Field Service Spring 2016 by ServiceMax

ISSUE NO 2 | SPRING 2016

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TOKYO

Wednesday, October 19th

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AMSTERDAM Tuesday, November 8 Wednesday, November 9 maximize.servicemax.com/europe

LETTER FROM DAVE YARNOLD

Dear Reader, Welcome to Maximize 2016 and to Field Service, our quarterly collection of stories that bring to life where our industry is now and how it’s evolving. It’s certainly an exciting time. It wasn’t that long ago field service was an afterthought for many industrial organizations. The product was the heart and soul of the company, and service was something inevitable — something costly and inevitable. But there’s been a paradigm shift occurring where companies are seeing that service is now more and more the product. A well-oiled, IoT-, cloud- and mobile-laced field service strategy can unlock dramatic revenue potential and shift business models so companies aren’t focusing on making money from selling the product — it’s more the service guarantee we’re enabling that drives business growth. Within this magazine you’ll find a full slate of compelling stories that bring to life how crucial field service is becoming in the modern economy — and why it’s imperative now more than ever that field service get the strategic attention it’s due. You’ll read surprising ways technology is changing the field service industry and what the Industrial Internet of Things means for customer satisfaction. You’ll also see best practices from leading thinkers on how to navigate hurdles in selling advanced services. And let’s not forget the taste you’ll get for how some of our customers are bringing the concepts to life we talk about every day. I’d personally recommend taking a look at how Schneider Electric is using augmented reality to boost its service productivity. There’s never been a more exciting time to run a service business. Dave Yarnold CEO, ServiceMax Twitter: @dyarnold

CONTENTS

UNLIKELY, EVEN EXPLOSIVE, TECHNOLOGY IN THE FIELD

THE FUTURE BELONGS TO OUTCOME-BASED SERVICE

HOW LUTRON ELECTRONICS SHINES A LIGHT ON SERVICE REVENUE

IS CULTURE PREVENTING YOU FROM SELLING OUTCOMES?

HOW THE INDUSTRIAL (INTERNET) REVOLUTION IS FORGING STRONGER CUSTOMER BONDS

SCHNEIDER ELECTRIC EYES AUGMENTED REALITY TRIAL PROGRAM

CONNECTING THE DOTS: OPERATIONAL EXCELLENCE

A C-SUITE WAKE-UP CALL TO SERVICE’S BOTTOM-LINE IMPACT

AN OPEN OFFICE FOR FIELD SERVICE PROFESSIONALS

IS COMMISSION-BASED PAY FOR YOUR TECHS SERVICEABLE?

Peek inside a few of the most extreme, high-tech toolkits in service

ServiceMax’s Patrice Eberline examines manufacturers’ radical service reinvention

Traditional manufacturers are getting into the service game with a decades-old strategy that’s as relevant as ever: the service-profit chain. (Maximize attendees: Don’t miss Andrew Johnson’s session, “Leveraging the ServiceProfit Chain Framework,” on June 14 at 4:45 p.m.)

Aston University’s Tim Baines on why corporate culture is often the biggest hurdle to selling the advanced services customers want

ServiceMax CEO Dave Yarnold explains how the IoT and other innovations in service are bringing companies closer to their customers

The French energy management giant looks to AR to improve service delivery, training and safety

Service leaders give their best advice on how to better run your service business

Searching for that next great idea? Spend some time with those closest to customers: your technicians. ServiceMax’s Joe Kenny explains

Camaraderie is important for every employee, whether they call a cubicle — or a van— the office, says The Service Council’s Sumair Dutta

Commission pay plans often sound like a no-brainer, but Jim Baston explains six common drawbacks

UNLIKELY, EVEN EXPLOSIVE, TECHNOLOGY IN THE FIELD The onslaught of new technologies in service is enough to set your head spinning: The Internet of Things. Augmented reality. Smart glasses. Virtual reality. And before them there were others — cloud computing. SaaS. iPads. But look beyond the hype, and it’s clear that technology is constantly upending how work gets done every day in the field. Field Service Digital looks at three new technologies that are already making their mark on field service:

IN SOUTHERN CALIFORNIA, PARTS HITCH A RIDE WITH UBER It’s a scenario any field service manager can relate to: A technician, tools in hand, is onsite and ready to fix the customer’s equipment, only to realize a crucial part is back at the warehouse. Sure, he could drive across town,

but it’s a waste of time and gas, and the delay will test the customer’s patience. Southern California-based McKinley Equipment has a novel solution for parts delivery: Uber.

“Why not dial up an Uber when

we have an urgent need, and use that as another pipeline to deliver parts to our technicians?”

— Dave Carevich, director of business development at McKinley Equipment.

“Sometimes the explosives don’t go off and get lost in the snow. ‘Dud hunters’ search for them, but it’s not uncommon for them to go unnoticed until springtime.”—

Reporter Jennifer Alsever

“Customers

always want the most experienced technicians to deal with their systems.” — Steve Scott, VP of facilities solutions at Lee Company Smart glasses help the company meet this request, without demanding that older technicians perform feats of strength and agility that might not be attainable.

