In our last post, Smart Products Need Smart Services: How IoT Affects Industrial Equipment, we introduced the TSIA Remote Services Continuum, which provides a framework for companies that have implemented or are considering incorporating smart, connected products as part of their product portfolio. Today’s post will go into more detail on the first and, by far, most common step along the continuum: Service Efficiency.
What is Service Efficiency?
TSIA defines the primary objective of service efficiency in the remote services continuum as to reduce service costs and improve responsiveness to service incidents.
Connected products enable the capture and analysis of data, including: self-diagnostics, monitoring critical components to understand failure rates and key component performance using data like temperature, vibration, fan / motor RPM, voltage, and drives.
Collecting data to monitor key components, get performance feedback, and identify actual usage patterns can ultimately reduce the total cost to serve and improve responsiveness to incident, while simultaneously increasing customer satisfaction. These benefits make the implementation of smart, connected products a popular initiative for many service organizations.
Service Efficiency Success Story
A TSIA member from the enterprise hardware and software industry implemented smart, connected products to diagnose and dispatch service requests without human involvement resulting in the following improvements:
- Generated automated service requests, improved response time, and reduced hands-on
labor costs by 90%.
- Spare parts orders automatically dispatched to field, including repair instructions,
with 99% accuracy.
- System health monitoring that leverages a knowledge base of more than 24,000 known situations based on configuration, products, and versions.
Other benefits realized by TSIA member companies that have focused on driving service efficiency include:
Service Delivery Channel Optimization
The financial benefit of optimizing service delivery channels is significant and undeniable. The shift of incident resolution from a high-cost, direct-labor channel to tech-assisted support has resulted in a total service delivery cost savings approaching 50%.
Spare Parts / First Visit Repair Rate / Mean Time to Repair
Leveraging self-diagnostics to optimize spare parts management is another significant benefit. The ability to quickly and accurately generate an Automated Service Request (ASR) for a failed part improves both First Visit Repair Rates and reduces Mean Time to Repair. An accurate diagnosis of the problem is automatically provided to the field service engineer before arrival on site, including instructions for the repair and how to install the replacement part.
Improved Service Entitlement Tracking and Revision Level Upgrades
Product asset information is made available for analysis and verification of issues. This information provides automatic feedback into the knowledge base which is used for future product improvements. The product asset information is also used for automatic revision level upgrades and downloads.
Reduced Learning Curve for New Hires
The development of a knowledge base to support service efficiency has an added benefit for talent management. A TSIA member company utilized the knowledge base to reduce the time to bring a new support representative on board while increasing employee satisfaction and reducing employee attrition rates.
Effective Preventive Maintenance
The use of smart, connected products captures the actual Mean Time Between Failure for critical components, which can then be used to optimize preventive maintenance programs.
But Wait, There’s More!
The pursuit of these types of benefits has led to an explosion of connected devices. It is estimated that there are over 10.7 billion objects connected to the internet today, and that number is expected to grow to 50 billion by 2020. One TSIA member experienced as much as a 115% increase in the number of connected systems. As more companies enable their equipment and software to gather data and diagnose problems remotely, customer expectations for improved performance will only grow.
This is why service efficiency is a great start, but suppliers are beginning to run into a few problems:
- Although the customer does experience reduced down time / increased uptime, the vast majority of the benefits described above reduce the cost to serve. By allowing access to data, customers are looking for more of a benefit to their bottom line, which can inhibit growth in connectivity.
- This limited direct customer benefit has not only made it difficult to gain approval to connect products, but has also made it nearly impossible for suppliers to charge a premium for these services. As a result, these service offerings are included as part of the base offer.
- This narrow focus on the service efficiency portion of the Remote Services Continuum has limited the supplier’s return on investment. In an arguably shortsighted decision, some suppliers are questioning the value of smart, connected products and are substituting additional features and functions in new product releases, as outlined in TSIA’s book, Complexity Avalanche.
In our next post, we will take a closer look at how smart, connected products in the age of IoT can give the benefits of service efficiency while more positively impacting the customer in Process Optimization. Can’t wait? Download the slides from our presentation, "How the 'Internet of Things' is Transforming the Industrial Equipment Industry" from TSW.
Read more posts in the “Intro to IoT” series:
- Smart Products Need Smart Services: How IoT Affects Industrial Equipment
- How IoT Process Optimization Can Improve Customer Outcomes
- Focusing on Customer Outcomes for Their Benefit and Yours
- Surviving the IoT Revolution: A Tale of Two Companies
- Collecting the Low-Hanging Fruit in IoT
- Breaking News of How Analytics are Enabling Services Growth
- Your Strategy for Escaping the Complexity Avalanche
- Organizational Structure and Capabilities Along the Remote Services Continuum
- Leveraging Your Field Service Engineers to Drive Revenue
About the Authors
Vele Galovski is vice president of field services research and advisory for TSIA. During his career as a services executive, he has provided thought leadership and driven breakthrough performance in high-profile assignments in a diverse set of companies, including Xerox, Eastman Kodak, Bank of America, NVR, and several cloud services startups.
Throughout his nearly 30 years in industry, he has consistently driven double-digit top-line growth with a proven retain, gain, and grow strategy; and bottom-line profitability with a focused cost-down process. He may be reached at firstname.lastname@example.org, or connect with Vele on Twitter @.
Prof. Harald Kopp is TSIA's director of industrial services research, as well as a teacher in a MBA program for sales and service engineering at Furtwangen University, Germany. His focus is chiefly on services in industrial automation, equipment, instruments and technology companies. He has 20 years of experience in the areas of research, consulting and management in industrial services, supply chain management, and IT-Management in industrial equipment, automotive and enterprise IT industries. He may be reached at email@example.com.