By Joe Kenny, vice president global customer transformation and customer success at ServiceMax
A third of product businesses will be services businesses within five years, according to a new Forrester Consulting study. It’s not such a dramatic leap when you consider the progress to date. Digital technologies have already had a profound effect on field service teams and their role in digitally transforming organisations. We’ve already seen the impact IoT, data capture, analytics, mobility and even augmented reality technologies have had on service and this is only going to accelerate.
Digital transformation is driving the pace and adoption of new service models globally and as a result, reshaping the way services businesses operate. We are seeing a mind shift towards outcomes-based strategies, as opposed to the more traditional product-based strategies. According to the Forrester study, entitled From Grease To Code: What Drives Digital Service Transformation, 85% of firms say servitization is now a high or critical priority, as are outcome-based business models.
What this means is that product-based businesses are re-thinking service and its standing within the company hierarchy. The role and impact of service maintenance, support, unplanned downtime, customer experience and, of course, revenue generation have shifted. New service delivery models, the emergence of flexible services marketplaces and demand for new equipment skills are reshaping the way service businesses operate and products are sold and managed.
According to Forrester, “the shift from grease to code is well underway, as firms unlock valuable data about their assets.” With the research showing that 89% of companies are already collecting equipment and service data to drive business decisions, it’s increasingly clear that organisations understand the potential impact of an outcomes-led strategy.
As AT Kearney says in a recent report, field-service, retailers and others companies that deliver the products and services that people use every day are at the forefront of digital change.
“Like the modern ski racer, they have to have the speed to plan, act, and react quickly, and the endurance to perform for a long period of time,” it says “Meanwhile, digitally savvy customers are using new channels to obtain information, want tailored and mistake-free encounters, and demand fast resolution when errors do occur.”
The data from products, equipment and machines is at the heart of this revolution. However, this digitalization of products and industrial services demands new skills. Field service techs have to be multi-functional, have knowledge and expertise in equipment but also new digital tools and services.
According to the Forrester study, the struggle to find service technicians with the required knowledge and expertise remains an issue, with 70% of firms saying external contractors are becoming more important to take up the slack. A further 80% claim they are interested in using a service marketplace to access suitable freelance talent when needed and source the necessary skills.
The skills conundrum will not be resolved easily but it will not deter from the overall sense that service is moving in the right direction. The study found that from a financial gains perspective, as-a-service businesses and predictive maintenance models will contribute most of the revenue within five years. This is a huge sea change for product-based organisations, which will no doubt be buoyed further by the introduction of new enabling technologies into the mix, such as 3D printing.
Offering assets on subscription, enabling preventative maintenance and shifting to as-a-service delivery models are seen as critical for improving customer experience. With 39% of companies already using predictive maintenance today, and a further 49% planning to do so within three years, there is little doubt that service-led is the future for all product-based businesses.