Research Findings - Aberdeen

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  • I’d like to start out with a brief overview of the Aberdeen Group and the research that we’ve completed over the past year in the area of Post-Sales Service in general, and M2M in particular. Then I’d like to dive into some specific research findings that speak to the most influential market pressures that are causing companies to devote time, people, and budget to M2M-enabled solutions, and what some of the most formidable challenges have been to successfully deploying M2M service initiatives. Next, we’ll paint a portrait of sorts of what best-in-class M2M implementations look like, and then look at how actual companies faced and surmounted obstacles to achieve success. We’ll wrap up with some specific recommendations your companies can take to begin to reduce overall service costs and edge out competitors from adopting M2M-enabled service solutions.
  • Technology decisions are being driven more and more by business-line managers. Research is ACTIONABLE for value-chain executives. They look at our research and see themselves in the mirror.
  • Quick background on research methodology: hypothesis-based (i.e. scientific method) surveys fielded through channels; data analyzed from pov of business value
  • Informed by a year’s worth of post-sales service research, this simple framework encapsulates the components of field service management that need to be automated, synchronized, and optimized for best-in-class performance. Our studies have shown that firms that have incorporated all 4 of these pillars in their business and technology approaches have consistently performed better that firms that have taken more singular approaches (i.e. tackling just people or parts). The Process pillar pertains to the business processes that are core and peripheral to the delivery of field service to customers. These processes include sales, accounting, technician and work order scheduling, warranty and contract management, and preventative maintenance. Enterprises endeavoring to improve their field service performance must first look at the processes that are in place, how or if they are being followed, and how technology might impact or even re-engineer existing processes. The People pillar pertains to all the stakeholders within and outside the enterprise who are involved with the planning, execution, reporting, and consumption of field service. These include call center, dispatch center, parts depot, and field technicians. The Parts pillar covers the important piece of equipping the right technician with the right service part at the right time, and at the right price. Service parts planning is a complex piece of the service chain which must be carefully synchronized with the other three pillars. Finally, the Data pillar is the lifeblood of any field service operation. Inputs and outputs that must be captured, stored, normalized, and communicated to all of the necessary stakeholders. Includes contract/warranty, customer information, service & repair bulletins, parts catalogs, etc. The efficacy of service chain performance measurement rests largely upon this Data pillar -- an enterprise’s data management approach. Due to the iterative technology trajectory at most companies, there are very few firms that have the luxury of a single centralized and normalized database for all its business processes. Regardless, leading companies are leveraging portals and other tools to aggregate data that resides in disparate solutions and present a unified and normalized view into business performance. With this federated data model, enterprises can capture accurate, often real-time, views of performance data, including customer histories, sales opportunities, repair statuses, and forecasts for assets, labor, spares inventory, and the like. With service-related business processes becoming increasingly integrated, companies cannot rely on a single application for data and performance management. As one mid-market company in the high technology sector noted, “Most service applications are about automating the dispatch, repair, logistics, and reports. Very [few] focus on real time management of the dispatch messaging and how communications technologies can proactively automate the entire service process front to back.” Companies that are actively integrating service management business processes with sales, financial, and other related business functions are finding that data-centric and function-centric integration approaches afforded by most enterprise application integration (EAI) solutions are insufficient for optimal business performance. With data-centric integration, the output of one application – a sales force automation (SFA) tool for instance – is captured and transmitted as input into a related application – such as a workforce management tool. However, most critical decisions about how best to service a customer or how to calculate the most accurate spare parts demand forecast require the concurrent analysis and synthesis of data from several disparate processes and applications. For example, to fix a broken asset, service workers need to call upon asset and customer histories to set a baseline for work completed to date. They would likely have to draw upon contract or warranty data to determine if the asset is under warranty. If spare parts were required, they would need to assess inventory availability at central, regional, customer, or truck locations. Scheduling the best technician to service the asset would require data on technician availability, aptitudes, and proximity to the customer. And completing and transacting the service order would require interfacing with back-office financial and accounting systems. Simply put, to accomplish an objective, sub-processes need to be rolled together into a cohesive end-to-end “uber-process.”
  • Through the use of microprocessors that are embedded within the assets themselves and connected to the Internet, original equipment manufacturers (OEMs) can automatically glean data on asset health and performance and then determine when equipment will need servicing, conduct remote repairs, deploy field technicians, and trigger parts orders. What’s more, OEMs can often execute maintenance and repair activities without ever deploying a field technician or disrupting the customer. To reach new heights in overall corporate performance, best-in-class companies are replacing unplanned in-person service calls with carefully timed and delivered service data and are realizing huge improvements in overall service costs, equipment uptime, technician productivity, and overall profitability.
  • Recent research from Aberdeen has shown that service organizations have already leveraged Internet and mobile technology to make strides towards automating and synchronizing the four key pillars of field service -- People, Process, Parts, and Data – and are now looking to on-site diagnostics for the next leap in business improvement.
  • Customers are expecting faster resolution times Particularly in industries like utilities, telecommunications, and healthcare where customers require 100% asset availability, speedy issue resolution is the number one driver for M2M technology investments. Nearly two-thirds of best-in-class firms across all industries surveyed reported this to be the case. M2M solutions can enable service organizations to detect and resolve product performance problems often without the product failing completely or the customer even realizing there is a potential problem. Shrinking product-based profit margins are spurring the need for service-based revenue growth Competition and other price pressures have eroded product-based profit margins in many industries, so leading firms are leaning on their service organizations for revenue growth. Firms of all maturity levels that participated in this study agree that the increasing prominence of revenue targets for the service organization is driving M2M adoption. Truly proactive service that’s made possible through M2M solutions adds another layer of value to the customer relationship and can be monetized as such. Asset management responsibility and accountability is shifting from the end-user enterprise to the OEMs As companies increasingly narrow their focus on their true core competencies, they are taking on less and less of the responsibility of maintaining the physical assets and equipment they use in their businesses. This responsibility is moving to the shoulders of the companies who manufactured or sold the products. Half of the best-in-class firms surveyed in this study view this shift as an important driver of M2M adoption. With increasing pressure to retain existing customers and more of the revenue mix coming from services versus products, OEMs are looking to increase their visibility into and control over their deployed assets. For major manufacturers with thousands of assets to service, M2M becomes an attractive option for true real-time visibility and control.
  • Early adopters are demonstrating that the most successful M2M initiatives are undertaken in the context of achieving stated business objectives. These front-runners have framed their actions inside of a few key strategies. 1. Build aggressive customer retention programs Almost three-quarters of best-in-class firms are leveraging M2M-enabled service solutions to achieve customer retention objectives. Service-oriented companies like Kodak Versamark have realized that the costs to acquire new customers in an increasingly competitive market far exceed the costs to retain an existing customer base. 2. Capitalize on cross- and up-sell opportunities for service Two-thirds of best-in-class companies are looking for ways to drive service-driven revenues with M2M-enabled service solutions. OEMs like Siemens ( www.siemens.com ) leverage M2M-enabled solutions to spur supplemental revenue streams with value-added services. Siemens has 200,000 medical systems and devices deployed world-wide, 70% of which are under active service contracts. The company leverages the remote system management capabilities of its M2M solution to offer real-time equipment monitoring, over-the-air software distribution and upgrade, and remote repair services. Indeed, as uncovered in recent related research from Aberdeen, leading service organizations are not just cutting costs, they’re driving top-line growth. Coupled with mobile field service solutions, M2M solutions can generate more timely, accurate, and granular data on service and asset performance, so companies should leverage this data as value points to justify SLA price increases. 3. Adopt an integrated approach to service delivery that links the support chain with the supply chain Today’s progressive value chain executives are striving to bring the post-sales service chain into closer alignment with the other phases of the product lifecycle. Design engineers, for instance, are collaborating with customer service executives to incorporate service requirements into the product design process. And procurement managers are participating in service parts planning and sourcing. Nearly 60% of best-in-class firms consider M2M solutions to be a critical enabler of this deeply integrated approach to service delivery. Indeed, embedded intelligent devices can automatically transmit replacement part orders to OEMs, based upon predetermined forecasts or performance threshold triggers. What is more, the proactive and preemptive service made possible by M2M is extending the useful life of many assets, reducing the frequency of asset disposition and refurbishment.
