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In this latest of his Momentum Case Studies, Jan van Veen, co-founder of moreMomentum, interviews proven leaders across the globe who are successfully implementing the 4 Winning Habits to lead innovative, energised and engaged teams.

Here the case study examines a global leader serving the mining and oil & gas industries. Much of their recent success has come because they take services very seriously, being seen as a knowledge partner to help their customers improve operational efficiency, reduce risks and increase profitability.

The challenges faced

The company operates in traditionally slow-moving industries with large incumbent players and has become a leader by creating a strong service business which now generates a significant portion of total revenues, deepens customer relationships and creates resilience during economic downturns.

However, it has now spotted that a potentially significant disruptive threat could emerge from ‘big data’ and data analytics technologies, enabling new types of services. In the past, they would have considered taking five years to develop new equipment to be fast for the industry, but now understands that when it comes to future services, the speed of innovation needs to be higher.

Senior management is very aware that customers will move away if they see a better way of doing things, so the company must adapt if it is to stay a market leader.

The Strategy

The company has entered a period of change. To meet the disruptive threat ahead it must be visionary: to redesign itself and its culture so it can move much faster to keep ahead, enthusiastically embracing digital technologies with a focus on the end-to-end customer experience. In fact, it has to re-imagine its relationship with its customers so that rather than selling products, it provides ways to help its customers improve their operational processes and even their business models.

The company has demonstrated success from the 4 Winning Habits for Momentum so far, but now they need to take it to another level. Here we will show how they are using each of the 4 Winning Habits in the implementation of its strategy, creating Momentum for long-term sustainable success.

Direction – the common cause that everyone can get behind

The company management has recognised that, at a time of change, a compelling vision describing their role to help customers be more profitable is important to pull everyone together in the same direction. It is being spread throughout the company using both traditional townhall meetings, the company intranet as well as new digital social sharing methods such as Salesforce, Chatter and Yammer.

It helps operational messages fit into context if there is a beacon for people to move towards if there is a vision of what the company will look like in five yearVP of Service Marketing: “It helps operational messages fit into context if there is a beacon for people to move towards if there is a vision of what the company will look like in five years, what the industry will be like, what our company will be like. Otherwise, you have isolated initiatives”.

To push the new company direction, the company has been busy hiring a new CEO, CMO and CDO (Chief Digital Officer), all with experience in driving innovation. The Board understands the need for change, but the company can be a supertanker which takes time to turn. However, it is also aware that the competitive landscape can change quite quickly.

Dialogue – open discussion at and between all levels to encourage new ideas

Digital initiatives are at the centre of this company’s reinvention, so senior managers are heavily involved in steering new ideas, to get behind them and also to prevent them from breaking current business streams.

Across the company, at least 75% of targets and incentives are collective, leading to limited silo thinking between teams since they’re all in the same boat. Where there is friction, it’s usually because goals have been set too narrowly and issues fall between the silos. As a result, there is much less politics than might be expected in a large company and a higher level of transparency on performance.

This all helps create a culture of trust with less finger pointing and blame.

VP of Service Marketing: “Rather than looking for blame, people look at how to fix issues and learn from mistakes. It works well due to open dialogue. People don’t feel threatened and are not so eager to hide problems”.

Decision-making – local decision-making empowerment

The company has always had a decentralised structure. Different markets are quite autonomous and allowed to make their own local sales decisions, choosing which sales and marketing initiatives in which to participate based on market needs. This has been a successful approach so far, but staff at all levels and across the business will need to now be included in the decision making processes if the company is to continue adapting at a fast enough pace.

Discovery – Looking for new trends, opportunities and threats (internal and external)

The newly established Digital Office is a powerhouse of new ideas to add new technology to client relationships, including tools such as the Internet of Things devices and data analytics. It has been set up to operate somewhat separately from the mainstream company in order to be free from ‘business as usual’ thinking.

Companies, middle managers actually, are often quick to kill new products they see as a threat to the status quo and that’s why it’s good to have a Chief Digital Officer, tasked to create change and disruptionVP of Service Marketing: “Companies, middle managers actually, are often quick to kill new products they see as a threat to the status quo and that’s why it’s good to have a CDO, tasked to create change and disruption. We might all be comfortable with how things are today and not want to change it but I’m damn sure there’s someone out there who wants to kill our business model, and will be aided and abetted by our customers if they see a better way of doing things”.

The company has even started trying new approaches to R&D, such as hackathons.

VP of Service Marketing: “When I first heard of hackathons I have to admit I was sceptical, but from what I’ve seen they actually allow people to look at problems in new ways and get people involved who would never normally be involved, and maybe redesign the way of doing things. And for big companies, that’s what we have to do, because our competitors don’t worry about the fact we have an established base and products, they’re actually thinking ‘How can I change the industry to make money? They don’t care if it destroys our business’”.

The company has also started involving customers in its processes, for example with surveys. They keep the company honest about its achievements, drive change and allow them to spot systemic issues. The voice of the customer can be very powerful.

Next Steps:

Change is an ongoing process at this manufacturing company, but they recognise the need to accelerate the pace of change to a new level and then make it ‘business as usual’ – a revolution in the mining sector!

The 4 Winning Habits for Momentum will be key. They are working on a clearer picture of the future state of the company, to give stronger Direction to the business units and local staff for local Decisionmaking.

Dialogue with staff will improve, so personal objectives will be better aligned to the strategy and not be so focussed on purely financial targets, but also learning, collaboration and Discovery of new opportunities. If they can do all this, then they will truly be creating a revolution in mining.

