Using trigger points to manage your service business

Sometimes it feels like being a jack of all trades when managing a service business. On the one hand you act like a firefighter, on the other hand you know service is strategic to your business’s future earnings. That said, how do you elevate your job from the reactive to the proactive? Establishing trigger points may be the key ingredient to manage your business on an 80/20 basis. Thus, giving you the focus on interventions that matter.

Define success

When do you know you are doing a great job? In speaking to many service executives, it is not always clear what the norm is. “We want to increase service revenue by 20%”. Why 20%? Why not more? Why not less? In my blog Mind the Gap I tried to establish a norm for a maximum service revenue. In a blog by Shawn LaRocco he defined a norm for Cost to Serve. Both blogs have in common that success is put in a perspective of a norm.

Triggering the outliers

A facilities management customer of ours is processing 15,000 – 20,000 workorders per month. In the past they had a team of 30+ people in the back office validating and correcting all debriefed work orders. Based on gut feeling and experience there was a belief that 80% of the work orders did close within a bandwidth of ±5% of expectation. By formalising that bandwidth through trigger points, they now have a tool to filter the volume and start managing by exception.

Timely intervention

Apart from managing your workload on a 80/20 basis, trigger points serve as an early-warning system allowing for timely intervention. You don’t want to pay penalty cost for a missed SLA. Instead, you want a service job to be flagged if its progress jeopardises SLA attainment. E.g., a break-fix job needs to be completed within 4 hours. After 3 hours you could ping the technician to ask if completion is still on track. If not, you could provide the technician with support and/or contact the customer with a heads up.

A trigger point is thus a floor or ceiling boundary on a metric triggering an event. Using workflow, you can route the event to the mitigating personas in your organisation.

Value = Result minus Expectation

Many years ago, the value of trigger points was eloquently explained to me by university professor Meindert Flikkema. He stated that every event has both an expectation and a result. If somebody gets more than expected, then that person is happy … and vice versa.

In the context of running my own service organisation at Bosch I tweaked Meindert’s equation and added the concept of a bandwidth around expectation. Similar to the above example of ±5%, I strived to manage my operations inside the bandwidth. Inside the bandwidth I let the business run on automations. If I managed well, that would account for 80% of my workload. The outliers I routed to my attention queue. Over time trigger points would help me focus on what really matters for both my customers and my CFO. I’ll use the business driver contract profitability to illustrate the value equation and its impact.

Contract profitability in action

Suppose a customer wants to buy a full-service contract with a scope-of-work containing preventive maintenance, capped break-fix events, calibrations, software maintenance and an included set of spare parts and consumables. Using a CPQ-like tool the scope-of-work totals to a calculated cost of $75,000, a calculated revenue of $100,000 and an expected margin of 25%.

Throughout the lifecycle of the contract executed service activities will impact the cost you accrue. If those cost exceed the $75,000 you have either over-delivered or over-run on your calculated cost. Your CFO will see a less-than-expected margin contribution. If your margin is significantly more than the expected 25%, then either you are over-charging or under-delivering. Your customer may get a feeling he/she is not getting value for money. 

Tipping the trigger level should make you curious. Challenge both expectation and result. Do you have a clear understanding of cost-to-serve? Are you taking the life cycle of the product into account? Did the product owner accept your mid-life-upgrade proposal?

Pro-active

As service leader you don’t want to be told about under or over-situations by your CFO when it is too late for corrective intervention. Similarly, you don’t want you customers to churn. Trigger levels act as an early-warning system before you accrue irreversible cost or impact customer expectation negatively.

  • It’s November. Show me all contracts at 80% of calculated cost. Let’s see what service activities we can push out to ‘save’ this years’ margin contribution.
  • It’s July. We anticipated six break-fix events for a full year. We’ve already had four. We want to flag future break-fix service requests to inform the customer service agent and technician to be stricter.
  • It’s September. The year-to-date contract margin spikes at 35%. Upon investigation you find that a contracted and scheduled calibration activity has been cancelled by the customer. Instead of treating this as easy money, you engage with your customer to pre-empt contract renewal conversations.

Managing intelligent

As long as we have unplanned downtime, firefighting will remain an element of a service leaders’ job. Service execution tools are a great help to facilitate the transaction and collect service data. The true value manifests itself when you use transactional data in combination with trigger levels. Trigger levels give you that early-warning to become pro-active instead of reactive. Trigger levels add direction to your decision making. And better decision making makes you more intelligent and more strategic. Not only inside the service domain, but across your organisation.

Keeping Your Assets in Shape

Do you have this feeling that the battery of your phone drains faster and faster? Internet forums are full of testimonials and resolutions for keeping your battery in tip-top shape. How does this apply to B2B products, equipment and assets? Can asset owners monitor the performance of the equipment, and what handles do they have to maintain output/ outcome at the nominal level promised at point of sale?

For many years I’ve captured the digital and service transformation journey in a single tagline: “from fixing what breaks to knowing what works.” The message is driven by a simple principle: customers expect things to work. Even more, they expect the outcome of the asset to be stable over the lifecycle.

Another simple truth is that everything eventually deteriorates and breaks. This prompts the following questions:

  • What is the life expectancy of the asset? 
  • What do I need to do to keep the asset in shape?
  • What can I do to extend the life cycle of the asset?

