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This is a topic I feel strongly about. Especially when I see so many companies struggle with it. Feel free to comment. I am sure others would benefit from opinions other than mine on this topic.

Jack

Even if the first introduction of remote service is about efficiency and cost reduction, which is often the case, there are many aspects that benefit the customer. In fact, one of the best things about remote service is that just about anything a service organization does to reduce costs with remote service, there is a corollary effect that has measurable benefit to the end-user.

For example, let’s say a manufacturer uses remote service technology to diagnose a problem before dispatching a technician. In some cases, they may even be able to avoid the dispatch altogether and save significant costs.

The end-user in this case just got the equipment back up and running in record time. In fact, you can measure the difference in “time to equipment recovery” with and without the remote service capability. This difference translates to an increase in your customer’s productivity – or, whatever they deem is valuable to having running equipment.

A big key here is that the new remote offering is focused on “support” and not really a “value-added service.” From a best practices standpoint, this is as it should be.

When it comes to increasing equipment uptime, I argue most end-users are more than willing to accept being connected to the vendor. Some even demand it. The mistake manufacturers make is overlooking the importance of properly communicating the value of the “support” offering to customers. This is especially true when the primary motivation for doing remote service is reducing service costs.

I can count three manufacturers off the top of my head who are stuck with deployment because the end-users want discounts on the service contract because the offering only appears to benefit the vendor. What is so appalling is that they give in and offer discounts for the connection. Obviously good services marketing is missing in these cases.

A question I get quite often is, “Fee or Free? Should we give the offering away or charge a fee for it?” The answer is very clear if the nature of the offering is to reduce your service costs – GIVE IT AWAY!

It is not a good strategy to commit to cost reduction within your organization that depends on your customer to purchase something from you. If they choose not to buy, you have just shot yourself in the foot to reduce your own costs.

Remove all barriers to acceptance, communicate what it means to the end-user, and get as many customers connected as possible. No matter how good your offering is, you won’t deliver any results if you are not connected to a large percentage of your installed base.

Save the value-add (fee based) services for when your customer has become comfortable being connected and has had a chance to experience the goodness of remote support. By this time, you will already have them hooked.

Only then will they be ready to “hear” about new services that can benefit them even further.

Holy cow, what a concept!

Perhaps this will be a wake-up call to other equipment manufacturers to cure themselves of “Box-itis” and they might see the strategic role services plays within an equipment maker.

One can only hope…unless they are your competitor.

It is an uninformed and shortsighted point of view. That is, unless you are only interested in having the equivalent of a long screwdriver to support your products in the field and there is no pressure to grow the business.

Here is a list of signs that indicate there is untapped value in the installed base. I’m not saying Smart Service is the only way to exploit that value. There are indeed many ways to do it.

I am saying however, that using remote service technology to create “Smart Services” happens to be one way that scales very well.

1. The cost of owning your products are at least 6 to 8 times more than its purchase price
2. Your customer is required to maintain records on equipment operations and maintenance
3. You know how to run your customer’s operation better than they do
4. There is a skills attrition problem among your customers
5. Your customer wants but cannot afford their own performance management tools
6. You customer could benefit from analysis of the data produced by the equipment they use
7. Downtime is expensive
8. You as the service provider can increase equipment uptime not only from fixing it faster, but also through proper configuration management and operator usage
9. More than 10% of support calls are operators not knowing how to perform or complete a task
10. If you improved your customer’s productivity, they could quantify the revenue gains

See the remote service FAQ for more on the difference between Smart Service and Remote Service. (links open in a new window)

1. Metronic CareLink Network

Device maker providing clinical expertise to physicians

2. CardioNet

Medical device maker accommodating insurance reimbursement requirements rather than waiting for industry change for disease management

3. Emerson Climate Technologies

Conserving energy consumption while protecting chilled retail inventory at the same time

4. Schmitz CargoBull Trailer Telematics

Through creative partnership with Bosch Security, the have enabled their customers to offer services to the end-customer previously unavailable.

5. Gilbarco – Veeder Root

Reducing total cost of ownership and automating inventory management

Which other ones belong on this list?