Outcomes

The huge growth in the service business at the company has brought enormous benefits for their customers, made the company a trusted ‘knowledge partner’ and expertly positioned them to forge ahead into digital transformation.

People buy from them now because of the advice they give and their approach to improving their customers’ businesses. For instance, mining equipment runs 24/7/365 and downtime can cost many €100,000s per day so, they have redesigned parts, consumables and field services to reduce the time it takes to change them, so reducing costs for their customers.

Energy efficiency has been another focus, as has the charging model – customers pay for service contracts by the ton, so they know their costs in advance. These changes epitomise the innovations that the company has achieved, and there are many more on the way.

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Insights from a recent study by the Advanced Services Group at Aston Business School can help you understand if you’re on the right path to advanced services. Professor Tim Baines explains...

Is Servitization a burning topic for your organisation - join Professor Baines and the Advanced Services Group for the Spring Servitization Conference, Copenhagen, Denmark, 14 - 16 May 2018 more info @ https://www.advancedservicesgroup.co.uk/ssc2018

Researchers and pioneering manufacturers have been singing the praises of servitization and its benefits to business – and it seems industry is starting to listen.

Increasing numbers of manufacturing and technology companies are trying to implement services-led strategies. How to go about doing this in practice, however, still presents a challenge to many. The leaders of today’s industry see the success of Rolls-Royce and Xerox in this area, yet they often struggle to work out how to achieve the same for their own businesses.

Within the Advanced Services Group at Aston Business School we’ve been working with manufacturers around the world using the latest research to support them in finding their path to compete through advanced services.

Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.While most manufacturers already offer ‘base services’ focusing on product provision such as warranty and spare parts, others take a further step by providing ‘intermediate services’ focused on the product condition such as maintenance, repair, overhaul and remanufacturing,. ‘Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.

Real-life examples include Rolls-Royce’s Total-Care offer on gas turbines for their airline customers based on a ‘fixed dollar per flying hour’; Xerox delivering ‘pay-per-click’ scanning, copying and printing of documents; and Alstom Train-Life Services supporting Virgin by assuring the availability, reliability and performance of their Pendolino trains on the UK West Coast Mainline. Advanced services such as these are a core concept in servitization.

With their potential to radically disrupt and alter the face of manufacturing, understanding the process of introducing them is vital to businesses and the economy.

At the Advanced Services Group, this is the focus of our work.

In a recent study, we examined two key questions about the path to servitization:

1. What stages do manufacturing companies go through to achieve competitive advantage through advanced services?
2. What factors and forces affect their progression through those stages?

We conducted interviews with 14 multinational manufacturing companies, all on a trajectory to compete through advanced services, representing a range of industries – from aerospace, defence and road transport through to air filtration and precision motion control systems.

The four stages of transformation

We found that manufacturing companies go through four stages in their transformation to compete through advanced services: exploration, engagement, expansion and exploitation. As manufacturers become conscious of the concept of servitization and suspect that advanced services may be relevant to their organisation, they will start out in a stage of Exploration, where they are doing their research to find out more about the concept and how it could benefit their business.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.Once a constructive outcome is achieved, the attention moves to Expansion, where advanced services are innovated and implemented with increased scale and speed. When the value of these is demonstrated, attention will switch from individual projects, to initiatives focused on the reliable and efficient delivery of a portfolio of services across the organisation. In doing this, manufacturers are focusing on Exploitation of advanced services.

In each of these stages you can expect multiple iterations and interactions until there is sufficient evidence and consent to move to the following stage.

Progression through the four stages – or in some cases falling back – is influenced by five forces.

Five forces affecting transformation

1. Customer Pull

Customers’ appetite for services has a significant influence on progression.

Several companies described their decision to offer more advanced services, together with usage-based revenue models (i.e. pay-for-flight-hours or pay-for-passengers-moved) as a direct reaction to customer demand.

2. Technology Push

Other manufacturers start servitization having become aware of the technology that could record how their products are being used and transmit this data back. The data makes it possible to develop advanced services contracts based around payment for outputs achieved rather than asset ownership.

The majority of the companies we studied said they had been influenced by this ‘technology push’; IoT and industry 4.0, which are hot topics in industry at the moment, were often mentioned. Fewer companies mentioned the ‘customer pull’ factor, and yet customers’ growing appetite for ‘experiences’ over ownership is arguably just as significant.

In the UK for example, the appetite for services has grown 2.4% per year for the past 20 years according to the Office for National Statistics, significantly outstripping that for selling products – a trend that is being replicated in every developed economy across the world.

3. Value network position

The position of the organisation within the wider value network can affect business transformation.

As an example, working through distributors can restrict access to customers and inhibit the changes needed to deliver services. In several cases, manufacturers chose to acquire their distributors.

One manufacturer was stalled by the access to remote sensing technologies, wrestling for some time over acquiring a technology vendor, to give them access and control over information. Positioning in the value network that delivers dependable access to both customers and suppliers has a significant influence.

4. Readiness to change

Internal organisational factors influence readiness to change and can affect progression. Having reliable and well-performing products, for example, is a prerequisite to compete through services. It also leads to an interest in advanced services in cases where, increasingly, product reliability and performance are no longer differentiators.

Organisational commitment is also important. In some cases, where the support of the management board was in place from the outset, companies progressed quickly through the exploration and engagement stages. Without this, progress can be much slower.

5. Competitor threat

The actions of competitors significantly affect organisational commitment. In one case, organisational commitment to advanced services came about when a principal competitor acquired a network of service providers.

This caused anxiety amongst the leadership of the company and led to significant investment in its own advanced services programme.

Are you on the right path?

