Sarah Nicastro: Welcome to the Future of Field Service Podcast. I’m your host, Sarah Nicastro. Today we’re sharing with you a keynote session that I recently delivered at Aston Business Schools Advanced Services Group World Servitization Convention. Say that three times fast! I was asked by Aston to join the event and deliver a session discussing some of the key themes that I’ve found in my conversations with service leaders this year that I think are a result of COVID, but things that will ultimately drive some significant progress forward for the industry. So in this session I am presenting those themes and then welcoming a panel to join me and talk through their thoughts on the themes, what they’ve witnessed in their businesses, and what they think the future of service will hold. I think it’s a great discussion. I hope you enjoy it. If you haven’t checked out the research the Advanced Services Group is doing, it’s well worth the time to do so. So have a listen and enjoy.
Sarah Nicastro, from World Servitization Convention session:
Hello everyone. I am so excited to be here with you all today. My name is Sarah Nicastro. I am creator of Future of Field Service and Field Service Evangelist. I am going to go ahead and share my screen so I can share some slides with you all, and we will get started. So very, very excited to be here with you all today. Want to talk a little bit about some of the themes that I’ve picked up on that I think are going to drive the future of service forward.
Before I do that, let me tell you a little bit about me. So as I said, Sarah Nicastro, Field Service Evangelist, creator of Future of Field service. I live in Erie Pennsylvania, right on Lake Erie. It’s a beautiful place this time of year, but we pay for it significantly in the winter months with some serious snow. Today is actually my wedding anniversary. I’ve been married to my husband, Eric, for seven years today, and we have two young boys. Evan, who turned five in June, and Ellis, who will be four in October. So they keep me very, very busy, that and work. But in my free time, when I do have some, I love to read nonfiction books. I love to travel when travel is possible and I love to spend time outside.
So, as I said, my role is running an industry resource called Future of Field Service. So Future of Field Service is published in partnership with IFS. I was asked to join the IFS family just about two years ago. Prior to that I was the publisher and editor in chief of a North American publication called Field Technologies. I had been there for about 11 years, and joined IFS late 2018 to launch Future of Field Service, which came to fruition in January of 2019.
So, what is Future of Field Service? Future of Field Service is an educational platform for any business across industries with a service focus. So even though it says field service it really is service as a whole. Our editorial philosophy, if you will, is heavily focused on sharing the voice of the community. So the vast majority of our content is derived from interviews with service leaders themselves, talking about the projects they’re working on, the initiatives they’re driving within their companies, the transformations they have underway, their paths to Servitization. We feel that sharing those insights from peer to peer is one of the most valuable ways for folks within the community to learn from one another.
Aston invited me here today to talk with you all about some of the macro trends that I’ve picked up on in my conversations with those service leaders this year. We all know that this year has been a particularly different and very challenging year for us all in a variety of ways. The way that businesses have been reacting to COVID challenges, the way that businesses have seen themselves evolving as a result of what’s happening, there are some commonalities. While it is a very unfortunate situation, I do think that these three trends in particular are sort of a positive outcome of a negative situation in the sense that as we recover I think these themes are going to really drive significant progress in the industry and on the path to Servitization.
I am going to talk with you about some of the trends, three trends in particular, that I’ve noticed this year as I’m interviewing service leaders. I will present them at, like I said, a macro level. I’m going to share with you some quotes from some of the interviews that we’ve done and talk with you about some of the folks that I’ve had the good fortune to speak with this year. Then I’m going to invite on a panel of some of my friends who I’ve talked with that are service leaders themselves. I’m going to ask them to weigh in on these three themes, what they’ve noticed, and most importantly, how we see them driving things forward.
Let’s go ahead and get started. So the first theme that I want to talk about is the theme of openness to change. So each of these themes I’m going to talk with you about today is something that could be on a continuum, okay? So some organizations were already really quite good at these things, and they’ve just gotten better under pressure. Other organizations that were lagging have had more of a gap to fill.
So, openness to change. So we know that change is very hard, and honestly, I would say in my 13 or so years speaking with service leaders and discussing transformation in service industries, I think that resistance to change, mismanagement of change, managing change and not prioritizing change management is one of the biggest areas that prohibits a company from transforming in the ways they would like to.
Change is hard, personally, professionally, it can be very challenging, right? And it’s natural for folks to want to do things a way that they’re comfortable with, that they’re familiar with, right? But what we’ve seen as a result of COVID is far more openness to change, out of necessity really, right? So companies can’t continue to do business the way they were doing business in December of last year. They need to do business differently. Employees can’t continue to work the way they were working December of last year, they have to work differently. So that force has really, really opened people’s minds and hearts to doing things differently than we’ve done. I think that while that is a challenging process, it is one that I think will have a long-term impact as businesses recover from this. So let’s take a look at a couple examples.
