February 2009
Recession Battle Plan for Field Service
For six straight quarters, corporate profits have fallen in the United States.
A recession also grips Europe and Japan, where it is expected to linger for
at least another year. And economic woes are expected to reach much of
the rest of the world through the course of 2009 and 2010. Reflecting these
macroeconomic events, nearly 75% of attendees at the October 2008
Aberdeen Chief Service Officer (CSO) summit indicated a decline in their
respective company's new product sales — and indicated having a dire need
to increase revenue from their service operations. Supplementing this
finding, Aberdeen research on the topic of Forecasting and Planning,
conducted in December 2008, revealed that, to weather the storm, 75% of
service executives around the world are placing more scrutiny on their
purchasing initiatives, and are seeking a clear understanding of value before
procuring technology to support their service operations. In the face of a
down-turning economy, it is clear that the function of service is becoming
increasingly important to corporate earnings. The question is, however, do
service organizations have the technologies in place to meet increased
demand, control costs, and deliver high-quality service — and, thereby,
contribute to the bottom line?
Striving for Balance: Cut Costs; Improve Service
To address the challenges of an unstable economy, many managers are
drawn into overly cautious modes of operation, focusing exclusively on
cost-reduction measures. Embracing such a strategy is shortsighted, however, as
hidden opportunities are overlooked.
Today, astute managers realize that customer satisfaction and retention
directly relate to corporate success. In an Aberdeen survey of 150 service
firms conducted during summer 2008, nearly 80% of industry leaders, those
who have achieved excellence in their operations, indicated that their top
goal is to improve customer satisfaction. These firms know that the concept of
satisfying customers supports long-term profitability. Such customers develop
deep brand loyalty, and return for additional business.
Analyst Insight
Aberdeen’s Insights provide the
analyst perspective of the
research as drawn from an
aggregated view of the research
surveys, interviews, and data
analysis
"Difficult times, as we face
today, allow us the opportunity
to examine our strategy,
improve our processes, and
procure and apply new
technology. In doing so, we
position ourselves to win new
business and improve the
percentage of revenue derived
from the service side of the
house."
~ Manager, High-Technology
Manufacturing Company
Make a Difference with These Technologies
The adoption of the right technology, under a thoughtful strategy, is critical
in helping field service organizations achieve success. The most beneficial
enablers today include:
•
Forecasting and planning
•
Scheduling
•
Contract management
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Recession Battle Plan for Field Service
Page 2
•
Mobility
•
Remote product monitoring
•
Business Intelligence (BI) and analytics
Forecasting and Planning
Service firms can't afford to carry excessive inventory "just in case." Nor can they
afford to underutilize highly-paid field technicians. Uncertainty must be replaced
with precision. However, the unpredictable nature of service challenges this
situation: it is difficult to determine future supply if demand is sporadic.
The leaders in the industry have addressed this challenge by adopting
stringent Forecasting and Planning (F&P) processes and utilizing advanced
F&P technologies that review history, trends, and real-time developments.
These companies have cut costs (through better utilization of people and
parts) as well as improved customer satisfaction, addressing the top industry
pressures, as stated by respondents in a fall 2008 Aberdeen survey and
reflected in Figure 1.
Figure 1: Industry Pressures
Customer demand for
faster service response
54%
35%
Mandate to reduce service costs
Mandate to improve
resource utilization
20%
18%
Need to increase service revenue
0%
~ Kurt A. Bradtmueller,
Director, After Sales,
Panasonic Factory Solutions
Company of America
32%
Competitive pressure
"When downtime costs our
customers $60K an hour, our
ability to put resources ontarget on-time defines
customer satisfaction and
determines whether
customers buy from us again.
We must be able to forecast
and plan, otherwise we
couldn’t provide quality
support. We can’t guess, we
can’t tell the future, and we
can’t read minds…but our
history and our tools make us
right over 95% of the time."