THE KEY TO THIS COMPANY’S RETENTION STRATEGY? WEARABLE TECH With a massive rollout of 500+ smart glasses to its field workforce, American HVAC provider Lee Company looks to retain its aging technician workforce as “virtual supervisors” who can collaborate with the smart glasses-equipped techs in the field — from the comfort of the office. 4

CANINE TECHS (AND ARTILLERY) KEEP THE SLOPES SAFE Handheld bombs. Avalanche-blasting “avalaunchers.” A team of Labrador retrievers. There’s no doubt that the avalanche techs at New Mexico’s Taos Ski Valley have some of the coolest tools in field service.

PATRICE EBERLINE

THE FUTURE BELONGS TO OUTCOME-BASED SERVICE

Adapted from the original that published in CIOReview

Businesses succeed when they achieve tangible and sustainable results for customers — especially when those results improve their own bottom lines. Executives judge employee performance based on results they deliver for the company. Boards judge executive results based on how many deliverables and company goals set forth annually were achieved the previous year. Yes, the business world is fundamentally outcome-based, and in order to better compete, a company’s service organization should be measured on outcomes, too. Today, many companies still employ traditional field service models that support primarily reactionary maintenance when a machine or asset breaks. Technicians in these models typically respond to problems after they occur and often do so with the sole focus of reducing costs per truck roll. As a result, companies view these service organizations solely as cost centers and therefore tend to allocate funds to more productive, proactive divisions. Despite the industry’s historical inefficiencies, there’s good news. While many companies hosting service organizations make money from basic service delivery, as well as the manufacturing and production side of their operations, there’s a new trend emerging that takes traditional service delivery and contribution methods to a new level. It’s called outcome-based service, and it is designed to create long-term customer relationships by getting to the core of a customer’s wants and needs. It achieves results by providing solid and guaranteed business outcomes in support of those needs. This move to outcome-based service presents a new way of looking at service delivery, by

providing service that goes beyond a traditional response and maintenance SLA, to a true business value proposition – a value proposition supported by emerging technologies unlocked by mobile, cloud and the IoT.

FROM PRODUCTS TO OUTCOMES

So what is this outcome-based approach? There are a few business-to-consumer examples that might be familiar to you. I recently purchased a printer for my home office. Right on the heels of my first order of ink, I was able to sign up to receive ink on a subscription basis — no need for me to worry, and no hassle of purchasing future cartridges myself. My solar energy system was not a purchase of solar panels nor a lease, but rather a purchase of guaranteed energy production. If the level of energy production falls, I am compensated, and in the interim I don’t have to keep track of everything myself.

“Outcome-based service presents a new way of looking at service delivery, by providing service that goes beyond a traditional response and maintenance SLA, to a true business value proposition.”

— Patrice Eberline From a business perspective, the shift to outcome-based service is also becoming more mainstream. In the United Kingdom, Alstom keeps the London Underground Northern Line running with the promise of maximum train volume and minimal loss of passenger time due to delays. This goes beyond the traditional service response model and even preventive maintenance 5

BENEFITS OF OUTCOME-BASED SERVICE TO A CUSTOMER • Risk reduction: Under the old model of waiting until there’s a problem before identifying a solution, the risk of faulty machines causing mission-critical system failures is laid squarely in the customer’s hands. The new service model dynamically and effectively crafts contracts around sustained performance and moves risk back to the vendors who provide and service machines. • Closer vendor relationship: An immediate result of this fundamental change is differentiated service that builds end-to-end customer confidence in your organization and your ability to monitor asset performance. The move to a focus on outcomes boosts service value to customers by increasing the chances assets will be fixed or maintained before a problem or shut down. • Value co-creation: Customers with properly working field assets will boost operational efficiency and profitability. Minimized asset downtime also allows customers to focus on building or rehabilitating other parts of their business. • Cost predictability: While the old model could allow spikes of service costs and fees (depending on contract provisions), the move towards providing outcome-based services delivers a more visible and predictable cost outlay. With fewer “surprises”, businesses can focus on running their business, rather than worrying about contingency plans for downtime, maintenance schedules of the equipment across geographies, associated consumable fulfillment lead times, etc. BENEFITS OF OUTCOME-BASED SERVICE TO A SERVICE ORGANIZATION • Competitive advantage: Industry’s shift to outcome- based service is driven by a move away from product- centric service contracts to long-term agreements focused on the continued improvement of field assets and technician performance. Service technicians and engineers drive the shift to outcomes with a renewed focus on dedicated customer engagement. • Tighter customer relationships: A shift to outcome-based service enables providers to grow the vendor-customer relationship with a dramatically heightened awareness of customer needs. • Increased margins: Service organizations implementing outcome-based contracts can optimize technician resources and use data from assets to diagnose potential operational problems across the fleet. Increased asset visibility and a promise of long-term service efficiency can expand profit margins. This is especially true as less money is spent to fix internal inefficiencies inherent with the reactionary service model. • Service predictability and continuous improvement: Service organizations focused on outcomes and using IoT technology can apply knowledge gathered across field assets back into R&D to design better (and cheaper!) service. These improvements are crucial to carrying out longer vendor-customer relationships with consistent asset performance.

