joanna.darby@ifsworld.com, Author at Future of Field Service

Nunzio Bagnato, Director of Home Service & Advance Servicing At Foxtel, describes how the company has motivated its contract workers to be highly engaged, effective, and empowered to deliver the Foxtel brand experience.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today we're going to be discussing a topic that comes up, conversation after conversation with opposing views and a lot of questions. I think we're going to answer some of those here today, so we're going to be talking about how Foxtel has mastered the contract workforce model.

Sarah Nicastro: I'm excited to be joined today by Nunzio Bagnato who is the Director of Home Service and Advanced Servicing for Foxtel. Nunzio, welcome to the Future of Field Service Podcast.

Nunzio Bagnato: Thank you.

Sarah Nicastro: Thank you for being here.

Nunzio Bagnato: How are you?

Sarah Nicastro: Good, good. Doing great. All right, so before we get into the contract workforce discussion, start by just telling our listeners a bit about yourself and your role and your background and anything you want to share related to Foxtel.

Nunzio Bagnato: Yeah, thank you. Look, as you said, I look after the home service part of our business as well as the advanced servicing. Advanced servicing is more to do with our case, technical case management and secondary activities that require some additional case management. But around 50% of my role, even 60% of my role is the home service, field service part of the business, and I oversee the field service part of that business as well as the contract relationship, all the field activities that involve installation, servicing the customer, upgrading the customer.

Nunzio Bagnato: I've been at Foxtel for 23 years, I've got 30 years experience in field service, originally started as a field technician at one of our first pay TV companies when I was about 20, and have been in the industry ever since and made my way up the ladder, and have now enjoy running a successful home service team here at Foxtel.

Sarah Nicastro: Awesome. Okay, so 23 years, that's a heck of a tenure, and you have that first hand perspective of what the front line job is all about. So I think that's really cool as well. I want to start by saying the audience of this podcast is a global audience and so we talked about the fact, Nunzio, when you and I connected previously, that the contract model is a more common model in Australia, and so I think that factors in to this discussion in the sense of maybe giving you a little bit more of a comfort level around it, but I think the practices that you have put in place at Foxtel for really mastering and optimizing this model, or something that is easily transferable or good food for thought for any company in any region looking to better leverage the value of a contingent workforce.

Sarah Nicastro: That being said, there does seem to be some debate around, is our contract workers the way to go, are they not the way to go? Are they the way to go, or are they not the way to go? In Australia, it's more common. You had mention that when you talk with colleagues in the US, the number one issue seems to be concern over control. Why do you think is?

Nunzio Bagnato: Look, I understand that concern. For many, many years we had some of those challenges. We had a traditional contractor model. Very transactional, very volume based model and the field technician was probably single minded focusing on what they can get from the role. It was the way we shifted that model, moved up to a more service based model, less transactional. And transformed what the technician should do and what the contractor's responsibility is in that contract.

Nunzio Bagnato: And it wasn't until we actually shifted to the new model and changed the way we operate and the way we engage with our vendors or our contractors, that's when we started to see the results of what we see today. We needed to change the culture. Traditionally a contractor model is transactional, it's a master/servant sort of arrangement, and you're going to get those type of results, you're going to get that behavior, you're going to get that culture.

Nunzio Bagnato: So, how do get a contracted workforce to feel and behave like your own field workforce without crossing any of those legal lines and having a strategic partnership where you have your contracting workforce or your contractors in the same building, side-by-side, part of your team, an extension of my structure and then have the field workforce change the way they interact with the customer, the way they actually present themselves. Shifting that model, introducing a score card model. And I know that every organization has score cards, but we didn't want to introduce a score card that was just something that we look at and tick and flick, it really had to be a way of working. It was the Foxtel way, if you like.

Nunzio Bagnato: And it was the program of work that we married with the score card and the rankings, and I'll talk a bit more about the score card. We did away with all those penalties in a traditional contracted model. In the past technicians will be penalized for not hitting KPIs or milestones. We did away with that. Our view was that we're dealing with adults. We want to have adult conversations with our vendors, our technicians or our contracting leadership team and have meaningful collaborative conversations.

Nunzio Bagnato: If they're an extension of my team, then we're having the same operating with them. We have those weekly meetings, we have those strategic meetings that actually drives us to meet our strategic goals. So, they are the key areas that we changed. To colocation, the extension of our team, the score card and the culture, and by the way, it wasn't like we just flicked it overnight. It was a journey, especially the culture phase. Shifting an entire workforce from a traditional contractor model to the model that we have today, we still have challenges today, but by large, we have been able to shift the workforce.

Sarah Nicastro: Okay, we're going to dig into all of that a little bit more, but I think one of the key messages that I want to get across to listeners here is that not only would you say that the cost efficiency of the model outweigh some of those concerns, but it doesn't necessarily have to be a trade-off. There are steps you can take and measures you can put in place to circumvent and alleviate a lot of the concerns that I think prohibit people from taking a deeper look at this model. Would you agree with that?

Nunzio Bagnato: Yeah. I don't disagree, no. You're right.

Sarah Nicastro: Okay, so let's talk then about some of those steps that Foxtel has taken to really shift things from that transactional more penalty based environment to one that's more collaborative, and when you said that we've gotten away from penalties and we've shifted, I know what you've shifted to, so I have a little bit of a sneak peek, but it made me think of parenting. They say that when you can give positive reinforcement, it's much more effective than punishment, punishment, punishment. So that seems to be a theme here as well.

Nunzio Bagnato: Well, it's an interesting point you make there. That exact point was pretty much when it came to the score card and how we actually managed the score card and the conversation we have with our field technicians. We wanted to focus on the positives. Every conversation had to be around the positives. What are we doing really, really well? And how? First of all, how did you get there? Not by luck. Not by sheer luck. You got there because you did something, you followed a particular sequence or you followed the process, or whatever it may be.

Nunzio Bagnato: Understanding how you got there, so we can continue to do that or improve on that is critical, so positively reinforcement and then what else can we do to improve? What are some of the other areas we can improve on? That is definitely how we approach our conversations. And that is at all levels. What I do when talking to my direct reports, when they're talking to the vendor or leadership team, we're talking to the field leadership team, when we're talking to the tech leadership team, it's the same, same conversation.

Sarah Nicastro: Yes. And I think that another aspect here is, if you're looking more for positive reinforcement, then how do you incentivize or reward these workers in a way that promotes those positive behaviors rather than simply penalizing them for a negative outcome. We're going to dig into that. Before we do, you mentioned that the score card was one pillar of this overall journey. Walk us back through the different areas of this, and then we'll dig into the score card specifically.

Nunzio Bagnato: We really needed to shift the way that the technician focused on the day. And prior to the score card or prior to our command center model being rolled out, our technicians focused on the traditional metrics like the completion rates, the misdeployment, blah, blah, blah. Really important, really important, but it was definitely drove a volume base behavior. Bang, bang, bang, bang, just get through the day as quick as I can, get the volumes through, because the more I do, the more I get paid.

Nunzio Bagnato: But that obviously impacted the way we actually serviced our customers, it impacted quality, it impacted safety, it impacted a number different areas of our business that we felt that needed to be addressed. And we lost the reason, we lost focus on why we're here. We needed to realize, we needed to take a step back and really make sure that everyone in our business understands why we're here. We're here to provide a service to a customer. In my case, we're providing entertainment to a customer.

Nunzio Bagnato: There was no focus on the customer when we're out there, so let's focus on the customer. We introduced the score card collectively with the leadership team, we introduced the score card that focused on four quadrants. And the first quadrant was all about the customer. It's about customer surveys and arrival on time. That's it. That's all I want to know about. If we go out there and we get a really good survey and great verbatims to go with that, and we've met their expectations by arriving on time, we've done what we had to do in that particular quadrant.

Nunzio Bagnato: And then we have our cycle quadrant, which is your traditional metrics, which is your completion rates and that type of stuff. The other quadrant is finance, and we wanted to focus on the finance component of what the technician does, because we do have a free issue model in our business. There are things that we need to keep an eye on and the contractors are a sub-contractor, their own business. So they need to understand how they impact the financial component of the score card. Nothing major, just something small, just for them to keep an eye on, but it's really important for us to keep track of our free issue and inventory.

Nunzio Bagnato: And then the last quadrant is quality and safety, of quality mainly. I'll talk about safety a second. Safety doesn't sit in the score card for us, safety is the qualifier, the gateway. If you fail any safety audits, then you are disqualified from your score card for the month. It's irrelevant how good you are in your score card, you fail safety, then you fail the whole lot. So safety is a gateway into the score card.

Nunzio Bagnato: And in the quality quadrant we have revisit, so the amount of times a job needs to be returned within 30 days. And what's important for us is having the set top box connected to the internet and the work involved in doing that. There isn't a lot of KPIs and it was by design. We don't want to have too many, but we've identified the key areas of our business that we want the technician to focus on. And each quadrant has a 25 point rating. So you can get a maximum of 25 and there are some thresholds.

Nunzio Bagnato: That score card is important to the field technician, because we lend idea from Uber and have a ranking, and the ranking, which is our bronze, our silver, gold and platinum, determines the priority of routing. So when it comes to routing, if you're a platinum technician, and you're been a platinum technician for that month, then for the next month you're going to enjoy priority routing, so you'll be the first technician to be routed. So all the platinum technicians get routed, all the gold guys next, all the silver guys and if there's anything left, the bronze guys will get the rest.

Nunzio Bagnato: That's really important for our business. Especially important for a contractor, a sub-contractor if you like, because this is their business. They have to ensure that they've got continuous work coming in so they can actually run their business. And for us, we're driving a culture. We're shifting the way the technician manages the customer. They sit down with the customer, they have that interaction with the customer, they service the customer, they really deliver what we want them to deliver and then they're doing everything else on the job they need to do. Making sure they complete the job, making sure they do this, they do that, from a quality point of view.

Nunzio Bagnato: When we first started this journey, it was five years ago, and we launched the score card model, 70 odd percent of our field workforce were bronze technicians. And we're really proud that right now, 70 odd percent of our field workforce is predominantly platinum and a little bit of gold. And that's taken a lot of work from our leadership team as well as the contractor leadership team. It is a lot of side-by-side compensations to get that team, the field team to operate where they need to be today.

Nunzio Bagnato: The score card really is identifying those KPIs that you want to focus on as a group, and introducing that KPI that's going to shift the way you operate, the way you service the customer and not put in any type of KPI, I mean, you can have a laundry list of KPIs, you can really get carried away, but we chose the eight. And we chose the eight for a reason, because we wanted to shift the way we operated, shift the way we serviced our customers, and we felt these KPIs did that.

Sarah Nicastro: There's couple things that I think are really interesting. The first is this recognition that I think a lot of the hesitancy around the contractor model, when you look at why do people feel they need to maintain that control. At least in my conversations it's primarily to protect the customer experience. Yet, when you're running a volume based business, you're working against that objective to some degree, just by incentivizing volume, volume, volume.

Sarah Nicastro: The incorporation of those customer focused metrics was an important step in helping your contract workforce understand, "Okay wait, we've realized the volume is not the only thing that's important here, and we need to prioritize the customer experience a bit more." I also think though there's something to be said about the simplicity of what you're choosing to track and how. So to your point, if you had a quadrant with eight KPIs in each square, it just becomes convoluted, it's harder for people to understand, they might not be as engaged in paying attention to what their rank is, and really simplifying that.

Sarah Nicastro: Now, one of the things we talked about though, is that those KPIs, you like to focus on two per quadrant, so the quadrants are identified, you like to set two KPIs for a quadrant to keep things simple, but those KPIs can change based on what the business' biggest priorities are. Can you talk a little bit about that?

Nunzio Bagnato: Absolutely, and it's really important to know that this score card is, all the KPIs that make up the score card, is fluid. There are some KPIs that will not be removed. I mean, customer satisfaction is one of them, that is always, that's cemented in, and that's important that we understand that, that is a number one focus.

Nunzio Bagnato: But from the moment we raised or launched the score card to where we are now, we've replaced these KPIs. In the early days when we launched the model, that's the command center model, and we introduced a new field service scheduling system, we needed the technicians to change the way they interacted with us and how they use the system, and I required them to follow a couple of different steps, click button here, click button there. And we just couldn't get the field workforce to do that. So we included it in the score card. Button compliance was critical to our success. Especially when you're working a workforce scheduling system that we share that depends on the technician clicking on-site and clicking off-site, so we can get accurate timings, get the data we need to be able to run an efficient business.

Nunzio Bagnato: So we had button compliance. We also had time on the job. We identified early on that technicians were doing seven minute service calls. And in a contract in the old world, that make sense, because you're pumping through a lot of volume, but in our world now, it's like, seven minutes, how do you actually knock on the customer's door, rate the customer, diagnose the problem, fix the problem, explain the problem and then take the customer through the ending of the interaction in seven minutes? It's not possible.

Nunzio Bagnato: So job timing were as important and trying to change, not asking the technician stop doing jobs quickly, it's about can you explain to me how this seven minutes service call happened? Can you please explain to me how we can actually increase the time? Have you gone through each of the steps on the scope of work? And it's just educating the technician on what we expect from them, and what our customers expect from them and what you should be doing in each of your jobs.

Nunzio Bagnato: And we're not suggesting for a moment that every technician spend an hour, an hour and a half on every job, you're going to have different technicians spending different times, but ruling out those little job times or those smaller job times, because you know we're not offering the customer the level service we need, was important. So we introduced things that we needed to focus on, that we knew that needed to shift. Either shifted from a performance point of view or shift from a behavior slash culture point of view. And we continue to look at what kind of areas of our business do we need to now reintroduce.

Nunzio Bagnato: Now, we don't do it as often as monthly, in actual fact, we went early days we did six months, now we've extended it out every year. So every year when we enter into our new financial year, we will review our score card and we will have a look at what we're going to include this year, what is our focus, so what is our strategic focus this year, and how does the field actually contribute to that. Do we need to change our score card, or do we need to change the target, and do that.

Nunzio Bagnato: And by the way, we don't just decide in this office and then roll it out, we have the conversation with our service provider or our contracting company, then we pressure test it with our field leaders and then we pressure test it with a focus group of technicians and we get feedback. And when they're comfortable, we're all on the same page and we got the right feedback and we're going to achieve what we need to achieve, then we'll formally roll it out as a change. In our model, we don't just do things for the sake of doing it, or we don't just change things and expect the rest of the business to fall in line. They're the ones that actually going to be delivering this, so we need to understand, is it something we're going to be able to successfully achieve?

Nunzio Bagnato: The score card is not only for the technicians. The score card is aggregated all the way up to me. So the score card the technicians look at, and we'll talk about the other score cards in a second, that is how everyone's measured. It's not only for the field techs, the score card model is aggregated all the way up to me, so everyone's got skin in the game here. I don't have a different set of KPIs, we all got the same KPIs, we work off the one score card.

Sarah Nicastro: Okay, tell us about the other score cards.

Nunzio Bagnato: We've got a command center and planning team that's co-located as I said to you earlier, and they have their own score cards. So the command center have their own score card and the planning team have their score card. There are shared measures or shared KPIs, things like customer satisfaction, completion rates, they are shared. They are things that we believe that everyone in this group has the ability to influence, and there's a couple of other KPIs that are shared. And then there are KPIs that are specific to their role.

Nunzio Bagnato: The difference with that score card is, they're employees of the contracting company, so they're not sub-contractors, so they're on salary. Their score card is linked to their bonus. For example this year, the target is gold. If they achieve a gold average throughout the year, they get a 100% of their bonus. If they don't then they get a percentage of their bonus, and it's really, again, same sort of operating rhythm, a weekly side-by-side conversation. Going through the score card, focusing on the positives, identifying the opportunities, having a look at other peers and bringing in those peer-to-peer conversations, the coaching, the mentoring to help that individual be successful.

Nunzio Bagnato: But the way it operates here, is that we have, an example be the Victorian Command Center Optimizer, we'd sit down with the Victorian Planner, we'd sit down with the Victorian Field Leadership Team in their weekly meeting and they would share their KPIs and work through their plan of attack for the week. Now, there is a focus, and then they go away and hopefully that plan they put in place is going to yield them the results they planned and then happy days. We keep moving and get better and better with it. So they work really closely together.

Nunzio Bagnato: And you've got a combination of contractor versus Foxtel employee in those conversations as well.

Sarah Nicastro: Yeah, that's one of the things you said earlier about even when you're making changes to the field score card, you're asking for feedback, and I think that's another good point, is just because you choose to leverage a contractor model, does it mean that you can't value and treat those employees as a part of the business. I think there's sometimes this perception that its internal or external and it sounds like you guys are doing a good job of making sure that you're listening to that feedback, incorporating that feedback and prioritizing those employees' voice in a similar sense of W2 employees.

Nunzio Bagnato: Well, we value the technicians, we value... My view is they have a voice. They have a very strong voice. They're the only face-to-face contact we have.

Sarah Nicastro: Right.

Nunzio Bagnato: When you look at our business, every interaction the customer has, is going to be over the phone or via chat or online. The field technician is the only face-to-face they have. So they are prime to tell us exactly how we can improve the customer experience, they are in a perfect position to tell us how to improve our business, because they are doing what they need to do to get the jobs done at the standard that we expect from them. They've got a voice in our business. Our field and myself, my field leadership team, my leadership team, have always been front and center in toolbox meetings or any type of technician gathering. They're out and about. We don't just sit in an office and cut ourselves off from the world, because I think having those face-to-face relationships, not only are you getting the feedback from them, you're helping them understand our strategy, the reasons why we make decisions.

Nunzio Bagnato: We are helping them with our message. We're actually developing a really strong relationship at every level. We're not hierarchical at all. I mean, I've had conversations with multiple technicians. I have technicians call me, text me, and I'm okay with that, because that is a window, that is a portal into their world that I need. So how do I improve my business if I don't have the relationship with the guys and girls that are doing the hard yards every single day?

Nunzio Bagnato: And I was a technical as well, so I've got a soft spot for them as well.