So the first is Reihaneh Irani-Famili from National Grid, and I like what she said. So a situation like this is helping leaders across industries to build those change readiness muscles. So if we think of it as a muscle that we need to exercise, and build, and flex, that’s what this situation has done for organizations and individuals alike. Companies are finding ways to be more creative than they’ve ever been, more agile than they’ve ever been, and really getting some necessary practice at doing that.
You see a quote here from Reeve Bunn, who is the president of DSL. Again, I like what he says. You get to early March, and all of a sudden you have to be laser focused. The speed at which you start to do things is quite amazing. It reminds you of what you’re truly capable of. You can move a mountain pretty fast when you have to, far faster than we probably thought we could back in January. So I think this is a really good summary of what I mean here. Each of the companies that I’ve spoken with that I feel are reacting well to this circumstance have looked at this situation and the need to change and they’ve jumped at it, whether it was comfortable or not. I think that there will be a long-term effect of this as we go forward, because some of that resistance to change has diminished, because people realize they can do it, they have done it, and they can do it in different ways we need to as things continue to improve.
So that’s the first theme. Moving on to the second is closeness with customers. So again, I don’t say this in the sense that companies were not close with their customers before. Some were very, very good at that, particularly when we talk about Servitization. If you look at the Advanced Services Group’s forces for Servitization, one of those is market pressure. It’s what your customers are demanding from you. So to be good at evolving on that Servitization journey, you have to be in tune with what those customer needs are. So some folks were already really good at this, and some weren’t. Some were, again, stuck doing things the way they had always done, or getting by out of a need to just get by. But this situation has really forced organizations to become closer than ever with their customers. Again, it’s a time of great change, right? So what your customers needed from you late last year or early this year is completely different from what they need from you today, and the only way to stay on top of what those needs are and be able to react in an agile manner and a creative manner to meet them is to be close with those customers.
Let’s take a look at a couple of quotes here. So Nicola Buckley is the executive vice president of Park Place Technologies, which is an IT services firm. She talked, we had her on the podcast, she talked a lot about how quickly and with great flexibility the company reacted to what their customers need. So this has been a difficult situation for folks from a financial perspective, and a lot of decisions have been put on hold or decisions are different than they looked a while back. Park Place Technologies has done a great job of reacting very fast to taking that into consideration and looking at from a services standpoint the contracts that they were offering. How could they change? So they introduced shorter contracts, they introduced more flexible terms. They really listened to the challenges their customers are having and they reacted quickly. She said to me that in this situation they feel that reacting in a way that puts their customers’ needs first is a great way for them to build long-term loyalty and long-term relationships, which will ultimately pay off.
The next quote is we had Jamie Beck from Peloton on. They’re one of the organizations, one of the industries that has actually been busier as a result of COVID. Everyone wants to move to home workouts. They have turned to field operations actually as a way to, as he says, put a strategic moat around what they’re doing as a business. So they’re looking at what those customer needs are. They recognize that with more bikes and more treadmills deployed in the field, they’ll have a greater need for a service force. They wanted to provide that service themselves rather than relying on third-party providers. So they’re, again, getting close to what those customer needs are and finding ways to scale up, in this case quickly and react adeptly.
I think that the other thing that’s interesting when you talk to manufacturers is a lot of them have seen a spike in interest in service agreements. Companies wanting to do their best to extend the life of their equipment that they have because they aren’t at a point where they want to make large capital investments right now. So, in a sense it’s also opening customers’ minds to the idea of Servitization and what service can do to benefit them. So, that’s the second theme.
The final theme is recognition of the digital imperative. So again, if you think of this as a continuum there are obviously organizations as we came into this situation that were well on their digital transformation journeys and there were those that were lagging behind. I’ve talked with folks on both end of that spectrum, and those that were already making a lot of progress when it comes to digital transformation and embracing digital tools were A, very thankful that they had been, and B, able to build on that foundation very quickly to react to changing circumstances and how work needs to be done. Those that were lagging are working to play catch-up. They’re realizing that this is something that they need to prioritize and they need to get up to speed on, because not only do they need to react to this situation, but they need to be ready to react to the next situation.
If you look at this quote here, this is from Jens at Alfa Laval. Alfa Laval had been looking into remote assistance, pre-COVID. This is another theme we hear, this acceleration of digital transformation, right? So this is something that was on Alfa Laval’s radar, and it was sped up significantly as COVID hit, because the company realized that it’s something that could help them immediately. But as Jens says, as this situation evolves and we begin recovery, this is a tool that will take them from business continuity to business transformation. So it’s something that the organization has been able to derive immediate value from in being able to keep service consistency in this situation, but it’s something that they’ll evolve the use of and build on as things improve.
Similar story here from Roel at Munters. I like what he says, is one of the greatest benefits of technology is how it will equip Munters to bring its vision for Servitization to reality. So he says here, “I’m thankful for how the technology is helping us address today’s challenges and excited for what the future holds.” I think that is a good synopsis of how folks feel about the digital imperative. They’re thankful for how it is allowing them to navigate through this crazy time, but also excited about the potential that it will bring to organizations as recovery ramps up, particularly knowing that there is that greater openness to change that I spoke about first.