offerings by taking over a number of pieces of “people transportation” and guaranteeing a level of service (90+ trains active at all times) and a standard of service that keeps lost passenger hours to a minimum and throughput high. Other examples include Rolls-Royce, which provides guaranteed flight hours rather than just engines and discrete engine maintenance services. Manufacturing giant GE deploys its Predix software across business units to stream useful data to the service organization, allowing them to confidently provide outcome guarantees to their customers. In practice, it’s the customer who benefits from a renewed, long-term focus on customer success through outcomes. Global manufacturers and industrial companies around the world are taking stock of field assets, technicians and technology to build outcome-based strategies that work for their business models. The results can be increased customer loyalty, higher end-to-end revenue generation and a sustainable roadmap for superior service and brand loyalty. The field service industry is poised to fundamentally transform the way companies do business. An outcome-based approach opens the door for an enterprise-wide standard of the level of quality customers can expect from their equipment, manufacturing and service providers.

Patrice Eberline is VP of global customer transformation at ServiceMax. She has nearly two decades of services

and leadership experience and has held leadership roles at several fast-growing software companies, including SuccessFactors and Infor.

VIRTUAL RIDE ALONG

Get a sneak peek at the ServiceMax Virtual Ride Along program. servicemax.com/field-service-university

Designed to bring you into a "day in the life" of a service organization, this virtual journey will also introduce you to some of the roles, concepts, terminology, and strategies that are key to customer loyalty, operational efficiency, and financial contribution. 7

HOW LUTRON ELECTRONICS SHINES A LIGHT ON SERVICE REVENUE DEREK KORTE

Traditional manufacturers aim to make money by selling services, not just products. But these days, it’s not just industrial giants like GE or Rolls-Royce that are successfully driving revenue through service. Thanks to a business school concept first unveiled during the mid-’90s — the service-profit chain — making your service revenue growth dream a reality is possible for companies of any size or age.

The twin goals are simple: improve profitability and revenue growth. Achieving those goals, however, requires service leaders to work backward through the factors that make growth possible. Field Service Digital sat down with Andrew Johnson, marketing project leader for Lutron Services Company, to learn how his team has put the service-profit chain to work. Hear more during Johnson’s Maximize 2016 session, “Leveraging the Service-Profit Chain Framework,” (June 14 at 4:45 p.m., Service Operations Excellence track.)

WHY IS THE SERVICE-PROFIT CHAIN A VALUABLE TOOL FOR SERVICE LEADERS? Andrew Johnson: It’s a guide for developing a profitable services company. Service is so different from manufacturing in terms of metrics, approaches and even lingo. When you sell service, you’re selling someone’s expertise. People become the products. Ideally, the service-profit chain results in profitability and sales growth, but the drivers of that growth are different for service companies than they are for product companies. For service companies, those drivers are primarily internal factors, such as employee satisfaction and empowerment.

Revenue Growth

Employee Retention Internal Services Quality

Perceived Customer Value

Employee Satisfaction

Customer Satisfaction

Customer Loyalty

Employee Productivity Profitability

LINKS IN THE SERVICE-PROFIT CHAIN HOW DO YOU MEASURE EMPLOYEE SATISFACTION? AJ: We look at metrics like employee retention rates. But what those metrics signify is training and empowerment. There’s a reason internal development is the first step in the serviceprofit chain. If technicians aren’t trained, they’ll feel insecure about their answers, or they close up, and aren’t willing to go the extra mile. We have many avenues of internal support to ensure our technicians are empowered to do their job, which, ultimately, is to be the customer advocate, advisor and expert.

WHAT ARE THE BIGGEST OPERATIONAL CHALLENGES TO ROLLING OUT THIS FRAMEWORK? AJ: Leadership is paramount. It is important to have a leader who understands service and who can help gain buy-in from other executives. We had that guy at Lutron, which was critical. He built the foundation and sent the message that service is important. Recently, we brought in a new executive who’s responsible for growing that message and continuing to integrate services throughout the company.

SO THERE’S A MARKETING ASPECT THAT CAN’T BE OVERLOOKED?

We do a lot of training and advertising, but I do a lot of internal convincing, too. That’s part of the job. There’s a longstanding joke with my peers in engineering and marketing that, when they see me walking down the hall, they know I’ll ask, “Have you thought about service?” But they’ll only listen if the metrics prove it works.

WHAT METRICS DO YOU USE TO SHOW SUCCESS? AJ: The one that speaks for itself is sales. Lutron’s services company is a profit center. But we also look at customer satisfaction (especially NPS), lifetime value, and retention. We also watch employee satisfaction, which is as important as customer satisfaction. What’s great about the service-profit chain framework is that it’s a guide, not an equation. We’re constantly trying to improve. When we ask ourselves difficult questions, we don’t just think about sales growth. We also think about how it could affect the left side of the profit chain. It’s a great way to keep perspective.

Derek Korte is the editor at Field Service Digital and a senior editor at Original9 Media.