Building a Fitness Plan

Preventive maintenance might be the first thing that comes to mind as the way to keep your assets in shape. But what does preventive maintenance (PM) prevent? And how does it affect asset performance and life expectancy? This was a tough question to answer when one of my counterparts in procurement, who was looking to reduce the selling price of a service contract, asked me, “What will happen when we reduce the PM effort by lengthening the interval?” This was even more difficult to answer when it became a numbers game, and the purchaser asked me to prove the offset between PM and break-fix. 

So where do we look next? I propose condition-based maintenance.  

We know that the performance of an asset will deteriorate over time, and we know the rate of deterioration will depend on various attributes like aging and usage. Because these attributes are measurable, we can use them as levels to trigger a service intervention. 

So rather than taking a one-size-fits-all approach based on time intervals, you can create a custom fitness plan for keeping your assets in shape. One that looks at the condition of the asset in relation to its expected performance. This can look like an intervention being triggered when the output of an asset or the viscosity of a lubricant drops below a certain threshold. 

To continue with the fitness metaphor, we often don’t just want to stay in shape—we also want to increase our longevity and even get in better shape as we age. When it comes to your assets, this is where mid-life upgrades, booster-packs and engineering changes come into play. And in the same way you use predefined levers to trigger service interventions, you should use these levers to trigger updates, upgrades and lifecycle extensions.

Both of these service strategies use asset health at the core of your service delivery model, steering you away from ‘fixing what breaks’ and towards ‘knowing what works.’

A Real Life Example

Imagine you have a pump and valve combination that has a nominal capacity of 140 m3/h.

If you used a preventive maintenance model that runs every 6 months, it would not take into account the age of the pump and valve combination, nor would it account for the corrosiveness of the transported materials. 

But if you took a condition-based approach using IoT-connected sensors, you could measure attributes like vibration, temperature, and energy consumption and use them as indicators for asset performance. For example, if the capacity drops below 130 m3/h, a service intervention would be triggered. It’s like the pump saying: “I’m not feeling well, I need a medicine.” On top of this, if you detect the pump is consistently pushed beyond original specifications, you can know that it’s necessary to initiate an upgrade conversation to safeguard asset health and durability.

Asset Centricity

The common theme of these service strategies is asset centricity. It’s about putting asset health at the core of your service delivery model and continuously comparing an asset’s current output with its expected performance.

By looking at current performance, expected performance and demand, you can also advise your customers on when it’s time to downgrade or upgrade the asset. Through this asset-centric lens you can truly become a fitness coach, advising your customers on the right fitness program that will keep their assets in tip-top shape.Learn more about IoT and condition-based maintenance here.

Why Are Sales Leaders Taking Over Service?

For a couple of years now, I’ve been writing about the convergence of Sales and Service. Service, with all its touchpoints during the operational life cycle of a product, has a tremendous capacity for value creation. To reap that value, Service needs a little more Sales DNA. Likewise, Sales needs a little more heart for Service. With a shift from revenue contribution to margin contribution, we see Sales ‘taking over’ the Service Revenue agenda.

You Now Report into Sales

A true story. I’ve had extensive experience running service departments. In all those years my main objectives were focused on service delivery and operational excellence. Over time, I saw an increased interest in service margin and service revenue. When my former organization updated my business objectives with a service revenue target, that goal came as part of a package deal: “you now report into Sales.”

Initially, I did not understand how reporting into Service or Sales when having a service revenue target would make a difference. At that time, the prevailing current was that revenue generation was the prerogative of Sales. Service was seen as a delivery engine focussed on operational gain.

Over the years, I’ve witnessed a dynamic between Sales and Service when it comes to the ‘claiming’ of business case benefits. Lately, a CEO put the reasoning into works while we presented the business benefits of a digital and service transformation project to his executive team. The CEO attributed productivity and cost savings to operations and service. He associated revenue targets with sales. When our business case showed significant revenue benefits through improving installed base visibility and attach rates, sales were the first to claim credits and ownership. For sales, these two improvements translate into touchpoints and conversion. This duo is the bread-and-butter of the sales process.

Bridging Sales and Service

Though sales leaders may be taking over the revenue growth agenda, we all know there is a huge difference between selling products and selling services. The engagement model is different. The buyer role is different. The appraisal of Capex versus Opex has a different impact on decision-making, etc. Most of all, it’s a simple numbers game. Sales revenue is big numbers, service revenue is smaller numbers: Guess who will be seen as the hero?

Any CFO can tell you that services, despite carrying a lower revenue amount, often have a significantly higher margin contribution. What if we were to start incentivizing salespeople with a margin contribution target rather than a revenue target? Great idea? Too radical? Maybe such a move could swing the pendulum in the opposite direction. If all your salespeople were selling services, you would forget you need an initial product sale to make the model work.

So we are back to an earlier blog post I wrote about the importance of Sales and Service Working in Collaboration. The initial product sale is like an ‘entry ticket’ to selling adjacent services. Using the analogy of a theme park, say Universal Studios or Legoland, once you are inside and start spending money, that’s where the EBIT is made. It is the achievement of ticket sales to get you inside. It is the effort of the entertainers to keep you inside as long as possible…and spend money. Are both roles different? Yes. Is one role more important than the other? No.