So, these are the themes we’re noticing, these are the macro trends that we have seen time and time again, conversation and conversation again. But what is going to come next? So I want to invite on three friends of mine who I have talked with at different points about this situation and their journeys, and I want to get their thoughts on these themes and what they’ve noticed related to each theme, and most importantly, what we think the future will hold.
Sarah Nicastro: So Kevin, Robin, and Larry, can you please turn your cameras on and join me now? There we go. All right, fabulous. So I’m excited for the-
Larry Blue: Hey, Sarah.
Sarah Nicastro: Hello, hello. Thank you all for being here. I’m excited to have you.
Robin Butler: Hi, Sarah.
Sarah Nicastro: Okay, so to start I’m going to ask each of you to introduce yourselves. Say a bit about our organization and what the business does and your role. So Larry, I’ll let you go first.
Larry Blue: All right. Great. Thanks, Sarah. My name is Larry Blue, I’m the chief executive officer for Bell and Howell. Bell and Howell is a North American automation equipment service business and value added distributor. So we do sell some equipment for some of our partners, some of our customers, and we service that equipment. So it feeds into our service business. So Sarah, thanks for having me.
Sarah Nicastro: Thank you for being here, Larry. Robin, can you go next?
Robin Butler: Sure. Good morning and afternoon. I’m Robin Butler. As of last week I am the group field service director for WaterLogic. We’re a global business with direct representation in about 19 countries. We provide point of use water dispenser in office environments largely. We do have a very small consumer element too. Each of the units are relatively independent businesses with their own independent operating models. Really my role is to come in and start to create some career best practice and standardization process operations.
Robin Butler: My background though, as I said, I’ve only been in WaterLogic for seven days. My background is actually in the telco market, and I imagine Sarah will be talking a lot about that at least as much, if not more, than my six days experience in WaterLogic.
Sarah Nicastro: All right. Great, and Kevin.
Kevin Starr: Hi, I’m Kevin Starr. I’ve been with ABB 33 years. It’s a automation industrial supplier of all kinds of products and services. I work in the process industry section, where we deal with paper, pulp, minerals, mining, metals, cement, food and beverage, and now data centers. So I’ve been involved with service, and I’m being brought in to help usher us into the digital age of service.
Sarah Nicastro: Okay. Excellent. Well, thank you all for being here. I’m really excited to have you with me and to have this conversation. So before we talk about the themes, I do want to bring up the Advanced Services Group’s services staircase. So this is … I know each of you had taken a look at this because I sent it to you, and hopefully most of the folks on have as well. But this is their staircase, and I’m hoping that for context for the discussion we’re about to have each of you can kind of talk a little bit about where you think your organization falls on this staircase. So Kevin, can you weigh in here first?
Kevin Starr: Yeah, sure. Actually, this falls in line very, very well with what we call our industry care service agreements, where there’s four components to start. Well, we do sell parts and products, and that’s a big component of our business globally. Then we get into the break and fix, we call that rapid response. When it breaks, somebody has to be there. Then we get into the performance improvement, or the lifecycle management, which is sort of in the middle tier there, where you’re doing better preventive maintenance to make sure a problem doesn’t happen.
Kevin Starr: Then we get into performance improvement, where we’re trying to be faster at reducing first time fix. Then we get into operational excellence, where we do forecasting and predictions. We’re finding that typically your digital alignment, you can do more things remotely as you get further up the ladder there.
Sarah Nicastro: That makes sense.
Kevin Starr: We’re in all of those different areas.
Sarah Nicastro: Good. Larry.
Larry Blue: Thanks, Sarah. In looking at this, a lot of what Kevin just said is pretty much the same for Bell and Howell. However, I think we’re more toward the guaranteeing the outcomes from our products, and we’re investing right now pretty heavily into data analytics to move up to being able to guarantee the outcomes of business practices and business processes. We’re not quite there yet. We’re kind of spotty. We service equipment from about 60 different manufacturers who’ve outsourced their service requirements. So some of the machines tend to be very legacy machines, and it’s a little harder to instrument them, a little harder to connect them to the internet, and therefore be able to get the kinds of remote data that you need to be able to guarantee business processes. We are doing that in some cases, where we’re taking sensors, putting it onto different types of equipment and starting to move in that direction. But I would say that’s where we are.
Larry Blue: We’ve been doing remote monitoring and repair on some of the newer types, more intelligent types of equipment for about the last four years now. So we’re trying now to use that data that we’re getting and being able to start looking at the business processes for our customers.
Sarah Nicastro: Excellent. Okay, and Robin.
Robin Butler: Yeah. I would say we’re kind of a mix, much like the other two. I mean, essentially we’re a product business. So the orange is a big part of our revenue stream, and in fact we sell indirect too. So that element of the business is solely product. The core of the business I would then say is sat in the middle with the assured maintenance. So most of our units are sold with a service contract. In many of the markets they can only be sold with a service contract, and is very much assured maintenance. So we are trying to maintain about every six months, depending on the machine, to prevent any breaks.