10%
20%
30%
40%
50%
60%
% of All Respondents
Source: Aberdeen Group, December 2008
Leading firms holistically forecast and plan all resources, both people and
parts; roll up all forecasts into a single planning effort; and appoint a single
executive to oversee the aggregate F&P endeavor.
Scheduling
In this economy, scheduling is the "killer" application, as it maximizes routes,
increases wrench time, reduces carbon emission, and satisfies customers. A good
scheduling algorithm considers such criteria as job type, job location,
required technician skill sets, technician's proximity to the job, parts needed,
job duration, SLAs, customer value, and more.
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Recession Battle Plan for Field Service
Page 3
In essence, scheduling ensures that the right person arrives at the right site
at the right time with the necessary tools, parts, and information needed to
accommodate the service request.
Leaders get results: Aberdeen research, conducted in summer 2008,
show that the leaders in the industry are realizing an 86% performance in
meeting promised response times and a 71% performance in workforce
utilization.
How they do it: These companies are twice as likely as all others to
optimize schedules in real time. They also are nearly three times as likely as
all others to leverage mobile field service applications to facilitate field-base
data access for their mobile technicians.
Emergency requests, extended service calls, and other activities can all
change a schedule that was fine in the morning, but is no longer viable in the
afternoon. Therefore, scheduling systems also must account for technician
activities as they happen in the field and make adjustments in real time for
unforeseen events. As well, mobile-enabled scheduling solutions that
support timely updates can facilitate information dispersal, and, thereby,
greatly enhance the ability to respond to developing situations.
"Effective resource scheduling
and management is extremely
important. We are trying to
convert our service offering
from a cost center to a profit
center and every penny saved
spends just as well as a penny
earned."
~ Field Service Coordinator
Large Global Communications
and IT Company
Contract Management
Service organizations cannot operate effectively without an understanding of their
contractual obligations to a customer. Customer commitments can include
service level agreements that define the minimum response times,
equipment uptime requirements, and other associated factors that govern
both entitlement to service and priority of a service request. Service
contracts are often sophisticated, offering commitments that are specific to
customers, devices, or locations. Furthermore, the profitability of an
operation requires that the service firm avoid giving away free service to
customers who are not entitled. Successful organizations know when to bill
for services rendered, inclusive of the cost of time and materials, where
appropriate. Most importantly for many, service contracts serve as a
predictable and renewable source of revenue for firms looking to offset
increasing cost pressures and declining product sales.
"We've embraced a holistic
approach to field service,
integrating our contract
management function with
service execution (scheduling
and dispatch) – thereby
enabling appropriate response
to contract terms and
avoidance of contract
penalties."
~ Director, Medical Device
Manufacturing Company
Mobility
Mobile devices provide field service workers with prompt access to customer, part,
and work order information — and the ability to instantly connect with fellow
workers as well as to home base. With the average service firm (polled by
Aberdeen) employing 200 technicians and utilizing 75 trucks — and facing
the needs of customers located across a wide territory — it is imperative to
put accurate and timely information in the hands of all field workers.
Sixty-one percent (61%) of all firms, responding to a fall 2008 survey,
indicated that increasing resource costs and economic conditions were
motivating them to consider mobile solutions, shown in Figure 2. This driver
was coupled with firms' desire to manage, meet, and exceed rising customer
© 2009 Aberdeen Group.
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Recession Battle Plan for Field Service
Page 4
expectations regarding speed and accuracy of service delivery, as indicated
by 44% of all responding firms to that same survey.
Figure 2: Cost Drivers Increase Focus on Mobility
Increasing service-related costs (workforce,
fuel, parts, fleet, vehicles etc.)
61%
Customer demand for faster and improved
service issue resolution
44%
Need for improved data capture and
information for management insight
40%
Shrinking product margins placing more
pressure on service revenue contribution
20%
0%
“The biggest benefit of
mobility for our organization
is that our technicians are
now self-reliant and don’t
have to wait for information
from the back-office to
complete their jobs.”
