In our previous post, we stressed the importance of companies designing new service offers that are centered on driving business outcomes in order to avoid creating another complexity avalanche in the age of IoT. In this latest installment of our IoT blog series, we’ll be tackling the topics of organizational structure and smart service capabilities as industries move along the remote services continuum.
Services Organizational Structure
When it comes to organizational structure, it’s better to separate fact from fiction. To that end, TSIA conducts periodic Services Organization and Structure surveys with members to identify common organizational practices, reporting relationships, and who takes the lead in driving sales.
Over years of conducting this study, we've observed a common pattern as new service offers are brought to market.
- In the beginning, the incumbent sales force lacks familiarity with the new service offers and the services organization has to create dedicated service sales specialists to nurture the new offer. This is the case today with new service offers that are focused on process optimization and customer outcomes, i.e. managed services, consulting services, and customer success.
- As the service offers mature and the sales organization displays competency and drive to sell them, service sales is integrated back into the broader sales organization. This is true for traditional offers like maintenance, support, and education services.
- With growth and maturity, we have seen the emergence of a global services executive that is not only focused on delivering increasingly complex offers, they are also taking responsibility for expand sales and the renewal process as the incumbent sales organization continues landing new product and service sales.
As the industry continues to make progress along the Remote Services Continuum, TSIA has observed a few organizational design trends worth noting. The biggest considerations when member companies are designing their organizational structure are to support the evolving product/service portfolio and maximize cost performance. In order to deliver the new offers, increased collaboration across internal service lines becomes paramount. (Tweet this!) Hardware companies, in particular, are addressing this need by:
- Sharing knowledge management infrastructure across service lines
- Creating cross-service line project teams
- Developing joint cross-service line performance metrics
As a result, we are seeing a blurring of traditional organizational structure since these new offers require capabilities and resources from sales, engineering, field support, and professional and education services.
Organizational structure will adjust and adapt over time depending on the business challenges a company is facing and the capabilities possessed by an organization. (Tweet this!) Identifying, assessing, and building the right capabilities into your organization is significantly more important to the long-term success of a company than organizational construct.
TSIA defines service capabilities as, “The ability to perform actions that achieve desired results.” In other words, what does a company have to master in order to address that specific business challenge? We’ve identified over 300 capabilities that address the typical business challenges faced by technology companies and we have organized them into nine categories: Markets, Strategy & Planning, Financial Model, Product, Operations, Go-to-Market, Sales & Marketing, Offers, and Partner Management.
By looking at industry trends and mining the service business challenges reported by members, we’re able to identify the top organizational capabilities that technology companies will need in order to optimize their service businesses–the TSIA Remote Services Heatmap identifies the following 27 capabilities are critical to success on this journey:
How to use the Capability Heatmap
Here are four steps to successfully navigating the Remote Services Continuum using the capability heatmap:
Step 1: Identify Success Criteria for each Capability
Knowing what success looks like for each capability is a crucial first step. As we have noted in previous posts, the delivery of smart services requires a smart, connected product so it should come as no surprise that Product is the “hottest” category on the heatmap. As an example, the success criteria for the “Data Handshake” capability is:
Data Handshake to Enable New Offers
Definition: We have identified the key data streams required to enable new adoption and outcome based offers.
Success Criteria: Completed Consumption Analytics Inventory
- Question Inventory
- Data Inventory
- Basic Consumption Analytics
- Advanced Consumption Analytics
- Strategy & Decision Making
Step 2: Capability Gap
Next is assessing your current competency level against the success criteria for each of the service capabilities on the heatmap. It is important that you generate a realistic view of your existing capabilities to create an overview of your current gaps. (Tweet this!) Which capabilities are missing? Which capabilities need to get improved?
Step 3: Prioritize Capability Gaps
Unfortunately, you can’t work on everything at once, so you will need optimize the ROI on your efforts to ensure that you achieve short-term improvements that are in sync with your overall company strategy.
Step 4: Build or Acquire the Required Capabilities
Although you still design and develop products that you have to install and support, all industrial equipment companies are fast becoming software and data analytics companies. As a result, you will soon be competing for talent with Google, Apple, and AT&T.
In this last step you will need to define how you will leverage technology, including which capabilities you intend to provide internally and which you intend to source through partners or outsourcing. An example of the types of strategic questions you need to answer is listed below:
In our next post we will talk about executing against the strategy and the role of benchmarking.
Read more posts in the “Intro to IoT” series:
- Smart Products Need Smart Services: How IoT Affects Industrial Equipment
- Driving Service Efficiency in the Age of IoT
- 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
- 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.