I witness this repeatedly. Larry, the support manager, feels the pressure of maintaining warranty performance on the products he supports. Every so often, the support group, doing its best to support a difficult product, reaches the boiling point trying to keep their heads above water. They have had enough of inheriting the product’s quality problems.

At which time, Larry stomps down the hall to product engineering with documented facts in hand. He pounds on Stefan’s door, the development manager. Waving his supporting data, Larry demands certain fixes be made immediately because support is falling down on their face trying to fix things in the field.

Stefan, being quite used to this by now, listens intently as Larry has his rant. It happens at least a couple times a year.

Stefan is quick to placate him, “Yes Larry, we are going to have a maintenance release as soon as these other features get done…I promise I will make this my next priority.” Poor Larry is gently subdued and leaves Stefan’s office with cautious optimism. Sort of like when Charlie Brown goes to kick the football while Lucy holds.

Stefan has no malicious intent here. He places Larry’s papers in the appropriate stack and makes a note to consider them during the next engineering development cycle.

Along comes Michael, the product manager, knocking on Stefan’s door. He has big plans for the next release. It is going to make a huge splash in the marketplace. Everyone is excited.

Stefan, being the good development manager he is, plans the next development cycle based on market priorities and fits in what he can.

Of course, Larry doesn’t have a snowball’s chance in hell of seeing any of his desired fixes in the next maintenance release. The only thing “fixed” were new features, not any old problems. Larry’s maintenance requests fell off the end of the table as market requirements filled the cycle.

Should we be surprised? No, not at all. The company should and will continue to focus on market needs. Whether or not they are properly interpreting them is a different story.

Larry, I have some advice for you. Why don’t you practice some Lean Six Sigma and just throw the paper in the trash yourself. It will save everyone a lot of time.

There is a better way. In fact, there is a way for the company to take advantage of a larger opportunity and for Larry to get what he wants. It all begins with the service group and the product group having the right relationship.

Let’s imagine for a moment that customers are shifting their buying criteria towards more emphasis on “Total cost of ownership.” Financial decision makers playing a more involved role in the buying process would indicate this shift. Are you seeing this behavior?

If so, let’s assume the product manager would score some serious points with the head of marketing if the company could say, “Our product are less expensive to own than anyone else’s.” Of course, having the data to back up that statement would be critical for Marcomm.

Here is an interesting idea. Let’s have Larry and Stefan sit down with a couple industry experts from marketing who really understand the customer’s business. We will have them talk about lifecycle costs and challenges associated with owning these products.

Let us also reset the boundary of the sandbox. We won’t confine them to the limitations of the product but allow them to consider “service” as part of the “system” of the product footprint – that extends back to the product manufacturer itself.

This is fertile ground. Not many know how to uncover the game changing potential here. The ones that do stand to make a quantum leap forward in market sophistication.

Luckily for Larry, all the things he wished for will come true in this scenario – but as a byproduct of remaining competitive.

That is ok. He can live with that. Either way, the company will be much further ahead in the marketplace. More importantly, design for manageability now has a place at the marketer’s table.

Support is what product manufacturers do to keep the product running as advertised. It involves repair, maintenance, parts, and all the other work required to keep the machine performing its intended function. Most manufacturers have founded their warranty and contract business on support.

Service is work done for others as an occupation or business. Think of it as anything over and above “keeping the machine running as advertised.” We can call them “Value-added” services.

Many manufacturers confuse the two. I argue their differences are distinct.

By thinking about them separately, the doors to opportunity and growth swing open and many more possibilities exist. Achieving this understanding is the first step to uncovering the strategic potential remote technologies offer.

Let’s illustrate with an example. Are remote software updates a value-added service? Maybe to the manufacturer – it turns out updating software and firmware is a major support cost. But to the customer, it is something they view necessary to keep the equipment running properly. They might even say, “for us much as we paid for this thing, it shouldn’t need any patches.”

I would put remote software updates in the “service efficiency” category under support.

Here is a different example. Let’s say the industry is regulated where the equipment is being used. Let’s say there are laws that require the equipment owner to keep certain records of their operations and these records determine whether they are in compliance or not.