The findings of our study suggest that transformation towards servitization is neither a clear-cut, linear processnor an easy one. In each of the four stages, key milestones have to be achieved before a company can move to the next stage.

The five influencing forces work internally and externally, affecting progress in each stage. These five forces may be so strong that the manufacturer moves rapidly through all four stages. In other instances, they may be so weak that the manufacturer fails to progress entirely.

Next month we will be running the seventh annual Spring Servitization Conference, this time in partnership with Copenhagen Business School, where we will examine research into the detail of these stages and influencing forces.

The Conference is the go-to place for researchers from around the world to present and discuss their latest work, and topics this year will include: changing the mindset of the organisation in order to compete through services; pricing advanced services; how to use data as an enabler for servitization; how SMEs, in particular, can create value through servitization; internal and external enablers and inhibitors.

To book your place, visit https://www.advancedservicesgroup.co.uk/ssc2018. 

Field Service News will be reporting from the conference and interviewing some of the industrial speakers; look out for updates in future issues.

Can’t join us at the conference?

You can still develop the skills, knowledge and action plans to implement servitization and advanced services at our Skills for Servitization workshop on 22 May 2018. Find out more at https://www.advancedservicesgroup.co.uk/skills-for-servitization In the meantime if you want to assess where your company stands today in terms of adopting a services strategy and where you’re aiming to get to- and compare your thoughts with colleagues to test your alignment- our quick survey Unlock Your Insight will give you a personalised set of feedback in under five minutes. Visit https://www.unlockyourinsight.co.uk/

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Jan Van Veen, Managing Director, moreMomentum explains how field service companies can thrive in a disruptive industry...

The key challenge

In the manufacturing sector, a popular topic is the potential disruption, driven by:

• New technologies like artificial intelligence, Internet of things and augmented reality
• New technology specific to the equipment we offer
• Changing customers
• Emerging markets
• New entrants into the industry

And the potentially disruptive new value offerings, operating models and business models which could emerge.

As manufacturers, we run the risk of missing the boat, so the question is: Disrupt or Be Disrupted? Most of the companies will not be able to disrupt but certainly, need to know how to thrive in a disruptive world.

In my view, the following is required to be successful:

1. Full understanding of disruption and its potential impact for the business
2. Clarity on what needs to change in your business to thrive in a disruptive industry
3. The high pace of continuous change to innovate and execute

However, too often I see misconceptions about disruption and disruptive innovation, a lack of clarity on what needs to change and too slow a pace of change.

By consequence, manufacturers tend to make inadequate assessments and develop inadequate strategies, allowing leading competitors and new entrants into the industry to take the lead.

In this article, I will focus on what disruptive innovation is, the impact and how to prevent typical pitfalls.

What is disruption?

Disruptive innovation is a nasty beast. We have seen quite a few strong brands (almost) disappearing because of disruption, like Kodak, Nokia, IBM computers and Polaroid to mention a few.

For clarity, I’d like to categorize innovation along two dimensions:

• Impact: mainstream versus disruptive
• Scope: Customer value versus internal capabilities

Mainstream innovation

Mainstream innovations annually improve the value of products and services (including the related internal capabilities) as expected by the market. The aim is to increase our value and margins by better serving our best clients.

These innovations can be small and incremental or more radical.

Examples of incremental mainstream innovations are improved fuel consumption of cars engines, improved uptime of the equipment we sell through more reliable equipment and better maintenance.

Examples of more radical mainstream innovations are cars going electric and our services becoming more predictive and performance basedExamples of more radical mainstream innovations are cars going electric and our services becoming more predictive and performance-based.

Manufacturers that fall behind the competition, have not been disrupted yet The majority of the manufacturing companies are too slow in driving the mainstream innovation and see leading competitors achieving higher growth rates, higher margins, more service – recurring and stable – revenue and higher customer loyalties being ahead of the game. As Jack Welsh said: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

Disruptive innovation

Disruptive innovations break with the ongoing and upward trend of improving value. There are two ways of disruptive innovation: offering lower value at a lower price for the low-end market or offering lower-barrier solution opening new market segments which have not been served so far.

At the early stages, disruptive products and services serve a small niche, often at a lower value level.

These solutions will follow a mainstream innovation journey, increasing value and price. Gradually the products or services become a viable alternative for a larger portion of the markets.

Examples of low-end disruptions are the low-cost airlines, which offer flights at lower service levels and lower prices. This is quite attractive for business travellers who do not want to pay a premium price for meals and convenience.

One example of new market disruptions in which a new product or service serves other needs are the PC’s, which after some time started competing against the mainframes. Another example is salesforce.com, which offered so much more flexibility and lower cost of ownership than the traditional on-premise CRM systems.

Innovating internal capabilities

New technology enables us to develop new organizational capabilities.

For example, the low-cost airlines have adopted quite different operating models which allow them to consistently fly at much lower cost and hence maintain good margins at a low price level. For service operations, we see many manufacturers developing capabilities like remote service, connectivity, big-data and algorithms and predicting failures.

These, in themselves, are not value propositions and have no value for customers. However, these can be crucial capabilities for new service propositions.

Innovating external (customer) value

For maximum impact focus on customer value, not on capabilities

The real impact to drive competitive value is by addressing unmet needs or barriers to use new technology or solutions with a new product, services or integrated solutions. Examples are:

• How Rolls Royce offers a zero-disruption proposition for aerospace engines in which clients only pay per flight hour
• How MAN reduces fuel consumption by improving driving behaviour
• How Caterpillar helps managing a construction plant and will ensure at every stage of the construction the right number of the required equipment is available.

