STRATEGIES FOR GROWTH SM
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1 STRATEGIES FOR GROWTH SM "CONSULTANTS TO THE SERVICES INDUSTRY" Services Organisations Are Investing in Mobile Tools and New Technologies - Executive-level Results from SFG s 2013 Field Service Management Benchmark Survey - Written by: Bill Pollock President & Principal Consulting Analyst Strategies For Growth SM Westtown, Pennsylvania 5 December, Strategies For Growth SM P.O. Box 1024 / Westtown, PA / (610) / wkp@s4growth.com /
2 Strategies For Growth SM Page 2 of 14 A. Introduction and Survey Respondent Disposition Each year, Strategies For Growth SM (SFG SM ) conducts a series of Benchmark Surveys among its outreach community of more than 45,000 global services professionals. Total responses for the 2013 Field Service Management Benchmark Survey, conducted in Q2 of 2013, are 1,104, of which 923 represent organisations that are currently deploying field technicians (i.e., Field Service organisations, or FSOs). An overview of the survey respondent disposition reflects a microcosmic representation of the global services community, as follows: 59% Manufacturer/OEMs or Third Party Maintenance (TPM) providers; 17% Dealer/ Distributors; 15% Professional Services; and 9% In-house/Self-Maintenance 74% North America; 18% EMEA and 7% Asia-Pacific 63% Services Operations Director/Manager; 25% C-Level/VP/GM; 12% Services Technician and Other 37% Small Enterprises (i.e., less than US$100 million); 30% Medium Enterprises (i.e., between US$100 and US$999 million); and 33% Large Enterprises (i.e., US$1 billion or larger) 30% High-Tech/IT Services; 19% Industrial/Manufacturing; 19% Medical/Healthcare; and 32% Other (including Home Services, Automotive, Retail, Construction, etc.) As such, we believe the survey results to represent a realistic reflection of the global services community in which we all serve. B. Putting Things in Perspective Overall, survey respondents identify the following as the top factors, or challenges, that are currently driving their ability to optimise field service performance: 52% Customer demand for improved asset availability 47% Need to improve workforce utilisation and productivity 43% Need to improve service process efficiencies In order to effectively address these challenges and strive to attain best practices respondents then cite the following as the most needed strategic actions to be taken: 52% Develop / improve metrics, or KPIs, used to measure field service performance 44% Invest in mobile tools to provide field technicians with real-time access to required data and information in the field 35% Integrate new technologies into existing field service operations (i.e., ipads, Tablets or other devices, etc.) The remainder of this white paper provides additional insight on each of these and other related areas that may be impacting your organisation s drive to attain best practices.
3 Strategies For Growth SM Page 3 of 14 The survey results reveal that nearly two-thirds (66%) of respondent organisations currently operate service as an independent profit center (or as a pure, third-party service company), compared with only 31% that operate as cost centers (Figure 1). While there has not been a significant change in these percentages over the past two years or so, this two-thirds ratio validates the fact that profit centers now represent the dominant business model for the services community. It is noted, however, that the percentage of organisations running service as an independent profit center varies sometimes significantly from one industry segment to another. For example, the medical/healthcare segment reflects only 57% running as profit centers, compared to 65% for the Computer/IT Services segment and 77% for industrial/manufacturing a 20% spread. US$1 billion-plus organisations come in at 74%, while SMBs (i.e., Small and Mediumsized Businesses) report only 55%. Not surprisingly, organisations reporting total annual services profits of greater than 30% come in at 76% one of the highest levels among all of the segments covered in the survey. As such, they are not only operating service as a profit center they re actually making a significant profit by doing so!
4 Strategies For Growth SM Page 4 of 14 More importantly, the respondent base clearly reflects the predominant mode of Field Service Management (FSM) solutions currently being deployed that is, typically offthe-shelf, either with some customisation (37%), or basically right out-of-the-box (4%), comprising 41% of the respondent base in total. More than a third of respondents (35%) are either using home-grown, or internallydeveloped automated systems (23%), or custom solutions developed by a systems integrator (12%). However, the most perplexing statistic may be the fact that nearly onein-five respondents (18%) are still running their field service organisations basically via a series of manual processes (and spreadsheets) (Figure 2). Despite the means by which field service operations are being managed today, one of the more compelling reasons for why so many organisations are looking for ways to improve or enhance their service delivery performance and, ultimately, their corresponding levels of customer satisfaction and service profitability, is the fact that less than half (43%) are currently attaining as high as a 90% customer satisfaction rating. While more than a quarter (28%) currently find themselves performing in the 70% to 89% satisfaction range (i.e., probably where your organisation stands), the best practices organisations typically find themselves at the 95%-plus level and this is, ultimately, where you want to be!