  • 1. Misalignment of business requirements with tech. capabilities. Even with these clearly defined business goals as the backdrop for embarking on M2M implementations, nearly 60% of best-in-class firms identified the leading challenge in this area to be the misalignment of business requirements with technical capabilities. On the one hand, this misalignment can be largely attributed to poorly defined business requirements in the first place, as half of best-in-class companies identified this as a major challenge unto itself. On the other hand, the mismatch between business requirements and M2M capabilities has a lot to do with the current fragmented nature of the M2M solution provider landscape. There are very few, if any, M2M solution providers that offer a complete end-to-end solution, covering the hardware, software, and connectivity requirements inherent in any M2M implementation (see Appendix A). One class of providers manufacture the modules that are either embedded within or connected externally to assets and that collect sensor data from the asset’s microprocessor. A second class are application providers that build software that operationalizes the data collected from assets. And then there are the wireless carriers and other communications providers that allow remote assets to “dialogue” with each other and with back-office enterprise systems. These different categories of solution providers often partner to form loosely federated solution sets, but it is still challenging for OEMs to incorporate the full breadth of solution functionality into their business requirements planning and to communicate these requirements to a single accountable entity on the solution provider side. As is the case in any emerging technology space, some of the obstacles standing in the way of wide-scale adoption of M2M are as follows: 1. Costs : Only one-third of best-in-class firms identified the costs of M2M-related hardware and software as a major challenge to implementation, but in reality, initial instrumentation and development costs can escalate quickly especially for OEMs with large installed bases of legacy assets. 2. Device certification requirements: In addition to development costs, OEMs that deploy wireless M2M solutions must foot the bills for multiple phases of device certification. Wireless communication devices must pass muster with various governing bodies such as the Federal Communications Commission (FCC), the PCS-1900 Type Certification Review Board (PTCRB), the Cellular Telecommunications and Internet Association (CTIA), as well as the cellular network operators. This certification process can be lengthy and costly. 3. Multiple communications standards: The global system for mobile communications (GSM) and code division multiple access (CDMA) are among the communications networks upon which M2M solutions rely. Many companies are waiting for more open communications standards to emerge before embarking on full-scale M2M deployments.
  • So, what allows and equips companies to overcome these challenges to achieve success in adopting M2M technology solutions? In all of our research we distinguish best-in-class firms from average and lagging firms based upon defining characteristics that are resident at a firm in 5 critical areas… We consistently find that best-in-class firms anticipate and react to market pressures differently from avg. and laggards; BIC firms have markedly different underpinning capabilities resident at their firms — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, ecosystem partners, financing); and BIC firms have deployed technology more efficiently and effectively to support the organization’s objectives. (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management). According to Aberdeen’s Competitive Framework, these leading companies exhibit specific characteristics in 5 key categories that lead to measurable results on the top and bottom lines: Process, Organizational Structure, Data/Knowledge Management, Technology Usage, and Performance Management. This slide looks at the first two categories, Process and Organization. Companies that trigger all of their service orders based upon data captured directly from their assets are above-average performers, relative to their peers. On the Organization side, we’re finding that leading companies are separating themselves from the pack by aligning technician capacity, aptitude, and proximity with work order demand in real-time.
  • Knowledge Management: Has to do with which stakeholders have access to which data in which format, and at what frequency. As you know, field service operations in many industries struggle with high-turnover rates, and in some industries like utilities, there are cycles of massive personnel churn. For this reason, low barriers to ramp up and preservation of knowledge is critical for business process continuity. The more knowledge is stored locally or in the heads of technicians, the more at risk a service organization is. Not surprisingly, service organizations that monitor their deployed assets in real-time and store asset-related data in a centralized repository or other “single point of truth” perform at above average levels. Technology: Service organizations whose primary technology strategy relies on embedded intelligent devices at the asset level achieve above-average performance.
  • Our research shows that the best companies keep track of two general categories of metrics: operational/tactical and strategic. The operational metrics (first-call resolution rate, work orders completed per technician per day, etc.) roll up to and influence the strategic metrics (service revenue growth, customer satisfaction/retention, etc.). About two-thirds of best-in-class companies we surveyed monitor service performance on a real-time basis. While more than a third of lagging companies do not track or measure field service performance at all.
  • Best-in-class companies Aberdeen surveyed identified these top ten KPIs for tracking post-sales service performance. They all provide different views into the overall productivity of the field force.
  • Taken in aggregate, survey results show that the firms exhibiting best-in-class post-sales service characteristics and a successful track record with M2M-enabled solutions also enjoy best-in-class service and financial performance. What this chart shows is that companies that score highest across the three categories of maturity have realized such performance gains as 139% improvement in work orders completed per day per technician, 263% improvement in service revenues, and 50% improvement in the number of emergency or unplanned work orders per week.
  • More than two-thirds of service organizations whose primary technology strategy relies on embedded intelligent devices at the asset level achieve above average performance. More than one-quarter of all surveyed companies, however, still rely primarily on paper- or spreadsheet-based systems in their service operations; and just 29% of these firms are above-average performers.
  • Nearly 60% of service organizations that monitor their deployed assets in real-time and store asset-related data in a centralized repository or other “single point of truth” perform at above average levels. Not surprisingly, just 17% of firms where field technicians or call center workers record customer and asset data after the completion of a service order and store this data in decentralized locations are above-average performers.
  • So let’s look at a few actual examples of how companies have optimized their field service operations to dramatically improve their company’s performance. You’ll notice that in each of these cases, technology by itself did not constitute a strategy for improvement. It was part of a larger strategic effort that often included business process re-engineering, shifting roles/responsibilities, and the like. In fact, most of the companies we talk to tell us that setbacks in optimization and other areas of field service improvement occur more because of poor process definition or adherence than issues with technology deployment or integration.
  • Tips for Laggards 1) Minimize paper- and spreadsheet-based processes Outdated or lack of appropriate technology will breed error and inefficiency within a post-sales service organization, at the expense of customer satisfaction and retention. About 15% of companies participating in this study have no completed or planned M2M initiatives in place. Granted, M2M might not be a good fit for your service environment, but once business and customer requirements have been defined, consider leveraging or expanding existing technology investments. 2) Measure. Measure. Measure. About 20% of polled companies do not systematically track and measure post-sales service performance at all. In order to tap cost, revenue, profitability, and cash flow gains resident within post-sales service operations, companies must track at least a few leading indicators such as technician productivity, service response time, first-time resolution rate, and time to invoice. 3) It’s early in the M2M game… but don’t forget to get off the bench M2M is still an emerging technology, so most of its benefits have been realized only by a corps of early adopters. Service-oriented companies in competitive market segments have about 18 to 24 months to determine if M2M fits their service environment and to establish requirements for a solution before they will see their competitiveness degrade.
