An SFG℠AnalystsTake
ASpecialSFG℠ AnalystsTakeWrittenby:BillPollockPresident&PrincipalConsultingAnalystStrategiesForGrowth℠/ PollockOnServiceWesttown,PennsylvaniaUSA+1610-399-9717wkp@s4growth.comwww.PollockOnService.com ResearchPoweredby
How the Internet of Things (IoT)Is Transforming Field Service The IoT Is Both Disruptive and Pervasive –So How Come Not All FSOs Are Using It Yet?
©2017StrategiesForGrowth
July,2017
An SFG℠AnalystsTake
A. TheIoTIsTransformingtheFieldService– But,atWhatPace?
TheInternetofThings(IoT)istransformingthefieldserviceindustryinwaysthatmostanalysts– andpractitioners– couldnothaveforeseenjustafewyearsago.Whilemostofuswerefocusingonmachine-to-machine(i.e.,m2m)communicationsandtheprospectsforutilizingAugmentedReality(AR),theIoTwasalreadybeginningtobeleveragedintosmartsystemsandConnectedFieldService(CFS)solutionsamongthemoreprogressiveservicesorganizationsintheglobalmarketspace.
Evenaswespeak,whilesomecompaniesarejustbeginningtoevaluatethebenefitsofintegratingAugmentedRealityintotheirservicesoperations,ARisalreadymorphingintoMixed,orMerged,Reality(MR)throughthecombineddeploymentalongwithVirtualReality(VR)applications.Andthisadvancedtrendisnotonlynotgoingtostop;itismuchmorelikelytoacceleraterightbeforeoureyes.
ThegrowingrecognitionthatArtificialIntelligence(AI)andMachineLearning(ML)applicationsareultimatelypoisedtomakethedifferencebetweenthoseservicesorganizationsthataredestinedtobethemarketleadersversus everyoneelse(i.e.,thefollowers,andlaggards)isalsopickingupsteam,andwilllikelyjointhemainstreamofmarketadoptionshortly(albeit,theinnerworkingofAIandMLarebothmuchmorecomplicatedthantheIoT– especiallywithrespecttoAI).
TheIoTisnotjustform2manymore.Itisthetoolthatcanmakeanyservices(orother)process“smart”,ifappliedeffectively.Itcan(andwill)takeservicesorganizationstoplacestheyneverdreamedpossiblejustashorttimeago– anditwillberesponsibleforcuttingthecostsofdeliveringservicesalongtheway.
Atwhatpace?Basically,ifyoumerelyblink,youmayfindyourselfquicklyfallingbehindyourmoreprogressivecompetitors!Manyofthemarealreadythere!
B: TheIoTTransformationWillTypicallyBeHighImpact
Thehighest-impactfactorsinfieldservicetransformationwillbethenormalizationoftheplayingfieldacrossallindustrysegments,byverticalmarket,size,type,geographiccoverageandanyother“demographic”segmentsyoucanthinkof.FieldServiceManagement(FSM)isnotonlyforthelargeenterpriseorganizations,butforservicesorganizationsofalltypes,regardlessofsizeormarketcoverage.
TheproliferationofCloud-basedFSMsolutionshasalsomovedmanyorganizationsfromthehistoricalperpetuallicensepricingmodeltoamuchmoremanageablesubscriptionbasispricingmodel.Thisalsoishavingasignificantimpactonfacilitatingtheentryofsmallerandmedium-sizedorganizationsintotheworldoftheIoTandsmartsolutions.
TheintegrationofAR,VRand/orMRplatformsintoservicesoperationswillalsonormalizetheplayingfieldevenmore,therebyempoweringservicesorganizationsofalltypesandsizes,etc.,tocompetehead-to-headagainsteachother(aswellasthemarketleaders)withessentiallythesamelevelsofsystemcapabilities.Itwillalsoleadtoquickercustomerequipment“fixes”,atreducedcosts(totheservicesorganization),andwithfarfewervisitsrequiredtothecustomersitetoperformtherepair.
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An SFG℠AnalystsTake
C: TheTopBenefitsfromtheIoTtoFSOsWillBeMany
Thetopbenefitstofieldserviceorganizations,ascitedinStrategiesForGrowth℠’s(SFG℠’s)2017FieldServiceManagementBenchmarkSurvey,are(1)theabilitytorunamoreefficientfieldserviceoperationbyeliminatingsilos,etc.(citedby44%ofrespondentsasoneofthetopthreebenefits);(2)improvedcustomersatisfaction(citedby39%);(3)theabilitytoprovidecustomerswithanend-to-endengagementrelationship(citedby35%);(4)theabilitytoestablishacompetitiveadvantage(citedby30%);and(5)improvedfieldtechnicianutilizationandproductivity(citedby26%).