AJ: Yes. The first hurdle was proving that this works, that we could actually differentiate with service — and that customers would respond.

IS CULTURE PREVENTING YOU FROM SELLING OUTCOMES? JANINE MILNE

Adapted from the original that published in Field Service Digital

Many manufacturing companies are realizing

there’s a limit to how much money can be made from making “stuff” — particularly when those goods can be made far cheaper elsewhere in the world. Instead, the penny is beginning to drop that servitization — how manufacturing companies build revenue streams through selling services, rather than products — holds the key to sustainable profits. Professor Tim Baines, director of the Aston Centre for Servitization Research and Practice at Aston Business School in the U.K., has been “banging the drum” for servitization for years, but only in the past five years or so has he seen interest perk up. “The tenor of the conversation has moved from it being seen as an academic concept, where companies struggle to understand the relevance, to one where organizations say that they are starting to ‘get it,’” Baines says. But while they may profess to “get it,” many are actually looking for ways to improve their organization’s service delivery, rather than achieve true servitization. “The problem is the debate about servitization is getting washed in with improving service and, as a consequence, it’s not getting the airplay it deserves,” Baines notes.

THREE WAYS TO VIEW SERVITIZATION Clearing up this confusion is one of the main reasons behind the launch of Aston’s Advanced Services Global Forum, which debuted in April 2016. Baines hopes the conference will move beyond “scraping around the edges of the servitization debate” and delve deeper into the steps needed to adopt advanced services.

“Technology, relatively

speaking, is easy to access and to exploit compared to changing the people and culture side of the company.” — Tim Baines, Aston Business School

Baines maintains we should look at servitization through three lenses. The first is changing the business model (which is when people tend to talk about changing the relationship with the customer). Secondly, servitzation requires changing technology (which is about supporting field services). The third, and in Baines’ view, the most crucial lens, is organizational change. It’s this third lens that is often neglected, according to Baines. “Technology, relatively speaking, is easy

to access and to exploit compared to changing the people and culture side of the company,” he says. This organizational shift requires excellent change management skills. It also requires skills in choosing and dealing with technology suppliers, shifting the culture, engaging the entire company, and looking at the financial and contractual aspects of the change.

MAJOR CHANGE, MAJOR PAYOFF It requires a monumental effort — but the benefits can be enormous, as the U.K.’s MAN Truck & Bus has proven. Servitization wasn’t so much a matter of choice as a necessity for the commercial vehicle supplier. The market for trucks has more or less halved during the last 20 to 30 years, in a market where margins are tight. Making money from manufacturing alone, especially for a small firm, was simply no longer sustainable. The catalyst for change was a switch to digital vehicles. The addition of on-board telematics meant that many elements of the vehicle could be monitored remotely, including location, oil levels and customers’ driving habits.

share went through the roof and turnover grew from 300 million to 600 million British pounds ($430M to $860M). “You make a damn sight more money,” says Evans. “However, there’s a lot of risk involved — your reputation is in service and if it’s not good, you’re soon found out.” MAN is a great example of how servitization can create a sustainable revenue stream and profit boost, not only for itself, but for its dealers and customers.

BENEFITS BEYOND PROFITS In addition to profits, servitization also provides environmental and social benefits that are often overlooked, according to Baines. Servitization is better for the environment because the aim is to increase the longevity of products and improve efficiency (through less fuel usage, for example). It’s also good for society in general, because it keeps business local and puts an end to the it-could-be-done-cheaper-inChina style conversations.

Taking full advantage of the information these telematics provide required a new business model. MAN Truck’s sales force, services operation and dealer relationships were turned on their head. Dealers, for example, went from sales and services franchises to services-only franchises.

But to push through a major change to servitization requires leadership — by someone who has a clear idea of the benefits, and the technical and personal skills necessary to persuade the rest of the company. While field service professionals clearly see its benefits, they may not be the best people to push this change through.

“Twenty years ago, we sold trucks and we sold parts, and today we sell kilometers,” says Des Evans, former CEO of MAN, who spearheaded the changes.

“You’re preaching to the converted with the field services guys, but they haven’t necessarily got the traction inside the organization to bring about change,” says Baines.

The company spent 12 to 18 months just gathering opinions from all stakeholders and lobbying for the change before it did anything.

Someone in manufacturing or engineering might be harder to convince initially, but they may have more influence in the long run.

“Twenty years ago, we

sold trucks and we sold parts, and today we sell kilometers.”

— Des Evans, former CEO, MAN Truck & Bus Today, MAN and its dealers are both more profitable. From 2006 to 2010, MAN’s market

The benefits of servitization stack up, but it requires a massive change of focus and business model. And that requires long-term commitment, as MAN’s Evans can attest. He is often quoted as saying it took him 10 years to become an overnight success.

Janine Milne has been writing about HR, technology and business for more than 20 years, both as a freelancer and as an in-house editor. She contributes regularly to Field Service Digital.