Besides the services and products, we can also increase value by enhancing customer experience, our brand and (lower) price levels.

Why does this matter?

At the early stages of a disruption, incumbents may see the new products and services entering their market.

However, compared to business-as-usual, the new products and services are relevant for a small niche only, the market volumes are small and the added value often is much lower. Their best clients are not interested.

At the early stages of a disruption, incumbents may see the new products and services entering their market.Above that, there are so many trends and new innovations, it is hard to predict which ones will become successful. This, together with the pressure to optimize top-line and bottom line and adequately serving our best clients, means it is easy to ignore the signs and consider them as irrelevant.

Disruption most often comes from outside your industry

Historically it appears that often incumbents beat new entrants when it’s about mainstream innovations, as they will defend their main business with valuable clients. However, when it’s about disruptive innovation, new entrants disrupt the industry and incumbents only start to respond (in panic) when it’s too late.

The new entrants have built the knowledge, capabilities and the brand which makes it tough for incumbents to catch up in time.

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Servitization has been an increasingly widely discussed topic amongst the Manufacturing sector for some time now, but whilst an understanding of the why is becoming widely accepted, the how still remains a mystery for many.

Here Christian Kowalkowski and Wolfgang Ulaga coauthors of the book Service Strategy in Action go some way towards demystifying the path to servitization...

With growing digital disruption across industries, the emergence of new business models, and the mounting pressure to deliver better business outcomes for customers, much has been written about what servitization of industries means and why firms need to move into the service space.

Yet, in times where increasingly ‘everything’ is considered as a service, decision makers still need to understand how to master this profound transformation and decide which concrete actions they must take to carry out this change.

Roadmap for service growth

In our new book, Service Strategy in Action (S2iA), we show how to shift your business from a goods-centric model to a service-savvy one.

For over a decade, we have accompanied numerous firms on their journeys from focusing on manufacturing and selling products to providing services and customer solutions in a broad array of industries and markets. We distilled what we learned into a 12-step roadmap which provides clear directions for crafting a competitive service strategy and putting it into practice. We recognize that all companies have different starting points and goals for their service businesses, so we tailored the roadmap to make it possible for managers to focus on the most pressing issues.

When service-growth strategies work, the payoffs are impressive, and firms often discover that their new activities make more money than productsWhen service-growth strategies work, the payoffs are impressive, and firms often discover that their new activities make more money than products. But for every success story, numerous cautionary tales remind us that this move involves more than a few cosmetic adjustments.

Without giving this strategic initiative serious thought, and without methodologically managing the change process, our research has found that the transition is doomed to fail and companies struggle to turn a profit from their service growth initiative.

Our intention in this book is, therefore, to provide decision-makers with the tools they need to craft a competitive service strategy and put it into practice.

Readers can employ our proprietary 12-step roadmap and use methods and frameworks for each step in their own firms to navigate the transformation.

The first part of the roadmap tackles the very foundations of a service business: why to move into services and how to embed a true service-centric culture in your organisation.

The second part deals with strategic issues: how to drive change and align your service strategy with corporate goals, and determine if your company is “fit-for-service.” Then we discuss how to come to grips with implementation: how to make the most of your existing services, innovate and create value-added services and solutions beyond your products, and build the service factory.

Finally, we show how to build the structure needed: transforming your product-centric sales force into a service-savvy sales organization, designing an organizational structure that promotes service growth, and aligning your interests with distributors and partners.

Many firms profited from our hands-on approach.

For example, in one project with a forklift manufacturer, we worked on transforming short-term opportunities in revenues and profits.

Together with the company, we reviewed more than 80 “low-hanging fruits.”

In one project with a forklift manufacturer, we worked on transforming short-term opportunities in revenues and profits.During the project, we identified 22 service activities that the firm had been providing free of charge, but that offered notable opportunities for revenue generation.

Over a period of several months, the company moved 14 of these activities along the journey from free to fee. For example, the manufacturer started invoicing for on-site equipment diagnostics, an activity previously provided free of charge by service technicians during customer visits.

The diagnostic fees for each customer were relatively small, so customers were widely willing to pay. In one test market, 80 percent of customers accepted the fees, resulting in substantial additional revenues in the first year in which this single initiative was implemented in just one country.

The various free-to-fee initiatives that the forklift manufacturer adopted after attending our workshop collectively led to millions of euros in added revenues.

Building a true service culture

Once you understand why to move into service and what the main roadblocks are, consider the culture that supports successful service enterprises and how to venture into the service space. In working with managers in industrial and professional services companies, we have seen over the years that a strong service culture serves as a powerful enabler of successful service growth.

Product firms that neglect to assess culture often struggle to implement services, and sometimes abandon the effort.Product firms that neglect to assess culture often struggle to implement services, and sometimes abandon the effort. A company can burn a lot of energy trying to move forward with services if its culture is product-centric, because culture underpins the organization.

We have identified six misconceptions that are hurdles to transitioning from a product-centric to a service-savvy culture. Here are the hurdles, and the signs that you still need to jump over them:

1. A product-centric mind-set — Your marketing efforts focus on things that come in boxes. Your accounting system is designed for physical resources. R&D works on solutions that are objects. You compensate your sales team based on boxes moved.
2. An absence of deep customer insights — You are using a distributer network, and those channels – not you — have the close and valuable relationships with your customers.
3. A lack of understanding and using the co-creation concept. You still think value is created in your factory and you can’t see how customers can partner with you to co-create a service product.
4. The right rules are factory rules — You are uncomfortable with the new rules of service production that upset traditional factory values like standardization and quality control.
5. It’s all about CAPEX — You are focused on capital expenditures and selling customers equipment, rather than helping them solve operational challenges.
6. Working through channels — You have built a strong channel network, and you don’t want to think that it may be necessary to assume more control over channels – even owning them outright.