Building a Portfolio of Lifecycle Revenue Generators

We can transpose the analogy of a theme park to the world products and services by illustrating two common situations:

  • Product sales over-promises: Making it hard(er) for service to sell attached services. In effect, you’re trading high-margin contribution activities for a lower margin contribution.
  • Services portfolio not appealing enough: Making it hard(er) to generate service revenue and providing customers with reasons to churn.

Both examples should compel any product/services company to rethink their revenue generation and margin contribution ‘building blocks.

More and more sales leaders are understanding that revenue generation spans the entire lifecycle of the sold product. The realization that the post-sales value proposition has a symbiotic relationship with the pre-sales value proposition, triggers sales leaders to claim control of the services portfolio and the lifecycle go-to-market strategy.

Now you are thinking: is this the job description of a Chief Revenue Officer (CRO)? Yes, you are close. When a buyer applies a concept like total cost of ownership (TCO) in weighing a purchase, then the response on the sales side converges in the responsibilities of a CRO.

Is it bad for Service when Sales leaders are taking over? I believe not. I think Sales and Service have different but complementary skills to drive the revenue growth agenda. Sales DNA finds Service Heart!

This article is published in Diginomica on June 9th, 2021 and ServiceMax Field Service Digital on June 17th, 2021

Mind the Gap

At Maximize we discussed the topic of Enhancing the commercial maturity of your services business. In that conversation we spoke about ‘the Gap’. The Gap between your current service revenue and the maximum revenue you could achieve when every unit sold would have an associated ‘gold’ contract. This Gap is rather simple to calculate, and it won’t surprise me if the size of the Gap becomes a compelling reason to act.

The Gap

Why is it so important to acknowledge and quantify the Gap? If we don’t want to be like Alice in Wonderland, we need to know both our point of departure and the desired future state. 

We see more and more service executives having a revenue growth target. In the grand scheme of both service transformation and margin contribution, this makes perfect sense. As much as it makes sense, a growth ambition of eg. 20% is ‘only’ directional and not linked to a potential. To make your service revenue growth ambition actionable you need handles; metrics to monitor, levers to pull. The benefit of defining the Gap is, it is SMARTspecific, measurable, actionable, realistic and time-bound).

Let me illustrate this with the analogy of market share. Suppose you say you want to grow your market share by 20%, it makes a huge difference if your current share is 10% or 70%.

Where sales use market share, in the service domain we can use a blend of installed base visibility and attach rate. If you know where 50% of the units sold are installed, and of those units 60% have an associated service contract, you’re addressing 30% of the ‘market’. If those service contracts are a blend of warranty, bronze, silver and gold, your actual reach might be 15-20% of total addressable service market (TAM).

The above example is providing you with two things:

  • A compelling reason to act
  • Three mitigating handles

Compelling reason to Act

Let’s do some role play.

Suppose you are a service executive. You have a steady service revenue stream growing at the same rate of product sales. Your new management tasks you to grow faster than product sales, you need to grow your service revenue by 20%. What is your first response? How? Why 20%? The Gap will help you evaluate the feasibility of your new business objective. The Gap can also help you include other stakeholders in reaching your objectives. Think about sales leadership and portfolio development.

Suppose you are the sales leader. You work hard to maintain and grow market share. Growing market share by 20% is, to put it mildly, challenging. That challenge will only get bigger when your CFO changes the paradigm to margin contribution. To understand the dependency between sales and service I’ll flip to point-of-view towards the buyer of your product & services. From an asset owner’s perspective between 8-12%[1] of the life cycle cost are related to the purchase of the asset. The remainder is associated with maintenance and operational cost. This insight should trigger you and your CEO/CFO to rethink where you want to create your margin. It’s less about the one-time sale & margin of a product, and more about being able to create customer lock in throughout the life cycle of that product. Long-term contracts will deliver recurring revenue and margin contribution. The Gap is the quantification of what you are missing out on compared to a life cycle approach.

Suppose you are responsible for the product & services portfolio. Today you have a mix of warranty, bronze silver and gold. Each of those offerings has a different revenue/ margin contribution. Of course, you’d like all asset owners to buy your gold contract. The size of the Gap may be an indication to what extent your current portfolio aligns with the needs of the asset owners. Once you understand that an asset owner is more interested in using a product than owning it, your current service portfolio may need an upgrade.

Three mitigating handles

To mitigate the Gap, we’ve identified three handles:

  • Installed Base Visibility
  • Attach Rate
  • Service offering

The first one, installed base visibility, builds on a variant of Peter Drucker’s quote “if you can’t measure it, you can’t manage it”. You need to know where your assets are, and in what condition to be able to sell associated services. The bigger the Gap, the bigger your motivation should be to invest in an asset life cycle database. Documenting the As-Built, As-Sold and As-Maintained. And yes, this may be more work when your organisation sells products through an indirect sales channel. The Gap may justify the investment.

The second and third handle go hand-in-hand. Once you have visibility of the installed units, you can start targeting those with your services portfolio. Important to realise, not the product specifications and characteristics are leading in the service offering, but the use-profile of that product. For the same product, wear and tear can be completely different, based on how the product is being used. This realisation emphasises the need to collect data throughout the operational life cycle of an asset. If sales says, ‘each touch point is an opportunity’, service can extend that paradigm with ‘each data point is an opportunity’.

Is it doable?