HOW THE INDUSTRIAL (INTERNET) REVOLUTION IS FORGING STRONGER CUSTOMER BONDS DAVE YARNOLD

Adapted from the original that published in Customer Service Journal

The untapped potential of the Industrial Internet presents an immense customer service opportunity for the enterprise. Increased automation, machine-to-machine communication (M2M) and the Internet of Things (IoT) unlock new manufacturing frontiers and enhance traditional industries. At ServiceMax, we see the IoT, wearables and mobile technology as transformative elements augmenting the vendor-customer relationship — not replacing it. The most sophisticated IoT and M2M service technology still relies on people to complete the job — and will for the foreseeable future. While machines can now diagnose their own problems before a customer knows there’s an issue, it’s the engagement between a technician and their customer that remains key to closing the proactive service loop opened by the IoT and machine data. According to an IDC Manufacturing study, 45 percent of manufacturing companies expect roughly a third of their total revenue to come from service this year. This, of course, requires a healthy partnership between customers and their vendors. Without a technician meeting with customers face-to-face, the emerging datadriven maintenance process becomes incredibly impersonal. The customer appreciates that the asset continues to run with no downtime, but the technician and personal interaction that completed the job remains integral to the field service industry.

Consistent first-time fix rates and perpetual asset uptime leads to increased customer loyalty. Data from machines provides field service agents with accurate parts and knowledge to get the job done on the first trip. It also allows customers to build trust quickly and focus on building their own businesses. With the adoption of IoT-enabled machines and data streaming assets in the field, Enphase, a provider of solar energy microinverters, has seen revenue upticks thanks to more engaged and proactive customer service model. Embedded sensors in the company’s 300,000 worldwide residential and industrial systems directly contact Enphase technicians for smarter scheduling, more optimal routing and better informed technicians. Customer service interactions have subsequently been elevated by providing technicians with crucial data to pinpoint exact solutions, manage a customer’s assets more efficiently and even upsell Enphase’s technologies. For ServiceMax customer Elekta, a human care company pioneering significant innovations and clinical solutions for treating cancer and brain disorders, downtime isn’t an option. When it comes to servicing the 100,000 units of gamma ray and radiation equipment daily, cloud software and data streaming technologies produce faster fixes. But ultimately it’s the well-being and satisfaction of the patient on the other side of the knife that’s most important to their business. In this instance, increased first-time fix rates and decreased time-to-repair helps fortify long-term relationships, trust and responsibility.

At ServiceMax, we see the IoT- and M2M-driven shift in field service, and manufacturing more broadly, as fitting naturally into a process we call customer transformation. We make it a point to train ServiceMax employees, from engineering to sales, in the technical and personal elements of field service enhanced by our platform. Our ServiceMax certification and customer success programs thrive on informing customers of new technology thatâ&#x20AC;&#x2122;s out there while delivering stellar service through mobile technology. We encourage our customers to seek ongoing relationships in which both the customer and vendor feel empowered to bring ideas and concerns to the table. We believe in a two-way dialogue where you guide the customer and the customer provides you with valuable product feedback. Ideally, these interactions help you transform critical feedback from field assets into an outcome-reality. Being able to speak with customers about their business objectives beyond the asset in question opens many doors, sparks organic growth and allows for new technology to enter the equation.

Thereâ&#x20AC;&#x2122;s a growing number of companies transforming their business and CRM strategies around new technologies that change how they service their customers. Data-rich customervendor engagements, enhanced by the IoT, connected assets and M2M, help drive an emerging and sustainable shift from reactive to proactive field service. Technology constantly changes the way industries collect, analyze, and utilize operational data, but service will consistently remain at the core of industrial innovation.

Dave Yarnold is the CEO of ServiceMax. A veteran in the Software-as-a-Service (SaaS) and field service industries, Yarnold has contributed to the success of some of the fastest-growing companies in the enterprise software business during the past two decades.

SCHNEIDER ELECTRIC EYES AUGMENTED REALITY TRIAL PROGRAM JANINE MILNE

Adapted from the original that published in Field

Instantly, it was clear that this was a game-changing technology, especially in the area of service.”

It’s early days for augmented reality at global energy management specialist Schneider Electric, but the appetite and ambition for the technology are already huge.

Schneider’s research and development unit quickly zoomed in on augmented reality’s application in three specific areas: First, it is looking at whether AR can improve the speed and accuracy of maintenance. Secondly, whether AR can be used to train new technicians quickly on complex products that may have been highly customized.

Service Digital

When the idea of augmented reality (AR) was first pitched to a couple of Schneider executives, including the CMO, in October 2015, “both of them lit up immediately,” says Mark Minnucci, systems engineering manager at Schneider Electric. “We followed with a demonstration to the entire executive level and board of directors.

The third application is to examine how AR can be applied to improving the safety of both Schneider service engineers and customers — a priority for a company that handles the electricity power supply.

