Is Profitable Service an Oxymoron?
In many businesses the service department shoulders much of the burden for profit generation. Often a company loses
money on product sales as a deliberate strategy to gain market share with the hope that the after-market business will bring in the cash. So service managers are no strangers to margin pressures.
Traditionally, one way of ensuring high profits is by keeping costs down. This is particularly the case in field service, where anything but tightly controlled operating costs can threaten the survival of the entire operation. Since spending large amounts of money on application software has traditionally gone against the grain of any seasoned service manager, the adoption of field service automation has lagged behind its counterparts in other enterprise applications like supply chain and ERP. But that may no longer hold true as the world of field service continues to change.
Why go against conventional wisdom? Because in today's world, by ignoring field service automation you may be losing out on a chance to cut costs and improve your competitiveness. If you are still scheduling with spreadsheets and tracking inventory with an unrelated database or asking your technicians to provide debriefs on paper, it's time for a change.
Thrifty utility cuts costs
Consider the case of Scottish Water. Utilities in general are not known for risk taking, and yet for Scottish Water, the move to field service automation made the difference between remaining the local provider of choice to more than 5.2 million domestic and commercial customers, or losing the lion's share to competitors in neighboring England.
In January 2002 Scottish Water initially implemented a pilot program involving several field service applications that if successful would replace legacy systems in the organization's call center, as well as paper-based systems in the field. Dubbed the Promise to Resolution project, the scope called for massive transformation of field service processes pertaining to everything from managing ruptured water mains to fielding incoming customer calls. "We wanted our customers to hear a human voice in our call centers, but we also wanted their problems dealt with as soon as possible," says Cheryl Black, Scotland Water's customer service director, East. "Automation is helping our engineers in the field provide the best service we can as fast as we can."
The project connects 150 call center operators with 100 field service agents via laptops using mobile technology. With updated information flowing back and forth between operators and field agents, they now have the flexibility to schedule appointments on the spot and provide up-to-the-moment progress reports on standing orders. The successful pilot is now being moved into production, and Black is confident this will translate into higher productivity. "This will allow more jobs to be done in a day as engineers are relieved of the burden of paperwork associated with briefing and debriefing of jobs."
Automation helps Scottish Water and other companies boost profits through increased efficiencies. Four key areas where automation opens the door wide for lower costs and higher revenues are:
Eliminating paperwork and redundant, error-prone data entry
Accelerating billing cycles by streamlining payment methods
Increasing the visibility of the mobile workforce and communicating with them in real-time
Reducing time between service calls and facilitating faster customer response
For customers like Scottish Water the net gains have been better planning, higher productivity, happier customers, and increased profits. "This project will play a major role in helping us achieve our goal of trimming 40 percent of our cost base," Black says.
As for hard numbers, according to Black, Scottish Water now averages one call per incident instead of the usual two or three. The utility has also been able to bump up the number of blocked water line repairs completed during a workday from four or five to an average of nine.
Keep your project out of the CRM obituaries
With so many choices on the market, it can be confusing for customers to know what service solution is right for them. There are five must-haves.
The first is functionality that provides for integration with back-office applications--including vital processes such as billing, financials, and inventory. Everyone knows that field service does not happen in a vacuum; it is a part of business processes that span all organizations. Software for field service should be designed with that in mind.
Second, it should include advanced scheduling capabilities, including the ability to plan routes.
Third is spare-parts integration. The purpose is to provide visibility into parts availability and logistics, putting service engineers in a position where they're never at a job site without the right parts. This also helps suppliers maintain minimal inventory levels and avoid the risk of stock outs and obsolescence.
The fourth necessity is connectivity for a wide range of mobile and wireless devices--laptops, PDAs, and voice recognition capabilities built on proven technology that can be customized according to business needs of the intended users. Questions to ask here include: Will my technicians benefit from the information they access on site? Am I able to reduce the billing cycle and eliminate errors? Will my technicians be able to use the technology comfortably?
Finally, look for a comprehensive customer data model that provides a single view of customer and direct access to any equipment using installed-base data. Combining these pieces of information leads to cross-sell and upsell opportunities and higher revenues.
Automate or be left behind
And while Scottish Water is an innovator in its field, it is not alone in identifying the benefits of field service automation. The demand for field service management solutions is growing at roughly 8 percent per year; analysts at Aberdeen Group forecast field service management applications will be a $752 million market by 2005. With the market growing to that size, clearly someone is going to be buying field service software. And while you can't be certain if it's one of your fiercest competitors, can you really afford to ignore that possibility?
About the Author
Rick Jewell is vice president of manufacturing and supply chain execution applications at Oracle Corp. Jewell has been with Oracle since 1989 and has responsibility for the manufacturing, logistics and service execution products of the Oracle e-Business Suite. Prior to Oracle Rick spent nine years with Andersen Consulting as well as serving as CIO for a medical device manufacturer. He is a graduate of Stanford University with a BA in Economics and a MS in Industrial Engineering.