  • Tips for Average Firms 1) Maximize the capabilities of your field force, don’t try to eliminate them While M2M solutions hold the promise of reduced service call volume in most asset categories, field service technicians will still be required for most planned maintenance, disposition, and refurbishment activities. With reduced emergency and unplanned service calls, technicians might even be cross-trained for more value-added tasks such as proactive cross-selling and up-selling with existing customers. 2) Start with a pilot When embarking on an M2M deployment, companies should choose a single customer and a small group of assets where they can conduct a three to six month pilot to fully test the solution’s functionality and gauge its impact on the OEM’s and end-user’s existing systems and processes. In partnership with their systems integrator, companies should document learnings from the pilot and incorporate them into the full-scale roll-out. 3) Invest in user training and in identifying M2M champions Field mechanics and operating engineers might not have the skills to properly act upon leading indicators of major equipment problems that are detected and reported by M2M systems. In many cases, these indicators are comprised of new data types, so service professionals must be trained in how to interpret and address these indicators.
  • Tips for Best-in-Class Firms 1) Re-evaluate existing post-sales service processes and look for ways to leverage your M2M solutions to drive greater improvements Only about half of best-in-class companies polled seize the opportunity to re-evaluate and improve existing business processes when deploying a M2M-enabled service solution. Technology integration is indeed a challenge of mobile deployments, but companies should not let it overshadow the challenge and opportunity to drive positive process evolution. 2) Consider re-engineering manufacturing processes to include wireless M2M readiness Retrofitting legacy assets for wired or wireless connectivity with bolt-on external modems should not be a long-term strategy for M2M solution expansion. Once the benefits of M2M have been proven, OEMs should take a step back in the product lifecycle and incorporate embedded wireless connectivity in the design and manufacturing stage. 3) Quantify the impact on customers’ performance Forward-looking service organizations should collaborate with customers to understand how proactive service delivery is impacting the customer’s operational and financial performance. For instance, how is 100% equipment uptime impacting profitability, asset utilization, and customer retention for the end-user organization? Constructing and quantifying this vital link in the “service chain” will strengthen relations with the end-user firm and provide compelling data points to share with prospects.
  • Technology decisions are being driven more and more by business-line managers. Research is ACTIONABLE for value-chain executives. They look at our research and see themselves in the mirror.
  • Informed by a year’s worth of post-sales service research, this simple framework encapsulates the components of field service management that need to be automated, synchronized, and optimized for best-in-class performance. Our studies have shown that firms that have incorporated all 4 of these pillars in their business and technology approaches have consistently performed better that firms that have taken more singular approaches (i.e. tackling just people or parts). The Process pillar pertains to the business processes that are core and peripheral to the delivery of field service to customers. These processes include sales, accounting, technician and work order scheduling, warranty and contract management, and preventative maintenance. Enterprises endeavoring to improve their field service performance must first look at the processes that are in place, how or if they are being followed, and how technology might impact or even re-engineer existing processes. The People pillar pertains to all the stakeholders within and outside the enterprise who are involved with the planning, execution, reporting, and consumption of field service. These include call center, dispatch center, parts depot, and field technicians. The Parts pillar covers the important piece of equipping the right technician with the right service part at the right time, and at the right price. Service parts planning is a complex piece of the service chain which must be carefully synchronized with the other three pillars. Finally, the Data pillar is the lifeblood of any field service operation. Inputs and outputs that must be captured, stored, normalized, and communicated to all of the necessary stakeholders. Includes contract/warranty, customer information, service & repair bulletins, parts catalogs, etc. The efficacy of service chain performance measurement rests largely upon this Data pillar -- an enterprise’s data management approach. Due to the iterative technology trajectory at most companies, there are very few firms that have the luxury of a single centralized and normalized database for all its business processes. Regardless, leading companies are leveraging portals and other tools to aggregate data that resides in disparate solutions and present a unified and normalized view into business performance. With this federated data model, enterprises can capture accurate, often real-time, views of performance data, including customer histories, sales opportunities, repair statuses, and forecasts for assets, labor, spares inventory, and the like. With service-related business processes becoming increasingly integrated, companies cannot rely on a single application for data and performance management. As one mid-market company in the high technology sector noted, “Most service applications are about automating the dispatch, repair, logistics, and reports. Very [few] focus on real time management of the dispatch messaging and how communications technologies can proactively automate the entire service process front to back.” Companies that are actively integrating service management business processes with sales, financial, and other related business functions are finding that data-centric and function-centric integration approaches afforded by most enterprise application integration (EAI) solutions are insufficient for optimal business performance. With data-centric integration, the output of one application – a sales force automation (SFA) tool for instance – is captured and transmitted as input into a related application – such as a workforce management tool. However, most critical decisions about how best to service a customer or how to calculate the most accurate spare parts demand forecast require the concurrent analysis and synthesis of data from several disparate processes and applications. For example, to fix a broken asset, service workers need to call upon asset and customer histories to set a baseline for work completed to date. They would likely have to draw upon contract or warranty data to determine if the asset is under warranty. If spare parts were required, they would need to assess inventory availability at central, regional, customer, or truck locations. Scheduling the best technician to service the asset would require data on technician availability, aptitudes, and proximity to the customer. And completing and transacting the service order would require interfacing with back-office financial and accounting systems. Simply put, to accomplish an objective, sub-processes need to be rolled together into a cohesive end-to-end “uber-process.”
  • Planned deployments in Manufacturing: 40%.
  • Customers are expecting faster resolution times Particularly in industries like utilities, telecommunications, and healthcare where customers require 100% asset availability, speedy issue resolution is the number one driver for M2M technology investments. Nearly two-thirds of best-in-class firms across all industries surveyed reported this to be the case. M2M solutions can enable service organizations to detect and resolve product performance problems often without the product failing completely or the customer even realizing there is a potential problem. Shrinking product-based profit margins are spurring the need for service-based revenue growth Competition and other price pressures have eroded product-based profit margins in many industries, so leading firms are leaning on their service organizations for revenue growth. Firms of all maturity levels that participated in this study agree that the increasing prominence of revenue targets for the service organization is driving M2M adoption. Truly proactive service that’s made possible through M2M solutions adds another layer of value to the customer relationship and can be monetized as such. Asset management responsibility and accountability is shifting from the end-user enterprise to the OEMs As companies increasingly narrow their focus on their true core competencies, they are taking on less and less of the responsibility of maintaining the physical assets and equipment they use in their businesses. This responsibility is moving to the shoulders of the companies who manufactured or sold the products. Half of the best-in-class firms surveyed in this study view this shift as an important driver of M2M adoption. With increasing pressure to retain existing customers and more of the revenue mix coming from services versus products, OEMs are looking to increase their visibility into and control over their deployed assets. For major manufacturers with thousands of assets to service, M2M becomes an attractive option for true real-time visibility and control.