Let’s also say that every once in a while, the “Man” comes and audits those records to ensure compliance. Of course the “man” gives little or no notice of when he is coming. Rude, isn’t he?

For years and years, the equipment owner has made records management a part of daily operations of the business – for better or worse. Consider it a cost of doing business. When the “Man” comes by, everyone drops what they are doing and goes to the basement to sift through years of illegible paperwork hoping they can connect the dots and get out of the audit alive. Meanwhile, the day to day operations get thrown out the window and their customers suffer for it.

Can you smell that? Yep, that’s the smell of opportunity.

Along comes a young enterprising lad and approaches the equipment owner. He says, “Mister, let me take that burden of records management off your shoulders and I’ll make sure you’re ready for all your inspections from here on out.” The equipment owner is intrigued. “In fact”, he says in somewhat cocky manner, “We’ll keep an eye on things and if we see something that could lead to a compliance problem, we’ll let you know about it before it is a reportable problem.”

Ahh, the beginning of a valuable partnership.

At this point, the equipment owner is seeing visions of actually focusing on customers (patients in this case), operational excellence, quality assurance, being able to do more with less, trumpets, angels, and doves…all the makings of a value-added service.

You might be asking yourself at this point, “What does this have to do with remote service?” Well, as it turns out in this case, and this case happens to be the health care industry, many of the records necessary for regulatory compliance can be remotely monitored and stored by the equipment manufacturer. And, they can be stored is such a way that they are within fingertip reach if the “Man” happens to stop by.

If you are an equipment manufacturer, I bet you wish you were having these kinds of conversations with your customers (if you’re not already).

Support is vital to the services story. In most cases, remote support will be the way a manufacturer gets their foot in the door so they can be in a position to sell Services. Keeping the concepts separated, and that means how you package and offer them, is how you can make double word score in the market. That is, achieve both the cost savings potential of remote support and the revenue generation of remote service.

Now there you have it – the difference between support and service.

This implies a couple of important things. First of all, most are having difficulty implementing remote service. And, industries are getting to the point where companies see the need to benchmark themselves on their remote service capabilities and extent of deployment. This is a good sign as it indicates a maturity turning point.

Buy why do so many struggle?

One might be first inclined to scrutinize the technology. The remote technology vendors are relatively young as far as industry goes. Those manufacturers who choose to build their own systems usually don’t have enterprise software systems as part of their core competency.

I don’t believe technology is major contributor to the struggles with deployment. I have been witness to too many manufacturers attempting to implement remote service with very simple and straightforward technical requirements only to struggle in the same manner as their peers.

What about those end-customers? Are they rejecting remote service offerings and causing slow deployment? Since the extent of deployment by the manufacturer is directly dependent on the acceptance by the end-customer, they could certainly be the culprit to these troubles.

Not so. In fact, in almost every case, the end-customer was more than enthusiastic about anything the vendor could do to improve equipment uptime. I need to qualify this however. I said “almost” because there are some instances of end-user rejection across segments but they are the exception and not the norm.

It turns out, when you look at these organizations implementing remote services as a whole, the real cause of the struggle is self-inflicted.

They throw the project over wall to the product support group and expect them to succeed at a global deployment of a new service offering. After all, it is a support tool, right?

Well…implementing remote service from within a manufacturer is very much like launching a new product. What skills and experience does a support group have with new product introduction?

Most service and support groups within product OEM’s have very little experience introducing a service the customer has not asked for. Luckily, customers are beginning to ask for it. In fact, in several industries, we are seeing remote support listed as a requirement when customers are purchasing new equipment.

Nevertheless, creating and launching a new service program is still foreign to most service groups. To set them up for success really requires the support of marketing, product management, product engineering, and the head honcho.

There is so much “gravity” associated with launching remote service; it really takes the person at the top to understand the opportunity the business has. Once that happens, then real transformation can occur and all this talk about “becoming solutions focused” will actually mean something to customers.

Listen to the narration. He talks about the field service engineer (astronaut) fixing a loose power supply cable. Look closely at the long boom. That’s a person hanging upside down from it. Next time you hear an FSE complaining about working conditions, you can have them watch this.

How would you like to submit the travel expense report with 5.3 million miles!