Absolutely! A target of 20% service revenue increase may sound abstract when you get it. In this blog we tried to break that task into manageable pieces. Standard service metrics will allow you to monitor installed base and attach rates. Introducing the Gap helps you to quantify your revenue growth potential. The Gap will create both the compelling reason to act and the arguments to convince other stakeholders to jointly work on this revenue growth target.

Please share your victories with us.


[1] Source: Insight… Accenture and total cost of ownership (2012)

This article is published in ServiceMax Field Service Digital on May 11th, 2021 and Field Technologies.

Maximize Virtual Round Tables – Recap

On the Maximize agenda we offered set of 12 round tables spanning a range from covid implications to asset centric business models. From technician skill profiles to commercial maturity. These topics fuelled a wide range of conversations. In this blog we’ll try to give you a taste. Want more? Have a look at the Maximize recordings here: https://www.servicemax.com/maximize/

From short trial to longer-term innovation: lessons/ practices from COVID that will persist

A little over a year ago we learnt about Covid-19. Denial, anger, bargaining, depression and acceptance. We’ve been through it all. Covid-19 drove a number of changes in the way service was delivered and consumed. Organisations quickly deployed new solutions and digital technologies to enable their workers to continue to deliver service to their customers. 

In this round table the participants shared what changes are merely short-term adjustments or disruptions to the normal and which ones are longer-term innovations that are here to stay.

No surprise employee safety, compliance and remote service are high on the list of the more permanent changes. The underlying business issues were there all along, only Covid-19 amplified and accelerated the change.

What Covid-19 has also shown us, disruption has many forms. So better prepare to be agile and resilient. As a final thought: how is your organisation going to handle the backlog of push-out work orders? How are you going to prioritise while meeting your contractual obligations?

Recommended Maximize sessions:

  • Keynote: Making your Service Business Resilient with ServiceMax
  • Business Transformation: Listen to Your Assets: The Benefits of Using Asset Data for Business Outcomes

Recommended readings:

  • Transforming Field Service When the “Field” Has Changed (March 11th, 2021)
  • The Year Ahead for Energy: 3 Paths to Success Post-Covid-19 (March 9th, 2021)
  • 8 Considerations for Your Remote Support Program (February 4th, 2021)
  • How Will AR & VR Impact the Future of Field Service Management? (December 22nd, 2021)

The technician profile: changing role, changing skillsets – where do we find them?

Assets are changing. Service work is changing. The nature of customer relationships is changing. Has the technician skillset changed to match the evolution of service taking place? 

We ask a lot of our technicians. We ask them to be our brand ambassador. They want to be a hero on site. Maybe then best ‘gift’ we can give technicians is empowerment. To give them tools allowing them to engage with the right information at their fingertips. With a right balance between autonomy for the technician and control for the manager.

Is that possible? Sure. The discussion showed plenty of examples of how the combination of state-of-the-art service execution tools and empowerment drives adoption … and thus the projected business results. Once people see transformation in action, the mindset will follow leading to an intrinsic motivation.

Recommended Maximize sessions:

  • Keynote: Building Resilient Relationships. Being a Technician during the Pandemic
  • MaxTalk: Save my Bacon – Remote Assistant in the Field

Recommended readings:

  • 2021 Predictions for Chief Service Officers (December 15th, 2020)
  • Technician Advice to CSOs: 3 Interesting Takeaways from Our Inaugural Tech Talk Event (August 25th, 2020)

Enhancing the commercial maturity of your services business

Now most service organisations have a revenue target, we found it interesting to have a conversation on commercial maturity. You seemed to agree. We had a great turn out at our round table and engaging conversations.

Why is commercial maturity so important? Because margin contribution stemming from operational excellence is not enough. Organisations feel the pressure of margin erosion and commoditisation. In parallel there is a constant drive for growth. And with more vocal customers it is adamant to constantly ride the waves commerce.

We asked the participants to self-assess their current maturity using a poll. Defining a low maturity as a predominantly product focussed organisation selling services as an afterthought. On the other end of the scale, we positioned companies where both sales and service revenue generating activities are managed in unison over the life cycle of the product/ equipment/ asset.

To make the maturity assessment tangible and actionable we’d given the participants a simple calculation exercise. Suppose you have an installed base visibility of 100% and an attach rate of 100% ‘gold’ contracts. Meaning all installed products have an associated all-inclusive service tier. How much revenue would that amount to? Do we have your attention? 

Now compare this figure with your current services revenue. The goal of this exercise is to define the ‘gap’ and to use the gap as an instrument to drive your commercial maturity journey. 

Of course, we know that not all asset owners will buy the gold tier. More likely we have a mix of warranty, part sales, installations, break-fix, field change requests, inspections/ calibrations, preventive maintenance and availability services. Each of these services has a different revenue and margin contribution. If you want to maximize your revenue, you’ll have to revisit your current services portfolio and how you present these offerings.

Recommended Maximize sessions:

  • Asset360: How to Unlock New Revenue Streams with Warranty and Contract management
  • Business Transformation: How to Protect and Increase Your Service Revenue Stream with an Eye on Servitization
  • Business Transformation: How to Revitalize Your Service Portfolio for CEx and Growth

Recommended readings:

  • The key to Sales and Service working in collaboration (January 26th, 2021)
  • 5 Ways to identify new revenue streams in Service (November 24th, 2020)
  • Upsell leakage: Everything you need to know (November 19th, 2020)
  • How to sell Customers on the value of preventive maintenance (July 9th, 2020)

The installed base’s role in lifecycle management

Peter Drucker said: “if you can’t measure it, you can’t manage it”. We could say the same thing about the installed base. If you don’t know where your product is, in what condition and how it is being used, how can you excel in service? How can you serve asset owners over the lifecycle of the product?