  • Early adopters are demonstrating that the most successful M2M initiatives are undertaken in the context of achieving stated business objectives. These front-runners have framed their actions inside of a few key strategies. 1. Build aggressive customer retention programs Almost three-quarters of best-in-class firms are leveraging M2M-enabled service solutions to achieve customer retention objectives. Service-oriented companies like Kodak Versamark have realized that the costs to acquire new customers in an increasingly competitive market far exceed the costs to retain an existing customer base. 2. Capitalize on cross- and up-sell opportunities for service Two-thirds of best-in-class companies are looking for ways to drive service-driven revenues with M2M-enabled service solutions. OEMs like Siemens ( www.siemens.com ) leverage M2M-enabled solutions to spur supplemental revenue streams with value-added services. Siemens has 200,000 medical systems and devices deployed world-wide, 70% of which are under active service contracts. The company leverages the remote system management capabilities of its M2M solution to offer real-time equipment monitoring, over-the-air software distribution and upgrade, and remote repair services. Indeed, as uncovered in recent related research from Aberdeen, leading service organizations are not just cutting costs, they’re driving top-line growth. Coupled with mobile field service solutions, M2M solutions can generate more timely, accurate, and granular data on service and asset performance, so companies should leverage this data as value points to justify SLA price increases. 3. Adopt an integrated approach to service delivery that links the support chain with the supply chain Today’s progressive value chain executives are striving to bring the post-sales service chain into closer alignment with the other phases of the product lifecycle. Design engineers, for instance, are collaborating with customer service executives to incorporate service requirements into the product design process. And procurement managers are participating in service parts planning and sourcing. Nearly 60% of best-in-class firms consider M2M solutions to be a critical enabler of this deeply integrated approach to service delivery. Indeed, embedded intelligent devices can automatically transmit replacement part orders to OEMs, based upon predetermined forecasts or performance threshold triggers. What is more, the proactive and preemptive service made possible by M2M is extending the useful life of many assets, reducing the frequency of asset disposition and refurbishment.
  • 1. Misalignment of business requirements with tech. capabilities. Even with these clearly defined business goals as the backdrop for embarking on M2M implementations, nearly 60% of best-in-class firms identified the leading challenge in this area to be the misalignment of business requirements with technical capabilities. On the one hand, this misalignment can be largely attributed to poorly defined business requirements in the first place, as half of best-in-class companies identified this as a major challenge unto itself. On the other hand, the mismatch between business requirements and M2M capabilities has a lot to do with the current fragmented nature of the M2M solution provider landscape. There are very few, if any, M2M solution providers that offer a complete end-to-end solution, covering the hardware, software, and connectivity requirements inherent in any M2M implementation (see Appendix A). One class of providers manufacture the modules that are either embedded within or connected externally to assets and that collect sensor data from the asset’s microprocessor. A second class are application providers that build software that operationalizes the data collected from assets. And then there are the wireless carriers and other communications providers that allow remote assets to “dialogue” with each other and with back-office enterprise systems. These different categories of solution providers often partner to form loosely federated solution sets, but it is still challenging for OEMs to incorporate the full breadth of solution functionality into their business requirements planning and to communicate these requirements to a single accountable entity on the solution provider side. As is the case in any emerging technology space, some of the obstacles standing in the way of wide-scale adoption of M2M are as follows: 1. Costs : Only one-third of best-in-class firms identified the costs of M2M-related hardware and software as a major challenge to implementation, but in reality, initial instrumentation and development costs can escalate quickly especially for OEMs with large installed bases of legacy assets. 2. Device certification requirements: In addition to development costs, OEMs that deploy wireless M2M solutions must foot the bills for multiple phases of device certification. Wireless communication devices must pass muster with various governing bodies such as the Federal Communications Commission (FCC), the PCS-1900 Type Certification Review Board (PTCRB), the Cellular Telecommunications and Internet Association (CTIA), as well as the cellular network operators. This certification process can be lengthy and costly. 3. Multiple communications standards: The global system for mobile communications (GSM) and code division multiple access (CDMA) are among the communications networks upon which M2M solutions rely. Many companies are waiting for more open communications standards to emerge before embarking on full-scale M2M deployments.
  • some of the obstacles standing in the way of wide-scale adoption of M2M are as follows: Costs : Only one-third of best-in-class firms identified the costs of M2M-related hardware and software as a major challenge to implementation, but in reality, initial instrumentation and development costs can escalate quickly especially for OEMs with large installed bases of legacy assets. Device certification requirements: In addition to development costs, OEMs that deploy wireless M2M solutions must foot the bills for multiple phases of device certification. Wireless communication devices must pass muster with various governing bodies such as the Federal Communications Commission (FCC), the PCS-1900 Type Certification Review Board (PTCRB), the Cellular Telecommunications and Internet Association (CTIA), as well as the cellular network operators. This certification process can be lengthy and costly. Multiple communications standards: The global system for mobile communications (GSM) and code division multiple access (CDMA) are among the communications networks upon which M2M solutions rely. Many companies are waiting for more open communications standards to emerge before embarking on full-scale M2M deployments.
  • So, what allows and equips companies to overcome these challenges to achieve success in adopting M2M technology solutions? In all of our research we distinguish best-in-class firms from average and lagging firms based upon defining characteristics that are resident at a firm in 5 critical areas… We consistently find that best-in-class firms anticipate and react to market pressures differently from avg. and laggards; BIC firms have markedly different underpinning capabilities resident at their firms — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, ecosystem partners, financing); and BIC firms have deployed technology more efficiently and effectively to support the organization’s objectives. (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management). According to Aberdeen’s Competitive Framework, these leading companies exhibit specific characteristics in 5 key categories that lead to measurable results on the top and bottom lines: Process, Organizational Structure, Data/Knowledge Management, Technology Usage, and Performance Management. This slide looks at the first two categories, Process and Organization. Companies that trigger all of their service orders based upon data captured directly from their assets are above-average performers, relative to their peers. On the Organization side, we’re finding that leading companies are separating themselves from the pack by aligning technician capacity, aptitude, and proximity with work order demand in real-time.
  • Knowledge Management: Has to do with which stakeholders have access to which data in which format, and at what frequency. As you know, field service operations in many industries struggle with high-turnover rates, and in some industries like utilities, there are cycles of massive personnel churn. For this reason, low barriers to ramp up and preservation of knowledge is critical for business process continuity. The more knowledge is stored locally or in the heads of technicians, the more at risk a service organization is. Not surprisingly, service organizations that monitor their deployed assets in real-time and store asset-related data in a centralized repository or other “single point of truth” perform at above average levels. Technology: Service organizations whose primary technology strategy relies on embedded intelligent devices at the asset level achieve above-average performance.
  • Our research shows that the best companies keep track of two general categories of metrics: operational/tactical and strategic. The operational metrics (first-call resolution rate, work orders completed per technician per day, etc.) roll up to and influence the strategic metrics (service revenue growth, customer satisfaction/retention, etc.). About two-thirds of best-in-class companies we surveyed monitor service performance on a real-time basis. While more than a third of lagging companies do not track or measure field service performance at all.
  • Taken in aggregate, survey results show that the firms exhibiting best-in-class post-sales service characteristics and a successful track record with M2M-enabled solutions also enjoy best-in-class service and financial performance. What this chart shows is that companies that score highest across the three categories of maturity have realized such performance gains as 139% improvement in work orders completed per day per technician, 263% improvement in service revenues, and 50% improvement in the number of emergency or unplanned work orders per week.
  • More than two-thirds of service organizations whose primary technology strategy relies on embedded intelligent devices at the asset level achieve above average performance. More than one-quarter of all surveyed companies, however, still rely primarily on paper- or spreadsheet-based systems in their service operations; and just 29% of these firms are above-average performers.