Robin Butler: But actually we do have one or two much higher value offerings, where the product itself is more orientated towards specific outcomes, particularly in the hotel and catering sector. I would say we’re probably moving into the customer asset capability area there. So that first tier, the blue. There is talk about whether some of the markets weren’t climbing up that value chain into the capability sector as well, but that is certainly a couple of steps for us on a majority of our machines.
Sarah Nicastro: Okay, good. All right, so that gives everyone a little bit of context for where each of you are at. So now I want to revisit the themes that I walked us through at the beginning of the presentation, and I really just want to have an open discussion and get each of your thoughts on what have you observed within your organization and in the industry as a whole related to each of these themes. And mostly importantly, how do we feel these themes are going to impact the future of service? So, how are they going to carry us forward as this situation evolves? So we can keep this open, but I will prompt us along. So the first obviously is, as I discussed, is openness to change. So Kevin, can you start and just talk to us about how you’ve witness this theme and what you think that long-term impact of this will be?
Kevin Starr: Ooh, yeah. This has been a … Well, this year especially, I think that accelerated. We’ve been expecting the digital revolution to hit for several years actually, and COVID really sped that up. I kind of think about this a lot, is the fear of change is sort of inversely proportional to the risk of staying. When folks could hit their targets by not changing, why would they? COVID stopped that. So the industrial revolution 4.0 is upon us. The information that’s available, the assets. As Larry mentioned, we also have legacy equipment, 30, 40 year old stuff and new stuff. So the amount of information that our customers have to be able to understand is staggering. So when they used to be able to call us, say, “Hey, my system is down.” Now that could mean 20 different things, which could be 20 different skillsets. So if we send in the wrong person at the wrong time with the wrong solution, it makes everybody mad. So we’re realizing customers are like, “We cannot stay where we’re at. Please, help us.” So we’re being asked to do … I’ve done more digital webinars, we’ve introduced more digital, more remote. We’ve had more remote connections than we’ve ever had, because we can’t get people to site.
Kevin Starr: We’ve used technology where the remote insights, where you can see through the lens, HoloLenses and all that. I mean, it’s some of the stuff that we were dreaming of, even at the different conventions is actually being we have to have it now. So if you’re not open to change right now, you’re probably going to have a hard time staying in business.
Sarah Nicastro: Yeah. I think one of the things that I maybe didn’t mention about this theme is how it is permeating businesses from top leadership all the way down to the frontline worker. So I’ve talked with I mentioned Alfa Laval, Munters, are a few organizations that I’ve interviewed since COVID hit that have deployed remote assistants, right? Remote assistants is a tool that when I was interviewing folks about it last year they were excited about it at the leadership level, but at the frontline workforce level it was a lot of, but we’re not sure how to get them excited about it. They just want to keep doing things the way they’ve always done, right? So even at the frontline level I think this situation has … If you can’t go on site and you need a way to continue working, it’s really pushed these folks to be open to these tools that a lot of times at the leadership level companies have been excited about for a while.
Larry Blue: Sarah, just to comment on that. I think the willingness to adopt these tools I also think is a generational thing. I think if you look at our workforce, we’ve brought in probably two, 300 new field technicians in the last three, four years. That group seems to be very open to adopting the new tools, in fact, they kind of expect it. Some of the guys that have been here a long time, and we are pretty bifurcated in our workforce, they were a little less accepting, but as they saw the power of the tools, particularly in the last six months, we’ve seen good uptake from that group as well.
Sarah Nicastro: Yeah. That makes sense. Robin, what are your thoughts on this first theme?
Robin Butler: Yeah. I got two really, I think, to pick up really directly on the points Larry and you just made. You know I talk a lot about the case for change, right? You’re going to land change successfully, you’ve got to create a compelling case. That is often difficult with the frontline in particular, but I guess what we’ve got now is we’ve got such stark choices, and many businesses are facing this horrible decision of change or disappear, and that’s a threat what would’ve felt really distant and perhaps improbable to many people on the frontline. I think that is a much easier narrative to tell. It really is the case for many organizations, and the people on the frontline will know and believe it, and therefore be much more willing to accept those cases for change.
Robin Butler: So, I think you’re right. Right to the organization there is much more openness to change. Of course because it’s driving change, successful change drives a greater appetite for change. So because people are doing it and doing it quickly and landing change, that will create more kind of enthusiasm and support for change.
Robin Butler: I do wonder though whether this is a lasting change, a lasting trend, or whether it is simply a consequence of the situation we find ourselves in today. Ultimately-
Sarah Nicastro: And we’ll get comfortable again.
Robin Butler: Yeah. I mean, human beings, we’re kind of resistant to change, right?
Sarah Nicastro: Mm-hmm (affirmative).
