Meet Your New Best Friend

Published On : 08/01/2016

Rick Gustafson is Chief Financial Officer for field service management leader, ServiceMax.

Changes in field service management are bringing a smile to the faces of CFOs

Do you know the name of the person running your service operations? You should. They’re about to become your new best friend. Service is a business growth opportunity for both top and bottom line revenue growth that remains largely untapped. Now I know what you’re thinking. Service is a necessary overhead that costs us money, but we need it to keep customers happy. Think again.

Intelligent field service management is shifting service from being a cost centre to a profit centre. And the advent of the Internet of Things is moving service from being reactive to proactive to predictive, whilst also impacting R&D design, with some products being built as ‘service ready’ from the outset.  In addition, according to AberdeenGroup, over 90% of field service organisations that are considered “Best in Class” operations are managed as profit centres.  Obviously, there is a link between having a revenue target and driving a “Best in Class” operation.  Clients will not spend more with a company unless they are receiving excellent value for money.

So what’s all the fuss about?Growth.“Best in Class” field service management systemsare delivering a 22% increase in service revenue, a 24% increase in productivity, a 12% increase in contract renewals, and a 19% decrease in average repair times for thousands of companies globally. Not bad when you also factor in that70-90%of total lifetime cost of heavy equipment lies in maintenance and repair.

The software tools in the hands of field service workers today can automatically feed into central systems, databases of products, stock levels and so on. This level of automated field service management gives businesses a higher first time fix rate, lower emergency shipments, higher remanufacturing and increased first time pick rates for inventory. Not to mention visibility for managers on utilization rates and accountability for parts usage down to the individual service engineer level.

By empowering and mobilising service technicians with cloud-based, real-time tools in the field, they can do work-orders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively and up sell and cross sell products and solutions where appropriate. More importantly, you can measure and control the spend.

Field service has (finally) joined the information economy and is now speaking the language of finance. Words like cost control, upselling, accountability and efficiency are now in the service leaders’ vocabulary. Why?

Because with everyone chasing the same part of the value chain, the ongoing squeeze on product margins is spearheading a new service-oriented business model. This shift to outcome-based services is known as servitisation – the delivery of a service component as an added value when providing products.According to Ashton Business School, aservitisation strategy delivers a 5-10% jump in annual services revenue, profits two to three times greater than product sales alone, 30% cost reductions for customers, and the opportunity to increase service revenues even further by supporting existing third party or competitive products. This creates an ongoing relationship with the customer that effectively locks out competitors.

The result is a considerable improvement in cost control of a business function that was previously unmanaged at this level of granularity. Reduced waste also reduces expenditures, but there are more proactive benefits. Field service engineers have the ability to identify revenue opportunities by being on-site and seeing first hand potential problems and solutions. This results in product upgrades, replacement products and additional service provision. The intelligence gathered on field service missions is fed back into the manufacturer’s product design departments, where consistent issues can be addressed and improvements made for later product versions.

The shift in approach to service combined with powerful field service management software tools, is helping to re-shape businesses globally. By giving it the real world intelligence and accurate cost control for each product sold and serviced, businesses can build visibility and accountability for every product, service call, field technician, and customer warranty contract.  More importantly, taking advantage of the trusted position of Field Service organisations and unlocking service potential is an effective strategy for combating economic uncertainty.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.