Donald F. Blumberg Q&A: Service Becomes Strategic
Donald F. Blumberg, a pioneer in the development of advanced field service systems and technology, spoke with FFA Contributing Editor Michelle Delio about what the future holds in the field service technology space.
Posted Jun 20, 2000
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D. F. Blumberg Associates is a full-service management consulting firm providing strategic planning, market research, productivity improvement and systems design, development, and implementation for field service and support organizations throughout the world. During the 30 years that the company has been in business, it's been a pioneer in developing advanced field service systems and technology, including integrated field-service management systems, remote diagnostics and call-avoidance systems.

Donald F. Blumberg, president of the company, spoke with FFA Contributing Editor Michelle Delio about what the future holds in the field service technology space.

FFA: What technologies will be the key differentiators in the field service market?
Donald Blumberg: In general, the focus of the 1980s and 1990s was on automating clerical functions and producing the capabilities and infrastructure for supporting a viable service solution. The key differentiators in the field service market in the future will focus on developing optimized solutions rather than viable solutions. The most important new technology solutions will include remote diagnostics, call avoidance, dispatch assignment and scheduling software, and advanced logistics forecasting. Planning tools and techniques and communications technology will also come into play.

FFA: What benefits do these solutions provide?
DB: Remote diagnostics and call avoidance technology can eliminate approximately 30 to 35 percent of on-site calls. It can also significantly increase the intelligence produced as part of the assignment to the service engineer for site calls, resulting in a lower percentage of calls broken due to lack of parts and such. Dispatch assignment and scheduling software can optimize the assignment of service engineers to required on-site calls and can minimize traveling and "windshield" time. Advanced logistics forecasting is useful because it can help control the entire service-logistics pipeline from a central warehouse to the field and return. Forecasting also optimizes the balance of service inventory levels and allocations to maximize field fill rate.

FFA: You mentioned planning tools and techniques and communications technology. What functions will they serve?
DB: strategic planning optimizes the overall allocation of manpower and logistics resourcing to meet the needs of customers in the field over a full year. It also allows companies to create more meaningful business plans. Communications technology can be used in two ways. First, field service engineers can be linked to a central facility via handheld or laptop terminals, allowing the engineers to access new service-call tasks, close out and report on completed calls and request parts online. They can also tap into technical knowledge and configuration data contained at the central facility. Communications technology can also speed the delivery of things like drawings, diagrams, maps and diagnostic processes and procedures, ensuring they get to the right place at the right time.

FFA: Are these technologies going to turn field service, which has traditionally been a cost of doing business, into a revenue generator?
DB: There is no question that the general trend in the field service industry is to move from a cost-center structure to a profit center or a strategic line of business. The new technologies discussed above fully support that move. Our studies show that service run as a strategic line of business can generate substantial revenues at sizeable profit margins. Typically, a well-run manufacturing organization with service and support can generate approximately 30 to 40 percent of its revenues from service. In general, well-run service organizations can achieve pre-tax margins of 15 to 20 percent or more.

FFA: What are the best tools or systems for getting back-end data out to the field?
DB: Wireless communications. It is essential that the centralized systems dealing with the call handling and database management function be able to connect to the service engineers in the field on an untethered basis. The multimedia technology involving voice, data and graphics connected through wireless mechanisms and to the Internet are the most vital tools now available.

FFA: Where do users most often go wrong when implementing systems?
DB: The most serious problems occur when the system's design, development and implementation are solely driven by the information technology/MIS organization rather than service management. Without a careful and explicit consideration of systems requirements and needs based upon a strategic assessment of market needs and requirements, competition, customer needs and requirements and a willingness to pay, the system will ultimately fail.
Another serious error occurs when the implementing organizations start the process of systems development and implementation through "tire kicking" of individual vendor software.. A key to successful implementation is to go through an orderly process of specification and design requirements and then undergo vendor source selection and negotiation, rather than the other way around.

FFA: What is happening concerning the investment required and the time needed to design, develop and implement field service management systems?
DB: There is a clear trend toward a reduction in the investment costs and the time to develop and implement In the early 1990s, for example, typical development and implementation time was 12 to 18 months, and the typical investment costs for software alone were over $1 million. At the end of the decade, development times have dropped to 7 to 10 months and investment requirements have dropped to $300,000 to $500,000. In essence, integrated service management systems are becoming less expensive, easier to implement and operate and offer much more functionality.

FFA: Do most enterprises realize that service can and should be used as a strategic line of business?
DB: I think the most accurate answer, based upon our 30 years of experience, is that a great majority of the service organizations do not understand the need for running service as a strategic line of business. To the extent that this orientation does exist, it is generally found in the information technology market. However, some of the largest companies in process control and plant automation, building automation, healthcare and technology are beginning to understand the vital potential, in terms of increased revenues and profitability, that comes from moving service to a strategic line of business posture.
We also find that the customers of the service organizations are moving toward demanding a full strategic approach to service management and delivery based upon a single-point-of-contact process. Customers are increasingly looking for integrated, comprehensive, proactive and responsive service organizations to meet their needs. It is increasingly clear that those service organizations that do not understand the need to move towards a strategic line of business orientation will soon fall by the wayside and be incorporated into service organizations that do.

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