Robin Butler: So that’s millions of years of evolution have led us to this point. Is a global pandemic and this rapid disruption going to change that longer term, or as you say, once we get comfortable again with these new things we’ve adopted, the change imperative disappears, unless there are structural changes within an organization over how it makes decisions, then I’m not sure how lasting the change will be. If it fundamentally changes the appetite for risk and how they go about making decisions, that’s going to make a lasting change.
Larry Blue: Robin, just to comment on that. One of the areas that we’ve seen in terms of how is this going to impact the future of service is we have implemented as a result of COVID a lot more virtual training. As I mentioned earlier, we service about 60 different manufacturers’ equipment and we’re bringing new ones on board pretty regularly. As you bring those new pieces of equipment on board, you need to train your field staff. We had started down that path prior to the pandemic, but we have moved very quickly and pretty successfully into virtual training on many types of equipment that we’re now servicing. The interesting part of that and the thing that I think will make it a standard way for us to do training is the fact that it actually increased the rate at which we could derive revenue.
Larry Blue: We recently signed a new digital printer company to a service contract, and we had to train on their equipment. We made a comparison to a prior customer in terms of the amount of time, the ramp to revenue, and we were six months faster in getting to revenue with the new customer than we were with the old customer, as a result of being able to train the field faster because we were doing it virtually.
Robin Butler: Actually, it’s a good example, Larry, I think of … I like it because it’s not a direct customer orientated change, but it’s a change on how you do change, and so that’s likely to lead, sorry to overuse the word, lasting change for how you do change, right?
Larry Blue: Yeah.
Robin Butler: Yeah.
Larry Blue: It certainly will. It’s become in fact, we’re going through our budget process right now, and honestly the budget per training is changing significantly as the result of this process and this practice.
Robin Butler: Great.
Sarah Nicastro: So Robin, I think it’s a really great point that you brought up. One of the things I was going to say is, I think where there is change being operationalized, I think it will be a lasting change. Where it’s this sense of openness to change out of necessity, particularly at the frontline level, that I think will diminish. But one of the aspects of this that has come up in conversation after conversation that is more on the operational side is more rapid decision making, right? So organizations that used to meet on a monthly basis or a quarterly basis, they’re now having to meet and make decisions weekly, daily, right? So they’re putting steps in place to make that possible, obviously to have the right data that they need to have those meetings, to make those decisions. But in that, operationally, they’re not only getting comfortable changing more quickly and being more agile, but they’re putting systems in place to make that a longstanding impact.
Sarah Nicastro: So I think it’s a good point, though. I think that there are areas of it that as we reach this next normal and people get comfortable again I think will diminish, and then there are areas that I think will stick. Go ahead.
Larry Blue: We’re seeing some of that, Sarah, already. It gets to one of the other areas that became kind of interesting, and that is at our customers’ sites, people are … Here in the US masks have become a political weapon.
Larry Blue: We have a number of situations where at our customers’ sites they’re not mandating the wearing of masks. Part of our job as leadership of service companies is to keep our employees safe. So we’ve given our techs the freedom to say, “Look, I’m not going in there because I don’t feel safe.” So they have the ability to do that. Because people have started to believe that okay, COVID is going away in certain areas, people aren’t wearing masks. So we are reverting back to that comfort factor there, but it still represents an issue for us in management to make sure that our folks understand they have the authority to walk away from a job because it’s not safe. I think that part will stick. I think the masks and everything we’re already starting to see what Robin was mentioning.
Sarah Nicastro: Right, yeah. There is certainly more empowerment of the workforce as well. So I want to keep progressing along, and I think actually when you talk about the first theme, openness to change, it ties in very well with the next theme, because not only are we as organizations more open to change, but customers in a lot of ways are more open to change than they have been as well, right? So again, out of necessity customers who maybe were kind of stuck with well, I don’t want to change our service agreement because this is just what we’ve always done, or I don’t want to talk about outcomes based service or Servitization because we just have this comfortable thing. There are a lot of situations that are forcing customers to think differently, want to do business differently, to view the value of service differently. So I think that first theme ties in with the second theme.
Sarah Nicastro: So let’s talk a bit about what have your organizations witnessed in terms of your relationships with customers. Again, how do you think having to be closer and more creative in this time will have an impact on the future? So I don’t know. Kevin, do you want to start?
Kevin Starr: Sure. Why not. I think part of the closeness is customers, and I guess to Robin’s point about will it stick or not is I’ve always found that value sticks and cool sometimes doesn’t. So how do you know if you’re hitting the mark if you don’t know your customer? So at the end of the day, if they don’t make money, we don’t make money. So we have a lot of effort going into the value of services rendered. So what if this machine doesn’t start back up? Or what if it does start back up? And the difference is it’s kind of amazing with all the different industries that I get to work in is with uptime or downtime avoidance, or to be able to predict a problem before we even walk into it, from do we have the right spares mix. All of that stuff has a lot to do with our customer’s bottom line, and if we don’t know what our customer is doing, that’s very, very challenging. So our closeness with customers is that we know their process. We’ve been in their industries, we know the equipment, and we can help them reach their goals.
