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While for many the shift from traditional transactional product focussed business models to a more strategic service centric approach that focuses on longer term, outcome based contracts is a complex process to navigate. However, Jason Smith, General Manager, Aftersales, EMEA for Japanese food packaging and weighing manufacturer Ishida is a man that has not only been through the process, he has done it twice.

Kris Oldland, spoke exclusively with him about the importance of executive level buy-in to undertake such a move and why customer selection when rolling new service models out is vital….

KO: All too often I hear that despite the fact that service operations of a business brings in a significant proportion of revenue into a company, there is a general lack of support for the service team of many businesses at the top tier executive level.

This of course would be a fundamental barrier to moving to an advanced services model and is a challenge many senior service executives are confronted by even though they can see how both their business and their customers could benefit from a move away from the traditional break-fix maintenance to the type of proactive service operations that advanced services require.

So how can we get the voice of the service department heard at the executive level?

JS: I think the only way to do that is to have a fairly compelling argument and there is nothing like having a very compelling customer story to help give that leverage at board level. Traditionally, businesses are built upon delivering a product and they will have done that very successfully to have grown to a large size. It is the case really that they will have done so on tangible benefits.

Comparing one product to another is much easier than comparing one service against another. I think within most manufacturing organisations there is still probably a lack of understanding about the value services can deliver to a customer combined with a product.

 

Its still regarded as a separation – that’s why we have terms like aftersales – it’s after the sale, its not combined with the sale.

For your typical product salesman it’s hard to comprehend something as intangible as advanced services and how to explain it and describe the value when he hasn’t got any evidence or experience to back it up with.

KO: So does the adoption of servitization as a business model need to be driven from the top down?

JS: Absolutely, without that support from the top it is dead before it’s ever started.

KO: What about the customer point of view - it’s one thing pushing an advances services route and getting buy in internally, but what about externally?

Is it a case that some customers just don’t want to come down this route because they are so used to the transactional nature that they have always operated within?

JS: Very much, it is a cultural thing for a customer and customer selection is therefore very important.

A customer who is used to transactional relationships, that may have those pressures on them themselves from their own customer base, would be one who is very transactional and possibly looking to exploit the relationship.

They would probably not be the best ones to try and build this concept with because in order to mitigate, quantify or even deliver or offset the risk that you are going to assume in delivering an advanced service you are probably going to make it uneconomical and unviable compared to the traditional business models. You just won’t compete or you’ll be pulled a part and it just won’t be relevant anymore.

 

Therefore, I think customer selection is absolutely vital. The question is along the lines of technology push/customer pull – which is best?

I think it depends very much on the pace at which you want to work. Customer pull you lose control of the pace and velocity at which you want to work at in terms of the delivering the service. But if you push it out to your customers you have the challenge of convincing them to get on board.

KO: Ultimately will there always be two-tier customers, will there be those companies that you take on the servitization journey with you and those that remain doing business in the traditional sense or is the long term aim to eventually bring everyone on board with advance services? 

JS: I think there is really three types of customers and I would support the Caterpillar approach that there are those who want to do it themselves, those who want us to do it with them and those who want us to do it for them.

In terms of servitization probably you are always going to have an element in each of those three camps. The challenge that we face as service providers is moving them out of the ‘do it myself’ to ‘do it with me’ to ‘do it for me’.

Obviously moving them from a point where they are doing it themselves, to where you are doing everything for them is a big leap of faith. It’s not something you can do overnight, certainly not at a risk that you can sustain economically. So it’s a case of migrating that customer and building that trust over a period of time, to gain the confidence that you can deliver and that you can add value to their business.

KO: We touched on the fact that servitization needs to be driven from the top down, but do you need buy-in across the whole organisation as well?

For example with our field technicians - do we need their understanding of the concept and if so how do you achieve that?

JS: The easy answer to that is yes, you need buy in across the whole organisation because you are going to be relying on those inter-siloed relationships within the business to deliver within your promise. You’re going to have to rely on your supply chain and you’re going to have to rely on all your internal supporting departments to deliver that.

It is a fundamental change to the way you do business and the way you have done things traditionally, so yes the answer is yes you do need to have buy in from all levels and in particular your service engineers as it represents a fairly fundamental change or difference to the way they are used to operating. 

 

There will be a lot of knowledge in those teams, which is experiential and built up over time together with product training and in some ways you’re starting to both capitalise on their experience but also put it in a bottle so that you can use it in your supporting systems and algorithms for example. 