Sarah Nicastro: Right, right. Now, we talked about the tiers of technicians and the prioritization of routes. So the platinum technicians get the best routes. Are there other incentives tied to their achieved tier or is that the primary, I guess, incentive for them to work toward platinum, gold, etc?

Nunzio Bagnato: Well, as soon as you're a platinum technician, you've been given the opportunity to actually take on additional work or other types of work, for example, our VIPs and escalated customers are only serviced by platinum technicians. When we make a promise to our VIPs and we're sending out a technician, we're sending the best of the best, because they have a proven record. They're excellent customer experienced, they're excellent in every other KPI on the score card, but they've got a history of being a platinum technician.

Nunzio Bagnato: And any other type of additional event sort of work or any type of additional work that we need highly skilled technicians, they've been the first guys we go to. So there's a benefit of being a platinum technician outside of just the usual work. We just recently introduced the platinum plus, and that is because we identified that there is a group of platinum technicians who have been platinum for a very long time and they go the extra mile, but it's not captured in the score card. Like, they've always getting five out of five in their surveys and then another platinum technician is getting four point nine or four point eight, but they're always achieving, so they are high achievers. And we felt there's an opportunity for us to introduce platinum plus for those high achieving technicians. Allow those platinum guys to go the next level, to provide the next level of service. Really drive that customer interaction, really drive the way they service the customers and the way they operate, and recognize those guys that are continually hitting platinum. So we introduced platinum plus.

Nunzio Bagnato: From a routing perspective, it doesn't change, but we've got other benefits. Benefits like tickets to premiers, tickets to the football, any of that type of additional benefit, we're happy to provide to those platinum plus guys. And we've already got, we introduced this, what, in June? Sorry July, and we've already got close to 10% of our workforce sitting at platinum plus.

Sarah Nicastro: That’s great.

Nunzio Bagnato: Yes.

Sarah Nicastro: So talk a little bit more about the impact this journey, the score card has had on I guess A, service delivery and B, the contractor engagement.

Nunzio Bagnato: Well, from a service delivery perspective, I mean, we have achieved and we're enjoying probably the best patch of our journey ever. Our KPIs, our performance, the way we operate from an efficiency point of view, the level of service we offer our internal customers here at Foxtel and external customers, is probably the best that it's ever been. So when I just sweep through the KPIs in our business, we're not just improved, we've blind them out of water in a lot of cases, but for me, what's really important about that is sustaining that type of level of performance and keep the team striving for more.

Nunzio Bagnato: Our completion rates for example in the early days when we first launched this, now five years ago, we were kissing 87% completion rate, which means 38% of our customers were being not missed, but jobs waiting to get done. We're enjoying now an average of 94, 95%. It's not unusual for us to hit 95%. In actual fact, when we don't hit 95%, we scratch it and say, "What went wrong?". But that's where we are right now. Customer satisfaction, we never used to measure that, we introduced that as part of the command center launch, but in the early days that was sitting at three out of five. We are now averaging four point nine and four point nine five. And the verbatims we're getting from our customers is nothing but complementary about the level of service we provide our customers, the time we do, turning up on time, spending the time going through each of the scoping out of the job, providing the level of service that they expect from an organization like ours. And that's what we want to see. But there are other opportunities for us to improve on that.

Nunzio Bagnato: We're enjoying a patch right now that we've never experienced at Foxtel and we're not done. We believe we can do a lot more, a lot more. This is an ever changing environment, especially pay TV, field services is becoming tougher and tougher every single day. There are pressures that every field service organization around the world is dealing with. And we believe there is another iteration of what we've got here. We call it the command center model, but we believe there's another iteration that we want to tap into that is organic to where we need to go to.

Nunzio Bagnato: But from a partnership point of way, I think we've identified that the level of engagement we have with our field team, as well our contracting team, it's the best it's ever been. And that's because we moved away from that master servant model, allowed them to be in the driver seat. Sit beside me, let's work through this together, my KPI is your KPI, that type of stuff. But what's more important is that they drive the program of work. They focus on, they provide the areas of focus. They're the ones that are actually driving the change on our behalf, and we're giving them that control in allowing our vendors or our contracting company to set the agenda, so they're highly engaged.

Nunzio Bagnato: And that's because they're running this like their own business.

Sarah Nicastro: Now, when you decided to make this shift, the whole journey, part of that was a plaids word customer-centricity, and you talked about the fact that the technicians are the face of Foxtel, they're the ones that are interfacing directly with the customers, and so part of this was moving from that transaction and volume based approach to having them present and interact in a way that was in line with Foxtel's brand and persona and quality levels.

Sarah Nicastro: How did the score card method help in achieving that outcome?

Nunzio Bagnato: Well, we had to take a step back and we had to look at the Foxtel technician. What does a Foxtel technician look like? What is the future of the... What's the Foxtel technician of the future look like? And at that point in time the Foxtel technician looked like a standard trainee. I mean, if you had a plumber stand beside one of our Foxtel technicians, you wouldn't know the difference. They looked the same, they spoke the same and they serviced the customers the same way.

Nunzio Bagnato: And I'm not suggesting that plumbers don't service customers, but I was trying to illustrate here is that the Foxtel technician felt and look like a trainee. And when you look at what we were delivering, we're delivering entertainment. That's what we do, and we're providing a customer a form of entertainment. And does a Foxtel technician need to be in a trading uniform. Our old technician used to be in high V's vest with, we call them silicone snot marks all over his uniform, scruffy looking dot dude, turn up to the customer's house, grunt his wife through the job and get the hell out of there as quickly as he possibly can.

Nunzio Bagnato: That wasn't in line with the product we were providing. It wasn't in line with our brand. So we had a look at what does a Foxtel technician, what should it look like? And it needed to be somebody who was groomed, well groomed. Who presented himself really, really well in a standard Foxtel uniform who had really good soft skills. So we changed the way we recruited our technicians. We had technicians that were highly skilled when it came to installing Foxtel and servicing Foxtel, but when it came to the soft skills, there was an area of opportunity. So either we had to train up those guys in their soft skills, or when we were recruiting new technicians, they were really good with the soft skills stuff, really good with the customer experience, really good with the interaction stuff.

Nunzio Bagnato: And we can train them on the technical stuff. We've got a really good training program to get them right up to the standards we need to provide them that highly technical ability, but that soft skill stuff, that interaction, that was critical to us. So we made sure that our recruitment strategy shifted and we focused on those type of men and women. And that, together with the score card and the way we actually discussed the score card, a program of work with the score card, shifted the type of technician we had out there.

Sarah Nicastro: Mm-hmm (affirmative).

Nunzio Bagnato: They are 100% focused on providing a service to a customer and they know that they need to turn up with their ID, with their uniform, well-groomed and interacting to follow the scope from A all the way through to Z, because that is what we expect from a Foxtel technician. That is what's getting sure that they provide the level of service the customer expects from us. That is what helps them achieve a good score card. And if that all goes into plan, then they are almost guaranteed work.

Sarah Nicastro: It makes sense.

Sarah Nicastro: Yeah. So the other thing that you've mentioned that was key to all of this is the command center. The score card method and the command center work together to give the technicians the ability to focus more on that service experience. Talk about the command center's role in allowing the technicians to focus as much as possible on that customer interaction.

Nunzio Bagnato: When we designed the command center, we designed the field component to empower the technician to have full control over it, his or her day. We wanted the technician to be able to do everything from their device, control their day. But we also said is that we want you to focus on the job that you have in front of you. The old technician would be doing the routing, the jeopardy management, the rescheduling, the whole lot. Your role, let's define your role, your role is to go into a customer's house and service them and do what you need to do, do whatever is on the work order, but when you're at that house, you are 100% focused on that customer. You're not worrying about your next job or your route or whatever, tomorrow's route or whatever, 100% focused. But I'm giving you full control over that job.

Nunzio Bagnato: If a technician's day goes to plan, the command center will never interact with the technician. And we have technicians that go through days where they're not interacting with the command center. The command center only gets involved when the job or the route goes off path. And they only manage by exception. They're there to provide them support, but they're also there to take away all those admin type of tasks. If the day doesn't go to plan, the command center will identify that before the technician knows that your day is going off track. A job or some jobs in the afternoon present themselves at risk. The command center will reach out, the technician validate that, that's the case, because sometimes it's not exactly, the technician may be finishing off a job and as soon as he finishes that job off, the day corrects itself. We just want to reach out and make sure, the technician confirms that he's still on the job and may be out there for a while, and the command center will manage those jobs that are at risk, utilize or reroute them to another technician in the area to make that point of window.

Nunzio Bagnato: In most cases we will do that or bring another technician to the area to meet that time stop. In worst case scenarios that we're not able to meet that time slot and the command center will manage the customer.

Nunzio Bagnato: But there also is a where's my tech solution out there when the customer can self-service as well, so they can actually have a look the way the technician is and work out exactly when he or she is estimated to arrive and obviously job out their day to ensure that they, they do not have any inconvenience any way. So the command center really is there to provide them that support and level service and manage by exception. Again, if the day goes to plan, the technician would not speak to the command center. But there are scenarios where they have it.

Nunzio Bagnato: You've also got a planning team which is part of the command center and they are all part of the planning component leading into the day and they are highly important to the technician's score card, arriving on time, it's all about the planning, completing your job, it's all about the planning. Planning team have weekly discussions with the field leadership team about improving the quality of routes, improving the capacity, utilization rates and all that type of stuff.

Sarah Nicastro: Yeah, I think what's interesting to me is, you've recognized the need to enable your technicians to focus more on the customers, you've incentivized them to do that through the score card, but you've enabled them to do that by eliminating a lot of that administrative parts of the job so that they have the capacity to focus more on that interaction instead of those other manual or time consuming tasks.

Nunzio Bagnato: Yeah.

Sarah Nicastro: Yeah. Okay, all right, last question is, if someone's listening who is thinking through how to begin to leverage or how to better leverage contract workers, can you first summarize the value. What is the reason that this model can work and work well for organizations?

Nunzio Bagnato: I think a contractor model and the reason why a lot of organizations go to a contractor model is because it's not a fixed model from a cost perspective, and the attractive component of that is it becomes variable. And it depends on what kind of contractor arrangement you have, but most contractor models are variable and that's the attractive component of it. But with that comes a lot of pain if you don't manage it right. If you don't have the right relationship, if you don't have the right partner and you don't treat them like a partner.

Nunzio Bagnato: If you treat them like a contractor, you're going to get contractor results, guaranteed. So we've been able to take a trade-like sort of service and make it feel like a Foxtel service. But it's not unique to us, I mean, we can take this model anywhere, because it's not specific to Foxtel. What we've introduced, what we've built is transferable to any type of industry or any type of work I should say.

Nunzio Bagnato: If you treat your vendors like a contractor, you're going to get contractor results. It's about having a really strong strategical partner that can work with you and work side-by-side. And you're going to have to be okay with being challenged. In actual fact, we get frustrated, because we know we don't get challenged enough. We want to be challenged. I don't have all the answers, but the contracting company that we've engaged to do this type of work, that's what they specialize in, that's what they do really, really well. So they need to bring that to the game. They need to bring that to the table and you need to allow them to do that. And it's okay if they challenge you.

Sarah Nicastro: What's your best advice for someone to get started with incorporating a model like this, a score card model? How can you begin that transition from, all right, we're looking at this like a contractor thing, it's a volume based thing. We realize we need more. What's the best advice to begin that journey?

Nunzio Bagnato: For me it's don't try to do too much too soon. Understand exactly what is your desired end state. What is your desired outcome from that field workforce, and just keep it simple. Just really start off simple and then try to remove any of that complication. Allow your field, your leaders to understand exactly what you're trying to achieve and then build on that. Just start off slow and build on that.

Nunzio Bagnato: Focus on what you want to do and be very clear with that message, and everybody involved, from you down, needs to be singing from the same hymn sheet, they need to be with the same messaging. And it's okay to mess up, it's okay to mess up. In actual fact, as long as you don't break something, it's okay to mess up. Go ahead, mess it up, because it will only get better by messing up. Got to give them the freedom, you've got to make sure that they feel safe in the environment to do what they need to do, but they're not going to be losing their job over it.

Nunzio Bagnato: You can't penalize somebody for having good intent. I'll never remove a technician from the platform if his or her intent was to service the hell out of a customer and they've gone outside of the process. Processes are guidelines. I'm taking them as a guideline. As long as you've done what you needed to do to get the customer online, happy, enjoying Foxtel, it may not be the standard process, but I'm okay with that. That's what we're in the business to do.

Sarah Nicastro: Yeah, that's another good point, is that empowerment, because empowering the technicians to deliver the customer experience in a good way, even if that isn't picture perfect or whatever, it shows that you trust them and value them which goes back to that engagement and that buy in of what the mission is. But I like the point of keeping it simple. Again, the way that you've se the KPIs so that it's a consumable amount of things to focus on at once and if you can prioritize, here is what's most critical, then incorporate that, start there, and as you start to see progress and improve, then swap out some of those KPIs to get to that next wave.

Sarah Nicastro: You're not set in stone, you just need to figure out where to start and get started.

Nunzio Bagnato: But then I need the KPIs and score card, it's the processes or the way you've structured the team. I mean, start off small. Start off in a controlled environment and then keep adjusting. Don't stand still, keep adjusting and then you'll find your sweet spot. Once you found that sweet spot, bang, you're off and running.

Sarah Nicastro: Good. All right, Nunzio, well thank you so much for joining and sharing, I really appreciate it.

Nunzio Bagnato: Pleasure. Thank you for the conversation.

Sarah Nicastro: Absolutely. You can learn more by visiting us at www.futureoffieldservice.com, you can also find us on LinkedIn as well as Twitter @TheFutureOfFS. The Future of Field Service Podcast is published in partnership with IFS. You can learn more by visiting www.ifs.com. As always, thank you for listening.

By Sarah Nicastro, Creator, Future of Field Service

With the labor shortage proving one of the industry’s biggest challenges, there’s much discussion around the extent to which contract workers are a viable option to help organizations address the problem. There are some major differences of opinion on this topic among service leaders – those who are for the contract worker model are emphatically so, and those who don’t see it as a fit for their operations are firm in their stance.

In my opinion, any reasonable solution to a real challenge is worth evaluating. I also think that some of the greatest concerns around the contract model – namely a lack of control and the potential for negative impact on the customer experience – can be alleviated with a combination of strategy and effort. Australian media company Foxtel is a really good example of an organization that is successfully leveraging a contract workforce for field operations and has mastered the art of engaging and empowering those workers in a way that allows the organization to benefit from the flexibility and savings of the model without sacrificing its service or brand experience.

I recently talked with Nunzio Bagnato, Director of Home Service and Advanced Servicing at Foxtel, to understand what he’s learned in 23 years of overseeing Foxtel service and managing the company’s contract workforce. He shared some valuable lessons learned which you can catch on this week’s episode of the Future of Field Service podcast, but let’s summarize here some of the key points.

Lesson #1: Focus on Collaboration, Not Control

The concern companies have over not being able to control contract workers is reasonable in some ways, but to achieve success with the model Nunzio explains that you have to shift the thinking from control to collaboration. “If you treat your workers like a contractor, you're going to get contractor results. It's about building a partnership and working side-by-side,” he says. “Traditionally, a contractor model is transactional, it's a master/servant sort of arrangement, and that drives a certain behavior and culture. We’ve changed that culture.”

In evolving the way Foxtel views its contract workforce and focusing more on collaboration than control, the company has been able to improve those working relationships and create a contract workforce that is highly engaged and empowered to deliver the level of service Foxtel wants its customers to experience. “We have two-way communication and collaboration with our contractor workforce,” explains Nunzio. “We pressure test ideas with our field leaders and then with a focus group of technicians to get their feedback. We don't just make decisions and expect them to fall in line. They're the ones that are actually going to be delivering our service, so we need to consider their viewpoints and hear their voice.”

Lesson #2: A Positive Approach Will Yield Better Results than a Punitive One

About five years ago, Foxtel realized the need to provide a more sophisticated customer experience and shift away from transactional service. The company knew that to achieve this goal, the contract worker relationship needed to evolve away from a transactional relationship as well. “Previously, our technicians focused on the traditional metrics like the completion rates and we drove a volume-based behavior,” says Nunzio. “In the past technicians were penalized for not hitting those KPIs or milestones. We did away with that. Our view was that we're dealing with adults.”

Foxtel introduced a scorecard model focused on driving behaviors if felt mattered most in improving the customer experience and service delivery. It did away with the idea of punitive action for subpar performance and instead shifted toward positive reinforcement of desired behaviors and outcomes. “We wanted to focus on the positives. We wanted to look at what the technicians were doing really well, how they achieved that result, and promote more of those behaviors,” says Nunzio.

The scorecard was centered around incentivizing those behaviors by rewarding the contract workers who achieve the greatest results. Their performance on the scorecard determines a rank between platinum, gold, silver and bronze technician and platinum workers are rewarded by getting the highest volume and best schedule of work from Foxtel. Focusing on positive reinforcement for good work versus punishment for poor work has proven effective. “When we first started this journey and launched the score card model, 70 odd percent of our field workforce were bronze technicians,” Nunzio explains. “We're really proud that right now, 70 odd percent of our field workforce is predominantly platinum and a little bit of gold.”

Lesson #3: Clear and Simple Expectations Are Critical

So, with a collaborative mindset and positive approach, the third area that is key to success is to keep expectations around performance clear and simple. The Foxtel field technician scorecard has four quadrants: customer, cycle, finance, and quality. “We introduced the scorecard that focused on four quadrants,” explains Nunzio. “The first quadrant is all about the customer - customer surveys and arrival on time. The cycle quadrant is your traditional metrics, like completion rates. The third quadrant is finance, which looks at free issues and inventory. And then the last quadrant is quality, where we look at revisits.”

Four quadrants and only two metrics each at any given time; that’s it. “There isn't a lot of KPIs and that is by design,” says Nunzio. “We don't want to have too many, and we've identified the key areas of our business that we want the technician to focus on. You can have a laundry list of KPIs, you can really get carried away, but we chose the eight to keep it simple. We chose the eight because we wanted to shift the way we operated, shift the way we serviced our customers, and we felt these KPIs did that.”