“... Instantly, it was clear that [augmented reality] was a game-changing technology, especially in the area of service.” — Mark Minnucci, Schneider Electric

COMPLEMENTING A CONNECTED SERVICE STRATEGY This interest in AR is part of an internal initiative, Information Process Organization (IPO) 2020, to create a business that uses “connected and connectable” products. The aim is to create a continuous loop of data between customers’ assets and Schneider’s marketing, sales, service, product design and back-end systems. The initiative is powered by ServiceMax’s Connected Field Service offering, which leverages the PTC ThingWorx IoT platform. Out in the field, strapped to a service tech, is where the AR component shows particular promise. “When our technicians go out to the site, before they even have to open up a device, using the augmented reality capabilities, they can see inside of the devices,” says Twila Osborn, vice president for R&D and innovation efficiency for Schneider’s IPO 2020 initiative. “They can understand what products are in there, they can understand when it needs to be serviced and the asset itself will have created its own service request, so they know exactly what they are bringing out to the site.”

TOWARD AN EVERYDAY AR REALITY The plan over the coming year is to dig deeper into how AR could be applied to field service and talk directly to technicians about their specific requirements. Minnucci expects several field service AR pilots to be set up across the company within the next year. One particular aspect of AR that Schneider is exploring is how to exploit the potential of digital twins.

“Digital twin technology is something that’s very relevant to us,” Osborn says. “We’re working on some of the new things we can do with the digital twin concept.” A typical application for digital twins within Schneider would be to check the heat on a device. Osborn explains: “Many times you can’t tell if a device is overheating, but if you’re taking information from the asset, you can do a heat map and put that data right back into a virtual or digital environment … and then someone like a CAE [computer-aided engineering] expert can look at that and understand what’s going on there.”

AN ADOPTION DARK HORSE Digital twins and other AR-enabled benefits are exciting, but Minnucci believes sales — not field service — will pick up on AR’s potential faster, using it to show potential customers simulations of how Schneider products will work and interact with existing products. “Honestly, I believe the sales and marketing team might adopt this far faster than the technicians,” says Minnucci. “The power of taking this on a sales call and not showing a catalogue on paper, but actually showing a product in the customer environment — this is something I think you’ll see in one year on sales calls.” But no matter which division strikes first, Minnucci says adopting AR is not an option, but rather the reality of market forces. “We make sure we are ahead of what the customer needs, so that by the time the customer needs it, we’re already there delivering that capability for them.”

A digital twin is a 3D representation of a realworld device. But rather than just a static copy, a digital twin feeds live, real-time information about the actual physical product, which can be overlaid on top of the digital image.

DEREK KORTE

CONNECTING THE DOTS: OPERATIONAL EXCELLENCE Service organizations are only as good as their internal operations allow. For growth-minded

service leaders, the goal is to run a better business to improve customer loyalty, efficiency and profitability. Easier said than done, right?

Six field service pros weigh in on what operational excellence means — and why it matters.

“As a service leader, can you look yourself in the eye and say that you’ve built all of your processes and procedures around your service technician to deliver excellence to your customer? If not, then you are not delivering operational excellence.” Dave Hart, VP of global customer transformation, ServiceMax

“Operational excellence is executing in a repeatable and predictable manner to support customers and employees in a sustainable way. It is being able to adapt to their needs while maintaining the service quality on which they rely.”

“Remember: It’s your employees who will utilize the cutting-edge tools you provide, but you made the investment for your customers. If you let ‘making the metrics look better’ rule your decision making, without any thought of how your employees or customers will be affected by your next move, it’s time to re-evaluate.”

Carl Krupitzer, CEO, ThingLogix

Donald B. Stephens, senior customer service engineer, Xerox

“True operational excellence is elusive; it is rare in practice, extremely difficult to achieve, and almost impossible to sustain. All too often our professional lives are so complex, pressurized, and indeed noisy, that we all spend far too much time re-inventing well-established principles and techniques. Find ways to stay properly informed.” Tim Baines, professor and head of Operations and Information Management Group at Aston University

“Focus on the outcome as it applies to the overall business, not just the service business. Help technicians understand that technical proficiency is only one component of a successful service skill set. Technicians are key players in building lasting relationships, yet too few service organizations take the time to provide this awareness, choosing instead to focus on technical proficiency.” Steve Nava, senior director of field service, Luminex

“Ultimately, service will be judged by the customers. The customer perspective should be the overarching target for developing and refining the service operation… to separate the real opportunities from the distractions, especially when it comes to IoT technologies.” Andreas Schroeder, senior lecturer in information systems, Aston University

JOE KENNY

A C-SUITE WAKE-UP CALL TO SERVICE’S BOTTOM-LINE IMPACT

Good ideas can come from anywhere in a business — not just management. In fact, the boardroom is often the least likely place to find innovation, because the board is typically the furthest away from the minutiae of company processes and customer pain points.