That represents a fairly big challenge and that’s also going to have it’s own implications for supporting systems such as knowledge management. 

KO: Finally, technology is the key enabler to allow us to move to advanced services, but how far along the journey do you think we are in terms of the development of the technology such as IoT and Cloud? Are we there already or is there more to come?

JS: In terms of being enabled to do the job and to support the decision-making within servitization I think we are actually there with the Internet of Things. OK, there will be enhancements, maybe faster connection times, you can store more data etc., but I think it is essentially there. 

We’ve got enough to be able to do it, maybe even too much.

The real challenge is what you are measuring, the volume of what you are measuring, how you analyse it and draw conclusions from it -to me that is the real challenge.

 

Also the prize is that the value of the analysis that you do is metamorphosed into the value that you can then create for your customer. How you do that, that methodology, is your future IP. That’s where your sales proposition will lie in the future.

So its not the fact that you can get the data, its what you measure, how you measure it and more importantly how you analyse it, what you do with it and being able to express that value in a manner which the customer can fully understand.

 

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Kieran Notter, Director, Global Customer Transformation, ServiceMax from GE Digital, takes a fresh look at some perennial problems...

Field service management hit the headlines in 2016 as automation, the Internet of Things and servitization reshaped the way we service and maintain capital assets.

These trends have now trickled down to the supply chain, providing a fresh approach to age old headaches. In this article, we look at five areas of friction in the supply chain and how combining field service management with assets is solving them.

The Inventory Tug of War

CFOs will always push for lower inventory levels to free up cash flow and reduce the risk of obsolescence. Yet Service Directors want higher inventory to increase First-Time Fix rates, reduce internal costs, improve productivity and raise customer satisfaction.

The supply chain is between a rock and a hard place trying to balance between two opposing arguments. So what’s the solution? In a word, knowledge.

Knowing the assets and installed base – from the basic location knowledge all the way to IoT (smart connected products) – gives the supply chain a much better chance to meet the demands of both sides. It caters for greater availability but with less inventory, thus freeing up cash. By using the data that’s attached to the asset, it’s location, it’s preventative maintenance plan, and its productivity provides an alert when a part is about to break.

 

Expensive, Unplanned Freight Costs

Knowing the frequency of parts that fail, and the correct intervals for preventative maintenance visits reduces freight costs with fewer ‘emergency’ shipments. However, the biggest saving here is actually in reducing the parcel count itself. If you know what parts you are going to need and when, you can consolidate shipments, sending them direct to the technician in advance.

At a basic level, just knowing where your assets are means you can position the inventory in more strategic locations to reduce costs and increase availability.

Product Lifecycle – The Delayed Curve

A supply chain is expected to cover the assets through their lifecycle. However, if you cannot see if the install base is growing or shrinking, you can’t align inventory accordingly.

That means it’s on a delayed curve which will either result in back orders for new product ranges as the planning tries to catch up or obsolete stock for products as they come to the end of their lifecycle, and usage slows down as planning has not reacted quickly enough.

Addressing this issue also means you get insight into the true profitability of a contract or product.

Likewise, knowing the top 20 required shipments rather than just focusing on the 200 makes a huge difference to how a supply chain can react and prioritise their efforts and resources. This also gives a much more focused supply to the field service organisation and the customers with the most need.

Back Orders After The Fault Is Fixed

When parts are ordered direct to the fault on the machine, a small change in process and practice can pay huge dividend – cancel back orders once the fault has been fixed. This may not work for all businesses but it will work for many.

In most cases, back orders are left for the supply chain to fulfil, even though the technician has fixed the issue with a borrowed unit from a colleague or fixing the part rather than the assembly ordered. If the original back order is left, the other technician who lent the part is now second in line to get it returned, which has a knock-on effect with a ‘not required’ demand outweighing a potential ‘urgent’ order.

Also, if the original back order is shipped to the customer and the customer’s machine is up and running, then parts are often lost. One company who introduced this practice (less customer fit parts) reduced their back orders by 52%.

IoT (Internet of Things) – The Holy Grail of Condition-Based Service

Many companies are now firmly into the IoT realm and benefitting from the data that is being provided.

From smart sensors telling them what parts need replacement before an issue arises to optimum intervals between preventative maintenance.

Using this voice of the product alongside customer demand means you can plan your inventory to not only be available before a fault arises, but also plan the consumables and after sales items to a level that has not been seen before.

This moves you into the servitization market with confidence and a predictable profit margin.