The quadrants and KPIs in each which dictate the technician’s score and therefore tier make what’s expected of them clear and easy to understand. The quadrants never change, but Foxtel does update the two KPIs per quadrant as needed when focus on a certain area becomes important. Note they swap them out, though, versus add a metric in because it is important to keep the measurement targeted and simple.

If you use a contract workforce and are looking for some tips to drive performance or if you’ve considered a contract model but have some concerns, be sure to listen to Nunzio’s podcast for more detail on how Foxtel has mastered this model using its scorecard system.

By Tom Paquin

In this week’s look at what our COVID-19 co-habitation looks like, we’re going to consider how service leaders can work with customers, given their new geography, new expectations for social interactions, and new predilections for working with technology. Fortunately, we’ve seen, over the last year, the various ways that businesses have begun to internalize these truth into a broader strategy. So let’s take those different areas that I mentioned before and break down some hypotheticals.

Tackling our New Geography
I’ve tackled this previously on here, as businesses have had to realign their strategies to work with a decentralized workforce. I’ve mostly considered this through its relationship to the home office, but I think it’s important to consider more broadly across service as well.

How will, for instance, our increased lean on home workers impact the telecommunications infrastructure? While the path of least resistance for most businesses is to cut costs, eliminate office space and the business internet plans that come along with them, and offer the savings to home workers in the form of a stipend. That might work for the businesses, but teclo companies might not be thrilled about the shift, certainly in terms of long-term estimates of the amount of their networks that are being used for commercial purposes.

It might, then, make sense to create “home worker” internet plans, perhaps sold directly to consumers, or to the companies for which they work, to offer preferred speeds and specialized service for business users. The increasing prevalence of 5G might prove to be a boon for such a program, as 5G hotspots could function as the conduit by which businesses manage their remote workers’ internet. For the many workers currently battling with their kids’ Xboxes for bandwidth, this would likely be a welcome addition.

Of course, decentralizing business operations means decentralizing business service for telcos—suddenly, business priority appointments extend outside of a major metro, into the suburbs. That means infrastructure needs to be top-notch, even in rural areas, and that scheduling and routing optimization needs to be the bare minimum. This is a single example, but it belies the broader challenges that many businesses will face as the dust settles and the nature of what work means for people changes indefinitely.

Making People Comfortable

I’m vaccinated, and pleased a proud to be, as are my wife, parents, and in-laws. It feels nice to know that, per guidance from the Center of Disease Control, that we can be inside together without masks. Some folks, even vaccinated folks, do not feel comfortable with that. That is fine, and for customer service to be managed, maintained, and exemplified, we need to meet the level of respect that people feel.

Over the summer, for instance, we had an issue with our septic system. It was necessary for the router person to enter our basement in order to access our cleanout. He chose not to wear a mask, never asked if we were comfortable with that fact, completed the job, was paid, and left. Yes, sure, I never asked him to put on a mask, because remedying the issue took major precedent, but that assumption is very troubling. So…I’m not calling that router guy again (I’ll note that I’m also not tripping over myself to be in a position where I need to call any router guy, but that’s that’s enough about that).

I’m reminded of Peloton’s service questions for customers. In a pre-COVID world, this was simple asks like, “Can I take off my shoes?” but as time goes on, and expectations change, asking people about their comfort level before barging into their house seems like a bare minimum. We all now have a very strange relationship with our personal space. Service needs to recognize that, and champion communicative consent over making assumptions about people’s comfort levels.

New Technology Frontiers

About a year ago, I wrote about a postulation that, within eighteen months, manufacturing would see a technology evolution equal to about five years. So—twelve months in, is that true? I haven’t studied enough of how COVID has impacted manufacturing yet to say for sure, but let’s assume that most businesses have adapted to survive. So businesses are moving along, what about customers? Well, I also wrote about that about a year ago.

So—there are these two forces—personal and professional—both advancing their technological capacity. Customers are more amenable to digital service offerings like self-service and remote assistance, and businesses are accelerating on their digital transformation journey as well. This is a little bit of a tease, but in the second half of the year, we’re going to look at how those two areas have converged in holistic detail, and furthermore, where we go from here. We’ve certainly developed blind spots in our meteoric launch forward, and I can’t wait for the dust to settle so we can look at service and chart a plan for what comes next.

Pekka Nurmi, Director of Corporate IT at Cimcorp, talks with Sarah about the company’s efforts to modernize IT to increase its ability to be strategic, nimble, and most impactful.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today, we're going to be talking about how organizations can work smarter when it comes to their IT strategy and IT operations. I'm joined today by Pekka Nurmi, who is the Director of Corporate IT at Cimcorp. Pekka, thank you for joining us today.

Pekka Nurmi: Thank you. Nice to be here.

Sarah Nicastro: Good. Okay, so we're going to talk about how Cimcorp has made some changes in IT to work smarter instead of harder. Before we do that, tell us a bit about yourself, your background, and your role at Cimcorp.

Pekka Nurmi: Well, like you mentioned, I'm head of the whole of our corporate IT systems in six countries and three continents. And maybe a little bit different about my background is that I was actually a management consultant prior to working as a IT director, and I think has helped me a little bit in this transformation.

Sarah Nicastro: So your consulting background was in management? So on the business side or on the IT side?

Pekka Nurmi: In the business side, but I always ended up doing something with IT. So I sort of all the time, every year, I gravitated closer toward the IT topics all the time. I did have IT background. I'd been programming some software to couple of companies in way, way, way down the line, but the IT, of course, always something that I'm always seem to be gravitating toward that, so I think the current position came naturally.

Sarah Nicastro: Yeah. And I think some of the conversations we've had on this podcast, folks talk a lot about how traditionally IT and the business side, in many instances, were fairly siloed, and there's more of a need to really merge that together. So I think having that business background and bringing that to an IT role could be really helpful in creating that closer collaboration.

Pekka Nurmi: I really think so, that that is the case, and a really good idea I think to having the background.

Sarah Nicastro: Yeah. Yeah, I've talked to folks where the two within a company are at odds, and it doesn't work very well, right? So everyone needs to be friendly and work together, and I think when you have some experience seeing the other person's viewpoints, it's helpful in being able to do that.

Sarah Nicastro: Good. So tell us, how would you describe Cimcorp's IT strategy overall?

Pekka Nurmi: Well, I think the big idea, like a really big scale, is that we have six offices all around the globe, and the idea is that no matter where you go, you would always have that similar technology and back-end systems waiting for you, so you can just hop on the plane and arrive to another continent, and start working. That's the big idea.

Pekka Nurmi: But more about the strategy is that we seem to be and we are always reducing the number of the systems in house, because we really started from a situation where the number of different systems was just immense. And we were in the continuous loop that update, upgrade, and then you would [inaudible 00:03:56] to lag so much in behind. So we really decided, okay, we need to cut down the number of systems and concentrate on the core systems in general.

Pekka Nurmi: And also what we're doing at the moment is we're trying always to find things to outsource, and there is so much of new stuff we have to take care of, like a compliance, information security, and embedding IT and IT processes to be since development. And that seems to be the core, so we really always are trying to find things that, okay, we don't have to do this anymore. This is a ... Well, it wouldn't be fair to say trivial things, but less important stuff.

Sarah Nicastro: Right. Outside of your core competency, right? You want to be able to focus on what matters most, and not have to become an expert in everything.

Pekka Nurmi: Yeah. And I've been discussing with many of my colleagues in similar positions at similar companies, and we seem to agree on the thing that unless you're a little bit proactive in replacing and updating and upgrading, you will be on the worst side of the slope, and you always are playing catch. And that's not a good place to be.

Sarah Nicastro: That makes sense. And so from a high level, it sounds like global consistency is important, and then looking at simplification of complexity in the systems that you're using. And simplification in management, so that you're focusing on what matters most instead of trying to focus on every single thing.

Pekka Nurmi: Yeah. It's like when we start discussing with business, okay, what can we do and where can we improve? I really hate to say that. We could do that, but then I'd have to update system number one, system number two, and system number three, and maybe then, if all things go forward, we can do that. And that would be six months later. I prefer to be able to say that, okay, we are almost there. We have this one system, maybe two if things aren't bad, and then we can move forward. But the complexities, that can drag you down a lot.

Sarah Nicastro: Yeah, and so the idea of consolidating to less systems and also the idea of outsourcing in the areas where you can leverage external expertise, it's almost the management of IT, the planning, the strategy has become the job versus the management of systems, right?

Pekka Nurmi: Exactly.

Sarah Nicastro: So it's more of, like you said, staying ahead of things and looking at, okay, where do we need to be in six months? Where do we need to be in a year? So the more you can rely on folks to be a part of getting you there, then the more you can focus on staying ahead of that strategy, right?

Pekka Nurmi: Yes. And finding suppliers and partners who have a vision of the future, what can it be, because we cannot be inventing everything in-house. We are relying on our partners insights on many of the topics, so it's about finding who has the right vision, who has the capability to execute that, and things like that. So it's like managing a network of partners who are on the same page with you.

Sarah Nicastro: Yeah. So I'm curious to ask you, Pekka, though, I would say the majority of companies that we would have listening to this podcast would agree with the concept of focusing more on core competencies, right? So however you get there. Simplification of systems, outsourcing of different areas of expertise. But I think there are some that really, really struggle with the concept of relinquishing control, and so they're fighting their desire to do it all, and that all is growing and growing and growing and growing, and it becomes harder and harder and harder to do it all. Because as digital matures, there's just more sophistication, more capabilities, more opportunities. And so the world is expanding, and they're trying desperately to keep it all within their grasp.

Sarah Nicastro: So what would you say to those folks about the value of letting go, and then also how to shift the mindset, and know that it actually could help you more to not try and control everything in-house?

Pekka Nurmi: That's very familiar topic. That's where I started when I got this position. The IT department that, okay, we've done all, everything in-house, and this is how we want to operate, but through a lot of discussion and opening the idea that how management sees IT department, I think that opened up the idea that ... Like if we're trying always to do everything, we will be so slow that ... We would be a focus of top management, like a gaze on the IT department. "Why are you so slow all these things?" And through that, and a lot of discussion, and more discussion, and meetings, and staying in the different offices and talking to IT people, we gradually were able to see that. Okay, we just cannot go on like this. There's just too much to do, and being able to prove the point that, hey, we actually are quite slow on certain topics. So my team gradually realized that you have to do something.

Sarah Nicastro: Yeah. It's the idea, I think, that in today's landscape, the pace of innovation I so fast that it becomes almost impossible to keep up if you're trying to become a master of all, right? It becomes advantageous to rely on the experts in those different areas versus ... It's almost unrealistic to think that you can take the time to do all of those things and stay ahead to the degree you need to be competitive and all of those things.

Pekka Nurmi: And it's fantastic to see those small wins. Being able to prove that we're on the right path because being able to do something in two weeks with our partner that would have taken six months in some other way. So it's like, okay, this is good. This is a good way. People are happy about it, and we get compliments from the management. "How did you guys able to do that in such a short note and timeline," and the cost wasn't actually that bad.

Sarah Nicastro: Yeah, and it comes back to the idea of any change, right, or any evolution. If Cimcorp was used to doing this all itself, and you come in and you say, "No, we really need to shift and look at outsourcing more," the first few times you have those wins, you have more and more light bulbs of, "Oh, okay. This can work. It wasn't a failure. Everything's okay," and then the comfort level increases, and you start to see how you can really expand there. That makes sense.

Sarah Nicastro: So talking about innovation, I came into this space, Pekka, in 2008, and have been interviewing folks like yourself on a daily basis since then. And it's been really interesting to see how digital environments have matured and become more sophisticated, and just the wealth of opportunity that exists to companies today with the technology that's out there. How would you say the focus of IT innovation today differs from IT innovation of a decade ago? What are the major shifts?

Pekka Nurmi: I had a fantastic discussion with one of the colleagues from another company regarding this exact topic, and we were thinking, okay, 10 years ago how we would have solved this item at the time. And we would be selecting really dedicated IT people that is into IT, but they're probably thinking that, hmm, actually regarding one of the topics we were discussing about, we decided that actually we don't want to have IT staff on that at all. It's more like we were starting to discuss that wouldn't there be some business consultant that has some capability in IT that would define that area?

Pekka Nurmi: So I think that this goes back a little bit to where we originally discussed about the consulting background and things like that. So the business is much more involved and should be much more involved. It's not like the IT side has become any less important, but in order to get things done and the complete ideas, it's like the scope of things has increased. It might be 10 years, but it's enough that you solve the IT side. But today, you have to solve the IT and business side on the same time.

Pekka Nurmi: So I think that this is the core change that has happened in the 10 years.

Sarah Nicastro: Yeah. No, that makes sense. I think the importance of it is has it even increased significantly. You look at all of the digital transformation that's underway in every business today. I think the importance is critical, but I think what we're talking about here is the idea that it's shifting from the criticality of internal execution to the criticality of strategy, right? And how that allows you to scale the way that you need to be innovative and competitive.

Sarah Nicastro: Okay. So I wanted to come back to the title of the podcast, so talking about working smarter, right? So I think we've touched on some of those things, and we're going to dig in a little bit more. So we talked about simplification of systems. We've talked about outsourcing in areas where you can really benefit from leveraging external expertise. Is there anything else you would say is a characteristic of how Cimcorp is looking at IT in terms of working smarter instead of working harder?

Pekka Nurmi: Yes. We've done a lot of work on that topic, and I think the core thing is trying not to over-complicate any of the processes and topics. If we look at ERP systems or software in general, they already have a built-in processes, and tried out ways to work. And all the jobs I've had and all the customers I've had, I always saw that idea that everybody was trying to over-complicate that. "My process is so special. Our business is so special." And as an outsider, you could always say that I've seen this a thousand times. It's the exact same process repeating itself time and a time and a time and again, but the people running it are always saying that this is special. "We need special software." And the loop starts from there.

Pekka Nurmi: So the idea is to have an open mind that maybe somebody has found the golden nugget or golden egg of approaches that's already built into the system. Like ERP systems, they have tens of thousands of clients, and that have been running for decades actually. So the process, it might have been already evolved. And in many cases, I've found that accepting the ERP system might actually be already really smart.

Pekka Nurmi: And having the talks with the people that "This is really so special," or is there someone we can do a benchmarking on? And finding the ways that, could we just use this? There might be some idea in the background, and try it out, and if it's not, then we do something.

Sarah Nicastro: It's such a good point, Pekka, because I think the sense I get in talking with people is almost customization is a badge of honor. It's like, "No, we could never use an out-of-the-box solution. That's just preposterous. Our business is far too important for that," right? And I think, again, going back to evolution over the last 10 years, there probably was a point in time where that was more accurate than it is today.

Pekka Nurmi: Exactly.

Sarah Nicastro: Where the solutions were not sophisticated enough, or weren't incorporating best practices from 10,000 customers, or what have you. To the degree where it was x-percent there, but you needed to add onto that. I think you're making a really good point in that, while businesses have been maturing and evolving and transforming, so too have technology providers, right? So the point you're making about, hey, maybe it's worth taking off that badge of honor and not looking at it from the context of we need to make this super complicated because we're important and we're different and all of these things. And looking at, wow, could we make our lives a lot easier, maybe spend less money, have a faster implementation, maybe get better value if we open our perspective a bit and just consider that.

Sarah Nicastro: I think that's a really, really important point, just to think about the progression that's occurred, and next time you're evaluating software, why don't you think about looking at it a little bit differently, and not staying stuck in the history of it, but looking at what is out there right now.

Pekka Nurmi: Yeah. And also in my career, I've had a chance to look at ERP systems that were implemented two or three years ago, and I was invited to check that, how are we doing today with the system? And that always ended up like 60 to 80% of those modifications, the customer started paying for the ERP provider that, okay, we remove these customizations because the ERP system was right in the first place. But they just didn't accept that. So I've been seeing that happening so many times over.

Sarah Nicastro: And to your point, it's probably beneficial to, like you said, try it and if you do find areas, proven areas, where you need something, that's fine. But don't go into it with the expectation that you could never, because you might find that you could make things a lot easier. Okay.

Pekka Nurmi: Exactly. Yeah, exactly.

Sarah Nicastro: Very good.

Sarah Nicastro: So from an IT perspective, part of your job is helping Cimcorp to stay ahead of customer demands, and to enable internal operations and enable externally for a good customer experience. What would you say are the top demands of today's customers that end up falling into necessity from IT? You take customer expectations. How does that translate into what you're expected to deliver?

Pekka Nurmi: We are using IFS ERP system, and they are talking about moment of service in their topics, and I actually fell in love with that slogan, "moment of service." Because that describes quite accurately what we need and what the customers need. So the IT systems really have to be there, present, and have a real-time information that you can provide that. There's no other way. When the customer contacts you, they might have a spare part they would need desperately delivered overnight, or something, other issues going there, and what the customer wants to hear is that, okay, it's a can-do answer. And within that first email, phone call, whatever support ticket you might have done, and they really want to hear that, that, okay, we are on that, and we know what's going to happen, and when we going to be able to fix it.

Pekka Nurmi: So the moment of service is actually really fantastic word to describe the need of IT.

Sarah Nicastro: Yeah, I agree, and I think there's a lot that relates to that moment of service in the sense of it's a moment, but it's far more than that, right? So that moment of service is a moment of experience, but what happens in that moment, that can mean it's brand perception, right? It can be customer loyalty. It can be the difference between revenue growth or revenue loss. Service as a differentiator is where we are, right? And so how you align your infrastructure and your people to be able to, like you said, what do they want? Boom. We're ready. We have it. We're there. We're giving them what they need. It really is the name of the game. Everything you're doing is working to ...

Sarah Nicastro: And we're going to talk about this in a minute, but it's really this game of mastering complexity. And I say "mastering," not "simplifying," because you can simplify to a degree through some of the steps you've talked about so far, but the rest of it you have to master. Customers don't care. They don't care how much effort you're putting into delivering when they need it, but you have to be able to do it, right? So, yeah, that's a good point.