Making the move to services, then, is a process that starts with the culture at the very core of your business.

Changing culture is never easy, and understanding that fact improves a company’s chances of transforming their product-centric culture to service-focused culture.

Four stages mark the way. Not every company starts at the same point, so it’s useful to figure out where your firm is on the map, and what actions and initiatives will be required to move to the next step.

• Step One: The Service Desert – Many firms are what we call services-myopic. They are aware of service, but they see it as an after-sale addon.Firms deeply grounded in the service desert often consider providing spare parts or repairing equipment as a substantial part of their service business. This is a narrow focus view that obscures opportunities that could result in double-digit revenue growth.
• Step Two: The Dark Tunnel – A company ramps up investment in service, but results are slow. It’s a “bitter pill” experienced by many companies going through this transition. Decision makers must understand that a critical mass of services is needed before reaping benefits. A short-term focus only can lead to sacrificing long-term growth.
• Step Three: Promising Light – In this stage, companies that seized service opportunities early on are experiencing quick wins.Some firms emerge into this stage without even going through the dark tunnel. When it happens, welcome revenues turn up, and the proponents of the services transition have powerful evidence to persuade others across the organization.
• Step Four: Bright Landscape – This is the destination! The company has devoted sufficient resources and people top its cultural transformation, and the new service business is a source of profit and growth.

Would you like to know more? Please visit us on www.ServiceStrategyInAction.com To find out more and continue the conversation.

We are sincerely interested in your comments and reactions and hope that our book will initiate a fruitful dialogue among our community on this topic we all are so passionate about!

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In the Big Discussion, we will take one topic, bring together three leading experts on that topic and put three key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the what to expect in 2018 and our experts are Michael Blumberg, Blumberg Advisory, Bill Pollock, Strategies for GrowthSM and Jan Van Veen, moreMomentum

The first question we tackled was What is the biggest challenge facing field service companies in the next 12 months?

Now let's turn to the second question in the discussion...

What is the biggest opportunity facing field service companies in the next 12 months?

Bill Pollock: The biggest opportunity facing field service companies today is the ability to compete head-to-head with any of their main competitors – however large or small – through the implementation and/or upgrade to a Cloud-based Field Service Management (FSM) solution. Over the past several years, Cloud technology has normalized the playing field for both FSM solution providers and their customers, who are no longer encumbered by the cost and complexity of their legacy premise-based solutions and applications.

Advances in technology are also giving a boost to those field service companies that have embraced these new technologies. For example, the greatest opportunities over the next 12 months will most likely be realised by those companies that will have already implemented Augmented Reality (AR) and/or Merged Reality (MR) into their field service operations. However, the most likely dominant field service organisations will be the ones that have also taken steps to explore the benefits of moving to an Artificial Intelligence- (AI) and Machine Learning- (ML) driven field service solution.

The technology is already there for every field service company; however, only those that embrace – and implement – these technologies will actually be able to reap the benefits.

 

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Jan Van Veen:  When talking about the biggest opportunities, I think we need to look beyond 12 months. It is mission critical to act now on future success.

Most industries are somewhere around the top of the life cycle and are facing (first signs of) commoditization.

The big opportunity for them is to go through the next life cycle where the added value is about enhancing the use of technology. The new value propositions will be heavily driven by data, algorithms and intelligence. The value will be far beyond predictive maintenance and uptime of technology.

This is a domain in which young, rapidly growing data-driven companies are in their comfort zone. So, the opportunity here is moving up the food chain and increase relevance for clients. By failing to pursue these opportunities, the threat is being forced down in the food chain and seeing other players deliver the high value, whilst seeing your role being limited to manufacturing equipment, spare parts and, to some extent, delivering low skilled hands-on machines for maintenance.

For those companies who are not ready to focus on these opportunities, I think your top priority should be to build the missing foundation and make sure you are ready to pursue the opportunities soon.

 

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Michael Blumberg: The biggest opportunity facing field service companies in the next 12 months lies in pursuing strategies that will advance their journey along the path toward servitization.

The specific strategies vary from company to company based on where they are on their journey. For some companies, 2018 will be the year when they finally transition their field service operation from a cost centre to a profit centre. For others, the opportunity lies in monetizing service offerings and effectively marketing and selling service outcomes.

Still, others will have the opportunity to invest in digital technologies that enhance service quality, boost productivity, and create an uber-like experience for their customers.

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Annick Perry, Senior Project Manager, Noventum gives us some insight into the findings of a recent research project that Noventum and Aston Universities Advanced Services Group have undertaken to look at Advanced Services Trend within Manufacturing...

In a joint research study with the Advanced Services Group, a centre of excellence at Aston Business School, Noventum explored how five societal ‘Megatrends' bring opportunities for business growth for manufacturing companies through advanced IoT enabled services.

The five societal megatrends we explored in this research are:

1. Value change: The increasing importance of transparency, diversity, individualisation and freedom of choice, as well as demand for meaning and connectedness.
2. Green and resource scarcity: The increasing consciousness of manufacturers when providing products and services to fulfil human development and at the same time take care of the natural system.
3. Health and Aging: An ageing society and the increasing importance of healthy living and lifestyle.
4. Globalisation and the need for community: The increasing emphasis on communities, localities, etc. to foster identity in light of a globalised world.
5. Inequality and Social Exclusion: The increasing market share of poor customers, means reducing the complexity and cost of a good and its production. Designing products for emerging countries may also call for an increase in durability and when selling the products, reliance on unconventional distribution channels. Globalisation and rising incomes in emerging countries may also drive frugal innovation, which implies that services and products need not be of inferior quality but must be provided cheaply[/ordered_list]

In this article, the focus is on just one of the Mega Trends ‘Value Change’ which provided some interesting insights on how this will impact the manufacturing industry.