Both the supply chain and field service benefit hugely from analytical information, real time data feeds, and expected, predictable outcomes supplied by IoT and its communications. You only need to look at industry verticals benefitting from this already, such as jet engines, fleet management, HVAC and medical devices to name a few.

 

Without asset knowledge, you are essentially working as a ‘demand’ chain and within the limitations of technicians’ ad hoc tasks to manage any intelligent levels of inventory at your locations.

You will always be behind the curve.

Some companies with high volume and low SKU’s can manage with this model, but all businesses will benefit from more real time data and the ability to not just pre-empt future requirements, but act on them.

 

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Ahead of this year’s Spring Servitization Conference, Dr Ali Ziaee Bigdeli explores three key reasons why companies should be considering a move towards servitization...

One of the questions that keeps coming up when I talk about servitization is “what are the key examples that really demonstrate the scope of this concept?” There are many examples in the B2B world, where the concept originally took hold, but increasingly examples are emerging in the B2C world, and I often find that these examples that touch people’s daily lives as consumers help to make the point.

Examples of servitization first emerged in the development and delivery of Business-to-Business (B2B) offerings. In this regard, debates almost invariably refer to Power by the Hour, the pioneering engine maintenance solution introduced by Rolls Royce in the early 1960s.

Necessitating extensive changes to processes, structures, technologies and personnel within Rolls Royce, this iconic service provides a perfect example of the experiences and ambitions of many manufacturers who embrace  a servitization-based business model. It also had a fundamental legacy in terms of altering the way that customers contract with the company, with a move away from the transactional purchase of equipment towards a 10-year contractual relationship.

More and more manufacturers are moving towards this initiative. Other B2B examples include Alstom’s TrainLife Services. In this, French group Alstom provides the train with a bundle of repair and maintenance services and charges the operators (such as VirginTrains) based on the miles travelled through 15-20 year contracts. Xerox’s Print Management system offers a services and copier bundle which charges customers based on the number of papers they have copied or printed, and MAN’s pay-per-kilometre programme does a similar thing based on the distance its trucks are driven.

Most of these are ‘classic’ and very well-known examples now, but just recently Goodyear announced the launch of Goodyear Proactive Solutions.

 

This will aim to use new technologies such as predictive analytics to help truck fleet managers better handle how their vehicles are used. The common thread is that the outcome is not the sale of a product, but capability delivered through the performance of the product.

The extension of servitization into a product like tyres, which on the face of it is a ‘simple’ and commoditised product, shows just how widely applicable the idea is.

As I mentioned in my introduction, the concept is also slowly-but-surely getting into the Business-to-Customer (B2C) level too, where it touches our everyday lives. You may have experienced something like it if you have ever gone for a new car on a Personal Contract Purchase (PCP) contract.

It is basically a leasing model, in which the car manufacturers charge their customers based on the estimated mileage for a fixed period, rather than just the price of the asset. Repair and maintenance are usually included in these  contracts, meaning that the customers would only need to fill the tank and enjoy the drive.

Other examples include Brompton, the British manufacturer of popular folding bikes, now rents the bikes via docks across the UK to provide a more hassle-free option; Daimler’s Mercedes Me platform which remotely notifies drivers if the car requires maintenance or repair work; and OTIS’s Remote Elevator Monitoring (REM), which provides safety and continence 24/7 through the data collected, recorded and analysed from the lift. In this, the manufacturer enables to detecting trapped passengers, collect  lift performance data, communicate lift performance data to Otisline, and establish a voice link from the lift car to the Otisline or another manned location.

These examples may lead to the question of why is it critical for manufacturing firms to move towards servitization? I can think of three principal reasons:

1. Growth and sustainability.

Through the development and delivery of advanced service offerings, the manufacturer enables its customers to achieve their key strategic aims. This focus on helping customers to achieve their own Key Performance Indicators (KPIs) is how these manufacturers are differentiated from competitors, and delivers business growth and sustainability for both themselves and their customers.

For manufacturers it generates long term contracts, closer relationships with customers, new business opportunities and revenue streams, and an enhanced image and market differentiation. The customer is able to realise greater value from its operations, better understand and predict its costs and financial profile, and potentially have the opportunity to scale-up operations.

2. Locking-out competitors.

Today, more and more technology-focused intermediaries are moving into the product manufacturing space and disrupting their value networks.