Pekka Nurmi: Yeah. There is a huge amount of complexity in the background, but like you said, the customer doesn't care. They want their issue solved in as fast as it's possible.

Sarah Nicastro: Huge and only multiplying. It's not a huge amount of complexity that's going to stay level, right? The more sophisticated everything gets technology-wise, and the more consumer experiences that impact what customers want, that level of complexity keeps climbing and climbing and climbing.

Sarah Nicastro: And going back to the beginning of our discussion, that's why I think it's such a good point for folks to understand the idea of mastering it all yourself is not sustainable, right? You have to start looking at how to work smarter instead of harder because you can't do what you need to do in that moment if you're trying to ... I'm thinking about little people inside trying to master all of this complexity. You have to look for ways to streamline that.

Sarah Nicastro: Okay. So let's talk about the IFS ERP and then your recent transition to IFS Cloud as a real world example of the things that we've been talking about so far in action, right? So this is an example of how you're walking the talk of what your strategy is in real life. So just tell us a little bit about the migration from IFS ERP, which I think you deployed around 2016, and then transitioning to the new IFS Cloud, and how that touches on some of these themes.

Pekka Nurmi: Well, I've been doing exactly like we discussed before that. What I've been getting people to accept is that the baseline in the IFS might be acceptable for the business process. And for us, IFS has been able to provide many of those. I'd say they're like blueprints for our operations, and they've been giving us areas where we can work smarter. We've been even getting ideas on how to set up our VDM systems in the background based on what IFS, how the architecture has been formed in that system.

Pekka Nurmi: Really, the idea is that we've been trying to accept that what the platform enables, and we've been trying to channel our energy to provide value to the customer using that. But the innovation in that is really about we are accepting IFS as a platform, and we already discuss about limiting the number of those systems. We did our homework, and we decided that IFS is a good platform for us.

Pekka Nurmi: So it all comes together. And in our case, it seems to be working quite well.

Sarah Nicastro: Good. Now, how would you articulate the difference between the IFS ERP deployment circa 2016 to what IFS Cloud offers?

Pekka Nurmi: The change has been immense. The first feedback we are getting is that the HTML5 interface is huge improvement. People love the face that you can access with your mobile phone all the time. That's big plus. And it has developed a lot.

Pekka Nurmi: Back in 2016, we knew where IFS was going in the future, and I think with IFS Cloud, we are getting that system that we bought in 2016. So I'm really happy about the roadmap for IFS really came to reality for us.

Sarah Nicastro: And that goes back to the point you made at the beginning about if you're going to rely more on partners ... So if you can acknowledge the fact that you can't do it all, and then you know that you need to choose smartly who you want to work with, right? Because you're trying to work with less people. As you said, you're trying to really simplify the ecosystem in terms of eliminating too many disparate systems and looking for more of a platform relationship. It's a good point of don't just look at what's there now. Look at what that roadmap looks like, and think about how the organizations that you're choosing to work with, how are they innovating and what are their plans, right? Because you want to future-proof yourself in the sense of, do they have what you need now to run the business and deliver the moment of service the way you need to, but then also as your business evolves, are they evolving too so that you're not in a position where in too short of a time you're like, okay, well, this worked, but now we've outgrown it, right?

Sarah Nicastro: Really it's the same concept we talk about with a lot of the folks that we have as guests on the podcast of moving away from a transactional relationship and moving more toward delivering outcomes and building partnerships, right?

Pekka Nurmi: Exactly.

Sarah Nicastro: Good.

Pekka Nurmi: And I think one third of the decision to select IFS back in 2016 was actually that. How do we see IFS as a partner for our future? So we have a pre-finalist system in that one, and that this was really clear that with IFS we decided that we can trust them to be our partner and guide in the future as well. And that's really important.

Sarah Nicastro: Good. Okay, so we talked a little bit about the fact that a lot of what IT is responsible for today is that concept of minimizing but also mastering complexity. So like we said, customers don't care how hard Pekka is working every day, how hard Cimcorp across the board is working every day. They just care that you're delivering what they need when they need it, right?

Sarah Nicastro: So when it comes to delivering that ultimate simplicity to customers, what are the keys to doing that? So how does a solution like IFS Cloud or other tools that you use ... What are the key ingredients to mastering that complexity to be able to deliver an experience that really hides all of that complexity from the customers?

Pekka Nurmi: I think I'm getting back to the basics that we cannot invent everything in-house. We absolutely have to be able to trust to the partners we select and the people we do business with. And we don't want to select partners that wouldn't be giving us anything in return. Like, okay, we pay you money, and you provide us the service, but we really want them to be providing innovation and the platform actually. Like with IFS, they are giving us the service platform in so many ways.

Sarah Nicastro: And I think it's worth revisiting that point of why a platform play versus disparate solutions makes sense. And I think what it really comes down to at the root of it all ... There's many reasons, right? Part of it is just for you the complexity of managing multiple relationships instead of one relationship. But I think when you look at it from the customer perspective, and when you look at it from the ability to deliver in that moment of service, it comes down to eliminating failure points. The more systems you have tied together, the more opportunity there is to falter in mastering that complexity, right? The more cohesiveness you can create behind the scenes, the better your chances of delivering that simplicity to customers.

Pekka Nurmi: Yeah. Of course, we do alternative scenarios. That's what we do, and we started one alternative. And when we discovered that we would have to build 19 interfaces between two systems, and most of them two-way interfaces, so that was immediately the point that we don't want to do that. We don't want to be spending the time working the interfaces, all the changes in the system that will affect the interfaces. So, once again, we found a position where we would be digging a hole underneath us with those interfaces.

Pekka Nurmi: So, once again, one platform, one solution will help us to focus on the business actually.

Sarah Nicastro: So another area I want to talk about, Pekka, is around data. So we talked about how complexity has increased and it's continuing to multiply, and I think a lot of that has to do with the criticality of data, and data as a resource. So you mentioned the real time data is essential for delivering what you need to in the moment of service. So there's leveraging data within Cimcorp to do that, right? And then there's the idea of the potential for leveraging data externally, right? So with a customer base.

Sarah Nicastro: So tell us a little bit about what that looks like, and how you're looking at data and its limitless potential both internally and externally.

Pekka Nurmi: Oh, this is a topic. We always seem to have multiple data improvement programs ongoing all the time everywhere. That seems to be the thing of today. There's always something to fix, and especially now that we've expanded to new countries, and there's different cultures and people with very different backgrounds. And the most reason we have found that we need to have a ... What would be a right way to say it? We want to enable people to understand that the importance of why they are entering the data, and if I'm not entering this, this will affect this and this many departments after themselves.

Pekka Nurmi: And we've been finding that when it comes to data, we have to provide more understanding to the whole organization around the data, and also we've invested heavily into data warehousing because that is the big thing in future development.

Pekka Nurmi: But it's a really big topic, data, but that's a big focus area, and in my mind, I return to the situation where we have multiple systems. And with multiple systems, we would have to worry about the data. And, once again, we would find ourselves being farther away from the core idea.

Sarah Nicastro: Right. And I think there's so much to sort out yet about the real potential for all of the data people are gathering now, right? And how to make use of it, like I said, both within the company and within the customer base. And I think part of why it's important to relinquish some of the control of the systems that allow your business to run is so that you can focus more of your energy and efforts on sorting out how do we leverage data better in the future, right?

Sarah Nicastro: So that's a strategic focus, right? That's something that is worthy of thinking and time and resources and energy, whereas you don't want to spend those time and resources and energy managing a bunch of configurations on a bunch of different systems because it's not bringing value to the future of the business.

Sarah Nicastro: And I don't think anyone has a real good handle on exactly how powerful the data side can be into the future, but that is a really good argument for why you need to focus less on systems and more on strategy, right?

Pekka Nurmi: Exactly. I'd say this is exactly the way.

Sarah Nicastro: Yeah. So I wanted to ask, Pekka, you mentioned a couple times throughout the conversation interacting with some of your peers, and I think that's a really good point because that's the premise, honestly, of Future of Field Service is being able to learn what other folks are doing. But how do you do that and how is that important to you being able to stay in tune with how other companies are tackling challenges and handling their own innovation?

Pekka Nurmi: What I actually do is I continuously encourage my staff to find these benchmarking companies, and be active in ... There's these end user groups we are finding. There's an internet-based communities where people have discussions, and I've granted them time to help other companies, and also search help from other companies. So I think we don't want to be stuck inside the walls of our department, and I think it's more like encouraging that we discuss with the outside all the time, more and more, because we can only win. Of course, you cannot spend 90% of your time discussing with some other companies. You have to have some limits on that, but still the basic idea is that every week you should try to find somebody to help, find somebody to get insight on what you do.

Pekka Nurmi: And we seem to be finding. Today, we are getting emails from other companies that have heard about us and want to discuss. So it took one or two years to get us started, but we're finding really good partner companies we can discuss with. And also some of the partners have active ... They provide also insight that this company might be benefiting you, and maybe you two companies should discuss.

Sarah Nicastro: Right. Right. Yeah, I think there's so much power in building that collective knowledge, and it is very important to make the time to look outside of your own company and your own day-to-day. Because I think creating that space is what allows you to not mimic what someone else is doing, but survey the landscape to get different ideas to bring back into your own business. I'm a huge advocate of that, and I think it's a really good point, particularly if there are folks listening that some of the things we've talked about relinquishing control and outsourcing makes them nervous. Talk to some other people that are doing it to see if you can increase your comfort level a bit.

Pekka Nurmi: Yeah. Of course, you have to be really careful to which companies you talk to and which people, but generally, I'd say I really recommend that. It has provided a lot of value for us.

Sarah Nicastro: Good. Okay.

Sarah Nicastro: Last question for today is what do you envision the IT strategy of 2031 looking like?

Pekka Nurmi: That's a big question. First thing that comes to mind is obvious there's going to be more public clouds being used, and information security will by any mean be of lesser importance than it's today. But I think along the lines about what we discussed earlier, it's going to be more about businesses' IT strategies aligning in many ways. And I would say that there would be more partnerships with the IT suppliers, just like we discussed before, as sources of innovation and platforms and new ways of working.

Pekka Nurmi: And maybe there would be more deeper level partnerships on IT with our customers, too, just thinking about all the IOT data that we discuss about. All of that I see as a big part of IT strategy for in about 10 years' time.

Sarah Nicastro: Yeah. So that will keep you busy.

Pekka Nurmi: Oh, I'm sure.

Sarah Nicastro: Good. Well, Pekka, thank you so much for joining and sharing your story today. I really appreciate it.

Pekka Nurmi: Thank you.

Sarah Nicastro: I think there's some excellent points in here for people to consider, and I certainly appreciate your perspective.

Pekka Nurmi: Yeah, thank you. It was nice to be here. So very good discussion. Gave me a lot of ideas, too.

Sarah Nicastro: Good. Thank you. Yes, yes. All right, you can find more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter, @thefutureoffs. The Future of Field Service Podcast is published in partnership with IFS. You can learn more by visiting IFS.com. As always, thank you for listening.

By Sarah Nicastro, Creator, Future of Field Service

As digitalization permeates every area of the business, we’ve seen IT become far less siloed in its strategy, processes, and execution. The lines between the business and IT blur as technology becomes increasingly critical not only in how a company operates optimally, but in its value proposition for its customer base. With digitalization playing an ever-increasing role for businesses in every industry and geography, what needs to change as it relates to the IT approach to keep pace with innovation and remain competitive?

According to Pekka Nurmi, Director of Corporate IT at Cimcorp, it is critical to modernize your approach and focus on working smarter rather than harder. Cimcorp is a global supplier of intralogistics automation with systems used within manufacturing and distribution centers in over 40 countries across six continents. I recently sat down with Pekka to record a podcast that you should stay tuned for, but am sharing here the five major point of how he describes the company is working smarter versus harder to modernize its approach.

Tenet #1: Evolve Your Perception of IT’s Role in the Business

As I said, it’s imperative for the business and IT to be working alongside one another to accomplish today’s objectives. Many organizations have made strides in eliminating a siloed structure, but others have work to do in improving collaboration. “The business is much more involved and should be much more involved than it was a few years ago,” he says. “It's not like the IT side has become any less important, but in order to get things done and the complete ideas, it's like the scope of things has increased. Today, you have to solve the IT and business side at the same time.”

Particularly in service-oriented businesses, IT capabilities are crucial in delivering on the expectations of customers. Cimcorp is a user of IFS Cloud and, as Pekka mentions, believes strongly in the IFS mission to help companies master their moment of service. “We are using IFS Cloud, and they are talking about the moment of service and I fell in love with that slogan, ‘moment of service,’” explains Pekka. “Because that describes quite accurately what we need and what the customers need. The IT systems really have to be there, present, and have real-time information to provide in the moment of service. There's no other way. When the customer contacts you, what the customer wants to hear is that okay, can-do answer. So, the moment of service is actually really fantastic way to describe the need of what IT has to delivery for the business.”

Tenet #2: Relinquish Control and Leverage External Expertise

A key mindset in Cimcorp’s mission to modernize IT and reduce complexity is to understand that the idea of doing, owning, and controlling everything is outdated. A modern IT approach acknowledges the expertise that lies outside of the organization and finds power in utilizing that expertise in order to reserve more skill for strategy than execution. “We're trying always to find things to outsource, and there is so much new stuff IT has to take care of, like a compliance, information security, and embedding IT and IT processes,” says Pekka, “And that seems to be the core, so we really always are trying to find less critical tasks that we can outsource.”

For many organizations, Cimcorp included, this is a major shift and can take time to embrace – but in Pekka’s opinion, being a master of all is no longer a realistic goal. “Cimcorp has historically done everything in-house, but through a lot of discussion and opening the idea of how management sees IT department, we helped the company embrace this change,” Pekka explains. “It was based on an understanding that if we're trying always to do everything, we will be so slow that with all there is to do, it just isn’t reasonable. Being able to prove that we're on the right path by being able to do something in two weeks with a partner that would have taken six months internally helps foster acceptance. People are happy about it, and we get compliments from the management, ‘How did you guys do that in such a short timeline?’ and the cost wasn't bad.”

Tenet #3: Embrace a Platform Approach

To simplify and master the complexity that is inevitable in today’s digital landscape, Cimcorp has fully embraced a platform approach with IFS Cloud. “We are always reducing the number of the systems in house, because we started from a situation where the number of different systems was just immense. And we were in the continuous loop of update, upgrade, and then you would begin to lag so much behind. We knew we needed to cut down the number of disparate systems and concentrate on the core systems in general,” explains Pekka.

When you look to consolidate into a platform, it is important to choose a partner that you feel is aligned with your short, mid, and long-term business objectives. “We’ve focused on finding suppliers and partners who share our vision of the future, because we cannot be inventing everything in-house. IT, for us, has become less about building and more about managing a network of partners who are on the same page with you,” Pekka says.

In evaluating options, the value of a platform approach was clear. “Of course, we do alternative scenarios. And when we discovered that we would have to build 19 interfaces between two systems, and most of them two-way interfaces, that was immediately the point that we knew we don't want to do that. We don't want to be spending the time working the interfaces, all the changes in the system that will affect the interfaces. So, once again, we found a position where we would be digging a hole underneath us with those interfaces,” explains Pekka. “There’s innovation in accepting IFS as a platform and limiting the number of systems. We did our homework, and we decided that IFS is a good platform for us.”

Tenet #4: Think Out of the Box

Perhaps one of the most impactful points of my discussion with Pekka is his description of the outdated view many have of software systems in the sense of overlooking the idea that a solution might work quite well for the business, right out of the box. We talked about the fact that this may stem from a historical viewpoint of far less sophisticated solutions, but that with what today’s technology providers offer, insisting you require customizations is – in many cases – an issue of pride versus reality. “ERP systems or software in general, they already have built-in processes, and tried out ways to work. And all the jobs I've had and all the customers I've had, I always saw that idea that everybody was trying to over-complicate that. ‘My process is so special. Our business is so special,’” says Pekka. “And as an outsider, you could say that I've seen this a thousand times. It's the exact same process repeating itself time and time and time and again.”

What Pekka urges you to consider is to evaluate the out-of-the-box functionality before pressing for what you feel may be necessary customizations. “Have an open mind that maybe somebody has found the golden nugget of approaches that's already built into the system,” he says. “They have tens of thousands of clients, and that have been running for decades actually. So, the process, it might have been already evolved. And in many cases, I've found that accepting the ERP system might actually be really smart. At least try it out, and if it's not, then look to do something.”

Tenet #5: Focus on Continual Improvement

IT today is incredibly fast paced, and Pekka and I discussed that the primary role of the function has shifted from doer of all things to strategist and manager of all things. This means an increased focus on education, innovation, collaboration, and partnership. It also requires a constant state of movement. “I've been discussing with many of my colleagues in similar positions at similar companies, and we seem to agree that unless you're a little bit proactive in replacing and updating and upgrading, you always are playing catch. And that's not a good place to be,” Pekka says.

Pekka encourages his team to look externally for information and inspiration. “I continuously encourage my staff to find benchmarking companies and to be active in end user groups. We don't want to be stuck inside the walls of our department, and it’s encouraged to discuss with the outside all the time, more and more, because we can only win in gaining that insight,” he says.

By Tom Paquin

We talk quite a bit about the importance of planning and scheduling optimization. We know the business value, we know what constitutes best-in-class optimization, and we know that optimization is a lot more that auto-scheduling and recommending a couple parts.

True best-in-class optimization automates repeatable tasks, provide real-time resource adjustments that are scalable to meet the number of technicians in a firm (whatever that number might be), and can provide planning insights for a day, a season, a year, or whatever unit of measurement that your business is in need of.

An automation system, at its best, actually automates activities. And like any AI-powered system, you can’t just provide inputs without matching criteria for how to catalog, rank, and execute those inputs into practical outputs.