~ VP Operations, Large
North American
Telecommunications Firm
10% 20% 30% 40% 50% 60% 70%
% of All Respondents
Source: Aberdeen Group, September 2008
Today, nearly 50% of all service firms indicate that they currently use mobile
solutions, with another 40% stating that they actively are evaluating the use
of mobility in the next 12 to 24 months.
Remote Product Monitoring
Service firms are increasingly focused on improving their preventive (and
predictive) maintenance processes, as reflected in the 41% increase in assets
being monitored remotely over the last year. Remote product monitoring
enables service organizations to better support their customer service
needs by remotely capturing and analyzing asset performance data so as to:
•
Trigger corrective actions, root cause failures, and dispatch
workflows for an asset that has already broken down
•
Trigger preventive service workflows for assets displaying
suboptimal performance and that require maintenance and repair
before they break down
Leaders get results: Aberdeen research, conducted in spring 2008, shows
that the leaders experience a 93% current performance in serviceable asset
availability. They're also experiencing a 16% improvement in mean-timebetween-failure for their assets over the past two years.
“By combining remote
product monitoring and
predictive maintenance, the
number of traditional on-site
dispatches will significantly
decrease."
~ Paul Mercina, Director,
Service Product Management
/ Applications Planning,
Diebold, Incorporated
How they do it: Leaders are almost twice as likely as all others to trigger
corrective or preventive actions on notice-of-performance drop. captured
directly from the asset. They're also 25% more likely than all others to use
remotely captured data to inform service technicians of possible repair and
resolution scenarios prior to dispatch.
© 2009 Aberdeen Group.
www.aberdeen.com
Telephone: 617 854 5200
Fax: 617 723 7897
Recession Battle Plan for Field Service
Page 5
Business Intelligence and Analytics
Business Intelligence (BI) provides executives with valuable insight as well as
actionable information to adjust the direction of and optimize their operations.
Regardless of the industry, specific service function, geographic market, or
customer profile, firms making the investment in technology to drive better,
more accurate decisions have shown significant improvements across
multiple areas of service operations, as illustrated in Figure 3.
Figure 3: Most Positive Impact of BI
All Others
Best-in-Class
100%
Reduced costs
60%
94%
91%
Better internal reporting
of service performance
94%
Increased
workforce productivity
68%
88%
Issue resolution speed
75%
88%
Customer retention,
satisfaction, loyalty
66%
~ Andre Ezers, Executive Vice
President, Technical Services,
Sysmex America, Inc.
87%
Compliance with SLAs
0%
"What you measure is what
you manage. Business
intelligence technology is
critical in driving process
improvement and ongoing
measurement. It’s all about
improving the business model –
and balancing efficiency with
customer satisfaction."
56%
20%
40%
60%
80%
100%
% of Respondents
Source: Aberdeen Group, October 2008
Leading firms standardize their processes for corporate-wide data
collection, centralize their BI initiatives across all corporate divisions, and
identify a single corporate executive to oversee the BI initiative.
Case in Point
The Linc Group is one of the nation’s most successful single-source
providers of high-value facilities management and building systems services.
The company offers premier on-site facility operations and management
services, mission-critical government support, mobile HVAC preventative
maintenance service programs, lighting and electrical services, bundled
energy solutions, and related renovation and retrofit projects. For more
than two decades, the company’s expertise and innovative solutions have
helped building owners and managers reduce their operating costs;
maximize asset value; and create a comfortable, healthy, and safe
environment that results in increased productivity.
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Recession Battle Plan for Field Service
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The Linc Group prides itself on the delivery of high-quality customer care,
and that standard permeates throughout the corporate culture.
Management knows that customer satisfaction is directly related to
customer retention and directly contributes to life-time customer value.
Consequently, staff members are serious about customer obligations.
“Our present economic situation certainly challenges our business, but it
also offers some of us unique opportunity for self evaluation and
improvement,” stated Greg Lush, CIO, The Linc Group. “Over the past
year, we’ve thoughtfully returned to our core values, re-examined our
strategies, and invested sensibly.”