Indeed, significant disruptions are already happening in some sectors. For instance, the technology giant Uber is moving into the long-haul transport business with a new division called Uber Freight, in which the shipper directly connects with the truck, challenging the traditional business models of all stakeholders in this network from manufacturer through to user. Servitization strategies push manufacturers to move towards collaboration with other members of the network (e.g. distributors, suppliers, supplier of suppliers, technology vendors, and customers) and this will create a resilient barrier that inhibits the entry of new players.

3. Sharing risks of new technological innovation.

Manufacturing firms generally perceive implementation and adoption of advanced services as a high-risk strategy, perhaps due partly to a traditional product-based mind-set. The perceived risks are operational (e.g. capacity constraints, human resourcing and leadership issues), strategic (e.g. decline in competitiveness, reputational issues) and financial (e.g. direct negative impacts on profit, revenue and market share).

As with any new initiative, manufacturing firms that start to compete through services must internalise new risks. In this respect, the alignment of the incentive with other stakeholders in the value network enables risk sharing and mitigates unnecessary costs.

There are so many aspects to servitization; the benefits are quite well documented, but the challenges of adopting it are numerous, and our understanding- both as researchers and practitioners in industry trying to make an influence change- of how to overcome these is still developing.

This month I’ll be heading to Lucerne for the annual Spring Servitization Conference.

Over the past few years it’s become a key event in the calendar for researchers and thought leaders who want to share and progress their knowledge and understanding of how the theory of servitization can be applied in practice to manufacturing businesses around the world.

This year, I’m looking forward to the discussion on research topics such as: The impact of top management team composition and past performance on servitization; changing the revenue model for individual services; assessing your readiness for servitization with a diagnostic tool to measure service capacity, as well as industry keynotes from representatives of Sulzer Rotating Equipment Services, Testo Industrial Services, ABB Turbo Systems and Ali Group.

You can join the conversation by coming along to the conference, it’s running from 15th-17th May, and more details and registration are on the website https://www.advancedservicesgroup.co.uk/ssc2017w

 

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Mark Brewer, Global Industry Director - Service Management, IFS explains how the field service sector is being undeniably changed by the growing shift of companies towards servitization...

When I first started working in the field service management (FSM) space more than a decade ago, the industry landscape looked much different than it does today.

Ten years ago, organisations were looking to automate their field service processes in an attempt to decrease unpredictable costs and inefficiencies while gaining a little more control and visibility over an otherwise unpredictable industry. The core focus was scheduling and dispatch. Today, the focus has shifted, moving from core functionality towards a new, more holistic emphasis on the end customer.

The potential is limitless and the changing market cannot be overlooked. In a 2016 research report by Markets and Markets, it is estimated that the field service management market will grow from $1.97 billion in 2015 to $5.11 billion by 2020.

 

Low profit margins, increased competition and growing consumer demand fuelled by technological revolution have contributed to a major shift in the field service management market, both in demand and vendor response.

As field service organisations look to find new innovative ways to maximise operational efficiency and reduce operational costs, enterprise software vendors have established a sweet spot, spurring a flurry of field service management vendor acquisitions.

This change has created a fundamental shift in field service management, from expectations through to functionality and approach. As product-based organisations transition towards servitization and as traditional field service organisations look to adapt and grow, the following trends have emerged in order to enable the transformation.

1. END-TO-END. A NEW APPROACH MOVING AWAY FROM BEST OF BREED

Ten years ago, service organisations were simply looking to automate their existing processes.

In the majority of cases, schedules were generated on whiteboards or spreadsheets, paper work orders were manually distributed and communication between the field and back office was limited or non-existent. Best of breed solutions provided badly needed automation enabling organisations to increase efficiencies and reduce costs. Automation is now a given.

Today it is all about the data. As technology has advanced, organisations are now able to capture the data required to drive key business decisions at the highest level.

Where an automated solution provided process efficiency, an end-to-end intelligent service solution provides the seamless data flow required to optimally drive and scale the business while delighting customers. With end-to-end field service management, an organisation has access to real-time data, empowering fact based decisions and future plans.

2. CONSUMER-DRIVEN PRODUCT AND SERVICE DIRECTION

Now more than ever, today’s consumer is empowered and knows what they want. The world has become smaller thanks to globalisation, social media and connectivity in general.

Experiences are more important than ever as today’s customer has a multitude of platforms available to make their voice heard. Customer engagement is now imperative.

In the traditional make and sell model, you design a product, engineer it, procure materials, manufacture the end product, market and sell it to customers and then optionally provide aftersales support.