  • information storage behemoth EMC ( www.emc.com ) has relied on M2M-enabled service solutions since the early 1990’s to remotely monitor more than 100,000 hardware and software assets. Over the past decade, EMC has enjoyed such benefits as increased customer satisfaction from improved proactive support procedures, strengthened competitive advantage, and reduced service costs. The company continues to add more functionality to further automate the remote asset diagnostic process and to expand value-added services like “self-healing” capabilities.
  • Nearly 60% of service organizations that monitor their deployed assets in real-time and store asset-related data in a centralized repository or other “single point of truth” perform at above average levels. Not surprisingly, just 17% of firms where field technicians or call center workers record customer and asset data after the completion of a service order and store this data in decentralized locations are above-average performers.
  • More than two-thirds of service organizations whose primary technology strategy relies on embedded intelligent devices at the asset level achieve above average performance. More than one-quarter of all surveyed companies, however, still rely primarily on paper- or spreadsheet-based systems in their service operations; and just 29% of these firms are above-average performers.
  • With M2M solutions, OEMs can begin to build a value proposition for their customers built upon company-wide financial performance impact; not on near-sighted metrics like fastest mean time to repair, maximum asset up-time, or 100% service level agreement (SLA) compliance. M2M will enable service organizations to quantify and communicate the financial impact of an optimally maintained asset on the end-user enterprise. The remote diagnostics, workflow triggering, and self-healing capabilities of M2M solutions will pay dividends in what has traditionally been the first two tiers of service performance measurement: internal service delivery productivity, and asset-specific SLA compliance. But M2M will enable service organizations to quantify and communicate the financial impact of an optimally maintained asset on the end-user enterprise, and to better understand how their particular asset interacts with other assets at the end-user enterprise. Quantifying this impact on the customer is the key to true best-in-class “service chain” performance optimization, as distinct from internally-focused service delivery optimization.
  • Consider this: BP Solar ( www.bpsolar.com ) leverages an M2M solution from controlGen ( www.controlgen.com ) to fulfill the “energy guarantee” it offers to customers of its photovoltaic arrays. Physical sensors on the arrays capture data about specific weather conditions such as solar irradiance, temperature, and wind speed, and then create virtual “performance” sensors against which thresholds and alarm triggers are applied. The solution’s proactive condition and output monitoring capabilities and automatic dispatch of maintenance personnel have indeed improved BP Solar’s and its arrays’ productivity, but that’s not why BP Solar customers like Whole Foods Market ( www.wholefoods.com ) remain satisfied. It turns out that Whole Foods Market touts its reliance on natural energy sources in its own marketing and customer loyalty and retention programs. The natural foods behemoth captures and displays its energy-use data in real time via the Web, in the hopes of appealing to its uniquely environment-conscious customer base.
  • So let’s look at a few actual examples of how companies have optimized their field service operations to dramatically improve their company’s performance. You’ll notice that in each of these cases, technology by itself did not constitute a strategy for improvement. It was part of a larger strategic effort that often included business process re-engineering, shifting roles/responsibilities, and the like. In fact, most of the companies we talk to tell us that setbacks in optimization and other areas of field service improvement occur more because of poor process definition or adherence than issues with technology deployment or integration.
  • Answer the question: Does M2M fit our service environment? As discussed earlier in this report, a major challenge for today’s service organizations is aligning business requirements with technology functionality. So job one for companies considering an M2M solution for their service operations is to fully define their business requirements and then decide with a cross-functional team whether M2M is the best technology to address these requirements. Here are a few factors for OEMs and service providers to consider when weighing this decision: Criticality of the serviceable assets If 100% equipment uptime is a requirement of your customers, then M2M is worth pursuing. This is precisely why M2M has gained traction among medical equipment and systems manufacturers. Case in point: the software and hardware components for image-guided surgery, components for linear accelerators in radiotherapy, and systems for stereotactic radiosurgery manufactured by German-based BrainLAB ( www.brainlab.com ) have stringent uptime requirements for obvious reasons, so BrainLAB’s decision to deploy an M2M solution across its 1,300 systems made sense. If moderate equipment downtime will not significantly impact your customers’ business performance, then M2M might not be the answer. Value of the serviceable assets If your company manufactures or services high-end products or equipment that are costly to repair and replace – such as industrial-grade printing or laboratory equipment -- M2M solutions can deliver a compelling return-on-investment proposition. Due to the costs associated with instrumenting assets, especially legacy assets without built-in serial ports, M2M solutions can be cost-prohibitive for lower-end assets. Frequency and variability of service requirements Likewise, if deployed assets require frequent or unpredictable servicing, then the remote condition monitoring and problem resolution capabilities afforded by M2M can quickly increase the productivity of your field force. However, do not immediately assume that an M2M solution will reduce the need for field technicians. For Gaithersburg, Maryland-based facilities control and monitoring provider HVAC Concepts ( www.hvacc.net ), remotely monitoring equipment has actually increased the burden on their field force. Many times leading indicators of major equipment problems -- or a problem that only happens under heavy demand -- are detected and reported, but the core field mechanics and operating engineers might not have the skills to properly interrupt and act on this type of data. As a result, they have had to increase training to ensure an effective M2M program. Why not wires? Once your company has established that an M2M solution will meet your core business requirements, determine if assets might be networked via a land-line connection to the Internet. If assets are stationary and in an accessible locale, the less costly wired route is a viable option to consider. In many cases, though, assets are mobile or too remote for a wired connection, so wireless connectivity is required. M2M-readiness of your assets Chances are, the majority of your installed base of assets were not manufactured with wireless or even wire-ready connectivity capabilities built in. The costs associated with instrumenting these legacy assets are non-trivial, and not all M2M hardware providers are fully equipped or qualified to retrofit these assets to support M2M communications. To get started with an M2M deployment, make certain your chosen M2M hardware vendor has experience with retrofitting legacy assets. And going forward, consider enhancing the design of your products to include wireless connectivity capabilities. Single point of accountability With the possible exception of Opto 22’s recently launched Nvio product ( www.opto22.com/m2m/nvio/nvio_overview.aspx ), end-to-end M2M solutions are comprised of multiple vendors’ products and services. This makes it challenging for OEMs to communicate, test, and adjudicate their requirements with a single accountable entity. At this relatively early stage of M2M solutions, OEMs would be well served to partner with M2M integration and project management specialists like Airdesk ( www.airdesk.net ) or other systems integrators, to be sure business requirements are met with a scalable and cost-effective solution. Solution providers’ proven post-sales service deployment track record in your industry Make certain that the provider has deployed M2M solutions for post-sales service organizations on time, on budget, and with end-to-end testing that includes integration with existing enterprise systems. Post-sales service operations have unique business and usage requirements that may be overlooked by hardware, software, and connectivity providers that have never deployed a system in this space.
  • Tips for Laggards 1) Minimize paper- and spreadsheet-based processes Outdated or lack of appropriate technology will breed error and inefficiency within a post-sales service organization, at the expense of customer satisfaction and retention. About 15% of companies participating in this study have no completed or planned M2M initiatives in place. Granted, M2M might not be a good fit for your service environment, but once business and customer requirements have been defined, consider leveraging or expanding existing technology investments. 2) Measure. Measure. Measure. About 20% of polled companies do not systematically track and measure post-sales service performance at all. In order to tap cost, revenue, profitability, and cash flow gains resident within post-sales service operations, companies must track at least a few leading indicators such as technician productivity, service response time, first-time resolution rate, and time to invoice. 3) It’s early in the M2M game… but don’t forget to get off the bench M2M is still an emerging technology, so most of its benefits have been realized only by a corps of early adopters. Service-oriented companies in competitive market segments have about 18 to 24 months to determine if M2M fits their service environment and to establish requirements for a solution before they will see their competitiveness degrade.