Customers’ perceptions of value are changing

Consumer habits are changing, we are becoming more tech-savvy, and less connected to ownership of products and, in favour of experiences delivered by service providers operating new business models, like Airbnb. Expectations of a personalized experience are higher, which means companies must respond to customers’ needs faster and in a unique way. This change is passed on by B2C customers towards their B2B suppliers and partners. For manufacturers, this means staying alert and being proactive. As Anders Mossberg of Scania Trucks stated in our study, “Talk to your customers’ customers because they are the ones that will drive the trends in the future.”

Customers want to Buy Everything as a Service

Manufacturers are recognising the need to find new ways of offering value to customers. Their offerings are changing from a product focus to a service focus, which emphasises providing the customer with the capability to achieve their business goals, instead of emphasising product features. They are now competing through a combination of products and services, enabled by technology, tailored to meet the customer’s needs. Rolls-Royce, for example, sells hours of flight time for its jet engines rather than the more traditional purchase of the engine. These are more sophisticated, higher-value contracts, based on outcomes. They are also higher risk for the manufacturer but with higher potential to create a competitive advantage.

New technologies enable to respond to changing needs

New developments in technology are enabling the value chain to be redesigned. Embedded sensors and processors in assets and devices are increasingly capable of transmitting data to control centres to signal the need for repair or refurbishment. Research participants cited the introduction of driverless vehicles, some of whom mentioned that this is already a reality in some situations, and will increasingly be the case in the future. It will provide the opportunity for companies to take leadership and redesign the value chain to increase efficiency and added value. New configurations of networks allow companies to redefine their role in the value chain.

A transformation is needed

Delivering such advanced service requires fundamental changes in the manufacturer’s operations, relationships, organisational structures and potentially a change in their culture. Denis Bouteille of Fives addressed this in our study by saying, “Talking to the customer, we need people who can really develop the empathy, the listening and the deep understanding.”

Conclusions of the research on societal ‘Megatrends’

This exploratory research concludes that societal megatrends can drive opportunities for manufacturers to compete and grow through advanced services. To realise those opportunities, it’s important that companies exploit the implications of new trends together with their customers and explore what the impact of societal trends might be for future needs. The megatrends explored in this research show a significant potential for companies to develop advanced services and strengthen the competitive position of companies. However, some key factors need to be taken into mind when manufacturing companies take the decision to invest in developing advanced services.

1. Before companies can start developing advanced IoT enabled services…..

• Top management needs to support the development of advanced services and provide clear leadership to staff in the mindset appropriate to the development of the new capabilities[/unordered_list]

2. Stay close to your customers to identify opportunities for advanced IoT enabled services by understanding how value perception and needs are impacted by societal trends

• Understand your companies role in tackling global social and environmental challenges
• Explore the opportunities of the ‘circular economy’
• Recognise the impact of IoT on your customer's value chain

3. When you are developing the business models around advanced services make sure that:

• The tacit knowledge of the very experienced but ageing workforce is transferred into technical solutions to deliver advanced services
• Your company thinks global, but acts local and delivers a superior customer experience

Want to know more? Download an executive summary of this research and learn how the other societal trends can bring business opportunities. @ http://fs-ne.ws/dOId30iepLh

As we enter into another year it seems like the speed at which our industry seems to be hurtling forward is showing little signs of slowing down.

 

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If anything it seems to be getting faster.

Across the last year, we saw the Internet of Things shift full throttle from being a concept adopted only by those on the leading edge to something that was very rapidly becoming mainstream within the field service sector. It seems that the technology is finally all beginning to fall into place and the dual rise in prominence of outcome-based services and preventative maintenance means that IoT is at the forefront of most service organisations as we move into 2018.

One of the earliest and major proponents and enablers of IoT within field service was, of course, ServiceMax and when we saw the first fruits of the union between them and GE earlier this year with integration between the ServiceMax solution and GE Digital's Asset Management Performance solution we perhaps saw one of the last major missing parts of the puzzle of how IoT can be embedded within a field service workflow slot right into place.

Indeed, the acquisition of ServiceMax by GE whilst coming perhaps out of leftfield initially appears to be making more and more sense and so far at least it seems that as opposed a technology being lost to the wider market when swallowed up by a behemoth of an organisation such as GE, ServiceMax are set to become an even more prominent player as part of the GE DIgital stable as they push out into hitherto uncharted markets with a message of service excellence for all. The vibe was certainly all positive at the European leg of Maximize towards the end of the year and you can find my exclusive interview with Dave Yarnold, Rei Kasai and Anup Sharma.

At the other end of the evolutionary spectrum, but with just as much potential impact on the field service sector is New York-based startup Nanowear. Wearables have never really hit the heights that they should have so far in the field service sector, but Nanowear's smart cloth has huge potential to be utilised in smart clothing that could reduce the risk for lone workers. These folks are just at the start of their journey but are certainly one to watch and you can read why I think so on.

However, whilst technology is undoubtedly playing a more and more dominant role in our industry, there are certain maxim's that hold true and once again we see the importance of adopting an outside-in viewpoint when it comes to establishing a high level of customer satisfaction being re-iterated by a number of our columnists in this issue.

