BUILDING THE BUSINESS CASE FOR REMOTE SERVICE

Jim SweeneyVP Solution Management

October 20, 2016

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Why?

• Markets trends

• Service challenges

BUILDING THE BUSINESS CASE FOR REMOTE SERVICE

What?

• Driving Use Case

• Metrics

How?

• Sample framework

• Customer scenarios

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1 WHY?

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THE WORLD IS MOVING TO SMART CONNECTED PRODUCTS

Estimated potential economic impact of The Internet

of Things in 2025, range from $2.7 – 6.2 trillion annually

– McKinsey Global Institute

$6.2T #1Manufacturing industry will be the #1 industry

sector by share of global economic value-add.

– Forecast: The IoT, Worldwide, 2014

Smart, connected products will give rise to the next era of IT-

driven productivity growth at a time when the impact of earlier

waves of IT has largely played itself out.

– Harvard Business Review, November 2014

Jim Heppelmann

President and CEO, PTC

Prof. Michael Porter

Harvard Business School

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MY SMART CONNECTED PRODUCTS

IOT is already changing your personal experience, and it is also changing the business experience.

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WHY – KEY MOTIVATOR

-Keith Larson –VP Content Putman Media – Smart industry 2016

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IIOT CHANGING SERVICE APPROACHES

Remotely access, diagnose and service your equipment

Connect your equipment directly to your field service organization

Predict failures to improve uptime for connected equipment

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SERVICE CHALLENGES TODAY

OEM Revenue & Profitability

• Losing significant parts revenue to competitors

• Reactive models and high cost on-site service channels constrain EBITA improvement

• Technicians and customers struggle to identify the correct technical information and parts

• High service parts inventory and logistics costs relative to fill rate and availability targets

• Aging workforce limits ability to scale

Customer Retention and Satisfaction

• Customers demanding enhanced service and outcome based contracts

• Customer total cost of ownership perceived to be too high

• Poor service experience has a negative impact on brand loyalty and customer satisfaction

• OEM is a part vendor versus strategic partner limiting ability to impact customer value drivers

All while Service leaders are tasked with driving more revenue and

profitability for the Enterprise

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2 WHAT?

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WHAT IS THE DRIVING USE CASE

Business Reason for Remote Service

• Remote access to assets for monitoring, control and troubleshooting to improve service

• Reduce overall cost of servicing assets, reduce onsite service calls

• Improve process for software updates for your products

Primary User/Persona

• Call Center Technician

• Remote Service Technician

• Field Service Engineer /Technician

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WHAT METRICS?

Possible Metrics

• Mean time to repair (MTTR)

• First time fix rate (FTFR)

• Service cost per customer

• Service contract renewal rates

• No fault found (%)

• Technician utilization rate (%)

• Reduced truck-roll (remote fix rate)

• Equipment up-time

• Warranty costs

• Service revenue

• SLA compliance

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3 HOW?

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• Simple approach – one variable

• Assume 100 field technicians with 2 on site calls per week

• 2 weeks vacation per year

• Assume 15% of trips can be resolved remotely

• Could expand to other benefits such as Improved first time fix rates

FRAMEWORK – POTENTIAL SAVINGS

BASED ON UNNECESSARY TRIPS

Service Technicians 100

Calls per Tech/ week 2

Total Calls / Week 200

Weeks / Year 50

Total Calls / Year 10,000

Unnecessary calls 15%

Unnecessary trips 1,500

Cost / trip $1,000

Total Cost $1,500,000

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Business Reason

• Reduce cost and lost patient time with remote diagnostics and resolution

• Persona – Remote/Field Technician

• Results– Reduced site visits by > 20 %– Reduced Mean Time to Repair

(MTTR)

• Next Step– Investigating predictive service

CUSTOMER SCENARIO – MEDICAL DEVICE

Devices 20,000

Visits per year 72

Total visits / year 1,444,000

Cost / trip $2,000

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Business Reason

• Reduce asset downtime and field service visits

• Persona – Remote/Field Technician

• Results– 17% of issues resolved remotely– Reduced asset downtime by ~15%– Reduced Mean Time to Repair

(MTTR) to under 30 minutes

• Next Step– Analyze usage data to better

understand asset performance

CUSTOMER SCENARIO – INDUSTRIAL

Devices 5,000

Visits per year 2

Total visits / year 10,000

Unnecessary Trips 10%

Cost / trip $500

Total Cost $500,000

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Buy

• Commercial solution meets XX% of your use cases and requirements

• Subscription and implementation (cloud) cost

Build

• Required development skills in house

• Desire to maintain and support solution over several years

• Potential hidden costs – technology changes

BUY VERSUS BUILD INVESTMENT

3 Java Engineers

Base Salary $ 125,000

Benefits @ 18% $ 22,500

Full Time cost $ 147,500

QA Engineer

Base Salary $ 85,000

Benefits @ 18% $ 15,300

Full Time cost $ 100,300

Total Team $ 460,000

6 months $ 230,000

1 Dev $ 147,500

1 QA $ 100,300

Ongoing Yearly Cost $ 247,500

LABOR

TOTAL COST

SUPPORT COST

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CAPABILITIES TO CONSIDER

Capabilities

Track activities statuses

Audit trail/comments for activities

Workflow integration with activities

Integrations to knowledge management system

Secure remote connection

Multiple protocol support

Remote connection audit trail

Bi-directional file transfer

Accessible through Asset Manager

File upload, download, and deletion

File transfer history by asset

File transfer audit trail

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SUMMARY

1. Why – Smart Connected Devices

2. What – Use Case and Metrics

3. How – Saving and Investments

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Evolving Your Service Business in the Era of Internet of Things

In companion white papers, PTC looks at changes that are enabling manufacturers to redefine service.

Download these white papers to learn how OEMs are achieving:.

SERVICE TRANSFORMATION: UNDERSTAND, ADVANCE, OUTPERFORM

http://www.ptc.com/service-lifecycle-management/service-transformation

IDC Sees Opportunity in Product-Service

Systems

Service Transformation: Evolving Your Service Business in the Era of

Internet of Things

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THANK YOU

WATCH THE RECORDED WEBINAR ON-DEMAND:

HTTP://WWW.PTC.COM/SERVICE-LIFECYCLE-MANAGEMENT/REMOTE-SERVICE/REMOTE-SERVICE-WEBINAR

CONTACT A PTC SERVICE LIFECYCLE MANAGEMENT EXPERT:

HTTP://WWW.PTC.COM/SERVICE-LIFECYCLE-MANAGEMENT/CONTACT-US