Augmented Reality is already helping service businesses generate cost savings and productivity improvements, as Titos Anastassacos explains.
In the not too distant future, servitization, in the sense of product-as-a-service (PaaS), enabled by digitalisation and based on platforms will become ubiquitous.
The implications for jobs, companies, productivity, growth, and profits will be vast, though at present they are still the subject of on-going debate and quite unknown.
The nature of the service business will shift from technical labour and logistics to knowledge management and exchange. Service delivery will change drastically as will the nature of competition and business models.
Si2 Partners developed a series of survey-based management reports to shine a spotlight into service businesses’ efforts to grasp the opportunities of digitalisation while dealing with the challenges.
We then drew conclusions from the results and recommended the best ways forward. The first report on Augmented Reality is available now, the next report on Predictive Maintenance is due by year-end.
Augmented Reality (AR)
The origins of Augmented Reality as a technology, go back at least 50 years.
But the first public demonstration was in 1998 during ESPN’s coverage of a football game: generation and display of the yellow first down line. The line stayed fixed within the coordinates of the playing field. It was not physically present on the field and was visible only to the television audience.
From that simple application, only 15 years later, Gartner predicts that companies would be increasing their profits by more than US$1bn annually – by 2017 – through the application of AR in their field service business.
Things of course are not so simple. Reducing costs doesn’t directly translate into increasing profits. That depends on prices and we know that digitisation tends to make them drop, sometimes to zero. But even if we only consider costs, AR is clearly an important, in many ways transformational, technology with a potentially very powerful impact.
Recognising this, over the past few years, several AR start-up vendors have emerged, targeting specifically the (field-) service market, offering affordable, semi-standardised solutions, complementing, and competing with the more general offerings of bigger players such as Microsoft or PTC.
So, are companies adopting AR for industrial and field service?
Our survey showed that they are. Most expect significant cost savings and productivity improvements through AR, mainly in engineering time and travel cost – and, interestingly, smaller companies are at least as much engaged with the technology as larger ones.
Upfront investment can be low, and it can be implemented quickly and stand-alone (at least initially). Importantly, it may help reduce pressure on scarce, highly qualified, and expensive engineering resources, while simultaneously improving the cost-effective support of remote customers (smaller companies are less likely to have extensive service networks).
Overall, we found that while less than a third of respondents already used AR, and, of those, the majority had introduced it over the past 12 months, another third planned to introduce it over the coming 12 months. This indicates an accelerating trend.
Of course, for users, it hasn’t been all smooth sailing. Challenges are numerous. For example, it turns out that connectivity at customer sites is a significant issue, which hampers the use of the technology.
But technical problems are normal at this stage of introduction and they will be solved. Far more important are managerial challenges. For example; as always, one size does not fit all.
Augmented Reality use cases
The most common reported use case is field technicians receiving AR-based support by experienced engineers from a remote central hub. This may help companies with large field service workforces (possibly with high turn-over rates or less qualifications) supporting standardised equipment.
It is not much help to vendors of highly complex equipment whose field engineers are already highly experienced and qualified themselves. In fact, it may be even counter-productive, slowing things down or reducing acceptance.
Better applications for such cases may be pooling AR-based support, providing technical information through “knowledge-libraries”, particularly on rarely encountered problems or legacy equipment, or integrating AR with IoT, so that operational data can provide real-time context to engineers and support for diagnostics.
However, such applications require investment in digital content, something that many AR users have often not considered, as well as a process of experimentation and development.
Another finding is that following implementation of AR, many managements don’t take the necessary action to lock-in the AR benefits by pushing through change in the support and field service processes. For example, few companies eliminate technical manuals and drawings from a field engineer’s toolbox, delaying the necessary adjustments.
And, while many companies market their AR capability to customers, few have developed revenue generating AR-based offerings. Yet our survey shows that customers would welcome AR-based support if it would help to reduce costs and improve performance, notwithstanding issues of confidentiality or privacy.
The process to integrate AR into a company’s mode of operations and to maximise its benefits will, as for any new technology, be arduous and bumpy. But the impact on costs and productivity is becoming clear. Though most don’t yet formally track it, 72% of our respondents say that AR is on par with or has exceeded expectations.
The survey and report provide many more interesting results and recommendations. AR is a watershed technology, not least because it frees people from two-dimensional screens and pages, and enhances the ability to be informed, understand context, and learn.
It allows remote sharing and interaction in unprecedented ways. In the end, it is probably more about augmenting humans than “reality”. And, due to its nature, service is an excellent area of application for the technology.
But it should also be noted, that AR is an “infrastructural” technology and as such, while it may be of great value, does not confer competitive advantage on its own – it is available to all. How it is used is what is important.
And, on the realistic assumption that it will rapidly become a standard way of supporting customers and equipment, not using it already is a serious disadvantage.
Titos Anastassacos is managing partner at si2partners.com and can be reached via [email protected].