Both Nick Frank and Jan Van Veen to authors whose opinion and contribution to our humble little magazine I value very highly, raise the importance of understanding the customers wants needs and desires in their articles on this topic here and here respectively.

Interestingly, it is also a key theme in my interview with Matt Boretti, Strategic Director, Teleflex who is just six months into his role establishing a new Customer Experience group of his organisation.

Meanwhile, Alastair Clifford-Jones really brings home the increasing importance of field service when he points out how the focus of field service is shifting towards driving strategy rather than being a recipient of it and Michael Blumberg delivers his usual excellent deep level insight into this issue's lead article exploring how field service companies can deal with digitalisation, uberization and servitization which you can find on page 26.

The field service sector as a whole is moving into 2018 with a swagger, service delivery is more important than ever before and ours is an industry that is now reaping the rewards for embracing emerging technologies.

Long may it continue!

 

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The digital revolution in the field service sector is continuing to move forward at pace, Michael Blumberg, Principal Consultant, Blumberg Advisory Group helps us keep track...

It seems that there is no escaping the Digital Transformation Revolution in Field Service at this moment. A splendid example of this is the Servitization of Manufacturing. Servitization is about the journey a company goes through as it transforms from a product-centric company where service is an afterthought or a necessary evil to one that generates a sizable portion of revenue from services; where service is the business.  The ultimate example is a Product as a Service business.

This is sort of the razor and razor blade scenario where the manufacturer gives away the razor in exchange for the recurring revenue stream that comes from purchasing the razor blades.  Instead of razor blades, it services or more specifically, outcome-based services.  For example, paying for the usage or result (e.g., outcome) produced by a product instead of buying the actual product.   To deliver on the promise, the provider of this outcome most implement a broad array of digital technologies to ensure the equipment is up and running whenever the customer needs to access it.  Downtime is problematic so you need to have technologies like IoT, AI, AR, etc. to ensure this high uptime.

In parallel to the servitization trend is the general ethos that businesses need to disrupt or be disruptedIn parallel to the servitization trend is the general ethos that businesses need to disrupt or be disrupted.  Uber has become the poster child for disruption.  This has lead many Field Service Organizations, software vendors, and technology providers to promote the concept of “Uberization” within field service.

Let’s put the term Uberization into context, when I hear the term Uberization, I think of providing customers with real-time, on-demand, always on, always connected solution.  Other terms that people associate with Uberization are agility and frictionless.  Agility is the ability to scale quickly, frictionless is where touch points that would delay the time it takes to complete a transaction are eliminated.  We might also think of a solution that incorporates aspects of the sharing economy or gig economy.

The Field Service Industry is far from being a laggard when it comes to Uberization.  Examples of how Field Service Organizations (FSOs) are achieving this outcome include but are not limited to:

• Utilizing IoT to monitor equipment performance and send notifications and alerts about the condition and performance of the machine
• Leveraging Artificial Intelligence to interpret these notifications, identify and diagnose problems, and take corrective actions
• Transmitting dispatch orders, triggered by IoT alerts, electronically to an ERP or CRM system and using Dynamic Scheduling software functionality to assign the right person for the job based on the needs of the job
• Turning to a freelance management system platform to source and dispatch freelance technicians on-demand to scale to capacity during peak periods
• Using Augmented Reality, Virtual Reality, or Mixed Reality to provide less experienced field engineers with expertise they need to resolve technical problems they haven’t encountered before
• Relying on Big Data and analytics to optimize resource planning and allocation issues.[/unordered_list]

If FSOs are going to remain relevant and create value for their customers, their leaders must adapt and grow within the context of the trends identified above.   This motivation is required now more than ever.  Technological development and new business models are coming at such as rapid pace that leaders can afford to rest on their laurels or past successes of their company.  Past success does not guarantee future results!

In this digital age, companies must be faster, stronger and better than their competitorsIn this digital age, companies must be faster, stronger and better than their competitors.  A 5-year strategy is typically out of date within 18 months or less.  To survive and thrive in 2018, Field Service Leaders must have a crystal-clear vision about the outcomes they’d like to achieve within their organizations. They must pursue these outcomes with laser-like focus and adopt a sense of urgency about achieving these results.

Accountability to the mission is critical as is a mindset of certainty and a spirit of resourcefulness.

Quite often, the greatest of strategies and best of intentions are not pursued because of a lack of certainty or a perceived lack of resources.  The truth is that those who overcome enormous challenges and achieve phenomenal results have done so because of their determination (i.e., certainty) and their resourcefulness.   Cultivate these traits and the possibilities are endless.

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Salesforce’s VP of Product Management Chet Chauhan, explains why for those companies seeking to embrace a vision of outcome-based services at the heart of their business future, the platform approach is vital...

Servitization is very much top of mind right now, particularly in manufacturing circles - but also in the wider business landscape as well.

A lot of companies are seeing that their products are getting commoditised and have rightly identified that the path to much-needed differentiation is through enhancing the service experience. Whether they are business to business, business to consumer or even something more complex like business to business to consumer, we are seeing companies of all different types focussing on services as a way to get closer to their customers.

It is an approach that yields multiple benefits - companies adopting such an approach get to see how their customer base is using the products, meaning more tailored and better-targeted marketing and sales efforts - but also they can gain insight into how they can better improve those products and feed that insight back into their R&D teams.

However, the fact still remains that for most companies the initial steps on a path towards a servitized business model often tend to stem from companies feeling the pressure to get closer to their customers - a pressure that is in itself driven by the fact that customer service has widely become one of the key differentiators between businesses today.