  • Tips for Average Firms 1) Maximize the capabilities of your field force, don’t try to eliminate them While M2M solutions hold the promise of reduced service call volume in most asset categories, field service technicians will still be required for most planned maintenance, disposition, and refurbishment activities. With reduced emergency and unplanned service calls, technicians might even be cross-trained for more value-added tasks such as proactive cross-selling and up-selling with existing customers. 2) Start with a pilot When embarking on an M2M deployment, companies should choose a single customer and a small group of assets where they can conduct a three to six month pilot to fully test the solution’s functionality and gauge its impact on the OEM’s and end-user’s existing systems and processes. In partnership with their systems integrator, companies should document learnings from the pilot and incorporate them into the full-scale roll-out. 3) Invest in user training and in identifying M2M champions Field mechanics and operating engineers might not have the skills to properly act upon leading indicators of major equipment problems that are detected and reported by M2M systems. In many cases, these indicators are comprised of new data types, so service professionals must be trained in how to interpret and address these indicators.
  • Tips for Best-in-Class Firms 1) Re-evaluate existing post-sales service processes and look for ways to leverage your M2M solutions to drive greater improvements Only about half of best-in-class companies polled seize the opportunity to re-evaluate and improve existing business processes when deploying a M2M-enabled service solution. Technology integration is indeed a challenge of mobile deployments, but companies should not let it overshadow the challenge and opportunity to drive positive process evolution. 2) Consider re-engineering manufacturing processes to include wireless M2M readiness Retrofitting legacy assets for wired or wireless connectivity with bolt-on external modems should not be a long-term strategy for M2M solution expansion. Once the benefits of M2M have been proven, OEMs should take a step back in the product lifecycle and incorporate embedded wireless connectivity in the design and manufacturing stage. 3) Quantify the impact on customers’ performance Forward-looking service organizations should collaborate with customers to understand how proactive service delivery is impacting the customer’s operational and financial performance. For instance, how is 100% equipment uptime impacting profitability, asset utilization, and customer retention for the end-user organization? Constructing and quantifying this vital link in the “service chain” will strengthen relations with the end-user firm and provide compelling data points to share with prospects.
  • Research Findings - Aberdeen

    1. 1. Next Generation Service and Asset Management Mark W. Vigoroso Vice President, Post-Sales Service Research June 28, 2005 Maximizing Performance with M2M
    2. 2. Agenda <ul><li>Who is Aberdeen? </li></ul><ul><li>Background on Next Generation Post-Sales Service research </li></ul><ul><li>Market pressures for M2M </li></ul><ul><li>Obstacles to success </li></ul><ul><li>Defining Best-in-Class </li></ul><ul><li>Case studies </li></ul><ul><li>Recommendations for Action </li></ul><ul><li>Q&A </li></ul>
    3. 3. Aberdeen’s Value Chain World View <ul><li>“Technology-driven Business Value” </li></ul>
    4. 4. Next Generation Post-Sales Service Research <ul><li>Next Generation Post-Sales Service Benchmark Report </li></ul><ul><li>Surveyed 129 service chain executives </li></ul><ul><li>Key Take-away: Early adopters of M2M-enabled solutions can gain an edge on their competition by deploying these solutions in 2005. </li></ul>
    5. 5. Strategic Service Management Framework <ul><li>Strategic Service Management is comprised of 4 critical pillars </li></ul>
    6. 6. Machine-to-Machine (M2M) Defined <ul><li>An emerging technology that allows original equipment manufacturers (OEMs) to connect their installed base of assets to the Internet and to monitor programmatically the health and performance of these assets in real time. </li></ul><ul><li>In the simplest of terms, M2M represents the zero-latency convergence of the physical supply chain with Web-based enterprise solutions . </li></ul>
    7. 7. Critical Elements of M2M Solutions <ul><li>Hardware </li></ul><ul><ul><li>i.e. microprocessors and sensors deployed at the asset level. </li></ul></ul><ul><li>Software </li></ul><ul><ul><li>i.e. applications to capture, synthesize, and operationalize business data. </li></ul></ul><ul><li>Connectivity </li></ul><ul><ul><li>i.e. wired or wireless infrastructure to enable machines to communicate with enterprise systems and with each other. </li></ul></ul>
    8. 8. Market Pressures Driving M2M Adoption
    9. 9. Strategic Actions Taken by Service Organizations
    10. 10. Obstacles to Successful M2M Implementations
    11. 11. Defining Best-in-Class M2M Adoption Alignment of technician capacity, aptitude, and proximity with work order demand occurs in real-time Alignment of technician capacity, aptitude, and proximity with work order demand occurs on a daily basis No systematic alignment of technician capacity, aptitude, and proximity with work order demand Organization Process Trigger planned and unplanned service orders primarily based on verbal communication from customer Laggards Trigger planned service orders primarily based on customer and/or asset history; Trigger unplanned service orders based on verbal communication from customer Industry Average Trigger planned and unplanned service orders primarily based on data captured directly from the serviceable asset Best in Class
    12. 12. Defining Best-in-Class M2M Deployments Embedded intelligent devices that transmit data on assets’ condition, repair history, etc. Desktop or handheld Web-based status, tracking, order processing, and communication tools Paper or spreadsheet-based status and tracking tools Technology Customer and asset data captured in real-time from the serviceable asset and stored in centralized database Customer and asset data recorded by employees after the service order and stored in centralized shared files Customer and asset data recorded by employees after the service order and stored in decentralized employee files Knowledge Best in Class Industry Average Laggards
    13. 13. Defining Best-in-Class M2M Deployments Field service performance measured at a strategic level – in real-time primarily by customer retention, profitability, and service revenue growth Field service performance measured at a tactical level – asynchronously primarily by repair cycle time, service response time, and technician productivity Field service performance not systematically tracked and measured Performance Measurement Best in Class Industry Average Laggards
    14. 14. <ul><li>1. Customer satisfaction </li></ul><ul><li>2. Profitability </li></ul><ul><li>3. Customer retention </li></ul><ul><li>4. First-time resolution rate and speed to resolution </li></ul><ul><li>5. Service response time </li></ul><ul><li>6. Service revenue growth </li></ul><ul><li>Warranty and SLA compliance </li></ul><ul><li>Repair cycle time </li></ul><ul><li>In-warranty repairs </li></ul><ul><li>Technician productivity (i.e. work orders completed per day) </li></ul>Top Ten Post-Sales Service KPIs
    15. 15. Best-in-Class Post-Sales Service Performance
    16. 16. Best-in-Class Post-Sales Service Performance
    17. 17. Best-in-Class Post-Sales Service Performance
    18. 18. Case Study: Applied Biosystems <ul><li>Service profile : Service engineers repair and maintain 180,000 instrument systems installed in nearly 100 countries. </li></ul><ul><li>Challenge : Manual and reactive service processes engendered inefficient technician deployments and were degrading equipment uptime and customer satisfaction. </li></ul><ul><li>Solution Strategy : Leveraging remote monitoring technologies to enable faster equipment problem diagnosis, failure prediction, notification, and resolution. </li></ul><ul><li>Results : </li></ul><ul><li>Immediate reduction of on-site repairs by one-third </li></ul><ul><li>Increase in asset uptime </li></ul><ul><li>Improved overall customer satisfaction </li></ul><ul><li>Competitive differentiation and increased revenues. </li></ul>