 

The shift now is moving away from selling products towards delivering ‘product-as-a-service’. Where price has traditionally been based on product output and performance, now ‘contract value’ is based on a defined outcome, thus moving away from a transaction based model to a value based partner relationship. A field service organisation needs the right platform to facilitate this change in order to drive value from the product throughout its entire lifecycle.

3. REINVENTING OPTIMISATION

Whilst Servitization can be a strategy to drive enhanced revenue, this should not be to the detriment of service execution. Service will always be measured by how well you perform, and that means optimising the entire service chain from human capital to parts and logistics.

It also encompasses real-time measuring and monitoring of service execution enabling the transition to a proactive ‘manage by exception’ model, rather than providing a reactive response.

Optimisation is no longer viewed in isolation, optimising intraday schedules and inventory. Rather it should be considered holistically in an effort to deliver flawless end-to-end service.

How do field service organisations prepare for what’s next in the industry while ensuring continued success?

 

The first step is to ensure they have a strong foundation or platform to start from. Core processes and systems should be running optimally to allow an organisation the ability to effectively scale and adopt new technology.

Organisations must embrace change with an enterprise-wide change management strategy.

Lastly, the most successful field service organisations have a clear understanding of the end consumer’s expectations for today and tomorrow to ensure these can be met or exceeded today as well as anticipated for the future. Value added service is no longer optional, it is the very future of service.

 

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Who are the most influential people in the global field service sector that you need to pay attention to in 2017?

The Field Service News #FSN20 is our list of the individuals we believe will be key influencers in our industry across the next twelve months. Those included in the list have been selected by our own panel of industry insiders, who were given the simple criteria of identifying people who will have a significant impact on field service thinking.

However, more than just an annual list of 20 individuals the #FSN20 has grown since it’s launch to become a true celebration of excellence and innovation within our industry.

There are some familiar names and some new faces on this years list and as always we don’t expect everyone to agree with our selection – at it’s heart the #FSN20 was conceived as a tool to get everyone in our industry thinking about who it is that they have come across in the global field service sector that has made them think, who has made them question the accepted paradigms, who has inspired them to do just one little thing more in their own day to day role.

The #FSN20 is not just about the list our panel has put together. It is about fostering discussion that celebrates the unsung heroes of the field service sector. So look out for the online version of this list as well to take part in the debate.

But for now, ladies and gentleman and without further a do, in no particular order, we are pleased to introduce the #FSN20 of 2017…

 

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Click here to see page one of the 2017 #FSN20

 

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Click here to see page two of the 2017 #FSN20 

 

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Chris Proctor, CEO, Oneserve

With their relatively niche operating background primarily serving the UK local government and housing sector Oneserve may not be a company that are as well known as some of their competitors within the FSM solution space, however, there is no denying that in Proctor they have a CEO who isn’t afraid to ruffle feathers.

He has called for the Field Service Management software industry to stop “holding innovation hostage” and under his leadership the organisation have won some significant contracts away from their ‘home turf’ of the housing sector including Pay TV leaders Sky and construction giants Kier.

Having been promoted to CEO from Marketing and Sales Director in just 8 months with the company Proctor is a young, dynamic leader who is not afraid of controversy if it means raising awareness of issues within the industry.

 

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Professor Andy Neely, Head of the Institute for Manufacturing, Cambridge University

Professor Andy Neely is Pro-Vice-Chancellor: Enterprise and Business Relations at the University of Cambridge and also Head of the Institute for Manufacturing (IfM) and Head of the Manufacturing and Management Division of Cambridge University Engineering Department.

In his role as a Founding Director of the Cambridge Service Alliance he is widely recognised for his work on the servitization of manufacturing, as well as his work on performance measurement and management and as such is often seen chairing sessions in the field service sector.

 

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Hilbrand Rustema, Managing Director, Noventum Service Management

As service management consultancy spanning three continents. With over 200 successful projects and a proven track record of improving growth and profitability Noventum are a tour de force and are firmly established as the leading consultancy within the field service industry.

Hilbrand Rustema has been a driving force in that development and continues to lead the business having been at the heart of evolving service thinking for many, many years.

 

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Jan Van Veen, Managing Director, Van Veen Business Innovation

One of the founding partners of Noventum, Van Veen is now working under his own brand and is currently developing a framework for companies to be able to develop continuous momentum based on a series of detailed benchmarking and researching projects.

A broad and ambitious project, but Van Veen has the background and insight to be able to deliver what should be highly powerful business tool.

 

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

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