Senior business leaders across the globe are asking “as our products become more and more commoditised how do we differentiate on additional services that we can introduce to our offering?”

Field service has played an intrinsic role in the quest for improved CSAT standards in recent years, and with so many customer touch points becoming digitised, that is only likely to increase in the future.So let’s try to unpack some of this and explore what the future of field service looks like on an intelligent platform.

So the first thing to consider really has to be ‘How do you get closer to your customers?’

It is only at this point that we can really start to consider the next important consideration, which is ‘How do you deliver a better customer experience?’

Of course, field service has played an intrinsic role in the quest for improved CSAT standards in recent years, and with so many customer touch points becoming digitised, that is only likely to increase in the future.

However, the smart companies embracing servitization see that for the approach to be truly effective, i.e. for it to be more than just a shift in revenue from product to services, but to actually become a genuine paradigm shift that simultaneously makes your customer relationships more profitable and longer lasting, they need much better capabilities to connect to with customers across the whole journey within the organisation.

This concept needs to not only sit on the service side of the business but also be understood from the sales and marketing perspective as well. When an organisation understands this and wants to fully manage the whole customer journey seamlessly - this is when the importance and value of a common technology platform really come to the fore.

Over the last few years, we’ve seen some very important technologies emerge which are having and will continue to have a significant impact on field service delivery.

Firstly, Cloud Computing really drove down costs whilst offering the ability to offer infinite opportunities in terms of scaling businesses. IoT is perhaps the technology that has grabbed the most headlines in 2017 with a some excellent IoT platforms appearing including our own, that allow you to constantly connect to your assets. Mobile has of course been around for many years now but again the technology is keeping pace with other advancements, meaning our engineers and technicians are increasingly more empowered even when working in highly remote areas.

Over the last few years, we’ve seen some very important technologies emerge which are having and will continue to have a significant impact on field service delivery.However, it is another big technological trend that we are now seeing really bring everything together and that is Artificial Intelligence (AI). In a sensorised world of IoT & Big Data AI really is critical. When you have a hundred million sensor events being recorded every hour, a human simply cannot comprehend meaning from that level of information - they will simply drown in the data. Yet, AI can deal with such quantities of data very well and then turn that data into insight, the insight into actions and then it is in actions that we will find value.

We need to think of all of these technologies as being integral elements of an ecosystem rather than being individual technologies - and this is why we are seeing the common technology platform become vital. If you are to adopt a truly servitized business model then you absolutely need to be able to orchestrate the full life-cycle of service and customer interaction in one place.

Indeed, we are already beginning to see examples of these types of forward-looking developments appear in a number of different sectors.

We are seeing many companies connecting their assets - though really this is only the first step in the process. It is when Artificial Intelligence is introduced to take this data and turn it into insight and action that things really begin to get exciting.

In fact, some of our clients are now using multiple layers of AI across their entire service cycle. Often there will be one core AI to draw insight from the vast sets of data across a whole fleet of assets. Something like IBM’s Watson can transmit that data into our own Field Service Lightning platform the second AI, Salesforce’s Einstein takes over as it is designed to handle the more specialist needs of a service call.

The basic premise is that an AI like Watson will assess the data, figure out where it needs to take action and will then communicate directly with Salesforce.The basic premise is that an AI like Watson will assess the data, figure out where it needs to take action and will then communicate directly with Salesforce.

If there is a break-fix scenario or if there is a maintenance scenario where an additional job needs to be added to the next preventative maintenance work order, that is all done in an automated fashion within Field Service Lightning.

The engineer can be automatically scheduled using our own AI (Einstein) to make sure the person scheduled has the necessary credentials. If it is a preventative maintenance scenario then it will look at when the next preventative maintenance job is scheduled, make sure that it’s within the time frame required, put the work order in and make sure the parts are ordered and will be on the truck on the day of the job.

So let’s just recap briefly to think about how this process comes together across all of the various technologies.

Firstly, you need to have the IoT element which in turn is dependent on Cloud Computing and Big Data. Then the various AI capabilities to initially read those events in order to begin automatically creating field service job and finally there is a need for the second AI to actually handle the setup and scheduling of both preventative maintenance and break-fix jobs.

Of course, reaching back to the customer and keeping them informed of the stellar service you are delivering is also key so we need to be connected to the contact centre solution as well. And let's not forget that the customer themselves will want to be on whichever channel they prefer - whether it be a mobile app, online portal or SMS and you need to facilitate that for them in whichever fashion they choose.

Many of our clients are already embracing the growing trend of outcome-based revenue models and field service is one integral element of thisSo all of this really needs to be running on a single dedicated platform for it to work seamlessly - yes, you can definitely bring together a number of different solutions and tools by having various integrations across the network, but the reality is that the cost of doing so would be prohibitive - that’s before you even consider the ongoing challenge of keeping everything updated and working harmoniously.

Indeed, the evident need for a common platform approach that can facilitate the seamless transfer of data and actions across different business divisions is the exact reason why we launched Field Service Lightning in the first place.

Our customers were coming to us and telling us ‘this is what we need to do.’ ‘This is the experience we want to deliver and we need you to add field service to your platform so we can orchestrate all of this.’ Many of our clients are already embracing the growing trend of outcome-based revenue models and field service is one integral element of this, as is sales and marketing and as are all other business units.

The key is being able to let the data and insights flow across the business as a whole and to achieve this you really need a platform that can bring together all of these various functions and technologies we’ve discussed in this article including AI, IoT, Mobile and of course FSM – you need all of that in a single place to make it work effectively, but the benefits of doing so will be felt across each and every department within your organisation.

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