Should I Buy An Asset-Centric Solution or Build It?

It takes twice as long, at twice the cost and you will only get half of the expected functionality.” Many times, we have heard this proverbial phrase. And even if it is true, does it automatically mean you will go for the buy-variant? We’ve learned that decision-making consists of weighing many pros and cons. In this blog, we’ll provide you with a set of arguments to take into consideration.

More than just the financials (The Mindset Matters)

In our experience, a build-versus-buy decision is both multi-faceted and multi-stakeholder. To give you an example: A business leader will typically look for business process support and time to value. An IT leader may have a preference to stay on the same platform and exert control through the deployment of internal IT resources. Procurement will weigh the risk profile and continuity of the vendor base. The security officer may focus on secure, compliant transfer and storage of the business data. And finance? From finance, we expect that they will compare the cost of build versus buy in relation to the budgeting cycle.

What you have here is a mix of different personas, each with different priorities and objectives. So, how to tackle this, how to move forward? You can start to untangle this Gordian knot by genuinely trying to understand and acknowledge each stakeholder’s position.

One word of caution. However accurate the numbers are that you come up with. As you are zooming in on the pros and cons with the goal of creating a viable comparison, you need to do your homework and not only gather the facts but also be aware that each stakeholder has a different motivation.

As a business leader from Bosch said so eloquently:

“I don’t care about the make and model of the tool. I’ve got a business to run” – business leader at Bosch

We started this blog by outlining the various personas that each have their own priorities, but at the end of the day, there is one common goal: keeping the business running—today and tomorrow. And to do this, you need a solution that can either be built or bought.

What are the hidden and obvious costs?

Let’s start with the most rational comparison: the financial axis. For sure the first and foremost thing finance wants to do is compare the cost of build versus buy. The purchasing cost is easy to identify. It’s the figure at the bottom of the vendor’s quotation. What is on the build side of the equation is more elusive. If building software is not your core business, it is difficult to grasp what effort goes into creating and maintaining a business application. When we see stakeholders evaluating the financials of build versus buy, typically only a fraction of the build costs turn up in the comparison. The reputed tip of the iceberg.

Together with a number of prospects, we created a model to help identify and uncover how far the iceberg extends under the waterline, in other words—to make the hidden cost elements visible. While building the model, we had to face difficult questions such as:

  • How much effort does it take to retrieve the data points?
  • Is it even possible to obtain an insight into the below-sea-level items?
  • To what extent will a complete view of the build cost influence the decision-making?

In close collaboration, we discovered two findings:

  1. Apart from any numeric comparison, getting a complete picture of all cost elements proved to be extremely insightful and changed how both scenarios are evaluated.
  2. Appraising the ‘submerged’ cost elements is essential in defining the tipping point.

Evaluating build versus buy

When making a build-versus-buy decision business leaders strive to get a complete picture of the cost aspects and understand the impact on the business as a whole. But how do they know that? This is where the iceberg comes into play.

When working with prospects and customers to uncover the true cost for them, we found the iceberg to be an educational exercise and a great conversational framework to understand all aspects of business application creation and usage. Different areas in the framework have different owners and they don’t all have the same agenda, e.g. the cost for software developers falls within the IT department, whereas cloud-subscription fees come out of the line of business budget.

Our framework requires input from all areas that DIY touches on. By doing so, it also reveals the mindset and priorities of the different stakeholders and provides insight into the evaluation criteria of the build-versus-buy decision. As such it will be an eye-opener and helps to align all stakeholders.

Conscious Competence Learning Matrix

‘Hidden’ costs impact the tipping point

The hidden or underwater costs play a significant role in determining the tipping point. It’s a matter of simple mathematics. The more you can exclude hidden costs from the equation, the more your decision will lean towards build. This conclusion led us to investigate why one would exclude hidden costs. We found:

  • The effort to retrieve the hidden cost is too high.

What to do about it: This is fairly easy to mitigate. To find your way out of this impasse, think about using estimates and guesstimates as an alternative to actuals. As long as your data is ‘good enough’, you can still use it to make good decisions. Thus, not creating an exact cost comparison, but a probable comparison.

  • We don’t want to include hidden costs.

What to do about it: This finding is more of a political and commercial nature. Here it matters who you are talking to. You can imagine that a sales rep who is trying to sell the buy-scenario has an avid interest in having as many costs associated with the build-scenario and vice versa. To overcome this potential conflict of interest, we co-developed the cost comparison model. As a result, we know that all cost elements in the model are relevant to the decision-making. When we encounter a persona saying that a particular cost element is non-retrievable, we have solid arguments to go into challenger mode.

A blend of arguments

We started this blog by explaining that a build-versus-buy decision spans multiple departments and stakeholders, and we gave the financial aspect the most weight when it comes to making the choice. There are certainly other factors that play a role in the decision, such as time to value, feature richness and risk, but ultimately, all of these aspects affect the total cost to build.

For several of our prospects, the co-developed framework has been instrumental in finding an answer when faced with the question Do I Build or Do I Buy?

build costs

If you want to find out what other aspects are influencing the build-versus-buy decision, check out our Build-Versus-Buy Guide here.

This article is published in ServiceMax Field Service Digital on June 22nd, 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

CIO take – Field Service Engineer of the Future

What is your digital roadmap? What technology advancements is your organization utilizing? There’s a great chance these questions are crossing your path. In the Argyle CIO Webinar on the Field Service Engineer of the Future five executives shared their take on technology both as driver and enabler for generating business value. 

At center stage we position the Field Service Engineer. His/ her propensity to work with and embrace technology is a critical success factor in value creation. Though field service may have suffered from under investment or derision, new technology is turning everything on its head. Service is increasingly seen as critical business function.

PerfectStorm

In a way, we see a convergence of many insights molding into a perfect storm. In addressing each aspect, we see a pivotal role for Field Service. This leads us to a Vision for Digital Worker: “The Digital Worker suite of applications enables, empowers, and elevates industrial workers to drive the customer outcomes of productivity, reliability, safety, security, and profitability”.

AugmentedReality

The toolkit of the Digital worker comprises of:

  • Internet of Things
  • Augmented Reality
  • Big Data
  • Predictive Analytics
  • Drones and robots/cobots
  • Artificial Intelligence
  • Wearable & mobile devices
  • Additive Manufacturing (3D Printing)

The good news is that these are not technologies of the future, they are available today and providing solutions to the most pressing business issues. Also, the cost of technology is coming at a point where the business case turns positive.

The CIO panel stressed the human component; the interaction between people and technology. Technology can be a very powerful instrument in attracting and retaining talent. At the same time addressing the aging workforce and productivity issue. Tech savy field service engineers tend to recognize the value of technology and thus adoption rates are high.

By2020

When it comes to investment priorities the panel was unanimous on connectivity of assets and how that data collaborates with operations and the field service engineer. Customers value the output and outcome of assets. The new play is about Overall Equipment Effectiveness (OEE). Both cost of downtime and increased earnings capacity of the asset are the main drivers for the investment priority. 

With the value promise of field service and digital technology the final question to the panel was on getting from knowing to doing. Who do we need to convince and/or pull into the discussion in moving forward? The first answer was “everybody”. We’re in a paradigm shift. We have to see it. As CIO’s we have a leading role in driving the transition. As CIO’s we understand tech and digital, we understand the importance and reach. We have to reach out to the business and lead. Through innovation teams. Through a Chief Digital Officer. By being agile. Glad to know Field Service both loves technology and more and more is recognized as a critical business function.

A closing remark from a Field Service Engineer: “Do give me the right tools to be a hero on site. As a result I’ll deliver value”.