Kevin Starr: There’s been a lot of that right now as their goals change this year. So we’ve been with them to … Our contracts, they ask us for terms and condition adjustments, for how we change our cashflow, how we work with them on everything. But that’s part of sticking with our, they’re our colleagues. We’re here to help them, and if they don’t make money, they don’t need us. So we’re in this together, and feel that when we have that trusted advisor status where they know that hey, we’re calling ABB, they’ll help us. We’re going to come out of this and we’re going to even be stronger than ever. So that’s that relationship, that bond with the trusted advisor and that we are genuinely interested in helping them meet or exceed their value requirements. That’s becoming a bigger topic. I guess on the top end of our staircase there is more of a consultant maybe at one point, but still part of our operational excellence. It’s not just enough if the equipment is on. Is it on and driving performance?
Sarah Nicastro: Right.
Kevin Starr: That’s where analytics come in and all that fun stuff.
Sarah Nicastro: Yeah. They want more than just uptime, right.
Kevin Starr: Yeah.
Sarah Nicastro: Now, Kevin, you, ABB has seen an increase in service interest during this time, right?
Kevin Starr: Yes, yes.
Sarah Nicastro: Yes. I think that that is in line with a lot of the folks I’ve talked to. They’ve either really ramped up on the services side, because again, as I mentioned earlier, a lot of companies aren’t in a position to make capital investments. So they want to look at how can we work with you to extend the life of our equipment? How can we work with you on these different service related things? A lot of organizations have even introduced new service offerings, right? I’ve talked with HVAC organization that are doing air checks, and more quality stuff. I’ve talked with companies that have introduced safety services and things like that. So it’s been an opportunity for folks that might be not doing as well on the product side to really ramp up those service offerings.
Kevin Starr: I would even say the staircase is almost is very traditional starting with a widget or an asset, or something that you can touch and then you grow into service. This year that’s almost flipped upside down as we start with service, and oh, by the way, we make some good products. It’s almost the opposite. Is they’re looking for the long-term service provider that has a variety of solutions that can be tailored to fit, and then we also make equipment that they can continue to invest in their process.
Sarah Nicastro: Right. Larry, Robin, what are your thoughts on this theme?
Larry Blue: I agree with a lot of what Kevin said. I mean, we’re finding that our customers have a more positive, I would say a more positive opinion of the services that we provide, because guys are showing up in the middle of a pandemic. We’re continuing to meet our service level agreements, we’re continuing to do the preventive maintenance stuff. We’re moving to predictive and then to I think that consultative kind of level with what we call a prescriptive maintenance, and that requires a lot of this data that we were talking about earlier. But I think Kevin’s point about service coming first, making sure that you can in fact get all the equipment, that you’ve got highly skilled employees that can fix it quickly, because let’s face it, the cost of a lot of this new equipment is such that it’s a critical piece of gear, and it’s not redundant. There are no extra systems laying around for folks to get back up and running and run those particular tasks. So having that equipment as a single point of failure makes a rapid response, and with the right kind of response. Again, to Kevin’s point, you got to have the right people with the right skills there at the right time. I think we’re seeing that more so with our customers today because of the environment, because of COVID.
Larry Blue: Whether that’s one of those temporal changes that Robin was talking about, we’ll see. But certainly during this period we are seeing that.
Sarah Nicastro: Okay. And Robin.
Robin Butler: Well, I think first of all this is more likely to be a lasting change than the openness to change one is, because ultimately we are social animals, right? It’s in our nature generally, maybe not as individuals, but as a species to interact and be social, and want to understand each other. We’re inquisitive beings. I think, I mean, specifically on closeness to customer, I’ve got a huge amount to add on top of what Kevin and Larry have said. I kind of agree with it all, but I would almost expand it slightly and say it’s actually it’s been a great time to be in field service, because it’s going a bit beyond closeness with customers and probably a bit more like closeness with society as a whole. We’re seeing society as a customer. We’re seeing lots of people step up and start to produce products to help fight the pandemic, even though that’s miles outside their core, but they’ve got facilities to do it. Many of us will have people who are classified as key worker status, which anyone from the UK will understand what that means. The telco and IT sector, where I’ve come from, that stepped up and played a key role in building these enormous kind of super hospitals and delivering the infrastructure that is helping the planet fight the pandemic.
Robin Butler: I think it’s driven much more appreciation of people who do these types of jobs. The people like, I think as Larry said, you still get up every day and go into sites, while everyone else is sat working from home, sort of shielding themselves from the virus, out they are. They’re out there, making sure the infrastructure works. I think that’s driven personal pride of the individuals doing it, but also kind of pride from society. I think it has driven that closeness, and I certainly hope that’s something that lasts and we’ll start to see some benefits through kind of retention rates and the ease with which we recruit.
