Top tips to guide your business through how to keep costs low and achieve success in a servitization model.
Servitization is the next generation of manufacturing revenue. While the idea has been around for years, the 2008 recession ushered it along even faster.
Companies needed new revenue streams in the wake of reduced spending and found them with service offerings.
Even in an economic downturn, existing items needed to be fixed and new ones didn’t necessarily need to be bought. Today, one out of four field service operations is generating new revenue from servitization, per Aberdeen Group research.
When firms servitize, they tend to expand their potential offerings. Servitized companies can offer:
- equipment-focused product life cycle offerings (including maintenance services),
- asset-focused managed services (more complex than a single piece of equipment and often involving different pieces of equipment purchased at different points in time), and
- process focused advisory services (consulting to other firms on how to migrate all the way to a servitized model).
Servitization opens up all these potential offerings and revenue streams, and ultimately, it’s about delivering valued i.e. differentiated business outcomes.
These possibilities alone don’t make the idea of servitization profitable, however. Companies still must minimise costs associated with servicing their products in the field.
Step 1: Use field service management software
Systems, which in a paper-driven world tend to be separate “silos” not speaking directly to one another, are now transparently connected.
Using field service management software, someone in your office who is focused on scheduling also has access to inventory. Now a technician’s time is maximised through advanced scheduling and automated routing and inventory can be considered to strive for the highest first-time fix rate possible.
Invoicing within field service management software can often be completed onsite, via mobile, reducing the time to payment, and inventory levels are updated to ensure reorders are completed as needed.
Step 2: Connect smart devices to field service software
Connected field service leverages the potential of predictive maintenance through machine learning to drive better business outcomes. The term comes from Internet-connected devices.
Estimates claim we’ll have 80 billion of these devices by 2025. These connected devices send status information directly to an Internet hub and to your field service management software to determine self-healing steps and automatically dispatch a technician when self-healing cannot solve the problem.
Step 3: Integrate field service across your business
Servitisation can only work if you can meet service agreements at a profit. When everything in your field service organisations is operating silo-by-silo, it is hard to do this.
For example, if inventory data isn’t seamlessly integrated with scheduling, a first-time fix may not be achieved because of a needed part. Your profits are quickly eroded with every truck roll. Systems working together in harmony allow you to delight customers and keep your costs down.
Step 4: Leverage machine learning and augmented reality
The use of machine learning has exploded in recent years. Machine learning is a type of artificial intelligence (AI) that provides computers the ability to learn without being explicitly programmed with that set of information. It’s the development of computer programs that can grow and change based on interactions with new data sets.
Augmented reality (AR), or the integration of digital information into a user’s real-time environment, is perhaps most notable in popular culture through Pokémon Go. In a business sense, it’s seen in products like HoloLens. The capabilities of AR are transforming some legacy industries.
Step 5: Allow field service to power the innovation engine
Product and service innovation comes from insights into how customers are deriving value from them, their unmet needs, and your challenges in meeting their expectations.
Having a 360-degree view of your customer interactions across channels, and the product telemetry from connecting your smart products to field service, gives you a new catalyst for innovation.
Much business growth comes from asking the right questions and solving the right problems. In this case, some questions may include:
- What products or configurations are deployed?
- Are we over- or under-engineering our products? Should we retire a supplier or a product? Should we upsell to a more reliable model or sell an extended warranty? Should we redesign the product with lower-cost parts to increase margins, or with better supplier parts to reduce failures?
- What features are being used — or not? Is this an opportunity for training, consulting, or a product redesign? Do we need to design in more sensors to understand how customers are using our product?
- Where are our competitors succeeding and failing? What can our product telemetry and service technicians tell us about competitors’ products and configurations?
To learn how servitization can benefit your revenue streams in your business, register for our webinar, on September 12: How to Unlock New Business Models in Field Service.