So it’s necessary, then, to build a set of criteria that moderates your service system to prioritize outcomes, which will ultimately be passed on to your customers. I’ve written about this previously as a function of AI-based learning. Let’s outline some criteria areas that best-in-class systems can employ in this capacity:

Customer-Oriented Criteria

As we frequently discuss, building outcomes-based service scenarios has become an imperative for many service providers. Planning and Scheduling systems are an important (and often overlooked) piece of the outcomes-based service mix. So for that reason, you can build outcomes into the systems to help prioritize jobs to meet SLA expectations. Here are a few examples of criteria:

Time from ticket-to-invoice
Downtime expectations
Dispatch expectations
Asset value expectations

The list goes on and on, but, as an example, if you promise 2-hour resolution time for a specific asset for a customer (like our friends at Scientific Games), when a ticket is raised, it needs to be appropriately scheduled and prioritized to meet those SLA expectations.

Operationally-Oriented Criteria

These tend to be what people think about when considering planning and scheduling tools, but as you can see, they’re only one piece of the puzzle. Here are some considerations:

Cost per truck roll
Location
Technician schedules
Time per job based on criteria

And so on. The name of the game here is to build a list that offers businesses the ability to derive the most value out of a day’s worth of technicians. And something to note is that might not be the highest quantity of completed jobs in a day, and, when the criteria is established, you might end up being surprised by what the optimization tells you is the right thing to do.

Sustainability-Oriented Criteria

Finally, and most compellingly, is the ides of using optimization as a launchpad for sustainability. Yes, I wrote about this not long ago, but let’s outline some of the criteria that best-in-class optimization systems can work off of when building and stress-testing schedules:

Drive time
Fuel consumption
Trucks on the road

And so on. And yes, these naturally overlap with what’s going on in the world of operational criteria, but as I said in the article I linked to above, there’s an added value, and added imperative for businesses to focus on it. It might just be what drives a customer to choose you over the competition.