Othertopbenefitsinclude(6)reducedTotalCostofOperations(TCO)(citedby25%);(7)reducedongoing/recurringcostsofoperations(citedby19%);(8)improvedservicedeliverytime(citedby16%);(9)fosteringenhancedinter-departmentalcollaboration(citedby15%);and(10)abilitytocompletetheautomationofallfieldserviceoperations(citedby12%).
However,asmoreandmoreservicesorganizationsrampupwithrespecttoIoT-poweredtechnologiesandapplications,therewilllikelybeevenmorepotentialbenefitsidentifiedwithintheglobalservicesorganizationcommunity.
D: LeveragingAlloftheDataYouGatherfromtheIoTMayBeProblematic
Manyreportshavebeenwrittenaboutservicesorganizations(andbusinessesofalltypes)“drowningindatalakes”.However,thekeytosuccessistoestablishearlyonwhatdataisneededtoeffectivelyruntheservicesoperations,andhoneinonspecificallythosetypesofdatawhencollectingandprocessingthereamsandreamsofdatageneratedfromyourIoT-basedsystems.Toomuchdatais…well,toomuchdata,ifyoudon’thaveaplantoharvestiteffectively.
Servicesorganizationsalsoneedtobeabletoidentifywhichdatais“needtoknow”vs.whichdataisonly“nice-to-know”.Nice-to-knowdataisultimatelywaytooexpensivetocollect,process,analyze,monitoranddistribute;however,need-to-knowdataisnotonlyinvaluable– butcriticaltoensuringthewell-beingoftheservicesorganization.
Youdon’tgotoworkwearing12watches;youdon’tbuy48oz.ofsteaks,perperson,toputonthegrillforasummerbarbecue;so,whywouldyoupayformoredatathanyouwilleverneedwhenyoucanharvestjustwhatyouneedfornow(pluswhateverelselookslikeyoumayneedinthefuture)?
Thinkofyourdatarepositoryasastoragespaceforallofthedatayouwillneedtoday,tomorrowandinthefuture.Iflargeenough,putitinadatalake– butmakesureyoudon’tuseLakeSuperiorforwhatasmallerdatalakecandoforyoumoreefficiently.
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An SFG℠AnalystsTake
E: ThereAreStillSomeBarrierstoFull-ScaleAdoptionoftheIoT– ButTheyCanBeOvercome
ThegreatestbarrierintakingfulladvantageoftheIoTistypicallyseniormanagementresistanceatthetopoftheorganizationstructure.CoupledwithagenerallackofunderstandingofexactlywhattheIoTis,andexactlywhatitcandofortheorganization,thesetwofactorscantoooftenbecome“momentum-killers”withintheorganization.
Thisiswhymakingsurethatallparticipantscomprisingservicesmanagementarekeptup-to-datewith(1)advancesinIoT-basedtechnologies,(2)theintroductionofnewapplicationsandmobiletoolstosupportfieldtechnicians(andtotransfersomeoftheirhistoricalon-siteresponsibilitiestomoreremote-basedscenarios),and(3)evolutionsinFSMsolutioncapabilities,etc.,issoimportant.
Withsubscription-basedpricing,costshouldnolongerbeascriticalanissuetotheprospectsformovingforwardwiththedesiredFSMsolution– however,doyourCFOandPurchasingteamsunderstandthat?Oraretheystillentrenchedinthetraditionalperpetuallicensemindset?
AttendingfieldservicestradeshowsandIoT-focusedconferencesshould“shakeoffthecobwebs”formostofthenon-believersornay-sayersintheorganization.Collectasmuchinformationasyoucan,schedulesomedemos,andinvitemanagementtowitnessthebenefits(i.e.,theoutcomes)ofanIoT-poweredFSMsolutionfirst-hand.Thiswilldefinitelyswaymostofthenon-believers!
F: MonetizingtheBenefitsoftheIoTWillNotAlwaysBeEasy
TheabilitytomonetizetheIoTinfieldservicesisanothervariationonathemeofwhathasdoggedthefieldservicesindustryfordecades!Everytimethereareadvancesintechnology,themoreprogressive–andaggressive– FieldServicesOrganizations(FSOs)adoptthetechnologytostreamlinetheirprocesses,reducetheirinternalcosts,andimprovetheirservicedeliverycapabilities.However,customers,forthemostpart,seetheadoptionofthistechnologyasbeing(1)strictlyforthebenefit(i.e.,cost-benefit)oftheservicesorganizationitself,andnotthem;and(2)ameansthatshouldreduceoverallcostsforboththeservicesorganizationanditscustomers(i.e.,themselves).