5 Strategies For Growth SM Page 5 of 14 However, making the improvement from a level of 70% - 80% customer satisfaction to 90% or higher is not simply accomplished through the implementation of new field service software automation technologies; or the deployment of mobile tools, devices and solutions and simply waiting for customers to become more satisfied there are many additional aspects of service performance that will still need to be improved and/or enhanced in order to have a positive impact on customer satisfaction. The respondents to the survey have clearly identified the specific drivers that are pushing them to aspire to the attainment of higher levels of performance. For example, customer demand for quicker response time is cited by just over half of the respondent base (i.e., 52%) as the top driver their organisation currently focuses on with respect to optimising field service performance. The need to improve workforce utilisation and productivity is next most highly cited by 47% of respondents (Figure 3). It is noted, however, that these two market drivers have essentially flip-flopped over the past two years in terms of characterising the most important market drivers currently impacting the market s path toward service delivery optimization. As such, once again, the top market driver is focused on satisfying the customer, rather than strictly on improving internal processes and/or productivity a reflection back to the more historical perspective of the field service community.
6 Strategies For Growth SM Page 6 of 14 However, there are several other key drivers that also impact between one-third and one-half of the market, including the need to improve workforce utilisation and productivity (47%), the need to improve service process efficiencies (43%), customer demand for improved asset availability (35%), and an internal mandate to drive increased service revenues (33%). As such, the common threads that tie all of these drivers together may be best categorised into three groupings essentially comprising: Customer demand for quicker response and improved asset availability; Field technician utilisation, productivity and efficiency improvement; and An internal mandate to drive service revenues and profits. The results of the survey reaffirm the relationships between and among these three groupings by linking internal process and productivity improvements directly to improved customer support, ultimately leading to reduced costs, increased revenues, more satisfied customers, and a healthier bottom line. Another key influencing factor revealed through the analysis of the survey findings is that only two-thirds (67%) of the services organisations surveyed have experienced any improvement in year-to-year field technician productivity in the most recent period. In fact, one-in-12 have actually experienced declines in productivity over this 12-month period some of which were up to 50%! These levels of year-to-year declines in performance are largely unacceptable in an environment where a majority of FSOs remain on a path toward improved service delivery performance. We also believe that it is a mistake to dwell only on the top factors that are driving the market and the organisation. In fact, there are several other factors that respondents cite as just bubbling under the surface with respect to their potential impact on the overall well-being of the organisation. These include: 32% Competitive pressures / need for market differentiation 18% Escalating field service operations cots 15% Customer demand for more accurate service call scheduling 6% Need to reduce dispatch-related errors 5% Need to reduce / eliminate incidence of night / weekend work Again, while not necessarily representing the top market drivers overall, these factors still resonate with many field services organisations in terms of their impact on the way day-to-day business will need to be transformed in order to meet customer and market expectations for meeting service performance and customer satisfaction expectations. Best practices field service organisations typically take all of these factors into consideration when evaluating their service performance and identifying more effective ways by which to satisfy their customers.
7 Strategies For Growth SM Page 7 of 14 Based both on the survey findings and SFG SM s ongoing research, it is not surprising that the field services community recognises it will need to increase its investments in new technologies and mobile tools in order to compete in an expanding global marketplace. In addition, it also recognises that it will need to develop and/or improve the Key Performance Indicators (KPIs), or metrics, it uses to measure the impact that these implementations, deployments and technology advances will actually have on the organisation s performance (Figure 4). The new global economy also demands that these investments be made in a certain balance that allows the newer technologies to support a back to the basics approach with respect to running a successful and profitable field services organisation. In other words, services organisations need to embrace new technologies, but without forgetting that it is still all about the customer. Some of the basic strategic actions that between one-quarter and one-half of respondents also cite include training, planning and forecasting, service delivery automation and enterprise-wide access to important field-collected data.