Chris La Fratta, Vice President & Head of Professional Services and Solutions Delivery at Philips, talks with Sarah about embracing a broader view of what outcomes-based service can mean for your business, how Philips is evolving its service offerings, and some of the key changes necessary in order to deliver.   Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today, we are going to answer the question; is your view of outcomes-based service limiting your success? We talk a lot about outcomes-based service and delivering greater experiences and guaranteed results to our customers, but today we're going to dive in a little bit more to what that really means and how you may be keeping your view too small of the opportunities for you with your customer base.   Sarah Nicastro: I am excited to welcome to the podcast today, Chris La Fratta, Vice President and Head of Professional Services and Solutions Delivery at Philips. Chris, welcome to the Future of Field Service Podcast.   Chris La Fratta: Hey, Sarah, thanks for having me. It's so nice to virtually be with you here today. It's everybody's reality all day, every day.   Sarah Nicastro: I wish we were doing these on site in a studio. Maybe we'll get there someday, but for now, virtual, yes, and happy to have you.   Sarah Nicastro: So, Chris, before we dig into the topic at hand, tell our listeners a bit about yourself, your background, and your role at Philips.   Chris La Fratta: Thanks, Sarah. First, let me tell you a little bit about Philips and I'll dive into my role. Philips has been around for about 130 years, we're 80,000 employees worldwide, and our purpose is to improve the lives and wellbeing of people through innovation and technology. We're very specifically focused on healthcare. And that's actually been a transformation from Philips. People who are familiar with the brand would know we've sold consumer electronics like flat TVs, and lighting, and things like that, but we've divested the portfolio and we're 100% focused on healthcare, so it's been a big shift for Philips. And also, part of our strategy, another big shift and what I want to talk to you about today is that we're shifting from a company that primarily sold products to a company that sells solutions.   Chris La Fratta: And just to use a simple definition of a solution, for me, that means hardware, software, services, kind of bundled together, both Philips developed content as well as third parties, and that together, these things solve a customer's problem and deliver an outcome better than a product will on a standalone basis. So, that's kind of, in a nutshell, who Philips is.   Chris La Fratta: I've had a long career in healthcare. I've worked at HP, Hewlett Packard, back when they had a medical device product group, I've worked at a company called Elekta, which is an oncology focused medical technology company, but I've spent most of my career at Philips and most of my career in services. I've run call centers and technical support groups, I've run field service teams, both on the software and IT side as well as on the capital equipment side. And these days, my job is really, as you said in the title, it's around solutions delivery. So, as we make the shift into solutions, how do I repurpose an organization that was designed to deliver break/fix into an organization that sort of consults upfront with our customers around how to design a solution, and takes them through an implementation, and then at the end, it's really all about helping customers adopt the technology so they can achieve whatever it is that they want to achieve.   Chris La Fratta: So, a lot of words there, but that's what my job is, is to run these teams. I have team members who are solution architects, I have team members that are project and program managers, technical consultants, which I've converted... and maybe we can talk about this, I've converted a lot of field service engineers and technicians into a role called technical consultant. Then for us, because we're in healthcare, clinical application specialists who do training and consultation on the products and solutions.   Sarah Nicastro: Okay, excellent. So, there's a lot we're going to dive into and I'm very excited to do so. I said in the intro and you kind of mentioned in your introduction of yourself, the conversations I have with people across a variety of industries these days are in some way all tied back to this concept of solving customer problems instead of delivering a product, a service, right? So, this idea of, however you want to say it, for a product organization moving this way, often servitization, delivering more outcomes, that sort of thing. So, you already defined that for us, and I think it was a very simple but very good definition, which is putting together solutions that solve customer problems, right? So, that makes perfect sense. Let me ask you, why do you feel this is the path every company, in some form or another, is on right now?   Chris La Fratta: That's a great question. I think about it, maybe what's going on in the IT space where everything is as a service today, or maybe companies like Uber and Lyft, they've kind of set the world on fire with their business model. So, if you think about Uber, the car companies model was to build and sell you a car, and they make all their money, then they service it after and keep it running, but you as a consumer, do you really want a car or do you just want to get from A to B. And I think that's kind of what it's all about.   Chris La Fratta: So, I think that we have a demographic shift going on in society where people have grown up kind of around these business models, but if I think about my business space in healthcare specifically, hospitals are stretched. They don't have the capital they used to have. A lot of them don't make a huge operating margin. So, these innovative business models where you're tied in as a supplier to the customers' outcome and success, I mean, it just works well because of the economic model there. And I think we've seen it happen in other industries. I think IT was the first place it really happened. I think IBM started this revolution, whether they wanted to or meant to or not, when they kind of got out of the mainframe business and got into web services and things like that.   Chris La Fratta: So, I think those are some of the variables going into it. I think the digitization of everything enables it to happen. I think that's also part of the reason why you see these shifts happening at the moment.   Sarah Nicastro: Yeah, that makes sense. So, in the headline, we said, "Are you limiting your view?" Okay? So, as an organization, whatever industry you're in, if you're thinking about how do we act more as a trusted adviser? How do we sell solutions instead of products? Oftentimes, the first thing people think of is, "Well, we need to guarantee uptime," that must be the answer, uptime, right?   Sarah Nicastro: And our argument today is that there's nothing wrong with guaranteeing uptime, but if that is where you sort of stop, in your thought process or in action, you achieve this, and then you just end there, you could really be limiting your potential to expand your service revenue, because if you can step outside of maybe your historical role in your customer's landscape and think more about how you could potentially solve some of the problems they have, you may find different opportunities to contribute to the outcomes that they need to drive.   Sarah Nicastro: So, tell us a little bit about some of the different ways that Philips has expanded its portfolio to deliver more customer outcomes.   Chris La Fratta: Yeah. And it's funny that you started off with the uptime comment, because as I told you, I've had a long career in service, and I think that traditionally it was about, keep my system up, and so it was about making it available. And I think over the past 10 years, at least in healthcare technology, it kind of shifted from, "I want it to be available, but I also want to integrate with the rest of everything else that's going on." So, in healthcare, it meant sending data from devices to an EMR, so it's about integration. But now, I think it's really about, "Help me adopt it so that I can be successful."   Chris La Fratta: So, in healthcare, hospitals talk about a quadruple aim, their targets as healthcare providers is to achieve this quadruple aim, and its financial outcomes, clinical outcomes, patient satisfaction, and staff satisfaction. I'll give you a couple of examples of where Philips plays in this space and why we've been successful. So, in an intensive care unit, you have a system of patient monitors, and they connect to a network, and nurses are able to centrally monitor the vital signs of patients and they respond when an alarm goes off. So, we've always sold that as a capital equipment with some services bolted in. And there's uptime and bench repair and all these things that go on to make the monitors available. So, that's the way we've always done it.   Chris La Fratta: Last year... actually, a couple of years ago now, we had a first of kind implementation in a big hospital in Florida where we actually offered this as a service. So, instead of getting paid for the monitors after we've implemented them and sold them and then going on a service contract, we actually get paid per patient day. And so, what is the customer is trying to do there? Let me talk about the outcomes that we're looking for.   Chris La Fratta: We're trying to make sure that they're efficient. We don't want patients to stay in an ICU any longer than they need to stay in an ICU. We're trying to make sure that as they move around the hospital from the OR back into a post op recovery area and what have you, that we don't lose any data. It's really important that the data gets captured through the whole journey. Then of course, we don't want them to be readmitted and things like that. And so, through this offer, we're able to completely upgrade a hospital where they wouldn't normally have the capital to do at all, every unit of the hospital is using the same technology, so a nurse can move from one place to another. They get software upgrades through the lifecycle of these things, because it's Philips's assets at the end, not the customers, and we'll keep them up to the latest and greatest and things like that.   Chris La Fratta: And what we're seeing, and last year was a great example because COVID happened, and when COVID happened, all of a sudden, it was a different subset of patients that needed really specific care. So, we were able to adapt and get monitors where they need to go in the hospital without the customer spending an extra penny, right? So, that's one example of where we've done it. We've done some great studies at this customer, whereby we asked the staff, "Hey, how do you like the new technology?" And there was just off the charts positive. This hospital was literally at a place where a new patient would get admitted and they have to check to see if they could find a monitor that worked. If it was from brand X or brand Y, they wouldn't necessarily know how to interact with that monitor. So, the patient, or the staff satisfaction went up really high.   Chris La Fratta: Obviously, the financial outcome was a big improvement for them. Instead of spending this huge amount of capital upfront, they moved their spend from CapEx to OPEX, so if they have a lot of customers, their bill goes up for the month, like our gas or electric bill, right? But if they don't have a lot of customers, when they have a down a month, their fees go down accordingly.   Chris La Fratta: And then we saw some clinical outcomes too. So, specifically, because they had this hodgepodge of technology, it took a long time for them to transfer a patient from one unit to the other, which meant patients sitting around kind of in limbo. So, now that we have all the Philips equipment in-house, they're able to transport patients quicker, the nurses are happy with that, and the patients spend less time kind of just waiting for something to happen. So, that's one example.   Chris La Fratta: Another example that I would cite is that we have something called Managed Technology Services, it's an offer that Philips has, where we actually go in with the hospital staff, assess their installed base of technology, and help them make a 10-year plan for replacement. So, Philips will finance that equipment, we will service it for them, regardless if it's ours or a third party, but the key is that we really help them to adopt and utilize the equipment well. So, we have counters on all of our equipment, we can zoom in and see if an MRI is being 65% utilized in one unit and you have another unit that might be 120% utilized, maybe they run it on a second or third shift or what have you, we can take that information back to the customer and say, "Hey, look, you can utilize this one asset better, or maybe it's time to retire it because the service costs are too high."   Chris La Fratta: So, really, partnering with their capital asset planning, because let's face it, what our customers, and my case with healthcare customers, are really good at is providing care to a patient, not capital planning for medical equipment. But at Philips, that's what we do all day long, and so we're able to kind of help and assist. And that's an example of helping a customer drive a financial outcome. And we've had some really good success stories with that.   Chris La Fratta: It's not an easy model to shift into, and it takes a little bit of courage, and it's kind of risky, because a lot times that you move in, the model is not always perfect, but you go out, and you get your feet wet, and you start to learn from it, and then you hone the model. So, I think the real key, though, Sarah is, if you have shared goals with your customer, now, they're partners and not customers, and when you win, they win, and vice versa.   Chris La Fratta: So, in the first example I gave, if we could increase the number of patient days that the customer is being monitored, because we're consulting with the customer and helping them put these devices in the right places, then I get a higher patient per day price, but they also get better utilization of the asset. So, uptime is keeping the thing available, but what we're talking about is making sure it's used and used well, and used to deliver these quadruple aim outcomes. That's probably a good way to state it and kind of summarize the points.   Sarah Nicastro: Yeah, that's perfect. And I think it is interesting, and I've mentioned this on the podcast before, Chris, there is a great overlap there for companies that are willing to find it, of needs customers have, real needs, real value opportunities, not forced, not, "Hey, we need to increase our service revenue, so what can we try and sell them?" But real opportunities to help that can help your business build revenue. I mean, it really can be a mutually beneficial place that you can get to, and this is a good example of that.   Sarah Nicastro: Before we talk about some of the complexities, I did want to just go back to the examples you shared. So, obviously, there is a real thing of, for a lot of these hospitals and health systems, modernizing the equipment they have and the lift that can bring in patient care itself, right? But to your point, there's a lot of planning that goes into that, there's a lot of knowledge about what's needed, and where it's needed, and what the right patient flow is, and things like that, on top of this change in model that we're going to talk a little bit more about to being OPEX versus CapEx. But the other thing, and we're also going to talk more about this, but I want to clarify it before we dive in is, some of the opportunity from a services perspective to kind of expand the skills that you're leveraging to bring value to your customers, and I know from one of our earlier conversations, there's a couple we talked about that I'm hoping you can touch on.   Sarah Nicastro: One is, knowing that this equipment is part of a hospital's bigger IT infrastructure, there's some opportunity there, and then I think a really big one, because I think it covers a lot of different industries and a lot of needs people's customers have is this idea of, "Hey, we see you're only using your MRI machine at 65% capacity," to your point, maybe they have an extra one they don't need or something like that, but it could be maybe their staff is struggling because they're not good at using it or they need some extra training. And so, I believe you've also kind of expanded into some more services there to help assist your customers in making sure that their staff as effective as well. So, can you speak to those two aspects?   Chris La Fratta: Well, yeah, I'll take the first piece about how things have really shifted. When I first started my career, when we hired a field service engineer, we were looking for somebody who had a mechanical engineering or electrical engineering background, and then we taught them customer skills. Back then, most devices were standalone, they didn't talk to themselves or each other, they didn't connect to the hospital's network and things like that, and if they ran software, it was proprietary, for the most part. Now, everything is on common platforms, Microsoft and things like that, everything is highly integrated and talking to each other.   Chris La Fratta: About five or six years ago, I was really involved in our patient monitoring solutions, and they were really highly networked. So, we started to realize that we needed to get network experts on the team, and so we kind of went down this path of, we think our guys are really smart, our guys and girls, and they can get Cisco trained and certified, so we provided them that opportunity to make the shift. At the same time, we were growing, so as we were hiring new people, we brought in Cisco trained and certified people that were really good with networks. And then there were people who were in the ranks that realized, "The way things are going, maybe this isn't the job for me anymore."   Chris La Fratta: So, we kind of went through a five-year journey where some of our internal folks stepped up and learned the skills, as we were hiring, we hired people with those skills. We hired a lot of people, actually, from the military who have been network trained, but also people from data centers and banks and things like that, and we had to teach them what healthcare was. And then we had some turnover. There's kind of a demographic thing going on in terms of baby boomers retiring and things like that. So, it was about a third, a third, a third, if you know what I mean.   Chris La Fratta: So, that was a big shift we had to make, and now we're seeing it again where networking is kind of not enough, we're seeing a few specialties that we have to get really good at. So, cyber security is one. We're starting to hire staff that has some experience and background around cyber security. Microsoft OS's, Microsoft server and things like that. Virtualization is really a big things. So, all of those skills have been important for us to realize we needed them and then either acquire them or train people to get them. So, that's kind of a little bit about the first question.   Chris La Fratta: I think the second question, I'll give you a really good example. So, Philips has trusted advisor and consultative partners. If you're in an ICU, there's all these alarms going off all the time. It's really, really a stressful place to be. If you're visiting a loved one, it's stressful, if you're sick in the hospital, it's really stressful too. It's particularly stressful for nurses. They're hearing these beeps, and the beep turns into a page on their phone, there's a central monitor, there's things going on all the time. And it turns out that a lot of them are false positives or alarms that don't need to be responded to.   Chris La Fratta: So, what we are able to do is to go in and consult with the nursing staff and make decisions around their alarm policies. They can lower thresholds, they can silence alarms and things like that. It's a really collaborative process. I mean, as Philips, we can't go in and tell them what their alarm policy should be, they need to make those decisions on their own with information from us. So, we can say, for example, "At hospital X, we see a best practice whereby they set this alarm here." And then they make those decisions, and we can implement them on the monitors.   Chris La Fratta: So, we've had to take our clinical educators, who are nurses, for the most part... well, almost every clinical educator in Philips has credibility and background as a nurse, but we had to teach them how to facilitate that discussion. So, they went away and learned how to run a Kaizen so they can get a group of nurses from a hospital site be open and have this conversation. And we just have great results from that as an offer.   Chris La Fratta: And it's great because it's done in conjunction, and you see the hospital nurses, sometimes, they start a conversation like this, and they just don't want to hear it or know it, and it's something outside of their day to day job that they don't have time for, and six weeks later, they talk about it being a life changing experience, having participated in something like that. And now there are fewer inoperable false alarms, there's less noise and they can focus on what's really important. So, that's a good example. And it took time not to build that skill on the team. Nurses tend to be really good at it, for whatever reason. I think they have right levels of empathy, but it's a good example of where we do that.   Chris La Fratta: We do some cybersecurity consulting, helping hospital CIOs prepare a plan and a strategy for things that live outside a data center. So, we're in a world where everything is a connected device, and IT people tend to be really good at connected devices than are computers, but when it's an MRI machine, or patient logs, or an ultrasound, they don't typically know how to apply an OS patch to a device like that. You can't just say, "Hey, there's going to be a maintenance window in the ICU at three o'clock on Sunday," it doesn't work like that, so it's a different problem set. So, we advise and we help with things like that, I mentioned some of the capital planning, and of course, utilization of the devices. So yeah, it's a special skillset. We've taught some of the staff how to do it, like the clinical educators.   Sarah Nicastro: Okay. So, there's a couple things I want to touch on based on what you just said. The first is, going back to the title of our podcasts and not limiting your view of outcomes, right? So, what you just described to me is a perfect example of, you start with your core competency, and maybe you even servitize that well, right? So, instead of just offering products, now you've bundled that with services, so you are Philips, and you offer X equipment, and you can service it supremely, right? But now you start looking at what is your customer journey, right?   Sarah Nicastro: So, how much pain would it cause your customer if you show up and say, "Hey, great, I have this industry-leading piece of equipment, I can sell it to you, we'll take great care of it, we'll make sure it has uptime, but this network stuff, good luck. So, see you next time we talk," right? And then they're sitting there like, "Okay, now we have to interface with another person and bring them in? And do those people know the Philips equipment, etc." Right?   Chris La Fratta: It's the worst experience for our customer, right? When they say, "Hey, Philips, your system is slow." And we say, "No, our system is working fine. It's a problem on your network." And they call Cisco, or they call their internal... and everybody's pointing at each other right? And so we decided, you know what, we're going to just help them solve the whole problem end to end, and if we have to be the middle person and work with Cisco or whoever it is, we'll take that role and do it, because to your point, they can't get what they want unless that problem is fixed. And for us in this example, the network infrastructure is such an important component of it all that it's just absolutely fundamental to what we're doing there. So yeah, I agree.   Sarah Nicastro: Absolutely. So, by eliminating that friction for your customers and improving their experience, you're expanding your own value proposition and your revenue potential, right?   Chris La Fratta: Exactly.   Sarah Nicastro: So, it's just a really good example of looking... I think sometimes companies get really... they're kind of stuck in their history, and so when they start thinking about innovating, or servitizing, or delivering outcomes, they have really good intentions of innovating but they still kind of are on this lane, right? And so, just being able to kind of expand the view a bit and just think about, "Okay, what are these friction points? What do we hear? What do we see? Where do we know our products connect with other systems in our customer's infrastructure, etc?" Because sometimes it's a situation of not communicating enough with your customers to the point where you're not asking the right questions for them to share their pain points, but sometimes they might not know to ask you, right? So, sometimes it's observing instead and going to them with suggestions, right? So, that was just one thing that I thought was important to mention. And there was another one, but I forgot it now, so hopefully, it'll come back to me.   Sarah Nicastro: But I think that those are fantastic examples of really being able to look at your customers' journeys and look for those opportunities to really help them, and in turn, help yourself by creating more potential.   Chris La Fratta: Yeah. I've got a mentor of mine who always says, "Chris, we have two ears and one mouth, right, and you've got to use them in those proportions." So, you said it a few times, but it is really listening. And I think sometimes it's also... when you talk about that trusted advisor comment, sometimes it's about being brave enough to tell a customer, "Hey, I know you want to do that. That's not the best practice." We had a customer who wanted to use Active Directory in a certain way. No other Philips customer does what they do, and we should have said to them, "Look, you're taking a risk doing that and we're not sure we can support that." But I think a lot of times our tendency is, " We want to close this deal, so let's just give what the customer wants."   Chris La Fratta: But I think one of the reasons why customers want to work with an industry leader is because of the experience you have as an industry leader, especially when implementing very complex things like this, they want to know what the best most successful customers have done and how they've done it. So, I think you got to kind of own that and bring it to the forefront.   Sarah Nicastro: And you just reminded me of my other point, so thank you, but it was exactly that, which is when you have a wealth of assets that are connected assets across a variety of customers, and you can look for those insights that your customer base is going to find value, and that in and of itself is another opportunity for that revenue, diversification and to differentiate yourself to build that relationship, to stop looking at it as a transactional product, sale, break/fix service to that partnership, because there's so much value, in your case, to the hospitals, of you knowing, based on fact, based on data, "Hey, actually, the best practice other hospitals do is this. Let me show you a couple examples. A customer we have in this state does this, this state does this."   Sarah Nicastro: They don't have that information, so that information, that data is power you have that you can use to educate your customer base that no one else has, right? So, a lot of times, that data in and of itself, is an untapped opportunity to expand these relationships and diversify revenue, because companies might use it operationally internally, but they're not looking at it from that perspective of what's this telling us that is insights, best practices, information that our customers would potentially pay to know or that we can bundle into this overall thing?   Chris La Fratta: Yeah, no, it's fascinating. Again, one of the customers that have bought into this as a service model with us around our patient monitoring, I was at a quarterly review with them not long ago, and we were reviewing their statistics. And so the monitoring gets broken into three segments, there's high acuity, mid acuity, and low. So, the most sick patients are in high acuity, your sort of middle patients are mid, and then when you get checked into the ER or the general ward, they put you on these low acuity monitors. And so, by looking at their statistics over the last quarter, and we're reviewing this from a billing point of view, like eight years, this is what your quarterly invoice is going to be, but they saw this huge spike in mid acuity, and they start to ask operational questions about why? "Why did it go up so much? I don't understand." Well, it was driven by COVID volume.   Chris La Fratta: But it's to your point that, if you have this huge install base of information, not only can you help one hospital compare itself to the other and get some best practice, of course, the information is completely anonymized and de-identified and things like that, also, even within the hospital, they're not always seeing operationally what's going on. Everything from our equipment is being used, and I gave some of those examples earlier, to where is the equipment? I mean, we have a patient-worn device that allows people to walk around the hospital when they're recovering while still being watched. Well, things get lost all the time. And I can tell the last time it made a network connection were in a hospital that it wasn't. So, even as simple as, "I lost my keys. Help me find them," sort of thing.   Sarah Nicastro: Yeah, for sure.   Chris La Fratta: So, it's all about data. And I know there's a question that we'll talk about maybe at the end about my vision of what's next, and it's all about how do we better use all this data that's being generated, whether it's to deliver an economic or patient outcome. I think there are clinical outcomes that could potentially be better achieved if we can somehow... And Google, Apple, GE, Siemens, Philips, we're all trying to get there, but nobody's really cracked the code yet, but if you think about all the sick patients that go to a hospital, so much information about them, and their symptoms, and their treatments have been captured, that's a place where we've got to start applying AI and machine learning and things like that so that we can get some better treatment plans, quicker diagnosis and things like that. That's sort of a vision of the future that I have.   Sarah Nicastro: Okay. We're going to get there.   Chris La Fratta: All right.   Sarah Nicastro: All right. So, everything we've talked about is really exciting. You guys are doing an amazing job of becoming that partner to your customers instead of a vendor or supplier, and really looking at modernizing the relationships you have with them. But this process and that shift, it's a fundamental change in how you're doing business, right? And that is, in no way do I want to touch on the good points and have people think like, "Oh, Philips is doing it, it must be easy," because it isn't. It's really, really hard. And I think that the deeper and richer the history in developing, manufacturing, selling, servicing products, the harder this transformation can be and this shift can be.   Sarah Nicastro: So, you're obviously doing an excellent job at it, but I want to talk about a couple of the major points, and you can maybe share a little bit the challenges and how you've either overcome them or are working to overcome them. And the first thing I want to talk about is just this idea of transitioning to the as a service model, right? So, for Philips, I understand the value to the customers loud and clear, but to you guys, you're moving from these large influxes of revenue to more of a recurring model, and then you're risk sharing. So, to your point, if the hospital doesn't use as much one month as another month, that dips. So, explain how you kind of get on the same page about why and how that's worth the risk and what that takes to migrate too.   Chris La Fratta: Well, there's a lot in that question, so let me try to touch on some of the topics there. The first thing I would say is, as you start to make a transformation like this, think about Philips, as I said, it's 130 year old company, when I introduced myself, and for 125 of those years or so, we sold a thing, we manufactured a thing, sold it, and then did some service on it, right? So, all of our processes, all of our back end systems are designed to do that thing.   Chris La Fratta: And so, a few years ago, we decided to get into the solution space, and all of a sudden, SAP doesn't want to allow us to transact business that way, or our service system is really good at break/fix service, and dispatching engineers and doing things like that, but not so good with other things. So, there's a lot about kind of tuning up your back office systems to allow these business models to work and things like that.   Chris La Fratta: Then you start having discussions with your CFOs and folks, because they used to get in the sort of episodic revenues, what I would call it, and install a huge capital deal, and there's a little bit of services that go along with that, but that's how we forecast revenue, but we're basically getting all the revenue up front. So, let's just say we're going to do a million dollar deal, we get a million dollars up front, we get a $75,000 a year service contract, and that's kind of the model. Now we've gone towards that million dollars that gets spread over five years, and oh, by the way, there's some risk in it, because if the customer doesn't achieve their outcomes, you're going to make less money in that month. And we actually saw that.   Chris La Fratta: A lot of our solutions... we have a paper use solution for our picture archiving services, so when you get an image done on an MRI, or a CT, or whatever, it gets stored digitally and clinicians retrieve that and they work the images, and they read them and all that stuff. Well, during COVID, a lot of elective procedures were postponed. So, for the whole year, last year, people getting MRI scans or going in, in some cases, for things as serious as a bypass surgery, a lot of that was postponed for a long time, so the usage of those images went down and our revenue went down, and it's a big hit. So, why would you still do it?   Chris La Fratta: I think why you would still do it, first and foremost, is this is the direction that industry is going, so if you don't make the shift, you're just going to become irrelevant in a few years. That's one reason. But I think the second more compelling reason is, it deepens the partnership with your customer and it makes what you do really, really sticky. So, these customers that have been using your service as a service, it's not easy to switch. It's really, really difficult to migrate that data that might be in our systems, the competitor's systems, or what have you, once you kind of make that shift, but I think you become sort of indispensable as a partner so the long term is worth it.   Chris La Fratta: The other thing I'd say is, if you go from that episodic revenue, and all of my peers who are listening to this podcast will tell you, you've got these huge fourth quarter hockey sticks. You got to make that Q4 number, everything's being discounted, there's so much pressure to make that revenue number. I mean, somebody has to sell it, supply chain has to deliver, I have to go out and install it, and all that stuff needs to happen. But if it's recurring revenue, that recurring revenue just builds on itself, and builds on itself, and builds on itself, and builds on itself, you still have to renew it, and hopefully over the lifecycle, you're expanding it, but it's a lot more predictable, and it just makes running your quarterly business that much more sustainable. It's a little bit easier.   Sarah Nicastro: Yeah. It's just that initial transition. It's this big hurdle and then you can start to see how it can be an improvement.   Chris La Fratta: I'm jealous, so jealous of the companies who started this way, like salesforce.com, because they didn't have to make the shift. And then there are companies like IBM who said, "We're not going to be in mainframes anymore, we're going to shift totally to services," and they kind of like made a bold decision. At Philips, we still do both, so it's sometimes hard to kind of run both-   Sarah Nicastro: Straddle, yeah.   Chris La Fratta: ... but there's good reasons to do it. And I'll tell you, the number one reason to do it is not every customer is ready to consume this way either. There's still quite a few big customers that just aren't interested. They want to buy capital and depreciate it over 10 years because that suits their operating model better. So, for us, it works being in both worlds at the same time. Sometimes I wish it wasn't the case, because I think we can move faster, but we're balancing it as well as we can.   Sarah Nicastro: Yeah. Okay. So, that's a big one. The other one I'm wondering if we can just touch on quickly before we get to the other big one. And I say quickly, because I know that service is your world, not necessarily sales overall, but obviously, this is a complete shift for sales too, right? I mean, it's a different value proposition, it's expanding, really, the stakeholders within a customer organization that you need to be selling to, when you get into these adjacent services and all of that.   Sarah Nicastro: So, what have you seen in relation to what it takes to transition to selling that as a service model?   Chris La Fratta: Yeah, a few things there, I think. First of all, it's not a department level sale anymore. You can't go to the head of biomed, or the chief nurse of a unit, or the chief radiologist, it's a C suite sell. So, that means the salespeople have to really up their game and learn how to talk to and sell to the C suite, because these tend to be longer term, and they tend to be enterprise wide. They are big bets on both sides of the equation.   Chris La Fratta: Second of all, the incentive schemes have to be taken into account. So, we have a really good sales executive within Philips who came over from Microsoft, and at Microsoft, remember, you used to buy Windows and Office and pay $300 for it, and you got the CDs, and Microsoft shifted from that model towards 360, which everything is online and downloadable. They had to change the comm plans for their people because of that. It means they weren't getting the one time episodic hit any more. And so now you need to comp on total contract value over time and things like that, and that's very different.   Chris La Fratta: And I think the last piece is, and I alluded to this a little bit in my last answer, but the renewal becomes a really important conversation, and expansion becomes a really important conversation. So, out in industry, you'll hear people talk about success managers, customer success managers, which we're still figuring out what that means for us in Philips, but part of it is making sure that when the renewal conversation comes up, that customer is so happy with the value that you've added that it's not even a conversation. But it's also things like, "Hey, you're doing really well in these units of your hospital with the solution. Why don't we go to the west building now, or why don't we go to your children's clinic, or whatever it is?" And so, it should provide you with a base to do that stuff. So, if you're doing it well, you're not hunting business as much, but it's a different art form or different science, or however my sales colleagues would describe it. It's just a new methodology.   Chris La Fratta: So, those are some of the thoughts around sales. I can't emphasize that first point enough. Upping your game to be able to talk to the C suite. At Philips, we've sort of developed playbooks around how to do that. We have account executives who are identified as those people who should go in and have that conversation. And yeah, I mean, we're on our journey. I can't say we've solved it all yet, but we've had some success there. And even identifying the right customers. So, in the US, there's a lot of consolidation going on around healthcare and stuff, lots of small hospitals, now you have these big integrated delivery networks, and some of them are kind of taking this journey and making this leap of faith with us. But like I said earlier, someone who just aren't ready yet, they'll be ready on their own time, so I think timing is really important as well.   Sarah Nicastro: Yeah. I would imagine it forces a closer relationship between service and sales too, right, because it's just kind of a continuous cycle of that. Like you said, you don't want to get to a point where it's, they're sold, they're serviced, and then they need to be sold again, right? You want it to just be cohesive.   Chris La Fratta: Yeah. So, my sales counterpart, "Hey, I sold the equipment," and he gets all that order intake and all that revenue, and I get the service. And so in a way, we kind of had our own P&L. There's a dependency, of course. And that was just one thing. The solution is the equipment and services integrated as one thing. So, we can't split it up anymore, we have to be side by side, and it forces that, and that's actually a really good thing.   Sarah Nicastro: Yeah. And that's probably a whole separate podcast on its own, right? Because I think the companies that are trying to do this with to P&Ls are the companies that are trying to innovate this way without the top level commitment to taking the business in that direction. I mean, it's really tough to make this transition if everybody isn't working in the same vein. But we'll tackle that another time.   Sarah Nicastro: I want to get into one more big thing before we finish for today, which is, the thing we've alluded to but haven't really discussed in detail yet is the fact that this requires a real significant shift in skillset, mindset of your technicians. And so, you touched on the fact that you gave them a choice, empowered them to decide, do they want to kind of expand their skillset and all of that, but I know you've also increased your use of contingent workers to be able to eliminate some of the, we'll say, more traditional break/fix non value add work so that your technicians, you can focus on upskilling them, re-skilling them, expanding their skills, to have those consultative relationships and to do these different things. So, talk a little bit about that and what you've learned in making that work for Philips.   Chris La Fratta: Yeah. It's a good topic. I mean, at the end of the day, you can only focus on so much, so you define what your core competencies are. And our core competencies have shifted from people who are really good mechanically and electrically to people more IT oriented, as I said, or people more consultative, which I think is even more kind of a unique skill.   Chris La Fratta: So, what we've determined over time is that that's where we want to focus and develop folks. But guess why, at some point, when we ship product, there's a loading dock where there's tons of boxes of our stuff. And so, we used to pay our staff whatever their hourly rates are to unbox things, and to stage things, and to prep them so that they can go into the hospital. So, that's a really easy example of where we've used third parties to kind of supplement. It's not a skill that's highly specialized, it's not something that we want to develop a core competency in, and there's some variability around demand. So, if we have a really big fourth quarter, I don't want to hire 100 people and have them part of my fixed costs as we enter the next fiscal year, I want to be able to ramp them up and down as needed. So, it's really helped there.   Chris La Fratta: But even if I say, "Okay, that's some basic stuff. I'll take it one step further," we do a lot of staging of servers and equipment like that, and that's pretty standard and can even be done remotely. So, there, even in the IT space, when it's something fairly basic like loading an image onto a server or doing some configuration of a server, we start to work with third parties as well. If I have a third party that shows up on site, they are part of the Philips team, they get treated as if they were a Philips employee, they get the same training, in many cases, that our employees would get. We really do a lot to ensure the quality is there. It's a little bit more difficult to control, if I'm honest with you. I mean, probably the worst story I can tell you is one of our third party guys fell asleep on a patient bed or stole a dessert off the lunch tray. I mean, these things kind of happen from time to time, so you do need a process to check in and make sure that the quality is there.   Chris La Fratta: But for us, I think the main benefit is being able to focus on what's core, and it offsets some costs, of course, that's part of the reason why we do it, and it allows for a lot more flexibility. So, it's a tricky road to go down, but I think it's important. Like I said, the approach we've taken is we're allowing and promoting the development opportunities for our internal folks, so as we shift, we want them to come with us, but at the same time, where it doesn't make sense for us to unbox equipment and to do basic configurations, we're just going to use the contingent help. I mean, I think it's happening everywhere.   Chris La Fratta: And it's kind of interesting, people talk a lot about the gig economy, and I don't know if a guy who works for Philips can change his field service engineer jacket and go in and work for Siemens, and on the next call, go in and work for GE. I don't know if we'll get there in healthcare because we're a little bit specialized, but definitely, I see it as an increasing trend that any activity that's not core, you're working with a partner, and they are partners, and you're giving them the training and you enable them to work on your behalf.   Sarah Nicastro: Yeah. And I think what you said at the beginning is spot on. You can't do everything, right? So, if you're going to work toward this world of creating more value, then you need to focus on fueling the skills to do that value added stuff instead of unboxing things, right? I mean, you're not going to want to pay W2 employees to do all of those things, and this gives you that opportunity to unburden them with some of the things that you can leverage these other resources for so that they have the time, bandwidth, energy to commit to where you're going and build their skills, right? So, I think it's a really good point. I actually think that's another area we could do a podcast on, because I agree it's a direction we're going in, but at least based on my conversations, I still have more people asking me, "So, what do you hear around contingent workers, and how, and how do you make sure they don't fall asleep onsite? And how do you train them? And how do you control them?" All of those things.   Sarah Nicastro: So, I think it's an area that will grow, but there's a lot of people trying to sort out how to make it work, and I think that's a different conversation. But the premise of incorporating that into your labor mix to free up your resources to progress and build skills in the direction of those solutions I think is very, very smart. So, we'll have to hopefully have you back sometime.   Sarah Nicastro: Okay. So, last question, Chris, and you touched on this earlier, the future is data, right? That's where we're going, right? So, tell me a little bit more about that.   Chris La Fratta: Yeah. I mean, my vision of the future starts with Philips being an indispensable partner and helping hospitals achieve these outcomes that we've been talking about. So, we'll become trusted advisors, bringing to bear all the experience and everything that we've learned by being a leader in healthcare, and pretty much present in every hospital and every health system in the world, but especially in North America.   Chris La Fratta: And so, I think about it this way. In certain segments, we have like 50, 50 plus percent market share, and that means for patients being treated with those devices, one out of every two, we're collecting their data, and it's all being saved now, right? Everything's being saved, it all gets dumped into the data warehouses and all that. So, I think, like we were talking earlier, being able to harvest that data, I think it starts out with simple things like dashboards, like, I want to watch the patient flow through the hospital. I want to have a sort of command center where I can see everything happening. And we have that, in some senses. There are central organizations where they can monitor all the cardiac monitoring of the hospital in one place, and there are people behind all these LCDs, it's kind of like a NOC but for healthcare.   Chris La Fratta: I think it starts with things simple like that, but then it gets into more advanced like, "How can we really harvest this information and use it to drive a better outcome? Is it machine learning and AI?" I'm actually not smart enough to tell you whether that stuff works because there's a lot of hype about it, but there aren't really good examples. But I certainly think that you can say, if a patient came in and he had these symptoms, and he was a man, and 50 years old, and whatever else his demographic information was, if you've seen 1,000 of those cases, how were they treated and which one had the best outcome? In my simple mind, those are ways that you can really provide a valuable service, that not only helps my customers, it helps mankind, it helps us stay in the hospital less, get diagnosed more precisely, and get back to our healthy lives.   Chris La Fratta: Philips actually is a big player right now for monitoring people at home. So, when you're chronically ill, you don't want to be in the hospital, doctors don't want you in the hospital, so let's figure out better ways to deliver telehealth, and that's a big play for us. And I think data enables that and enables better outcomes there as well. So, if I were in school right now, I'd be becoming a data scientist because I think that's where it's at. And for companies like Philips, I think it's yet another area where we can develop services and solutions and continue on this journey that we've started.   Sarah Nicastro: Absolutely, yeah. I have two sons, and my five year old son has type 1 diabetes, so I've never cared so much about medical data as I do now. But I mean, he has a continuous glucose monitor, and he has an insulin pump, and those two things don't yet, at least the type he has, work together, right? But the advancements that you're seeing in being able to leverage that data, to, if not find a cure, which hopefully is coming, be able to have the, they call it the artificial pancreas, right, it's really cool.   Chris La Fratta: Yeah. And COVID, I think, last year forced a lot of that. There's a healthcare provider out in the Midwest somewhere, huge, huge system, and I think they were doing like 4,000 telehealth visits a month before COVID, and now it's like 80,000 telehealth visits a month. And it's something that nobody wanted before the pandemic, now, docs like it better, patients like it better. I mean, they don't have to leave the house and travel if it's not that serious of an issue.   Chris La Fratta: I myself, I think it's great. I'd rather call my doctor on the phone and say, "I think I have a rash," and answer a couple of questions and get a prescription than interrupt my day and go into the hospital or in the doctor's office where there are other sick people. So, I think it's inevitable and technology will certainly enable it., and it's just now even a bigger pool of data to pull from. So, yeah, I think that's definitely a big part of what we'll see in the next five to 10 years.   Sarah Nicastro: Cool. Well, Chris, thank you so much for coming and sharing. I love the vision. What Philips has accomplished is fantastic, and I appreciate you sharing that with us. I think it'll be really helpful for our audience, and I'd love to have you back sometime.   Chris La Fratta: Sarah, thanks so much. It was really fun to talk about all this stuff with you, and yeah, I'd love to come back any time.   Sarah Nicastro: Awesome. You can check out more of our content by visiting us at futureoffieldserviceref.ifs.com. You can also find us on LinkedIn as well as Twitter @thefutureofFS. The Future of Field Service Podcast is published in partnership with IFS. You can learn more at ifs.com. As always, thanks for listening. </div> </div> </div> </div> <div class="col-12 col-lg-3"> <div class="form-wrapper"> <h2 class="form-tittle">Stay Connected</h2> <iframe src="https://info.ifs.com/GM-CP-CU-2012-12-FoFS-Newsletter_IFrame.html">