A survey by Accenture stipulated that over the lifecycle of industrial assets approximately 8-12% of the cost is related to the purchase of the equipment. The rest is maintenance and operating cost. These numbers should convince any OEM to step up to the plate and offer life cycle services.

What do you do when you sell a significant number of units via the indirect sales channel, via dealers and resellers? Value chain actors that may shield their installed base data. The engineering change request may come to rescue. As OEM you have a legitimate reason to reach out to the asset owners, whether it is quality related or if the change enhances the capabilities of your product.

Recommended Maximize sessions:

  • Asset360: How to Unlock New Revenue Streams with Warranty and Contract management
  • Business Transformation: How to Revitalize Your Service Portfolio for CEx and Growth

Recommended readings:

  • 3 Steps to make engineering change management easier (March 2nd, 2021)
  • How to maintain and protect your brand as an OEM (December 17th, 2020)
  • Looking for Design-for-Service? Start here (December 10th, 2020)
  • How to sell Customers on the value of preventive maintenance (July 9th, 2020)

This article is published in ServiceMax Field Service Digital on April 15th, 2021

Developing Engineering Change Strategies for CX and Customer Engagement

Each time when you launch an engineering change (EC) campaign you’ll have to balance brand image, quality and cost. In my previous blog 3 Steps to Make Engineering Change Management Easier (FSD, March 2nd, 2021), I added two additional business drivers: customer engagement and upsell revenue. I promised to elaborate on EC strategies, on how to use the EC touch points to further your business objectives.

But first I want to say thanks to a reader who helped me frame the two different emotions associated with an engineering change: the ‘positive’ and the ‘negative’ engineering change.

  • Negative: the EC is triggered by a quality issue or a complaint.
  • Positive: the EC improves the specifications/ capabilities of the original product.

Does the emotion matter? Yes, it does and maybe it shouldn’t matter that much. Let me explain.

When the negative emotion is associated with cost and a perceived reduction of CX & brand value, its mitigation is deemed operational. Getting your act together. When using the EC as an instrument to exceed expectations, the positive emotion will trigger growth driven stakeholders to jump on the bandwagon. With a comprehensive EC strategy, you can nudge the negative to the positive side too.

“There’s no such thing as bad publicity” – P.T. Barnum (1810 – 1891) 

Creating a plan

Creating an engineering change strategy is a subset of product life cycle management. During the operational life cycle of a product many things can happen. Some of these occurrences are pre-conceived and/or planned. Some will happen ‘as you go’. Simply because it is nearly impossible to predict how a product will behave in each and individual use context.

Creating a plan is like preparing for the unknown. The good news is that the unknown can be moulded into a limited number of buckets:

  • The product does not deliver on its as-sold and nominal attributes
  • The product is used in a context beyond its nominal attributes
  • New product capabilities enhance the nominal specifications

For each of the three buckets you can create a communication channel with your installed base and define a follow-up workflow. As a potential response to each of the three buckets:

  • Document and investigate the gap, provide a product fix … or change the expectation.
  • Investigate the use context of the product and re-evaluate the product specifications. Advise on product replacement or product upgrade possibilities.
  • Filter the installed base on those customers that will perceive the enhanced specifications as a value add.

Each of these workflows impacts cost, revenue and CSAT. Most of all, you build a communication relationship with your installed base, managing customer experience over the life cycle … and beyond. Just imagine your EC strategy becoming the proactive/ predictive instrument to avoid unplanned downtime.

What does your customer buy and expect?

Words like strategy and lifecycle imply a longer timeframe. This requires us to revisit the original value promise made at point of sale. Is that promise a one-off or a longer-term commitment? The answer will impact your EC strategy.

If the sales value promise is a one-off, the customer buys the product as-is with an optional limited warranty. Because warranty is an integral part of the product sale, we need to define both coverage and period. Also, we must be mindful of expectations and regulations.

  • In Japan the phrase “Quality is included” drives EC and lifecycle services to high expectations with ample opportunities to monetise them.
  • In Germany the warranty construct is decomposed in two definitions “Gewährleistung” and “Garantie”. The former relates to a defect and/or violation of regulations, the latter is a voluntary value promise.
  • When you buy a product from a AAA-brand you’ll likely have a different lifecycle support expectation over a B-brand.

With the above components it becomes clear that you’ll need a product lifecycle vision with an EC strategy spinoff.

A steady flow of engineering changes waiting for a framework

Now, let’s expand the horizon beyond the warranty period. Your customer may have bought a product. What your customer needs is the output and outcome of that product, preferably over a longer period of time. Over that time entropy and technology advancement are the biggest drivers for engineering changes. 

Knowing you’ll have a steady flow of ECs you’ll need a framework to manage them. Even more so when we’ve learnt in the previous blog that ECs often occur in an environment of constraints. You’ll need to make choices of who gets scarcity first, knowing this will impact cost, revenue and CSAT. 