The Linc Group knows that its many competitors are retracting in this
economy … as well as compromising in their service. “We are focused
fervently on retaining existing and adding new clients by constantly
delivering value,” said Lush. Lush, who comes from a long line of field
technicians, knows that every interaction with a customer provides a pivotal
opportunity for his service firm to solidify — and expand — the relationship
with that customer. Accordingly, the company has begun an extensive
survey process to determine customer perception and need — and is
investing in its staff with on-the-job training programs as well as formal staff
education and career improvement seminars. “We want our technicians,
who present the face of our company, to represent us professionally, self
assuredly, and with deep knowledge at all times.” The company also is
empowering its staff with new tools to improve productivity and job
satisfaction.
On another front, to increase its footprint, the company has broadened its
marketing initiatives significantly, outreaching to and securing new clients in
new markets and industries.
The Linc Group is intensely committed to quality, especially now. “We are
looking very closely at all of our internal processes,” stated Lush. “These
days, strong companies turn back to their documented processes to review
and improve age-old practices.”
The Linc Group, through Lush’s stewardship, has been a pioneer and early
adopter of technology to supports its corporate goals. But the down-turning
economy has meant that capital expenditures and other big-ticket items are
reviewed with much more scrutiny. “It only makes sense,” continued Lush,
“that we’re reducing the number of acquisitions, focusing on organic
growth, and devoting a somewhat smaller percentage of our capital budget
to innovation. We’re still procuring technology, but we are pushing vendors
to show us the value — as well as provide us with deep discounts.”
“You can’t escape this current
gloom, even for a moment.
Everywhere you turn there are
reports that indicate a
precipitous fall in GNP,
employment, and confidence of
our citizenry. In the service
sector, we require staff
members who are
knowledgeable and self assured
when in front of our
customers. They cannot reflect
the fear and pessimism that
surround us. As such, ongoing
investment in staff, including
training initiatives, is critical."
~ Greg Lush, CIO, The Linc
Group
The company is taking stock of its existing investments, too, and is tirelessly
looking to derive additional value from those investments. “My mantra is to
take what you have and integrate to improve,” stated Lush. This means
connecting corporate-wide systems through intelligent interfaces, making
the whole greater and more powerful than the sum of the parts. “People
© 2009 Aberdeen Group.
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Fax: 617 723 7897
Recession Battle Plan for Field Service
Page 7
use only a fraction of the features in a system,” said Lush. “We must now
leverage our past investments, and capitalize on that unused functionality.”
In summary, Lush acknowledges the dire economic situation and its effect
on business, but knows intrinsically that cowering in such a period is
wrought with peril. "Today, service is becoming increasingly important.
Companies wish to extend the life of their assets, and turn to us for
maintenance and other services. In times like these, one must focus on
increasing marketing efforts, training staff, improving processes, and
optimizing and fortifying systems infrastructure — all to improve the
customer experience.”
Lush continues, "Don’t be tempted by low margin work for the sake of
keeping your workers busy. Remember that service is not a commodity…it
provides real value, so avoid compromising on price. Trim unproductive
workers and cut non-profitable customers. Focus on your annuitized
streams of business. That's where the proof is. Invest wisely in technology.
Push your vendors to show system value."
Key Takeaways
A company's revenue stream, typically, is derived from two sources: sales and
service. In a troubled economy with waning new product deals, service,
consequently, is becoming increasingly important. Against this backdrop,
current market characteristics — and opportunities for service
organizations — include:
•
An ever-increasing demand from still-funded clients who wish to
extend the life of their existing assets through Preventive
Maintenance (PM) and other service means
•
Existing and prospective clients who possess budget for, are
interested in, and need additional service offerings
Moment of Truth: Now is the Time to Act!
For service organizations around the world, this period in time represents a
moment of truth. Narrow-sighted service managers will cut their IT budgets
to "weather the storm." Visionary executives, however, will invest now in
efforts to retain existing clients and add new ones. In doing so, they will
review their market strategies; eliminate old and optimize present business
processes; and adopt technology that makes sense and supports the goals of
managing costs and preparing for long-term demand from customers.