By Sarah Nicastro, Creator, Future of Field Service

Companies leading the charge in capitalizing on the strategic potential of service are all looking for ways to break away from break/fix and advance their service offerings, customer experiences, and revenue streams. Innovation abounds from industry to industry, with a common focus on bringing customers the utmost simplicity, peace of mind, and outcomes – whatever that looks like for each organization’s market. Companies are realizing the immense opportunity that exists in not only introducing more evolved iterations of its core service offerings, but advanced services that incorporate complimentary areas, sharing of expertise, and utilization of data.

As this focus on advanced services increases, the skillsets needed to execute on the outcomes customers desire change and grow. In a break/fix service environment, organizations have traditionally sought very mechanically inclined workers who were incentivized to fix fast and well but not really expected to think about or do much else. In this new world, a host of new skills are needed – the soft skills necessary to be seen by customers as a trusted advisor, skills outside of the historical competencies of the business as companies expand into adjacent areas, and skills that are well positioned to maximize the impact of data.

So how do contingent workers fit in where the necessary skills are becoming more – not less – sophisticated? Hear me out.

I talked recently with Chris La Fratta, Vice President & Head of Professional Services and Solutions Delivery at Philips, who is taking action to evolve and expand the customer outcomes that Philips enables. Chris and I talked at length about many factors related to the evolution to outcomes, and you can stay tuned for our full-length chat on this week’s podcast. That said, one of the points that stuck with me is how Chris is incorporating greater use of contingent workers to free up his W2 talent for the more sophisticated and value-add work that is fueling Philips’ service growth.

“At the end of the day, you can only focus on so much, and you must define what your core competencies are,” explains Chris. “And our core competencies have shifted from people who are really good mechanically and electrically to people more IT oriented, as I said, or people more consultative, which I think is even more kind of a unique skill.”

Being clear on what the focus is for skills allows Chris clarity on where to enlist help from contingent workers. “We've determined over time where we want to focus and develop folks. But guess what? At some point, when we ship product, there's a loading dock where there's tons of boxes of our stuff. We used to pay our staff whatever their hourly rates are to unbox things, and to stage things, and to prep them so that they can go into the hospital. That's a really easy example of where we've used third parties to supplement,” he explains. “It's not a skill that's highly specialized, it's not something that we want to develop a core competency in, and there's some variability around demand. So, if we have a really big fourth quarter, I don't want to hire 100 people and have them part of my fixed costs as we enter the next fiscal year, I want to be able to ramp them up and down as needed. It's really helped there.”

The examination of what’s value-added and what’s more basic can be applied throughout various service offerings and across the customer journey to determine where there are opportunities to free up your most valued resources to focus more on core competencies and development of their skills. “For instance, we do a lot of staging of servers and equipment that's pretty standard and can even be done remotely. So, there, even in the IT space, when it's something fairly basic like loading an image onto a server or doing some configuration, we work with third parties as well,” Chris says. “If I have a third party that shows up on site, they are part of the Philips team, they get treated as if they were a Philips employee, they get the same training, in many cases, that our employees would get. We really do a lot to ensure the quality is there. It's a little bit more difficult to control, if I'm honest with you, but we have a process to check in and make sure that the quality is there.”

While not without its challenges, the incorporation of contingent workers is a viable option to consider as you realize you can’t be a master of all and need to focus on developing skills around the core areas that will impact customers most. “The main benefit is being able to focus on what's core, and it offsets some costs and allows for a lot more flexibility,” says Chris. “It can be a tricky road to go down, but I think it's important. Like I said, the approach we've taken is we're allowing and promoting the development opportunities for our internal folks, so as we shift, they can grow. At the same time, it doesn't make sense for them to unbox equipment and to do basic configurations, so there we benefit from contingent help.”

I think we have to consider the fact that as service continues to advance and expand, we will have to make decisions around what skills are most important to invest more in than others. That will look different for each industry and each company, but how Chris is approaching this at Philips is great food for thought. Be sure to check out his podcast this week for far more insight into how Philips is evolving to deliver advanced services and impactful customer outcomes.

By Tom Paquin

Nearly twenty years ago, I was sitting in a seminar hall during a class called “Issues in Biotechnology”. The week’s lesson was on pandemics. I had originally taken the class figuring it’d be a relatively easy way to fulfil a science requirement for my major that I could coast through while focusing on college’s many more important activities, but over the course of that day’s seminar, I was at full attention.

I sat, horrified, as the professor described the likelihood that animal-borne diseases would emerge. The prevailing theory at the time was that we’d be struck with an “avian flu”, since in the late nineties several poultry farmers had started to catch diseases from their chickens, though those diseases had not yet mutated to a stage where they could transfer from human to human. This still happens all the time. The pandemic would be an upper respiratory disease, and would have a devastating impact on, in the words of my professor, the elderly and the very young. “It’s not a matter of if,” he said, “It’s a matter of when. I don’t mean to be alarmist, but we should all be prepared.”

It will likely come as no surprise that, for literal years, I was overwhelmed with a dire sense of paranoia that the dark cloud of pandemic was imminent. As I rode the subway, I peered suspiciously at the human petri dishes around me, wondering about the devastation that any one of us could inflict upon our surroundings. In the intervening years, H1N1 came and went, and the spectre of worldwide pandemic seemed like less and less of a threat in the face of science and technology.

2020, though, showed how much worse reality could be than my expectations.

But now, the US has vaccinated half of its population, and the world is following suit (I will note that my western-centric view ignores the persistent and significant challenges that remain globally, but I am hopeful and confident that a unified effort to combat the virus can support with the resources and expertise to overcome those challenges). According to the New York Times, we’re seeing exponential case growth invert into exponential decay, meaning we’re entering a new phase of our relationship with COVID.

I am confident that the state of Global Pandemic will be lifted, hopefully this year. Dr. Fauci thinks we’ll be in a state of normality in the USA by July 4^th. But the trendlines all have something in common.

They never reach zero.

And yes—in the years since the “Swine flu panic” H1N1 has sidled itself into the shuffled deck of seasonal flus, and COVID-19 is likely to do something similar. And that is fine, in the long run, as our collective human consciousness makes sense of the new illness, but the fact that we have to live with the virus itself also means that we’ll be living, perhaps in perpetuity, with some of its effects. These effects, the tectonic changes in people’s behavior that we’ve normalized over fourteen months, will invariably impact service. For the next few weeks, we’re going to dissect s a few of the ways that things have changed, and what they mean long-term for service. Here’s a few of the topics we’ll be covering:

Meeting People Where They Are
Planning for Perpetual PPE
Decentralized Dispatch

With more to come as we reach the next, next, next, next normal.

On a personal note, my wife is nine months pregnant, with our daughter set to arrive at virtually any moment. In writing this series, I’ve had an opportunity to reflect on the world that she’s going to be born into. I think that it will ultimately be a better one than the one that we were in when the pandemic began. I will sure be trying to make it better for her in every way that I can.

Jason Prokop, Director of Field Service, and Alesia Magon, Sr. Manager Technical Support & Repair Center, both of global laboratory diagnostics firm DiaSorin, take a deep breath after the massive growth, major pivots, and immense perseverance of the last year to talk with Sarah about their lessons learned.

Sarah: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today, we're going to take a moment and press pause to reflect back after the COVID sprint. While we certainly aren't completely past the pandemic, we've reached a point where a lot of businesses are stopping to take a look at the lessons learned and the experiences they've gleaned over the last year.

Sarah: I'm joined today by Jason Prokop and Alesia Magon, both of DiaSorin. Jason and Alesia, welcome to the Future of Field Service Podcast.

Alesia: Thanks for having us.

Jason: Nice to be here. Thank you.

Sarah: Thank you for being here. Let's start with some introductions. So why don't you tell us a little bit about DiaSorin, your roles and anything you'd like to share about your backgrounds. Alesia, do you want to go first?

Alesia: Sure. My name is Alesia Magon as Sarah mentioned and I'm the senior manager of technical support in the repair center at DiaSorin. I'll let Jason describe DiaSorin too in a little bit, in a global sense. But what I'm responsible for, is the 24/7 technical support team at DiaSorin Inc., across the U.S. and Canada, as well as the repair depot and internal service for equipment that we have here at the DiaSorin Inc. site.

Sarah: Excellent. Jason, can you tell us a little bit about DiaSorin and your role?

Jason: Yes, hi. I'm Jason Prokop. I'm the director of service and support here at DiaSorin Inc., out of Stillwater, Minnesota. So I'm responsible and our team's responsible for the field service across the United States and we also have a subsidiary up in Canada. We directly manage our customers install base. We do preventative maintenance, repairs, et cetera.

Jason: So DiaSorin is a global manufacturer of immunodiagnostics products. We're very multi-international company from that perspective and we really specialize in specialty diagnostics. That's why if you see our brand, DiaSorin's called the diagnostic specialist from that perspective. So we try to come out with niche and innovative products, that fit gaps in our customers' needs from that perspective.

Sarah: Okay, great. So I wrote an article, I think it was, I believe it was late 2020 and it was my love letter to the service industry for surviving such a crazy year. Alesia, you actually reached out to me, after coming across that article and saying, "Hey, this really resonated and I think that we experienced a lot of this and we have some interesting stuff to share." So here we are. So can you tell us a little bit, what about that article resonated most with you?

Alesia: Yeah, during the pandemic, there was a lot of news and media about the frontline workers, as there should have been. That's completely appropriate. There was people, many, many industries and types of people that were serving the communities, that weren't as readily noticed. When I read that article, I thought, "Absolutely, yes. This is the love letter to the people in this community and the community of the service industry, that are trying to help in their own retrospective ways for the customers that they serve." And thinking specifically about the service industry at DiaSorin, I thought, "Yes, this is what we went through." We had unbelievable challenges, but we had a lot of lessons where we learned about perseverance and we learned about how to stay strong and you wrote and touched on several of those points in the letters and I shared it on LinkedIn, as an effort of expressing the same level of gratitude back to the service department that we represent.

Sarah: Yeah, you make a really good point, which is there's many layers and types of essential workers, right? So some that have experienced maybe different things first-hand, like those that are on the front lines in the healthcare industry, certainly I think deserve to be top of mind, when you think about what this last year has looked like. But to your point, there's a lot of things that are a little bit more behind the scenes and a lot of people that have worked really hard to serve those front line workers and to make sure that those front line workers have been able to do everything that they needed to do for patients and for people that have been impacted most. I think that that's a really, really good point.

Sarah: Now, DiaSorin being in the industry that you're in, just so happened to be in a position to provide testing for COVID and therefore, had maybe a doubly crazy year last year, because you experienced some really intense growth. So Jason, can you tell us a little bit about sort of, what's the core business? So what were you kind of up to before COVID hit? Then, what has that growth looked like? How did you sort of pivot and start providing that testing and what did that kind of mean in terms of the impact on the business?

Jason: Yeah, absolutely. So pre-COVID, it was typical business as usual for our organization. We had our national commercial meeting laid out at the end of February, where we were given our strategic objectives of an organization, with the products that we were going to come out with and launch and what our focus was going to be for 2020.

Jason: So we were all out on our plan. Everybody, all the information was cascaded to everybody in the commercial organization, as well as internally. Then come mid-March, things changed. Now we're in the midst of the pandemic, so as an organization and being we're very innovative from that perspective, we saw what was needed in the market place. So we quickly, our molecular colleagues out in California, came up with the PCR test for COVID. Then our global colleagues in Italy and internally here in Stillwater, came out with some amino acids, both for IgG and antigen testing. Now we have another IgG testing for post-vaccination from that aspect.

Jason: So then we saw much interest in the market place, because no vendor was ready with the supply to meet the demand from our customers. So then we quickly had to collaborate with all of our colleagues, both from a corporate level and in the U.S., as well as our instrument manufacturers, to look at what we could do with our supply to meet the demand of the public and I think from that, we saw the communication across our organizations really increase, even though we're in this virtual setting from that perspective. We all had to communicate with one another on a daily basis, to make sure that we could get done what we needed to get done for the organization, as well as our communities and society from that perspective.

Sarah: Mm-hmm (affirmative), okay. So can you give us kind of a base line to think about, like, "Okay, before COVID we were producing X units." Like how much did that really boom the business and like a scale for what you had to adjust to.

Jason: Yeah, so I can talk a little bit from an instrument standpoint. So from a molecular standpoint, our install base more than doubled in 2020. From immuno standpoint, we had a couple months where we installed more instruments than we ever have in the history of the time that I've been with the organization and I've been here almost 27 years from that perspective. I think from an immuno side, in one month we installed over 50 instruments in May, I believe. Typically, we do maybe 10 a month. So it was all hands on deck, to get our customers the instrumentation and the testing they needed to keep up with their demand that they had.