Sarah Nicastro: Mm-hmm (affirmative). Yeah, that’s a really good point. I think there is not a theme in here around sort of the humanity of this all, but it has been something that’s come up in conversation after conversation, both in how folks are relating to their employees and how they’re relating to their customers. Just this idea that how you treat people right now is something that they’re going to remember for a very long time. So from a customer perspective what that looks like, again, is to Kevin’s point, if we give them what they need right now we’re building a loyalty, we’re building a relationship, and that’s a long-term investment that will pay off. I think that companies for the most part have been very, very good at that.
Sarah Nicastro: I think related to the topic we’re here to talk about today in terms of Servitization, I do think that this change in customer relationship and sort of change in how customers view service is something that I think will have a impact on the journey to Servitization going forward. Because just as simple as someone saying, “No, I’d rather buy the equipment.” To, “No, I’d rather pay a monthly fee to use the equipment.” I mean, just differences in that mentality right now are huge, and the realization of how important service is and the role it plays, and that trusted advisor status, and those true business partnerships. I think that that will really kind of spur this journey forward.
Robin Butler: It’s really exposed the interdependencies I think between organizations and the ecosystems they exist in.
Sarah Nicastro: Yes, exactly. I think that it’s going to make it so that it’s not a company trying to drive a Servitization journey, versus a company meeting its customers with what they need and having it be a mutually beneficial outcome.
Larry Blue: We got a quick question here about how all of this, closeness with customers was going to impact the future of service. Speaking from a Bell and Howell perspective, we’ve had a lot more customers be willing to allow us to gather more data on their machines, because we can say, “Look, we may not be able to get a tech in there because of safety concerns, et cetera, but if you allow us to connect to the equipment to be able to monitor the health of that equipment, we can provide a similar level of uptime.” Or lack of downtime to Kevin’s point, with remote kinds of services, remote assistance. I think that has helped tremendously because if you’re close to the customer and you’re open with the customer, you develop that trust that Robin was talking about. As you develop that trust, they know you’re not going to misuse the data. I think that’s an important aspect, and certainly we’re seeing that openness with certain customers that we currently have.
Sarah Nicastro: Yeah. That’s a very good point. Okay, so I forgot to say this guys earlier, but we are going to try and take some questions from the audience. I do see that there are some. So let’s get through this third theme and then we’ll try and save a few minutes to answer some of the audience questions that we have. If you have one and you’re listening, please go ahead and type it in now. We will get to as many as we can and I’m sure that all four of us would be happy to follow up after the session today as well.
Sarah Nicastro: So last theme, recognition of the digital imperative. So digital tools have helped us to persist through this situation and to have business continuity, and they are also what will enable a lot of the long-standing change that we’re talking about. So customers want more data, customers need more solution advisor and consultative relationships, and data is how we deliver on that.
Sarah Nicastro: So let’s talk about what you each have recognized in terms of the digital imperative and what we think will happen going forward.
Kevin Starr: I guess to me we’re in the midst of a digital revolution. That’s why they call it digital revolution 4.0. I mean, that was before COVID was coming. Sometimes you have to sit back. So, what does that mean? That means there’s a paradigm shift. The way you think in the old paradigm won’t work in the new paradigm, and that’s where people get scared. In the old paradigm of service we could train a person to be a subject matter expert and they could handle pretty much an entire class of assets. Today, the amount of assets, functions, and processes that are in the industrial sector that our people have to know has grown exponentially. It’s actually grown beyond point of singularities, going beyond what a person can know. So there’s always sort of the whack-a-mole kind of in today’s world is well, what’s going to get hit today? And if I’m an expert on a transformer, I’m not an expert on a drive. If I’m an expert on a drive, I’m not an expert on the control system, or in HMI, or data space, or a control.
Kevin Starr: So what we’re seeing is we are having cybersecurity, and IT, and OT. There’s specialties now that require tremendous levels of knowledge, but they don’t all break at the same time, but they all interact. That’s what we’re seeing, is customers are frustrated. They don’t know who to hire. Well, if I hire a control guy, I don’t have a cyber guy. Then we don’t know if we hire a subject matter expert but they’re not a generalist, that’s the imperative that we’re in. We’ve recognized that and we’ve shifted to a connected engineer by sort of like we call it the project Iron Man, is how do we put a platform in place that a person can plug into and automatically kind of like The Matrix, and okay, now I’m an expert on this. That can’t happen with the technology that’s available today. We’re trying to leverage the expertise that we have globally and then bring it to the point of contact, which is our field service organization that comes in contact with the customer so that they can have that trust, and that sort of like, hey, what’s your problem? I can fix it, doesn’t matter what it is. You know?
Sarah Nicastro: Right.
Kevin Starr: That’s what we are seeing. Is if you think you can hire one person who knows everything, you’re thinking in an old manner and that’s not going to work. You’re going to hurt the person, you’re going to hurt morale, and you’re going to stagnate. So you have to think different, and this digital imperative is, what I’m seeing is if you don’t think different, you’re going to hurt yourself or hurt your business.