Themistakethatmanyservicesorganizationsmakeistryingtosellthesameservicestocustomers,atreducedcoststothemselves,butincreasedcoststotheircustomers.Customerswilltypicallyseethisapparentdisparityandquestiontheirservicesprovidersastowhytheyshouldhavetopaymoreforsomethingthatcoststheirvendorsless!
WhatbasicallyneedstohappenisfortheservicesorganizationstomoveawayfromtraditionalServiceLevelAgreement(SLS)pricing,toanoutcome-basedpricingmodel,suchas“powerbythehour”,“airplanesintheair”or“xlevelsofoutput”,ratherthan“yhoursofservicecoverage”.Rememberthe“bullion”pricingmodel(i.e.,Platinum,Gold,Silver,Bronze)?Itbitthedust(inmostcases)yearsago.So,too,willtraditionalServiceLevelAgreements(SLAs)astheyarereplacedbyoutcome-basedservicesagreements.
Thebestcurrentexamplesofthisare,asnoted,selling“uptimeasaservice”,ratherthanmerely“throwinghoursofsupport”atcustomers– arifleshot,ratherthanascattergunapproachtosellingservices.
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An SFG℠AnalystsTake
G: TheIoTWillAlsoHaveaGreatImpactonServiceLifecycleManagement(SLM)
ManyservicesorganizationssaytheyoffertotalServiceLifecycleManagement(SLM)support,butmanystillonlyofferFieldServiceManagement(FSM)solutionsintermsoffieldserviceandsupport,preventivemaintenance,andmeagerpartsandinventorymanagement.
However,theIoT,insomecasesforthefirsttime,nowempowersFSOstoprovide“true”LifecycleManagementfortheirservicescustomers– essentially“cradletograve”supportforalloftheirsystemsanddevices,throughoutalloftheirday-to-dayusageandapplications.
HowdoestheIoTdothis?Basically,byautomatingtheentireservicesmanagementprocess,end-to-end,fromdatacollection,throughdevicemonitoring,problemidentificationandresolution,routineandadhocmaintenanceservices,predictiveandpre-emptivemaintenance,parts/inventorymanagement– andeven“end-of-life”productsupport!SLMismorethanFSM– andtheIoTcansupportalloftheorganization’sSLMservicesprocesses.
H: TheIoTWillChangeHowCompaniesPackageandDeliverTheirServices
TheIoTismorelikelytochangethewayinwhichservicesorganizationsdelivertheirservices,first;andthewaytheypackagethem,second.
Bythat,Imeanthat,first,theIoTwillallowservicesorganizationstoperformmoremaintenanceandrepairserviceremotely,ratherthanon-site– andthegrowinguseofpredictivediagnosticswillcontinuetoreducetheneedforon-siteservices(insomecases,atall)overtime.Asaresult,manyservicescustomersmaynotevenknowthattheirsystemsorequipmenthavebeenserviced,aseverythingthatwasneededwaseitherperformedremotely– ordidnotneedtobeperformedatall(i.e.,throughroutinemonitoringandminorcalibrationsormaintenance“tweaks”,etc.).
Throughtheuseofacustomerportal,customerscantypicallygainfullvisibilityofexactlywhattypesofmaintenancehavebeenperformed,onwhichsystems,atwhattimes,andwithwhatresults.However,thosecustomersnotelectingtoutilizetheircustomerportals(oriftheirservicesproviderdoesnotofferthatcapability)willhavevirtuallynovisibilityastotheextentofthemaintenancethathasbeenperformed.Thisultimatelybecomesproblematicforsomeservicesorganizationsthatmustthenreportwhattheyhavedoneforthecustomer– andtrytoconvincethemthatbydoingso,therewasaddedvalueprovided.
Packagingthe“new”wayofprovidingservicesthroughanIoT-poweredFSM,orSLM,involvesanentirelynewwayofdeliveringservicestocustomers.Forexample,insteadofprovidingacertainnumberofhoursofsupport,withinadesignatedtimewindow,andprovidinga“guaranteed”uptimepercent(i.e.,oryoudon’thavetopayyourservicescontractfeethatmonth),someorganizationsarenowsellinguptime–period.