Scarcity is a multi-facetted ‘beast’. It can work both for and against you. Thus, one more reason to put a lot of thought into defining an EC strategy.

“There is only one thing in the world worse than being talked about, and that is not being talked about.” – Oscar Wilde

Every touch point is an opportunity

In the world of sales and engagement the mantra is: every touch point is an opportunity. Throughout the operational life cycle of a product there are many touch points. When you can explain entropy and technology advancement in its use context, when you have a compelling engineering change strategy and when you can embed that EC strategy in your service portfolio, then you’ll get the level of engagement and life cycle partnership you seek. Driving cost, revenue and CSAT to both party’s satisfaction.

This article is published in ServiceMax Field Service Digital on May 4th, 2021

Managing your Quality and Engineering Changes

February 2021, breaking news, your engineering team issues a mandatory engineering change to all product models ABC built between 2011 – 2013. “The gearbox needs a retrofit to avoid potential injury and claims”.

Change the verbatim, the dates or the technical details. I guess you’ll recognise the scenario. Whether the origin of the change is quality, compliance, engineering maturity or commercially driven, managing engineering changes is a big deal. A big deal because you don’t want claims. You don’t want your brand image tarnished. You don’t want cost overruns. It’s a big deal because you want to convert a negative into a positive.

Engineering changes extend into the operational life cycle of a product

I once believed every product was 100% engineered before it found its way onto the markets. Having run service organisations for more than 25 years I’ve reduced my confidence in this percentage year over year. Don’t get me wrong, I don’t mean to say that is a bad thing, but I do want to emphasise that acknowledging that anything less than 100% puts a burden on the service organisation to build mitigating processes.

I’ve seen organisations introduce 80% engineered products by business model design, as they need the usage feedback to finalise the engineering. Other organisations aim at a near 100% engineered product, only to discover their products are used in unforeseen contexts leading to post-GA modifications. And in the digital age I see more and more organisations enhancing product capabilities of physical products by ‘selling’ software upgrade options.

Where is my Installed Base?

All variants share a common premise: you need to have installed base visibility as well as an accurate as-maintained BoM to be able to manage your engineering changes effectively.

To illustrate this, I’ll give an example on the other end of the spectrum. If you don’t know where the affected products are, and you have a compliance obligation to reach out to the product/ asset owners, you can only go public … and that is not good for your brand image … as many car manufacturers and food companies will confirm.

In our Global Customer Transformation (GCT) practice we often see a hybrid. Some units sold have an associated warranty and/ or service contract, other units are not visible because they are sold via an indirect channel and/or the owner does not want to be visible. What engineering change managers need is a ‘workbench’ to create a near-complete installed base from multiple data sources.

Now we have a near-complete installed base, we can filter on model ABC with a commissioning date between 2011 – 2013. 

Spread the Wealth

A common characteristic of engineering changes is that they tend to come at an inconvenient time, on top of the existing workload. What potentially complicates things is the combination of a) the availability of replacement parts and b) the customer expectation to be first in line.

Let me give you an illustration that reveals my age. In 1989 Intel launched the 80486 processor. High-end customers upped the specs of their PC’s with the 80487 co-processor. Then a researcher detected a mathematical flaw in the co-processor. Immediately people wanted a replacement. The supply chain was stocked with the flawed 80487 revision 1, whilst Intel had to ramp the production and shipments of revision 2. In analogy to Covid-19 vaccinations you can imagine this became a puzzle of priorities and constant shifting plans.

In our GCT practice we talk to Engineering Change Managers. They receive so called product bulletins on a regular basis. And each time they need to make decisions on when to launch an engineering change campaign while weighing brand image, quality and cost. And once they have launched a campaign, they want to know the progress. But the most asked ‘feature’ by Engineering Change Managers is the ability to adapt the priorities in a campaign based on progress, the amount of ‘wealth’, the voice of the customer and the impact on existing SLA & Contract commitments. Regarding the latter, I’ll dedicate my next blog on Engineering Change prioritisation strategies. 

Digital EC’s and Retrofit Kits as Upsell and Lock-in instrument

I’d like to change the ‘energy level’ of the conversation. Engineering changes are not always negative from a quality, financial or brand image perspective.

There is a limit to the number of mechanical and electrical changes you can make to a product post commissioning using Retrofit Kits, but more modern products have an ever-growing digital component. Digital engineering maturity continues post commissioning.Do you own a Sonos sound system, a Tesla, a digital press? The physical product you bought remains the same, while over-the-air digital EC’s deliver a steady stream of new features and enhancements. Whether your organisation uses this EC-stream for lock-in purposes or upsell revenue, at the core you need an asset centric infrastructure with comprehensive engineering change capabilities.

This article is published in ServiceMax Field Service Digital on March 2nd, 2021

Field Service Circle Recap: Accelerating Your Digital Transformation

Digital service transformation does not start and end with implementing innovative technologies. It starts with a vision. Service Leaders rethink how to generate new service revenue streams and ensure long-term success. And at the end, when companies find the right path, customers benefit from the new services tailored to their needs.

During our EMEA Virtual Field Service Circles in 2020, we offered inspiration, expert knowledge and practical experience to those striving for improvement and progress on their digital journey. And it seems that with the change from on-site to virtual sessions we could translate this imperative into its very own form and take the huge number of attendees, who are looking to make a difference, along for the ride.