Sarah Nicastro: Absolutely. Larry.
Larry Blue: Yeah. I was just scribbling some notes here. I mean, one of the things that … Kevin is absolutely right. You can’t hire a MacGyver that can fix everything.
Kevin Starr: That’s good.
Larry Blue: Right? You just can’t do it. What you have to do is you have to give your guys in the field access to those SMEs, right? The way you give them access is through artificial reality, virtual reality, the Google Glasses, those kinds of things so that you can have the SME looking over your shoulder when you’re working on something that you haven’t seen before, right? Or if you’ve seen it, you saw it in training six months ago, a year ago, or whatever, and you need a refresher.
Larry Blue: All of that is now possible with today’s technology. We’ve implemented some of it. We’ve got a lot more to do.
Larry Blue: But the reality is you now have tools that are available to you, and you have bandwidth available to you and connectivity that you didn’t have before to be able to create the network of experts that then can virtually parachute in to a problem. I think that’s a really important way to look at this and to be able to provide the level of support customers need, right?
Sarah Nicastro: Absolutely. Robin, what would you add?
Robin Butler: I think the digital imperative has been there a long time, like Larry and Kevin have already said. Your terminology is spot on here. It’s really COVID has emphasized and it’s created recognition of both the opportunity and in fact the imperative, because I think what we’ve already started to see in the telecoms and technology sector in particular is, IT sector, is some organizations have already fallen behind the curve on it, and it can be very capital intensive to make the change. If they don’t do it soon enough, if they do it in a reactionary way, they won’t perhaps have the funding to be able to make the change, and then they’re on a hiding to nowhere.
Robin Butler: I think it’s important though, when this big kind of shock we’ve gone through, it would’ve driven certain types of digital adoption. I won’t say innovation, because I don’t think we’ve innovated very much, we’ve just adopted, which is really kind of the first point we discussed. So I think it would’ve changed the business case behind the adoption of some of these elements. I always talk about three threads to digitalization. One is digitizing the product that the customer interacts with, actually their product. The second is the way they interact with a service organization, things like WhatsApp or chat. Then the infrastructure that your own employees work upon. That can be digitized too, ERPs and CRMs. I think it’s really important that people out there push forward on all three of those journeys in a coordinated and cohesive way. Don’t just suddenly grab the product element and say, “We need to make that change now because of COVID.” And forget that you can and should be making the other two at the same time, because actually I suspect you’ll end up with a fragmented approach and you’ll end up trying to replace an ERP many years after you introduced many of the functionalities that would’ve benefited from a coordinated cloud based ERP.
Robin Butler: So yeah, I think that’s probably what I would add on it.
Sarah Nicastro: Awesome. Okay, so let’s see if we can just move through. So these are just some key takeaways. Remember that all of this is still a “people thing,” right? So people are always first, whether that’s employees or customers. I think companies right now are doing a good job keeping that in mind. We talked about operationalizing, faster decision-making, and really taking this digital imperative seriously and working to either build upon the success you’ve achieved or catch up.
Sarah Nicastro: I’m going to hop over and see if we have time for just one or two questions. Before I do that, I just want to invite you to, if you aren’t already familiar, check out what we’re doing at Future of Field Service. I am very, very passionate about what I do, and giving this community a platform to learn, and connect, and collaborate, and I would love to have you check it out. So let’s see if we can squeeze in just a question or two.
Sarah Nicastro: So this one, first one I’m reading is for Larry. If I understand correctly, your company services equipment from many different manufacturers. How do you get access to digital monitoring data and present that to your field technicians?
Larry Blue: Great question. I was just typing out the answer because I didn’t know whether we were going to get time or not. We price our services assuming that the remote monitoring … Again, as I mentioned earlier, and I’m getting a little ahead of myself, it does vary depending on the intelligence of the equipment. Some of the equipment just isn’t connected, some of the equipment just isn’t all that intelligent because it’s 40 years old. The more intelligent equipment, we price our services assuming remote monitoring and remote repair, so the customer gets a better deal. We’re also able then to provide some of that consultative capability so that we’re able to actually make the equipment run better and save them run time. So we offer that as part of it, and generally they’ll run an ROI, and as long as that you’re not looking at any PII, because we all understand cybersecurity and those issues, that you’re only looking at machine data. Then we’re able to justify the ROI typically with the savings they get on their service as well as the additional uptime they get from the prescriptive maintenance offerings.
Sarah Nicastro: Okay. All right. Sadly, we are out of time. It bums me out because I could talk with Robin, Larry and Kevin for at least another hour or two. We didn’t get to all of your questions, but rest assured we will follow up with you. Gentlemen, I appreciate you being here with me very, very much. So thank you for your time this morning and for sharing so openly your insights with myself and with our audience. To everyone that tuned in, thank you so much for spending some time with me as well. It was my pleasure, and I hope to talk with you all again soon.