"While our competitors are
complaining about the economy
and lost business, we’re
bringing on new customers.
Overall costs stay down with
the help of technology; it helps
us on the price side. Our
competitors have had to keep
raising prices, but we’ve been
able to maintain the same
prices as before. I think the
economy is what you make it. If
you listen to the news on TV
and believe it, then that’s how
your business is going to turn
out.”
~ Bob Bull, Owner and
President, CMS Mechanical
Service Company
Procure Technology
In this regard, there exist productivity-enhancing technologies that make a
big impact. Forecasting and planning solutions enable you to predict future
demand and accommodate that demand with a cost-conscious and balanced
supply of resources. Scheduling, combined with Street-Level Routing (SLR),
ensures that the technician expeditiously arrives with right tools, parts, and
information, thereby reducing windshield time, increasing first-time fix rates,
© 2009 Aberdeen Group.
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Fax: 617 723 7897
Recession Battle Plan for Field Service
Page 8
and directly supporting customer satisfaction goals. Contract management
provides a holistic view of the customer, ensures that agreements are
honored, assists in the proper alignment of resources, and serves as a
significant revenue contribution. Mobility empowers technicians with
knowledge, and ensures bi-directional communication with the home office
and with customers. Remote product monitoring guarantees asset uptime cost
effectively, which, in all industries, is critically important to margins. And BI
makes certain that insight is available, operations run efficiently and
smoothly, and issues related to ongoing improvement are supported.
Integrate and Centralize
These technologies are intimately dependent on one another and should
not operate exclusively. Integration is critical here. For example, scheduling
is inefficient if it is not connected with information garnered from F&P,
tightly woven into SLA and other customer data, complemented with field
workers on intelligent devices, and supported by business intelligence.
Aberdeen refers to field service as a "chain," which conjures an image of a
continuous loop of interrelated functions. These functions (the links in the
chain) must also be centralized, enabling resource sharing. Too often, "silos
of automation," developed over years, thwart collaboration and efficiencies.
Secure Oversight
Finally, executive sponsorship is required for your service operation, as such
backing provides the foundation from which the right authority stewards the
ongoing visibility, corporate justification, and budgetary support of field
service — and is empowered to elevate field service to boardroom status.
What's Next — Five Steps
Now is the time to invest in field service. Follow these steps:
1. Investigate the right technology for your business operations, your
IT platform, and your budget. Challenge vendors to articulate and
demonstrate solution value.
2. Centralize previously disparate functions. Look for waste and
redundant practices. Eliminate antiquated processes, and secure
executive sponsorship.
3. Deploy aforementioned technologies. These will reduce costs,
better utilize resources, and improve customer satisfaction.
4. Integrate all functions, so that field service is a comprehensive,
holistic entity.
5. Continue measuring. A corporate mentality of constantly measuring
ensures continuous improvement.
The combination of robust technology and optimal processes will bring
greater certainty and excellence to service operations — even in difficult
economic times. When the dark economic cloud passes, those who have invested
in field service will be positioned enviably.
© 2009 Aberdeen Group.
www.aberdeen.com
Telephone: 617 854 5200
Fax: 617 723 7897
Recession Battle Plan for Field Service
Page 9
For more information on this or other research topics, visit
www.aberdeen.com.
Related Research
Service Management for SMBs:
Employing a Strategic Approach; January
2009
Predict to Prevail: Forecasting and
Planning Service Demand in Challenging
Times; December 2008
Mobility in Today's Service Organization;
September 2008
Field Service Scheduling and Routing: A
Guide to Service Delivery Excellence; June
2008
The Maturity of Remote Product Service;
April 2008
Get Smart: Business Intelligence for
Service Organizations; November 2007
Optimizing the Service Supply Chain;
October 2007
Author: Jack McAvoy, Research Director, Strategic Service Management
(jack.mcavoy@aberdeen.com)
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