Inspired by the findings in the Forrester research report we commissioned in 2019, we created our 2020 season of Field Service Circle events. During these sessions, we looked at the three key pillars that are accelerating the pace of digital service transformation as well as future field service strategies. This article will recap each of our four sessions.

Future-Proofing Your Workforce

Recent changes as a result of the global pandemic have drastically changed the way some technicians conduct their work; however, the role of the field technician has been evolving at an increasing pace for a number of years now. What does a happy, versatile, future-proofed workforce look like? Together with Kris Oldland, Chief Editor of Field Service News, Coen Jeukens and Sumair Dutta from our GCT team not only talked about these questions but also discussed the value of field service tools for technicians, the importance of human intelligence, and the move towards a “remote first” model for service. Watch the on-demand recording here.

Keeping Customers at the Forefront

While technology has raised customer expectations, it can also help field service providers meet those expectations. But how well do we understand the expectations of our customer base and how is the customer’s voice a driving force in the service transformation? How will customers see value in new service offerings and how can we future-proof the supply of the same? All of these questions, and more, formed the focus of this session with Rob Merkus, EMEA Service Director at Hitachi Medical Systems, and Jan van Veen, Founder & General Manager at moreMomentum, as we examined the service delivery chain from the customer perspective, the best ways to adapt to evolving customer expectations, and the business opportunities therein. Watch the on-demand recording here.

strategy & vision

Using Asset Data as a Transformation Consultant

Customers expect their assets to work, and service providers want to know where the assets are, in what condition they are, and how they are being used. The focus on digital transformation has placed companies’ attention on harnessing equipment data for insights, exploring new business models, and implementing digital technologies. Sven Gehrmann, Senior Manager of BearingPoint, Thomas Heckmann, Solution Consultant of ServiceMax and Co-Founder of the German Chapter of the Institute of Asset Management, and Coen Jeukens particularly emphasized the message that equipment will become the transformation consultant of the future driving future business value. Watch the on-demand recording here.

3 pillars of digital transformation are your workforce, your customers, and you assets

Field Service Strategies for the Future

Field service management is evolving and adapting to the “new normal” that we must all embrace as a result of the pandemic. According to an IDC survey spotlight by analyst Aly Pinder, Jr., “The service experience can be THE differentiator for manufacturers in a time shrinking margins and heightened customer expectations.”1

Additionally, Susan Tonkin, who leads Analyst Relations at ServiceMax, presented some of the predictions recently published by Gartner, such as “By 2025, proactive (outbound) customer engagement interactions will outnumber reactive (inbound) customer engagement interactions.”2

Together with Professor Shaun West of the University Lucerne, Susan Tonkin and Coen Jeukens discussed Forrester’s three pillars of digital transformation and ServiceMax’s predictions for 2021 based on our CSO Summit series. Among various points, Shaun highlighted that the so-called “smart services” that are data-driven and geared to individual customer needs are gaining importance. Watch the on-demand recording here.

What’s Next?

Digital Service Transformation is no longer a choice but an imperative. Having visibility and control on Assets, Workforce and Customers allows service providers to drive excellence and growth. Technology plays a decisive role in this journey. It has profoundly changed the business landscape and its impact will continue growing as long as more businesses continue adopting technologies that add value to customers’ lives.

The EMEA Field Service Circles presented a fantastic opportunity to stay connected with ServiceMax and industry peers remotely as we all work to keep the world running and understand how to respond to field service changes.

Take the next opportunity to accelerate your digital transformation with Maximize!Click here to register for Maximize 2021, ServiceMax’s Global Field Service Conference on March 16-18, to learn what you can do today to support your business goals and how you can prepare your service team for the challenges of the future.

1. Source: IDC, COVID-19 IMPACT ON IT SPENDING, 09/2020)
2. Source: Gartner, Predicts 2021: CRM Customer Service and Support, 1 December 2020

This article is published in ServiceMax Field Service Digital on February 16th, 2021

Sales and Service working in Collaboration

“Which function in your organisation has the most touch points and the highest customer trust?”. Here I go again, preaching to the choir. You know where this line of thought is going. Today I want to voice a different tune. I don’t want to highlight what sets Sales and Service apart, but I want to find the common ground. Because we need each other for the sake of organisational survival and growth.

The Ugly Truth

A couple of years back I chaired the Copperberg After:Market event. In my closing remarks I provoked the audience with the word “after” in “after-sales”. Is service an afterthought? A big NO came from the delegates. Though the word “after” triggers quite some emotions and hits some nerves, let me share an ugly truth with you: after-sales does not exist without an initial sale! Service will not replace sales. Service should not compete with sales over margin contribution. Both sales and service have a role to play in customer value creation throughout the life cycle of a product. The product becomes the carrier of value creation.

Contributing Centre

So, I’m not going to ask you to raise your hands by asking if your service organisation is either a cost-centre or a profit-centre. We now agree that you are a contributing centre! Agreeing on this nomenclature is key to collaboration with sales for two reasons:

  1. In a head-to-head battle with sales, sales will claim ownership of the revenue play. You don’t want this. You want a joint role and responsibility in revenue generation and margin contribution.
  2. More conceptual, if Service were a true profit centre, Service would have had the organisational and budgetary mandate to sustain and grow service revenue. Practically all CSO’s I’ve met have a budgetary mandate up to 2,500 dollar, pound or euro. That’s not enough to drive your own margin and revenue destiny. So, maybe it is better to have Sales co-funding your new Service tools. In return you share your customer trust and high quality touch points with Sales.