8 Strategies For Growth SM Page 8 of 14 Planned strategic actions over the next 12-month period reflect a more dynamic, rather than static, approach to the field service marketplace. For example, an additional 41% of respondents plan to develop and/or improve their use of field service KPIs, or metrics, in the next 12 months, and nearly as many plan to integrate new technologies (36%) and invest in the next generation of mobile tools (33%) to support their technicians in the field. Other key planned actions will be taken in areas relating to the automation of existing manual field service processes or activities (33%), improving planning and forecasting activities (32%), and providing additional training for field technicians and dispatchers (30%). What these data primarily show is that the field service community recognises the need to take specific strategic actions to enhance and improve existing service operations, and that these actions begin first and foremost with the need to develop and/or improve the use of service metrics and KPIs in measuring and monitoring their service delivery performance. In addition, it shows that FSOs also recognise the need to invest in the right technologies and mobile tools to empower their resources both in the field, and in the back office, to improve existing processes, meet the growing needs of customers, and make greater contributions to the bottom line. The survey findings reveal that there are basically five service performance metrics, or KPIs, presently being used by a majority (i.e., 50% or more) of the FSOs that participated in the 2013 Field Service Management Benchmark Survey. They include: 80% Customer Satisfaction (up from 70% in the 2011 Survey) 72% Total Service Revenue (up from 66%) 69% Total Service Cost (up from 51%) 59% Field Technician Utilisation (up slightly from 56%) 52% Service Revenue, as a Percent of Total Revenue (not asked in 2011) However, there are also an additional seven KPIs that are used by just under one-half of FSOs to help them measure their performance. These include: 49% On-site Response Time (down from 51% in the 2011 Survey) 48% Field Technician Productivity (down from 66%) 47% First Time Fix Rate (down from 45%) 46% Mean-Time-to-Repair (MTTR) (down from 49%) 45% Percent of Total Revenue Under SLA/Contract (not asked in 2011) 45% Service Level Agreement (SLA) Compliance (down from 48%) 43% Service Parts Revenue, as a Percent of Total Service Revenue (not asked) Thus, presented in this manner, it appears that the most commonly used service performance KPIs from two years back are even more commonly used by FSOs today.
9 Strategies For Growth SM Page 9 of 14 The survey findings also show that FSOs aspiring to attain Best Practices do not merely look at outcomes, like improving the bottom line, or increasing customer satisfaction; they also look at ways in which to identify the root causes of major problems and leverage process improvement opportunities through the implementation of effective technologies and tools to support their resources both in the field and in the front and back offices that support them. For example, a majority of FSOs currently support their field technicians with a variety of online capabilities, including the ability to initiate service orders (80%), ability to track and update the current status of work orders (80%), access to product schematics/ documentation (68%), access to customer/asset service history (66%) and ability to provide customers with an Estimated Time for Arrival (ETA) (59%) (Figure 5). Each of these capabilities also reflects between 21% and 30% of the respondent base citing them as planned actions for the next 12 months as well, suggesting a strong and growing importance within the overall services community. Whether it is access to data and information that represents the past (i.e., customer/asset history), the present (i.e., current status of work orders), or the future (i.e., providing customers with an ETA), the leading FSOs already recognise the importance of real-time data and information access.
10 Strategies For Growth SM Page 10 of 14 The key to success for many best practices FSOs is that they are also providing their customers with a comparable set of online tools to make both their and their field service provider s lives easier. By providing customers with the right mix of Webenabled self-help capabilities, the leading FSOs have essentially been able to run their respective services operations more effectively, while also increasing existing levels of satisfaction by allowing customers to become part of their own support team. Figure 6 identifies the top online capabilities currently being made available by FSOs to their customers. Self-help support capabilities, such as the ability to order parts or view current work order status, saves customers and FSOs significant time in that an entire series of potential two-way vendor-customer status update calls can be avoided; and customers can create their own service tickets online, gain direct access to self-service resolution scenarios, receive real-time status update alerts, and track the shipping status of outstanding service parts orders themselves. Basically, the more the customer can do any of these activities itself, the quicker service orders can be created, the quicker potential time-related problems can be identified and resolved, and the happier the customers will be with the service they are receiving from the provider. Also, by making the customer part of the service delivery team, FSOs can also benefit from reduced time and cost-related factors. Customer access to online service order data and information is clearly a win-win scenario for both parties.