The key, of course, is proximity to the customer. Customer service is the front line of any business, a key touchpoint with customers that not only drives satisfaction but also innovation — if you let it. With sales increasingly taking place online, frontline service teams often know customer business issues better than sales teams. Timo Okkonen, chief commercial officer of Finlandbased inspection and certification firm Inspecta, says advances in field service management technology have enabled a radical rethink of his business. Where there were once departmental silos there is now an integrated approach, where field service (due to its field service management software) is helping to reshape the company’s entire approach to business. Imagine that: field service helping to re-define business strategy. It’s becoming more common than you think. The integrated approach that Inspecta and hundreds of other companies are embracing is something that Aberdeen Group analyst Aly Pinder Jr. refers to in a recent report on field service excellence. Pinder also talks about the growing importance of a knowledge base for a business fueled by field service intelligence. “The view into the field by an integrated technology engine isn’t intended to just be a one-way mirror,” Pinder writes in the report. “This real-time intelligence is valuable in that it can and should shape the interactions of other teams. In particular, the sales team can glean a lot of information from service interactions, seeding cross sell/upsell opportunities, proactive renewal conversations and more customized offerings.” This need for a knowledge base turns the field service professional into a strategic asset. After all, field service people work at the coalface. They see problems and solutions every day. They can identify the upsell opportunities and identify where there is unnecessary waste or inefficiencies. It is a unique position, but is this recognized enough? Do boardrooms fully utilize their field professionals and learn from them? They’re starting to.

Service technicians who are empowered with cloudbased, real-time tools in the field can handle workorders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively, and upsell and cross sell products and solutions where appropriate. Strike while the iron’s hot, so the saying goes. What sort of value does this add to the business? A substantial amount as it turns out. Companies report average increases of 22 percent in service revenue, a 12 percent increase in contract renewals, and a 19 percent decrease in average repair times. This level of service and personalization can also act as a barrier to entry for rivals.

One company, TopCon, actually empowers its field service teams to glean information from customers and feed it back to other departments within its organization via a field service automation system. This has included details, concerns and potential renewals for customer warranties, feedback on pricing and even invoicing and ordering issues. It is this level of intelligence that can transform a business reputation but also provide invaluable ammunition for innovation. So if knowledge truly is power, then field service engineers should in theory be the most powerful workers in the business. Of course the real measure of this is return on investment. The share of worldwide manufacturers using performance-based contracts jumped to 65 percent in 2015, with more than 70 percent of manufacturers relying on services as a key product differentiator. Happy customers renew contracts, but what we are advocating is that field service cannot only help retain existing business — but also grow it. Boardrooms need to turn traditional thinking on its head and recognize the growing value and insight of field service teams to the whole business. Don’t just measure it in terms of customer satisfaction. That’s doing service a disservice. It can be so much more than that now. Joe Kenny is senior director of customer transformation at ServiceMax.

AN OPEN OFFICE FOR FIELD SERVICE PROFESSIONALS SUMAIR DUTTA

Some of my ideas are original. This one isn’t. And I’m glad to say that it isn’t, because I come across so many bright minds in field service management. One of those minds is Steve Nava at Austin, Texas-based Luminex Corporation. In a recent conversation, Steve spoke about his intention to extend the concept of an open office to his field service workforce. What a novel idea. When we think about open offices, we typically think about a traditional workspace that promotes visibility and collaboration. But what about improving visibility and collaboration for those who call their van or truck an office?

COFFEE BREAK CAMARADERIE I was reminded of this discussion with Steve during a recent trip to meet customers in Columbus, Ohio. While working at a local Starbucks, I noticed a fleet of four service vans parked right next to each other. These vans belonged to the same service provider, a large

HVAC and facilities management organization. The four field service technicians in these vans weren’t working together at a customer site, but they were definitely developing camaraderie over coffee. This went on for 25 minutes, at which time all four vans went their separate ways. This type of collaboration is repeated every week all over the world. It probably drives dispatchers and service managers crazy, given the desire to maximize utilization. But to my mind, it’s a good thing. Field service technicians need to be connected to their organizations. Otherwise, they can get very isolated in their work, which typically requires long hours of driving and working alone. In our recent “Field Service 2016: The Technician’s Perspective” report, technicians cited isolation as one aspect they disliked the most about their jobs. This was true across experience levels, but more strongly among field workers who had recently entered the industry.

“Field service technicians

need to be connected to their organizations. Otherwise, they can get very isolated in their work, which typically requires long hours of driving and working alone.”

— Sumair Dutta

SHARING KNOWLEDGE — FORMALLY AND INFORMALLY Not only can the open office concept drive greater collaboration and innovation in the field service ranks, it can also drive greater knowledge sharing across the organization. The wealth of knowledge about customer issues, product challenges, and procedure failures built into the minds of these technicians is significant. Structured knowledge management efforts to capture this information are essential to the survival of service businesses. But unstructured sessions and meet-ups can also be extremely beneficial — not to mention building engagement and loyalty among field techs. Organizations are engaged in various strategies to create a more open and collaborative field service working space. Several schedule frequent meetings for their field service teams, where techs are allowed to collaborate and partner on topics of technology, customer management, and safety. Other organizations are creating mentorship or apprenticeship type of programs where technicians from one region are paired with those from another region for a period of time. Several companies also host technician competitions or retreats that allow for improved communication and collaboration. Retreats are typically reserved for the top salespeople — but why not for top service technicians?