    19. 19. Case Study: Bobst Group <ul><li>Service profile : Supplier of machines and services for the folding carton, corrugated board, and flexible materials industries. The $1.2 billion company employees 5,800 people. </li></ul><ul><li>Challenge : Complex machinery at customer sites could be down for hours or days while waiting for the appropriate specialist to arrive. Maximize value of engineering assets without incurring the costs associated with a full-time maintenance staff on site. </li></ul><ul><li>Solution Strategy : Leverage M2M solution to build customer retention, up-sell and cross-sell existing customers, and increase service-based revenue growth. </li></ul><ul><li>Results : </li></ul><ul><li>Shifted 50% of service calls to its service provider </li></ul><ul><li>Provided value-add services to customers </li></ul><ul><li>Increased equipment uptime, first time resolution rates, and customer satisfaction </li></ul>
    20. 20. Recommendations for Action <ul><li>For Laggards </li></ul><ul><ul><li>Minimize paper- and spreadsheet-based processes </li></ul></ul><ul><ul><li>Measure. Measure. Measure. </li></ul></ul><ul><ul><li>It’s early in the M2M game…but don’t forget to get off the bench. </li></ul></ul>
    21. 21. Recommendations for Action <ul><li>For Average Companies </li></ul><ul><ul><li>Maximize the capabilities of your field force, don’t try to eliminate them </li></ul></ul><ul><ul><li>Start with a pilot </li></ul></ul><ul><ul><li>Invest in user training and in identifying M2M champions </li></ul></ul>
    22. 22. Recommendations for Action <ul><li>For Best-in-Class Companies </li></ul><ul><ul><li>Re-evaluate existing post-sales service processes and look for ways to leverage you M2M solutions to drive greater improvements </li></ul></ul><ul><ul><li>Consider re-engineering manufacturing processes to include wireless M2M readiness </li></ul></ul><ul><ul><li>Quantify the impact on customers’ performance </li></ul></ul>
    23. 23. Research in store for 2005 <ul><li>June: Best Practices in Post-Sales Service </li></ul><ul><ul><li>Case studies of 10 leading field service organizations that are leveraging technology to drive business value. </li></ul></ul><ul><li>July: Post-Sales Service Solution Selection Guide </li></ul><ul><ul><li>A tactical framework for evaluating and selecting the best service technology solution to drive business value </li></ul></ul><ul><li>September: The Emergence of the Chief Service Officer </li></ul><ul><ul><li>Hypothesis : </li></ul></ul>
    24. 24. Q&A
    25. 25. Mark W. Vigoroso (617) 854-5278 [email_address]
    26. 26. Agenda <ul><li>Who is Aberdeen? </li></ul><ul><li>Background on Next Generation Post-Sales Service research </li></ul><ul><li>Market pressures for M2M-enabled service </li></ul><ul><li>Obstacles to success </li></ul><ul><li>Defining Best-in-Class </li></ul><ul><li>Best Practice case studies </li></ul><ul><li>Recommendations for Action </li></ul><ul><li>Q&A </li></ul>
    27. 27. Aberdeen’s Value Chain World View <ul><li>“Technology-driven Business Value” </li></ul>
    28. 28. “Strategic Service Management” Framework <ul><li>Strategic Service Management comprised of 4 pillars </li></ul>
    29. 29. From the halls of Interlog Summer 2005… <ul><li>“ Support is the number one priority over manufacturing…” – mandate from Raytheon CEO </li></ul><ul><li>“ We will exceed our customer expectations with our superior products and services.” – CEO of ON Semiconductor </li></ul><ul><li>Service maturity continuum: Product support  Services for profit  Services for growth  Services leadership – Service Edge Consulting </li></ul><ul><li>“ Service is people…” – Bob Lambert, ASM America </li></ul>
    30. 30. Next Generation Post-Sales Service Research <ul><li>Surveyed 129 service chain executives </li></ul><ul><li>Defining the M2M opportunity in the service chain </li></ul><ul><ul><li>An emerging technology that allows original equipment manufacturers (OEMs) to connect their installed base of assets to the Internet and to monitor programmatically the health and performance of these assets in real time. </li></ul></ul><ul><ul><li>In the simplest of terms, M2M represents the zero-latency convergence of the physical and virtual supply chains. </li></ul></ul>
    31. 31. Next Generation Post-Sales Service Research <ul><li>Key Findings: </li></ul><ul><ul><li>Early adopters of M2M-enabled solutions can gain an edge on their competition by deploying these solutions in 2005. </li></ul></ul><ul><ul><li>KPI impact: service costs, assets’ usable lifecycles, customer retention, revenue growth, competitive advantage. </li></ul></ul><ul><ul><li>M2M solutions will drive value for OEMs, service providers, and end-user enterprises in utilities , telecommunications , healthcare , life sciences , high-technology , manufacturing , printing , and other sectors where efficient post-sales service is critical to business continuity . </li></ul></ul>
    32. 32. Next Generation Post-Sales Service Research
    33. 33. Critical Elements of M2M-Enabled Service Solutions
    34. 34. Pressures Driving M2M Adoption in the Service Chain
    35. 35. Strategic Actions Taken by Service Organizations
    36. 36. Obstacles to Successful M2M Implementations
    37. 37. Barriers to Entry <ul><li>Costs : Initial instrumentation and development costs can escalate quickly especially for OEMs with large installed bases of legacy assets. </li></ul><ul><li>Device certification requirements : Wireless communication devices must pass muster with various governing bodies such as the Federal Communications Commission (FCC), the PCS-1900 Type Certification Review Board (PTCRB), the Cellular Telecommunications and Internet Association (CTIA), as well as the cellular network operators. </li></ul><ul><li>Multiple communications standards : Global system for mobile communications (GSM); code division multiple access (CDMA). Many companies are waiting for more open communications standards to emerge. </li></ul>
    38. 38. Defining Best-in-Class M2M-Enabled Service Best-in-Class Level of service optimization measured with operational metrics and customer-facing metrics Embedded intelligent devices that transmit data on assets’ condition, repair history, etc Customer and asset data captured in real-time from the serviceable asset and stored in centralized database Vice president or higher-level executive oversees profit-and-loss (P&L) for service operations; ser-vice workers receive compensation incentives for achieving customer satisfaction targets Trigger planned and unplanned service orders primarily based on data captured directly from the serviceable asset Perform. Mgt. Technology Knowledge Mgt. Organization Process
    39. 39. Case in point: Kodak Versamark <ul><li>Services more than 9,000 installations of high-speed, digital color printing solutions </li></ul><ul><li>Measures the quality of customer relationships based on the customers’ overall productivity </li></ul><ul><li>Kodak leverages an M2M solution to locate and remedy equipment problems before they negatively impact the user’s production capabilities </li></ul><ul><li>By analyzing data captured directly from its printing equipment, Kodak can often trigger a corrective action without ever deploying a field technician. </li></ul>
