Field Service, IoT and the Coming of Outcomes-Based Service




Despite the clear promise of the Internet of Things for field service providers, the industry has recently been suffering business challenges. 

The 2016 Technology Services Industry Association (TSIA) State of Field Services study noted significant product and service revenue drops for hardware companies in the previous year, and that 76 percent of field services organizations are struggling to achieve profitable revenue growth. Reduced product sales have affected after-sale maintenance. But the IoT promises to completely change how field services are provided.

Accelerating change in field service

“Where IoT is concerned, field service is where things start to get real,” says Randy Reynolds, Vice President of Service Marketing at ServiceMax. Anyone can quickly see how monitoring the wear and performance of a piece of equipment can lead to improved and faster field service.

But “the entire industry is on a learning curve,” he says. “The field service team can be inundated with sensor data, leading them to make unnecessary service calls or replace parts too soon, leading to higher cost. The next step is to send those readings through an analytics platform, see the trends, and get smarter on that product as time goes by. Then you can anticipate and respond only when necessary.”

Improved analytics, data filtering, and forecasting that uses sensor data effectively are already transforming the business.

Even old tech can get smarter

Reynolds gives the example of a mid-sized regional company in the Southwest that specializes in the maintenance and repair of lift doors, docking doors, and residential elevators, the kind of thing that might be regarded as fairly low-tech. They have installed a variety of sensors on the equipment they are responsible for maintaining, and are learning the use, performance, and failure patterns of their equipment. Their avowed goal is not cost-reduction, but service improvement. They can see patterns of overuse of which customers themselves are unaware. Aside from improving service, this allows for a clear market differentiation: they are “the smart lift-repair people”.

But this is a step toward a future where companies sell outcomes not products.

Moving to outcomes-based service

The business professor Theodore Levitt famously said “people don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”  IoT will enable a market shift, finally allowing manufacturers to sell holes, not drills. Rolls Royce’s TotalCare, for example, is jet propulsion-as-a-service, offering what they call “power by the hour.” Rather than selling an engine to Boeing or Airbus, they sell engine uptime, and often negotiate directly with the airline, skipping the airframe manufacturer altogether.

But without sensor data acquired via the IoT and then intelligently analyzed, any provider who tries this will pretty much be rolling the dice. The entire structure of risks and incentives between customers and suppliers will need to change dramatically. Anyone seeking to change this model will have to model the risks as well as the benefits.

The hard physical reality of field service

Those who work in offices and manage data sometimes lose track of the sheer resistance of physical reality. It takes a tech an average of 86 minutes to travel per task and 144 minutes for each repair, according to The Service Council’s most recent study on Mobility in Service.

The industry, like other field industries such oil, gas, and mining, has long been worried that its cohort of experienced older workers is retiring, and that they face a dearth of skilled, enthusiastic workers willing to put up with the physical requirements of the job.

And its hard intellectual reality

Field service also demands deep knowledge, intelligence, flexibility, and, increasingly, customer-service and marketing skills, as field workers interact more and more intimately with their customers, and act as brand ambassadors.

But according to a report from Aberdeen Group, there has been a recent influx of new workers—workers who easily use mobile technology, and expect to do so in the course of their work. More than twenty percent of field service workers are now under 30.

Augmented reality (AR) and video-enabled assisted field service will allow for faster and more thorough onboarding of new workers, through in-the-field training support. This is being done now, through handheld devices, and will migrate to wearables as those technologies mature. Companies in this space include APX Labs, ScopeAR, and PTC’s own Vuforia.

A wide range of advantages

Sensors are already in almost every manufactured device, and many more are being retrofitted to existing machinery. Competitive advantage will belong to companies who learn how to collect, filter, integrate, analyze, and act on this flood of new data. Service advantage will go to those who learn how best to use this information to build relationships with customers. Revenue advantage will belong to those who rebalance risks and incentives between themselves and their customers. And worker skill and satisfaction advantage will belong to those who use new technologies to train and integrate their new hires.

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