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An SFG℠AnalystsTake
Insteadofthrowingservicecontracthoursatanaviationcustomer,theynowprovide“airplanesintheair”tothissegment.Similarly,insteadofsellingastandardSLAtoawindfarmcustomer,theyareselling“powerbythehour”.InsteadofsellingstandardSLAsforexterminationservices,they’resellinga“rodent-free”environment.Andsoon.
However,this”new”wayofpackagingserviceswillbedifficultforsomeservicesorganizationstodeliver–andformanycustomerstoacclimateto.Itwilltaketime,anditwillnotbeaneasyconversionforsome.But,itisthewayofthepresentalready,inmanycases– letaloneforthefuture.
I: SomeRecommendedStepsthatFSOsCanTakeNowinOrdertoRidethisTransformation
Forsomeorganizationsincertainsegments(e.g.,aviation,energy,factoryautomation,medicaldevices,etc.),iftheyhaven’talreadyembracedandincorporatedtheIoTintotheirservicesoperations,theyarealreadyasteportwobehindthemarketleaders.ForthosethatarestillexaminingthepotentialvalueofVirtualReality,thereareothersthatarealreadylookingtoimplementArtificialIntelligenceandMachineLearning.
ThetimeisnowforreadinguponallthingsIoT,attendingIoTconferences,viewingvendordemos,establishing“longlists”andreducingthemto“shortlists”forvendorconsideration,etc.Gainingmanagementbuy-inisalsoamust– infact,itisbasicallyamustforallthingsservicesmanagementanyway– but,especiallywithrespecttotheIoT.
PrepareaplanforembarkingontheroadtoanIoT-poweredFSMorSLMsolutionscenario– doitnow,becausemanyofyourcompetitorshavealreadydoneso,andmanyofyourcustomers(andprospects)arealreadyatleastsomewhatfamiliarwithwhattheIoTcandoforthem.Whentheservicesmanagementmarketplaceismorefullytransformed,youwillneedtohavemadethetransformationaswell.Themarketleadersarealreadyseveralstepsaheadofyou;youcan’taffordtofallevenfurtherbehind.
J: WhereWilltheGreatestDisruptionComefrom?Startups,Midmarket,Enterprises,oraCombination?
Theexpecteddisruptiontotheglobalservicesindustrywillbemanifestedasacombinationofalltypes,sizesandcategoriesof“new”entriestothecompetitivelandscape.Most(ifnotall)oftheenterpriseservicesprovidersarealreadyofferingtrueServicesLifecycleManagementsolutions(or,atleast,enhancedFieldServiceManagementsolutions).They“getit”,andthey’redoingsomethingaboutit.
Overthepastseveralyears,we’veseenmanyofthelargeEnterpriseResourcePlanning(ERP)companies(e.g.,SAP,Oracle,etc.)acquiretheirFSMsolutioncapabilities.Forexample,OracleacquiredTOATechnologies,IFSacquiredMetrix,MicrosoftacquiredFieldOne,andsoon.Somelargercompanieshavealsoelectedtogomoreorganically,suchasSalesforcethatcreatedits“new”FieldServiceLightningsolutionbasedonClickSoftwaretechnology.ClickSoftwarewentprivateagain,butstilloperatesinthemarketplaceitself,whilealsolicensingsomeofitssoftwareappstootherorganizations.
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An SFG℠AnalystsTake
ThemidmarketisonlyasteportwobehindtheenterpriseservicesprovidersintermsofembracingandincorporatingtheIoTintotheirFSMandSLMsolutionofferings.However,wherethemost“confusion”anduncertaintyliesinisthelandscapepopulatedbystart-ups– andwhatIcalltheupstarts!
Inadditiontotheongoingspateofmergers,acquisitionsandalliances,andorganicdevelopment,therehasalsobeenasignificantincreaseinthenumbersof“new”entriesintotheFSMsolutionmarketplace.Infact,probablymoreofthistypeofactivityhasoccurredinthissegmentrecentlythaninthepastmanyyears–ordecades!
These“new”start-upscanessentiallybedividedintotwomaincategories:(1)FSMStart-ups,thataretryingearnestlytofindawaytoenter– andpenetrate– theFSMmarket,byleveragingnewtechnologies,experiencedleadership,deep(enough)pockets,investmentcapitalandabitofluckintoaservicesgrowthsegmentwheretheybelievetheycanactuallymakeadifference.
