getting some kind of feeling that the world that they operate in is changing.”

“It is the companies that are seeing new business models emerge, those who’ve still got stability but who know they’ve got to evolve the way in which they capture value, these are the businesses that we want to work with because if we can help those, we can learn an awful lot about this transformation process and we can position these companies to compete better in future years.”

However, Baines believes that there is definitely a synergy growing between academia and industry.

“This is the fifth time we’ve done this conference” he begins.

“The first year we did the conference we created an event where we had practitioners and we had academics and actually there was a huge gulf between them which was really quite hard to reconcile. We didn’t have a language to describe what was actually going on.”

“I think what has happened is that the academics have accelerated in that they now have a better understanding of industrial practice so they can talk more coherently with practitioners and conversely the practitioners are starting to understand the language of servitization.”

“Through conversations around base, intermediate and advanced services they are beginning to be able to converse with the academics. There are still differences and there always will be - we’ve got different sets of priorities when we are both doing our jobs, but there is a definite sense of it coming together.”

 

“We have now established the language of servitization the notion of these base, intermediary and advanced services is becoming well established, most of the presenters are using those terms and those languages now. We really don’t want any other papers coming along offering different frameworks for this topic because we have moved beyond it,” he continues.

So how can the academics move forward to support their counterparts in industry?

“I would say the first thing we need to do to move forward is to leverage what we have done,” Oliva explains.

“We have been out there writing case studies, interacting with firms, learning from them. Let’s step back and spend a bit more time with those cases, do the hard work of thinking about what it means as opposed to just documenting the story.”

“Then we need to look at the phenomena that we are researching. “We are looking at servitization, which is a transformation that is hard for companies and there is a very long tradition in research that says if you as an academic get involved in the change journey, you can learn from this process - this is something that we call ‘actual research’.”

“So the next strategy is engaging in that process, the research will take longer because we are going to walk with that company, but that is what it takes to get the work done.”

“The final strategy I propose is a push for being relevant,” Oliva continues.

“If we put relevance at the front of our research goals: how we design research questions, how we design research hypothesis, how we design and develop research implications, if we do that with a manager at hand and thinking about the manager and about being relevant, I think that will also help us shape our own work.”

One thing is certainly clear after the two days of exhaustive presentations and debate, servitization has begun to move forward both as an industrial movement and as a topic for academic research.

The key questions are moving from what and why to how. As Baines commented in summing up the conference in the final session:

“Really, now the conversation needs to be about how do we get traction within an organisation, how do we advance this concept.”

“That’s where the real challenges are.”

 

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