USING TECH TO FORGE CONNECTIONS Some organizations have resorted to technology to create a tighter-knit technician community. Take Luminex, for example. Technicians get greater access to the entire team’s service workload via Luminex’s field service application. As a result, field service techs can support one another in their time of need and can also work toward improving service delivery to customers as a team. This requires a culture of customercentricity and collaboration, one that Steve is very interested in driving. Other organizations are also using technology in novel ways. Some are extending messaging or collaborative platforms, such as Slack and HipChat to the field. Others are developing platforms, such as Cotap and TigerText, specifically for dispersed field-based workforces. In the same vein, video and merged reality tools, such as Librestream, Help Lightning, and XOEye, are being used for remote assistance and field-based training. And demos for Microsoft’s HoloLens, promise an environment where field technicians can collaborate with each other on repair procedures and more in a virtual meeting environment. We’ve also seen organizations resort to gamification to promote collaboration and recognition. Recognition is a wonderful elixir for isolation. We’ve seen gamification being used effectively to promote safety, as in the case of a TSC member organization providing access to safety scores and leaderboards to field service techs on their mobile devices. But at the end of the day, technicians like their coffee and donuts. They like working collaboratively. How about we let them have their coffee? After all, coffee isn’t only for closers.

Sumair Dutta is the Chief Customer Officer for The Service Council (TSC). In his role at TSC, Sumair is responsible for new member acquisition, member engagement, community expansion, as well as the development and expansion of TSC’s Smarter Services-oriented research agenda and portfolio. Contact him at sd@servicecouncil.com, and find him on Twitter @suma1r.

JIM BASTON

IS COMMISSION-BASED PAY FOR YOUR TECHS SERVICEABLE?

Adapted from the original that published in Field Service Digital

More and more field service firms are doing it. In order to encourage their techs to be proactive salespeople, many firms are offering some form of a direct incentive system, either based on a percentage of the actual sale that results from their efforts or a fixed amount (e.g. $50) for every lead that ends in a sale. This sort of compensation is popular for many reasons. Itâ&#x20AC;&#x2122;s relatively easy to implement. Increased profits from the sales generated cover the costs. The program rewards effort, so it provides reinforcement of the techniciansâ&#x20AC;&#x2122; behavior.

Although these benefits may seem to tip the balance in favor of a commission program for your service business, there are many factors that suggest that this approach may not be for you. Here are six drawbacks to consider before implementing a commission-based pay program:

PROBLEM: DIFFICULT TO EXPLAIN How would you feel if your auto mechanic were being paid a commission on all parts and services sold? Would it cause you to think twice about acting on any recommendations? Would you be inclined to seek a second opinion? If this makes you feel a little uncomfortable, then imagine how your customers will feel if your technicians are similarly compensated. How will you explain it to them if they ask?

“How would you feel

if your auto mechanic were being paid a commission on all parts and services sold?” — Jim Baston

PROBLEM: ENCOURAGES THE WRONG BEHAVIOR If you are asking your technicians to make recommendations only when they feel that the customer would benefit in some way, then the focus of their recommendations are on adding value rather than on adding sales. However, this message may be lost when technicians are directly compensated for the sales revenue generated. They may lose sight of acting in the best interest of the customer and feel encouraged to make recommendations for the purpose of earning the commission.

PROBLEM: DIFFICULT TO MANAGE Although these types of programs are relatively easy to implement, they can be difficult to manage well for several reasons. Sometimes disputes may arise over what qualifies for compensation. Other times company leaders may lose sight of managing the system, so things fall through the cracks. Often it is because management is reluctant to pay compensation for work that they feel the organization would have received anyway. A poorly managed program can become the focus of complaints rather than the positive reinforcement that it is intended to be.

PROBLEM: PERCEIVED AS UNFAIR If technicians are directly compensated for revenues generated, there is a real possibility that some techs will benefit disproportionately. Not all technicians have the same opportunity for generating new business. This may cause frustration and resentment in the team.

PROBLEM: DEGRADES PERCEIVED VALUE OF SERVICE I have spoken to many technicians who resent direct compensation programs on principle. They take great pride in their work and feel that incentive payments for work that they regard as part of the job somehow degrades the value of the work that they do naturally. These technicians will often refuse to participate in such a program and look down on those who do.

PROBLEM: MONEY ISN’T ALWAYS THE TOP MOTIVATOR A key reason why many firms adopt direct compensation programs is the belief that they will encourage repeat behavior. Although they may achieve this in some cases, they cannot replace management’s role in encouraging and supporting the adoption of new skills and behavior. Management’s efforts in teaching, coaching, practicing and reinforcing these skills will have a significantly bigger impact on skills adoption than any compensation plan ever will. If you are considering a compensation program for your technicians, be aware that your actions may have unintended consequences. If your goal is to fully and enthusiastically engage your technicians in business development activities, you should implement a plan that encourages the right behavior, is perceived as fair, and is easy to explain to your customers.

Jim Baston is president of BBA Consulting Group Inc., a consulting and training firm located in Ontario, Canada. He focuses his attention on helping technical service companies develop and implement strategies to transform field service personnel from reluctant into enthusiastic promoters of their company’s products and services. Baston is a regular Field Service Digital contributor.

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