However,itistheFSMUpstarts,thatarebasicallytryingtoridetheCloud-based,orSaaS,solutionwaveintoa“new”market(tothem),inordertomakeaquickbuckwhentheyultimatelyplantosellouttoalargerorganizationinanotheryearortwo.Assuch,itistrulya“buyerbeware”market,asthereareagreatnumberof“new”upstartFSMsolutionprovidersthatwillnotbearoundforverylong.
Hopefully,thisAnalystsTakepaperhashelpedyoutobetterunderstandthewaysinwhichtheservicesmanagementmarketischanging– bothrapidlyandpervasively.BlameitontheIoTforthisrapidevolution;however,blameyourselfifyou’renotkeepingupwiththeadvancesinservicesmanagementtechnology!
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AboutTheAuthor AboutStrategiesForGrowth℠
BillPollockisPresident&PrincipalConsultingAnalystatStrategiesForGrowth℠(SFG℠),theindependentresearchanalystandservicesconsultingfirmhefoundedin1992.
Previously,BillservedasPresident&ChiefResearchOfficer(CRO)atTheServiceCouncil;VicePresident&PrincipalAnalyst,headingupAberdeenGroup’sServiceManagementPractice;andManagingAnalyst,ServicesIndustryatGartner.
In2015/16/17,Billwasnamed“OneoftheTwentyMostInfluentialPeopleinFieldService”byFieldServiceNews(UK);oneofthe“Top10PeopleEveryFieldServiceProShouldFollow”byFieldServiceDigital;oneofCapterra’s“20ExcellentFieldServiceTwitterAccounts”;andoneofCoresystems’“Top10FieldServiceInfluencerstoFollow”.
Billhasalsohadmorethan350articles,columnsandfeaturespublishedontopicsincludingFieldServiceManagement(FSM),ServiceLifecycleManagement(SLM),CustomerRelationshipManagement(CRM),WarrantyChainManagement(WCM),ReverseLogistics,AugmentedReality(AR),theInternetofThings(IoT)andothersforleadinginternationalservicespublications.
HewritesmonthlyfeaturearticlesforFieldServiceNews,FieldServiceDigital,andFieldTechnologiesOnline,andisaregularcontributortoWarrantyWeek andotherservices-relatedpublications.
Billmaybereachedat+(610)399-9717,[email protected]’sblogisaccessibleatwww.PollockOnService.com,andviaTwitter@SFGOnService.
StrategiesForGrowth℠(SFG℠)isanindependentresearchanalystandadvisoryconsultingfirmthatsupportsservicesorganizationswithafullrangeofstrategic,marketing,businessplanningandconsultingservices.
Duringthepast25+years,SFG℠hasconsultedtomorethan300clientorganizationsaroundtheglobe.Theseengagementshaveinvolvedstrategicservicesplanning,marketresearch/customsurveys,thoughtleadershipcontentdevelopmentandmarketoutreachsupport,customerneeds&requirementsanalyses,customersatisfactionmeasurement&trackingprograms,businessintelligencegathering,verticalmarketsegmentation,servicesassessmentsandthedevelopmentofstrategicrecommendationsforimprovingserviceperformanceandcustomerretention.
SFG℠’sthoughtleadershipcontentdevelop-mentservicesincludeWhitePapersandAnalystsTake reports;Webinars,ghost-written/publishedarticles,datasupportforInfographics,guestBlogposts,expertinterviews,UserGroupkeynotepresenta-tionsanddevelopmentofWebsitecontent.
TheoriginalSFG℠ websiteisnowarchived,andhasbeenrebrandedaswww.PollockOnService.com.However,previouslypublishedarticlesandwhitepapersarestillaccessiblefordownloadatwww.s4growth.com.
©2017StrategiesforGrowth℠Allrightsreserved.Nopartofthematerialprotectedbythiscopyrightmaybereproducedorutilizedinanyformorbyanymeans,electronicormechanical,includingphotocopying,recording,broadcastingorbyanyothermeanswithoutwrittenpermissionfromStrategiesforGrowth℠.Youshallnotdisplay,disparage,diluteortaintourtrademarksandservicemarksoruseanyconfusinglysimilarmarks,oruseourmarksinsuchawaythatwouldmisrepresenttheidentityoftheowner.AnypermitteduseofourtrademarksandservicemarksinurestothebenefitofStrategiesforGrowth℠.Allothertrademarks,servicemarksorregisteredtrademarksappearingontheseStrategiesforGrowth℠ pagesarethetrademarksorservicemarksoftheirrespectiveowners.
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