As the economic environment changes and we near the end of the COVID-19 pandemic, field service organizations with equipment on customer premises have been impacted by various industry trends shifting how they operate and support their customers.
The Pandemic Drove the Adoption of Innovative Technology
As we approach the end of the more than three-year pandemic, it’s adding complexity to the economic landscape. For example, the pandemic created more opportunities for remote and gig work. It also set the stage for field service organizations to support customers virtually using augmented reality (AR), virtual reality (VR), and telemetry, decreasing costs because field service technicians no longer needed to make on-site visits.
Additionally, field service organizations have learned the importance of telemetry in their services. Post-pandemic, customers are increasingly more inclined to allow telemetry from on-site equipment. The Technology and Services Industry Association (TSIA) discovered that 38% of field service organizations include telemetry in customer contracts.
Customers View Field Service Technicians as Trusted Advisors
Customers are now looking to field service organizations’ close connection to their business outcomes. For example, according to the TSIA, 48% of TSIA members have reported that customers require their field service organizations to add penalty clauses to contracts for failing to meet service-level obligations.
While most work was conducted remotely at the height of the pandemic, when technicians did visit customer locations, they were typically the only staff to see customers in person. This reinforced technicians’ status as trusted advisors, with customers increasing technicians’ adoption and expansion responsibilities while on-site.
Services Become More Valuable Than Products
The pandemic sped up two key trends impacting technology providers’ business models for over a decade.
- The commoditization of feature functionality
- The demand for technology-as-a-service or consumption-based business models
Hardware manufacturers are experiencing a steep decline in revenue from their products. As customers move toward consumption-based business models, hardware companies need help to keep up with this trend. As a result, they need to be faster to develop service solutions that provide value to customers. Because hardware companies depend heavily on product-attached services and sales teams completely focus on selling products, generating service revenue is difficult.
These megatrends are shifting the customer-supplier relationship. While field service customers previously accepted and paid for complexity services and acted as general contractors, they are currently rejecting this model. Instead, customers are now conforming to best practices offered by field service organizations and prefer the supplier to own and operate equipment, which allows for more post-implementation services.
Adopting New Ways of Thinking
As these critical trends influence business, the field service industry must look to new ways of thinking.
For example, being a budget-friendly provider will always be top of mind for field service leaders. But, determining the operating costs to scale back and avenues to generate revenue in this economy can take time and effort. Field service organizations must only trim the operational expenses that won’t impact productivity or valuable revenue sources. And field service managers need to identify possibilities for revenue growth in this volatile environment.
Abandoning the status quo mindset will pave the way for field service success. Managers must move their focus from issues and data to choose between two incompatible alternatives. They must determine what must be true for their field service organization to succeed in each scenario.
Resource:
Vele Galvoski, The State of Field Services 2023, TSIA.