Handshake

This handshake, this collaboration between Service and Sales can be explained using the technique of Causal Loop Diagrams[1](CLD).

At last year’s Maximize we did a Technician survey and asked what motivates them. In short, most technicians want to be a hero on site. With that status they create customer trust. As a result, they get high quality and contextual feedback.

What happens when technicians can’t share that information, or get a feeling that their insights are not actioned? No, this is not a rhetorical question. Ah, your organisation has an incentive scheme to encourage technicians to create leads. Does it work? Do salespeople take leads from the service domain seriously? Do service people know how to deliver leads on a silver platter?

Yes, technician insights have the potential to create more and better leads. The service domain is also a repository of information to develop new services. Services that include the voice of the customer. Services aligned with your customers use cases.

As a salesperson you would make a great impression on your customer when you display your ability to listen. That you proactively use the feedback shared with the technician. Not only will your propositions be better, also your customer will feel genuine interest and attention.

The killer feature in this Causal Loop Diagram is the reinforcement towards the technician. A reinforcement that outweighs any financial incentive scheme you can devise. Imagine how the technician feels when he/ she gets feedback that his/her discovery and insights have made a difference. A feedback coming from two directions. Firstly, the salesperson who confirms the use of the feedback. Secondly, the customer confirming that their previous conversation was actioned.

Closing the loop adds to the technician’s empowerment and his/ her increase in hero status. Guess what, next cycle this technician and salesperson will even contribute more to your bottom line.

A Groundhog Day experience

Does it really work this way? In 2016 we trialled this causal loop with more than 60 chief service officers. The results were published in Field Service News in a piece called Demand generation: A Groundhog day experience. Do share with us what your experiences are. Happy & collaborative hunting.


[1] Business Dynamics, systems thinking and modeling for a complex world, John D. Sterman, McGraw Hill 2000

This article is published in ServiceMax Field Service Digital on January 26th, 2021

How to Maintain and Protect Your Brand as an OEM

You make great products. You have a strong brand. But how do you maintain those products and protect your brand beyond the point of sale? What do you do when customers demand more through CX or regulators demand more through compliance or channels partners struggle to deliver consistent service? The good news is modern field service management systems provide you with the tools to manage and overcome these challenges.

Trending in 2021

At the close of each year, a lot of people ask me to make some predictions for the new year. Honestly, with some extreme disruptions in 2020, it is hard to single out a theme for 2021. Though I do see a consistent trend over the last decade. A trend that will very much drive the OEM transformation agenda: how do we extend our value proposition beyond the revenue of the product sales? Margin contribution on product sales is dwindling. Thus, it is logical that your CFO is eying service margins and tasking you with service revenue growth. So, let’s focus on two 2021 topics to achieve those goals.

  1. Improve your installed base visibility across all your sales channels
  2. Support your product throughout its life cycle

And by focussing on these two, you’ll get a lot of adjacent benefits too.

Step 1: Invest in Installed Base Visibility and Effective Channel Partners

To exert a maximum level of control over the value an OEM can provide to its customers, an OEM may have the ambition to own each step of the value chain. The commercial reality is that a network of partners and competitors is involved in the value creation. This may result in a battle over the ownership of the customer relationship. Especially when we consider the underlying paradigm: the one who owns the relationship owns the levers to CX and sustainable revenue.

The key enabler to value creation is your Installed Base Visibility. It is pretty straight forward. If you want to create value from the products you sell, you need to know where they are and how they are being used. Without visibility, your service delivery will be in the blind. Without a relationship, your revenue streams will be unpredictable.

We see more and more OEMs investing in installed base visibility. This starts with shifting from margin contribution through product sales to margin contribution through using the product.  The increased margin contribution pays for the investment and buy-in from the channel partners.

Are you curious about what installed base visibility brings to the bottom line? See what Schneider Electric was able to achieve here.

Step 2: Support Your Product Throughout Its Life Cycle

Who knows your product best? You, the OEM. You designed it and built it, so it seems you are best qualified to support its use during its life cycle. Hence the previous paragraph, you need to know where your installed base is and in what condition.

For each product, we know that the true test comes when it is used by real customers. No matter how well designed and built it is, actual customers seem to use products in more different ways than you have anticipated. Whether the feedback is coming to you via the quality department, service interactions, or through an autonomous engineering department, your products do get revisions and engineering changes.

Some of these changes are for liability and compliance. Others may enhance the function of the product, potentially driving more value. Thus, you have multiple reasons to reach out to your installed base. And when you do so, you want to track what portion of that base you have reached.

Two to Tango

The combination of installed base visibility and product life cycle support form an ideal tango to strengthen your brand. Though the commercial reality of your channel strategy may impact your ability to reach out to your installed base, asset-centric field service management tools make it much easier to visualize and manage your assets. Extending those tools to your channel partners will make it easier to share and grow the value creation for your customers.

Whether you decide to take tango lessons in 2021 or not, at least put some thought into the beauty and joy of the dance. I promise you; your customers will like it.

This article is published in ServiceMax Field Service Digital on December 17th, 2020