    40. 40. Average Defining Best-in-Class M2M-Enabled Service Aftermarket service performance measured at a tactical level --asynchronously primarily by repair cycle time, ser-vice response time, and technician productivity Desktop or handheld Web-based status, tracking, order-processing, and communication tools Customer and asset data recorded by employees after the service order and stored in centralized shared files Director-level executive oversees cost-cutting and productivity targets for service operations; corporate culture is based on customer satis-faction, but there are no customer satisfaction targets or incentives for service workers Trigger planned service orders primarily based on customer and/or asset history; Trigger unplanned service orders based on verbal communication from customer Perform. Mgt. Technology Knowledge Mgt. Organization Process
    41. 41. Defining Best-in-Class M2M-Enabled Service Laggard Aftermarket service performance not systematically tracked and measured Paper or spreadsheet-based status and tracking tools Customer and asset data recorded by employees after the service order and stored in decentralized employee files Service is viewed as purely cost, and there is no discrete management or P&L for service operations. Trigger planned and unplanned service orders primarily based on verbal communication from customer Perform. Mgt. Technology Knowledge Mgt. Organization Process
    42. 42. Best-in-Class Post-Sales Service Performance
    43. 43. Case in point: Siemens Medical Systems <ul><li>Siemens has 200,000 medical systems and devices deployed world-wide, 70% of which are under active service contracts. </li></ul><ul><li>Siemens leverage M2M-enabled solutions to spur supplemental revenue streams with value-added services. </li></ul><ul><li>The company leverages the remote system management capabilities of its M2M solution to offer real-time equipment monitoring , over-the-air software distribution and upgrade , and remote repair services </li></ul>
    44. 44. M2M-Enabled Processes = Performance Gains
    45. 45. Case in point: EMC <ul><li>Information storage company has relied on M2M-enabled service solutions since the early 1990’s to remotely monitor more than 100,000 hardware and software assets. </li></ul><ul><li>Benefits: increased customer satisfaction from improved proactive support procedures, strengthened competitive advantage , and reduced service costs . </li></ul><ul><li>The company continues to add more functionality to further automate the remote asset diagnostic process and to expand value-added services like “self-healing” capabilities. </li></ul>
    46. 46. M2M-Enabled Data Mgt. = Performance Gains
    47. 47. M2M-Enabled Technology = Performance Gains
    48. 48. M2M Spurs Next Frontier in Performance Mgt. <ul><li>First two tiers of service performance measurement: internal service delivery productivity, and asset-specific SLA compliance </li></ul><ul><li>Next tier: M2M will enable OEMs and service organizations to quantify and communicate the financial impact of an optimally maintained asset on the end-user enterprise , and to better understand how their particular asset interacts with other assets at the end-user enterprise. </li></ul><ul><li>Quantifying this impact on the customer is the key to true best-in-class “service chain” performance optimization , as distinct from internally-focused service delivery optimization. </li></ul>
    49. 49. M2M Spurs Next Frontier in Performance Mgt. <ul><li>Case in point: BP Solar </li></ul><ul><li>Physical sensors on their photovoltaic arrays capture data about specific weather conditions such as solar irradiance, temperature, and wind speed, and then create virtual “performance” sensors against which thresholds and alarm triggers are applied </li></ul><ul><li>BP Solar customer Whole Foods Market captures and displays its energy-use data in real time via the Web, in the hopes of appealing to its uniquely environment-conscious customer base </li></ul><ul><ul><li>WFM touts its reliance on natural energy sources in its own marketing and customer loyalty and retention programs . </li></ul></ul>
    50. 50. Best Practice Case Study: Applied Biosystems <ul><li>Service profile : Service engineers repair and maintain 180,000 instrument systems installed in nearly 100 countries. </li></ul><ul><li>Challenge : Manual and reactive service processes engendered inefficient technician deployments and were degrading equipment uptime and customer satisfaction. </li></ul><ul><li>Solution Strategy : Leverage remote monitoring technologies to enable faster equipment problem diagnosis, failure prediction, notification, and resolution. </li></ul><ul><li>Results : </li></ul><ul><li>Immediate reduction of on-site repairs by one-third </li></ul><ul><li>Increase in asset uptime </li></ul><ul><li>Improved overall customer satisfaction </li></ul><ul><li>Competitive differentiation and increased revenues. </li></ul>
    51. 51. Best Practice Case Study: Bobst Group <ul><li>Service profile : Supplier of machines and services for the folding carton, corrugated board, and flexible materials industries. The $1.2 billion company employees 5,800 people. </li></ul><ul><li>Challenge : Complex machinery at customer sites could be down for hours or days while waiting for the appropriate specialist to arrive. Maximize value of engineering assets without incurring the costs associated with a full-time maintenance staff on site. </li></ul><ul><li>Solution Strategy : Leverage M2M solution to build customer retention, up-sell and cross-sell existing customers, and increase service-based revenue growth. </li></ul><ul><li>Results : </li></ul><ul><li>Shifted 50% of service calls to its service provider </li></ul><ul><li>Provided value-add services to customers </li></ul><ul><li>Increased equipment uptime, first time resolution rates, and customer satisfaction </li></ul>
    52. 52. Recommendations for Action <ul><li>Evaluating/Selecting an M2M Solution </li></ul><ul><ul><li>Answer the question: Does M2M fit your service environment? </li></ul></ul><ul><ul><ul><li>Criticality of serviceable assets </li></ul></ul></ul><ul><ul><ul><li>Value of the serviceable assets </li></ul></ul></ul><ul><ul><ul><li>Frequency and variability of service requirements </li></ul></ul></ul><ul><ul><li>Why not wires? </li></ul></ul><ul><ul><li>M2M-readiness of your assets </li></ul></ul><ul><ul><li>Single point of solution accountability </li></ul></ul><ul><ul><li>Solution providers’ proven deployment track record in your industry </li></ul></ul>
    53. 53. Recommendations for Action <ul><li>For Laggards </li></ul><ul><ul><li>Minimize paper- and spreadsheet-based processes </li></ul></ul><ul><ul><li>Measure. Measure. Measure. </li></ul></ul><ul><ul><li>It’s early in the M2M game…but don’t forget to get off the bench. </li></ul></ul>
    54. 54. Recommendations for Action <ul><li>For Average Companies </li></ul><ul><ul><li>Maximize the capabilities of your field force, don’t try to eliminate them </li></ul></ul><ul><ul><li>Start with a pilot </li></ul></ul><ul><ul><li>Invest in user training and in identifying M2M champions </li></ul></ul>
    55. 55. Recommendations for Action <ul><li>For Best-in-Class Companies </li></ul><ul><ul><li>Re-evaluate existing post-sales service processes and look for ways to leverage M2M solutions to drive process improvements </li></ul></ul><ul><ul><li>Consider re-engineering manufacturing processes to include wireless M2M readiness </li></ul></ul><ul><ul><li>Quantify the impact on customers’ performance </li></ul></ul>
    56. 56. Research in store for 2005 <ul><li>This week: Best Practices in Post-Sales Service </li></ul><ul><ul><li>Case studies of 10 leading service organizations that are leveraging technology to drive business value. </li></ul></ul><ul><li>July: Post-Sales Service Solution Selection Guide </li></ul><ul><ul><li>A tactical framework for evaluating and selecting the best service technology solution to drive business value </li></ul></ul><ul><li>September: The Emergence of the Chief Service Officer </li></ul><ul><ul><li>Hypothesis : Aftermarket service is emerging as a key driver of profits and competitive advantage and must be managed strategically by senior executives. </li></ul></ul>
    57. 57. Q&A
    58. 58. Mark W. Vigoroso (617) 854-5278 [email_address]

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