11 Strategies For Growth SM Page 11 of 14 However, the greatest impact on the future of Field Service Management is most likely to come as a result of the growing acceptance of Cloud-based technology, as reflected in one particular series of questions included in the FSM survey questionnaire. Respondents were first divided into three (3) categories i.e., those with existing FSM solutions already in place, those planning to implement in the next 12 months, and those considering an FSM implementation or upgrade in more than one year. The results strongly suggest that we are currently in the midst of a fast-paced sea change in the way FSM solutions are being marketed, sold and deployed. Among the group of respondents with existing FSM solutions (i.e., already in place), 60% report they are using a Premise-based solution, compared with only 26% reporting a Cloud-based, or Software-as-a-Service (SaaS), solution. Accounting for the roughly one-in-seven, or 14%, that are not certain as to the specific type, this represents an approximate 70% of current FSM users operating off of a Premise-based solution a ratio of roughly 2:1, Premise-based over Cloud-based. The ratio completely reverses 180 degrees, however, for FSOs planning to implement (or upgrade) their FSM solution in the next 12 months (i.e., they have either just signed, or about to sign, an agreement to implement). For this category, 54% plan to implement a Cloud-based FSM solution, compared with only 20% planning to go Premise-based (Figure 7). In this case, however, nearly twice as many (26%) are not certain as to which way their organisation plans to go so, by eliminating the don t knows from the equation, the corresponding numbers equate to 73% planning to go Cloud-based a 2.7:1 ratio in favor of Cloud.
12 Strategies For Growth SM Page 12 of 14 For those FSOs considering an FSM implementation or upgrade in the timeframe of one year or longer (i.e., they are presenting exploring their options, and/or just kicking tires ) the numbers are similar to those planning to implement in the next 12 months; however, with nearly half (45%) indicating they are still uncertain as to which path their organisation will ultimately take, these percentages are likely to shift somewhat over time. Still, the numbers reflect 36% favoring Cloud, compared with 19% favoring Premise a roughly 65% preference toward Cloud-based FSM, and a ratio of roughly 1.9:1 in favor of Cloud. Regardless of which type of FSM is preferred, the decision to acquire a specific FSM solution is based on many factors, as illustrated in Figure 8. In fact, a majority of respondents cite three factors as most important in making their selection; namely, a solution that interfaces with CRM (i.e., either their existing solution, or one that they plan to implement), one that is intuitive and easy to use, and one where they can work with a single provider with respect to field service functionality. Other factors cited by just under half of respondents include a preference for a solution that can roll out quickly, and one that fosters collaboration between Sales and Service within the organisation. Both Premise-based and Cloud-based solutions can accommodate this list of top factors, although Cloud would appear to have an edge in factors relating to ease of use, quick rollout and, arguably, fostering collaboration.
13 Strategies For Growth SM Page 13 of 14 Based on the results of SFG s 2013 Field Service Management Benchmark Survey, the key takeaways are: Field Service Organisations (FSOs) are being driven to meet customer demands for quicker response; improve workforce utilisation, productivity and efficiencies; meet customer demand for improved asset availability, and increase service revenues A majority of FSOs are adding, expanding and/or refining the metrics, or KPIs, they use to measure service performance Over the next 12 months, more than three-quarters (77%) of FSOs will have invested in mobile tools to support their field technicians, and more than 70% will have integrated new technologies into existing field service operations Field Technicians are increasingly being provided with enhanced access to real-time data and information to support them in the field Many FSOs are providing customers with expanded Web-enabled self-help capabilities (i.e., to order parts or initiate service calls, track the status of open calls, etc.) More than half of FSOs are not currently attaining their customer satisfaction or SLA compliance goals; and one-in-five are not achieving at least 20% services profitability (although services profitability, as a whole, appears to be improving) Existing FSM platforms are reported as reflecting a more than 2:1 Premise-based over Cloud-based ratio; however, planned FSM implementations are reported as more than 2:1 Cloud-based, or SaaS. While Cloud-based FSM has become the preferred mode of delivery for planned and/or considered implementations, an estimated one-quarter (25%) of the marketplace still cites a preference for a Premise-based FSM solution. Historically, the primary factors cited as driving the services community to improve its operational efficiencies and service delivery performance have essentially been customer-driven; that is, with a focus primarily on meeting and even exceeding customer expectations for response time, first-time fix, mean-time-to-repair and the like. The economic bust of the past decade changed the way field service organisations thought by shifting their focus to ongoing rounds of cost cutting and downsizing (i.e., the denominator of the bottom line). This was quickly followed by a shift to the numerator, best represented by an all-out effort to increase service revenues. In 2013, the focus once again shifted back to the customer in terms of meeting (and exceeding) customer demands and expectations or back to the basics. And how are FSOs planning to accomplish this? Mainly by integrating new technologies into existing field service management or Service Lifecycle Management (SLM) systems, investing in new tools to support both field technicians and customers, and developing and/or improving the KPIs they use to monitor their improved performance over time. New technology initiatives, such as Cloud or SaaS, afford FSOs of all types and sizes the opportunity to compete head-to-head against their competitors, while Premisebased is still preferred by many. However, one thing is for certain more changes will be coming as the market continues to evolve.
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