Sarah: Yeah. I think it's interesting that we think about, I think a lot of times when you talk about reacting to change, you think about in the negative sense, right? So like a lot of the organizations we've had conversations with around COVID, unfortunately what that looked like for them was, a significant reduction in business and some people had to make layoffs. So I think there's this perception of the challenges of COVID being more on the side of that contraction. But I think it's just interesting to point out that, challenges can also come in the form of opportunity, right?

Sarah: So I mean let's set aside the fact that you're all employees of DiaSorin and DiaSorin now has this opportunity to provide this testing in this time that it's needed, which obviously has a growth impact on the business. But you're all still human beings, dealing with the same fear and uncertainty and trepidation, in your own lives, right? But there's also a real business aspect of like, "Oh my gosh. Like we have the chance to step in and do this thing and being able to do it." Right, I think the recognition of the opportunity is one thing, but the ability to pull together quickly as a company and execute on that opportunity is a totally different thing.

Sarah: So I think kudos to you guys as an organization, for being able to see where you could have an impact and get to work, doing what needs to be done. You're talking about a global company, right? So all of that communication. The logistics. Everything. We'll talk a little bit about that. I think the other thing that's interesting to look at here is, not only was it a really hard year in many ways, even though for you guys that meant really, really rapid growth. During that, you ended up with the strongest NPS score that you've had since you started measuring it. So how? Like, how did you do that and why do you think that is, or how do you think that was accomplished?

Jason: Man, I can speak to that. So, if I look at it from my perspective, it's all about the great people that we have within our organization and I'm just not talking about all of our people in field service from that perspective, but that's internally, across all of our organizations, everybody stepped up. Did we all have some anxiety? Absolutely! I think everybody in society had some anxiety about stuff.

Jason: But we also knew that we were doing something different and really making a difference from that perspective. So all the people across the organization really stepped up, both internally and in the field and I think our customers saw that. They saw us as an organization, that's going to continue to provide excellent customer support, innovative products, to meet the needs that they have at this time, in a very quick and nimble fashion. Nobody ever stopped. I mean, whatever we asked people to do, of course everybody had a little anxiety about it and we were empathetic to that for sure, because we had the same type of anxiety. But they knew that they were doing the best they could for our organization, as well as the customers out there and all the people within the organization deserve all the credit and I think we had some of the best people of any organization that's out there.

Alesia: Add to that, Sarah, that the industry was, we saw it in the media everywhere. "We need more testing." People were saying, it was March, the middle of March, when the U.S. really became impacted by the pandemic and the number one response was, "More testing, more testing, more testing." Our organization a lot of great people within this company, who are very innovative in the scientific industry, were able to come up with that solution and the customer saw that DiaSorin is a solution provider, right? So we're able to come up with the plans.

Alesia: There was a lot of shortages of a lot of things, but testing was one of the things that was most talked about. When we did that and then you couple it with something that we were already providing before, but our employees dug deep and did it even better this year, was we really provided that customer support and that's not just like the front line people who are talking to the customer, although they are extremely valuable to that, being the face of DiaSorin, it was the people who were staying late and making sure that everything was received on time. It was the people who were processing the orders when they didn't necessarily have to. It was the people who were taking care of their children at home, while still working.

Alesia: I mean it was a lot of people who had to do things that they've never done before. But realizing the importance of why they did that and it was visible to our customers. We were able to say, when they were saying to us, I'm having to show up in the lab and to do the testing, we were saying, "And we're side by side with you, we're helping you." They saw that.

Sarah: Yeah, yeah. We're going to talk a little bit more about kind of the people part of this too and I think that's the most important part. But before we do that, I want to talk about the logistics. The operations of things, right? So in this case, you're talking about growth that was spawned by this crazy once in a lifetime, hopefully, event happening, right? But any company that experiences really, really rapid, big growth, struggles with how to scale and how to react quickly and nimbly to accommodate that.

Sarah: So I think there's a message here, not just, "We grew so much because of COVID", but just, "We experienced this rapid growth, period and here's how we adjusted our business operations to be able to navigate that." So can you guys talk a little bit about some of the areas of operations and how you sort of made some changes and pivots to be able to react and respond to the opportunity that was there?

Alesia: Yeah. Yeah, there was quite a few of those moments. So starting on day one, after we realized what was happening, was about the safety of our employees and what we were going to do. So what do we need to implement in order to get people safe? So for technical support, it meant, "You're working from home immediately." Well that meant that we had to set up their home offices and structure their home offices and ensure that there was business continuity with the phone lines and we had to ensure that there was no major disruptions. Other companies experienced that too. Our customers saw no difference on any of our phone support whatsoever. From a repair center perspective, where we had people who were having to work here at the office, in order to accommodate the needs, it was making sure they had the right PPE. That they had the right safety protocols.

Alesia: It was moving things around in the space and the lab, so that they were able to do that. It was making sure that we had procedures that they could all have their own laptops, where they were making sure that they were reading them without touching other people. It was making sure their badges were only allowing them into certain areas. There was a lot of things that we did, in order to say, "Okay, first is your safety and how are we going to do that?" From a field perspective, we did that as well and Jason can talk a little bit about the safety that we did for the field service employees.

Jason: Yeah and that was working very closely with our corporate colleagues, as well as internally with our health and safety teams and stuff like that. So you know how it went from a PPE perspective, where now everybody needs masks and there's no masks available and you're trying to find lab coats, you're looking for gloves. We were looking to make sure that we could find alternate suppliers, than our base suppliers, to make sure that we had a backup, in case there was a need from that perspective. We had to work with our corporate colleagues up in Canada, because now we can't ship stuff across the border, from that perspective, to get people PPE. So a lot of that comes back to that communications that we had within our teams.

Jason: So that really helped us get ready for that. Then even to keep up with demand, we had to hire some new head count, to make sure that we had enough people in place and then as Ally said, we had to look at social distancing between our confined space, to make sure that we could keep people a safe distance apart. Then we had to look at alternate shifts that people could work, as well. We had people in the field that had daycare needs. So they had decided, instead of working a normal eight to five, that they would work five to one PM, to be able to take good care of their customers still and that's kind of the ownership that we see from our service department, as well as all of our departments internally, is that they really were owned the situation and were very accountable for everything that needed to happen, from that perspective.

Alesia: Yeah and a lot of those pivotal operational things, head count, shifts, safety, working with colleagues around the world, they seem at a glance, something that you could breeze over, but they all took several hours of conversation to figure out, "How are we going to do this and how are we-

Sarah: Yeah, at least, I would think. I mean and it's easy to kind of look back. They say like rose colored glasses, or what have you. But the other thing is, in those very early stages, the circumstances were changing, almost every day, right? So it's like you figure it out once and then you get going and then next week it's different. Then you figure it out again and then, so it wasn't like, we've kind of as this has gone on, we've fallen into a norm. It's not the norm anyone wants, but we've kind of reached a more level state. But in the beginning, I mean it was different requirements and regulations and stipulations being introduced, really all the time. So I think the attention to detail and again, that level of cross-functional and regional communication, is really important in being able to make the changes you guys did and continuing refining them, as you went along. Any other things to note, in terms of logistically or operationally, how you guys kind of accommodated the growth?

Alesia: The main logistics points when it came to servicing, were really about working, when it comes down to the nuts and bolts, besides the staffing and how we had to manage that, was about the logistics of the parts. The logistics of the instrumentation. We really had to collaborate and communicate much differently to our corporate colleagues, in the way that it wasn't that we were speaking about things differently, but we had to speak about things much more rapidly.

Alesia: So instead of weekly communications, it was daily communications, because guess what? "Today we need this, this, this, this." They had to say, "Okay, now we need to gather up the people here that need to help with that. We need to talk to our suppliers. They need to talk to their suppliers. Who's our alternate suppliers? Where are we getting it? How are they going to be imported? How are they going to be exported?" There were so many meetings where we just had to come up with those solutions very quickly and get the right stakeholders in place immediately and there wasn't a person who didn't try to respond to that need.

Alesia: But the logistics of service, although PPE was something that many organizations were contending to get at that time, it's also a lot of those parts require special metaling, special people who are working on manufacturing lines that all were impacted by COVID, as well. When those production lines were shut down, because of a potential COVID case, which did happen multiple times. We had to think about, "Okay, now what are we going to do in the supply chain and how are we going to react?" That was something that we tried to make sure did not impact the customer. We were going to do everything that we could as an organization, to make that transparent to the customer.

Sarah: Mm-hmm (affirmative), yeah.

Jason: Yep and when we had such an increase in our install base, I mean we had to keep from an inventory standpoint, from spare parts, to be able to service our customers. Like you said, it changed in a month. We would have to manage our reorder points and everything and what our consumption is, pretty much on a weekly basis, to keep up with the growing install base that we were having. Because, we need to make sure we're supporting them in the best possible way that we can. Did we have some challenges? Of course we did. I think every manufacturer that's out there had some challenges from that perspective. But I think we, through a lot of dedication and commitment of our people, we made our way through it quite well.

Sarah: Yeah. So thinking about reacting to this. If you look at it from the business perspective, you're talking about being more nimble, more flexible, more creative, more probably organized. All of the things. What would you each say is the biggest lesson, business-wise, that you've learned, that you think you'll carry into the future? Like out of this experience, what's the one thing that you think will kind of persist?

Alesia: For me, from a personal perspective, right? Yeah, so for me, I would say that I really just want to continue to look at employees' individual situations with the business needs, because not just during COVID, but other times, people have various challenges and you have to be able to say, "Okay, how can we respectfully accommodate those needs and still meet what the objectives are of the organization?"

Alesia: So that's one important thing. But retaining being nimble. It's how to communicate with the other people. I know we've said that word multiple times, but really that was one of the things that came out is, we realized, "Okay, well forget the phone call. Now we're going to do a video chat. Now I'm going to chat you all day long about little individual things, in order to get the end goal done."

Alesia: When we're being nimble with the solution, it's, "Okay, so this is the way we've always done it. We've now proved to some people who have hesitation about that change, that we can do it and we can be just as effective and we can be just as efficient and let's figure out a way to get through it." I think a lot more open mindedness has definitely come out as a result of the COVID experience.

Sarah: Yeah. Jason, what would you add?

Jason: Mine would be similar from that perspective. As leaders within the organization and being we managed a lot of field based staff from that perspective, we want to make sure that they're still engaged from that aspect and we used to have a lot of regional meetings. Go to customer sites and visit. Now we don't have the opportunity to do that. So we're continuing to look at ways that we can keep people engaged from that perspective, where it used to be, well we'll have three regional meetings, we'll go visit some customer sites.

Jason: Now we have to look at alternative ways that we can keep all of our employees engaged from that perspective. I think we've been okay at it, but we still have some work to do from that perspective, because it's hard to be as engaged as you can be, when you're talking through a video monitor or on the phone, from that aspect. I also think that from this and the virtual environment, when we look at jobs that can be done remote, via all the time, or at least provide our employees that flexibility when they have personal needs, to be able to work from home.

Jason: I think from an executive level and leadership level with the organization with the tremendous job that everybody did this year, there's a lot more trust in that aspect, where the old school mentality is, if you're not in the building and you didn't punch your time card, I don't really know what you're doing. I think we actually saw our productivity probably increase with a lot of people working remotely. Probably a little less distractions. Probably a little less meetings being called, that you really didn't need to go to, but people spent half a day in meetings, rather than utilizing that time in a value-added activity. So I think that's going to help us in the long run, for sure.

Sarah: Yeah. Okay. So we talked about the fact that your people was the biggest key to being able to survive and thrive over the last year, in terms of the business. So you guys have mentioned I think, one of the important pieces, which is, there seems to be this pulling together, because everyone realized they were working toward a common good, right? So you guys were navigating this growth, because you were doing something that was having a direct impact on this life experience that we were all having. Alesia, talk a little bit about that kind of interconnectivity and how you think that played a role in peoples' commitment to working harder, or doing whatever it takes to scale up the way you did and to meet the outcomes that you needed to for your customers.

Alesia: Yeah, for sure. There's very few experiences that one goes through in a lifetime, or even generations, in which we all can say we experienced the same thing at the same time. That in itself, creates a connection between the people, right? So it's not the weather that we're talking about, because I mean we were all experiencing the weather that day, but we're talking about how this is impacting us. But it's impacting us in real ways, like real ways where, maybe you've not seen your grandmother for months and months at a time. Or your mother, you have to take care of. Or you're nervous about the fact that your child didn't have childcare, even people who had come with just very unique life experiences, that seemed heavier than normal, right?

Alesia: What made it different was that, a lot of people were having that same feeling, at the same time and it was a result of this. Like what it meant to be stuck in your home for several months. Or for me, I'm in the same building as a part of my team and I couldn't even see them for some months. I had to talk to them virtually, even though we were in the same building. All of those sort of things, really impacted peoples' moods, right? It should have. It did and we're all human. But, one of the things that that meant was, "Okay, I'm having this challenge in my life and my colleague in Italy, in Germany, in the United Kingdom. My colleague who lives in Massachusetts or California, they were all kind of experiencing that."

Alesia: So when I said, "Hey, today is a harder day for me", or that employee said that, we were all saying that. Then, you still saw your colleague next to you, digging deep and trying hard and working the longer hours. Or taking a rest when they needed a rest and you're covering for them, right? So somebody said, "You know what? I need this day off. I have bereavement, I have COVID leave." When that happened, people said, "Okay, I will do more." Because their turn was coming up, right? They kind of knew that. The people who didn't have those turns, felt, I saw a lot of gratitude and feeling fortunate for that. I still see a lot of us feeling connected, "Oh, I see that Italy is closed down again, for instance, last week. That must have been really hard on Easter not to be able to see your family." "Oh, yes that was." Or for all the other holidays that were going on and people didn't get to see their families. Then we were saying, "And when you can work, please come in and help." And people did and they replied to that.

Sarah: Mm-hmm (affirmative), yeah. Yeah, no. I think that makes sense. I think there's definitely this sense of deeper human connection to one another, after the last year. I think that that's the one thing that I hope out of all of this sticks, if anything. Because I think that we just view things differently and I think it makes us kinder to one another. I think it makes people, I'm not a patient person. So I'm not saying like, ultimately patient. But like a little bit more patient and just like I said, a little bit more considerate of what someone else is going through, knowing that we're all going through something and I do hope that that is something that we cannot dismiss when we do get back to an increased sense of normal. Because it is really easy to be kind of wrapped in your own world and your own experiences. But I think this connection that we all have to one another, has been one of the biggest positives out of a really bad situation.

Sarah: So I love the fact that you guys had such a positive response from your teams, in terms of that banding together and working toward a common good. I know we talked before about how important empathy was in leadership over the last year. Can you guys maybe talk a little bit, or give an example about how you have employed empathy with your teams throughout this experience?

Jason: Yeah, I think that was probably one of the most important things that we did as an organization, from that perspective. Because, we're all experiencing the exact same thing. First part is really listening to them, because we're not all in the same situation. Everybody has personal challenges that they have to go through, from that perspective and we all understand that. We listened to all those situations from that aspect.

Jason: We had COVID situations that happened amongst our teams and what we kind of really found from that is, the team work amongst the regions and departments that we have within the organization, that's where I really saw a positive change, because everybody was going through the same thing, "Okay, so and so has COVID. I can take his spot for a little bit. I'm going to go step in." Without any hesitation.

Jason: So I think the biggest thing that we really had was listening. We all had anxiety about what was going on, specifically at the beginning of the pandemic. I think that anxiety has lessened a little bit, but everybody still has a little bit of that there for sure, but really just listening to what their needs are. "If you have to take time out, it's okay. We'll figure it out and everybody else will just step up from a team aspect to get done what needed to get done."

Sarah: Alesia, what would you add?

Alesia: I mean empathy is a word that has gotten thrown around quite a lot, like you know, if you're a servant leader, then you're going to be empathetic to your employees. But what does that mean to really show empathy for one situation is, to be there other words that we described. Empathy for someone's situation is also to say, "We can be creative in this situation and we can allow for that to happen."

Alesia: For those reasons, there was huge kudos to the HR and executive team at DiaSorin, because they allowed the managers to express that creativity. It didn't have to be broad streaking policies that, of course we have policies, that's not the point. But they weren't so broad streaking that it didn't allow the manager to express empathy in a very specific way. I think that the other thing is that when you do show empathy for the employees, it's a double empathy. They show empathy for you, because there were multiple days where I had bad days too. I was experiencing some hardships too. My employees said, "It's okay. You don't have to be perfect today. We're not expecting more from you today."

Alesia: That sort of thing, again, going back to the human side of what COVID left. I mean we were asked to be, like you said, sprinters of this experience. We were asked to sprint through months and months and months of work and we were asked to live during this time, as well. They were sometimes contradicting one another. But that empathy portion of it, how to express it. Not just how to listen and not only to just say, "I am empathetic", but to be empathetic, was something that we were able to do this year and both from an employee side and from a managerial side.

Sarah: Yeah, I think we've had a number of conversations now on this podcast, about the reality of leading by example when it comes to vulnerability and normalizing conversations or making employees feel comfortable saying, "Hey, I'm struggling. I need a break." Or, "I have this going on." There's certain people, certain situations, where it's really hard for folks to speak up, or to feel comfortable, or not scared right, of, "Well what's the reaction going to be? Should I just force my way through it, or what have you?" Related to COVID and not.

Sarah: I think that we've had some really good conversations about, if you can figure out appropriate ways as a leader, to show a little bit of your own humanity and be a little bit vulnerable with your teams, then it shows them that it's okay to do the same thing. I think that that's a good thing. The other thing I think Jason, you mentioned earlier. Some of the field technicians were able to switch their schedules from eight to five. To five to one, right?

Sarah: That might sound like a really small adjustment, but I mean for a lot of people, that probably made the difference of, their spouse not needing to leave their job, or their family not losing an income, or it's just the amount of stress that that situation, in and of itself. People that have kids that couldn't be in childcare or in school, that were both working. I mean we've also talked on here and have relayed a lot of statistics about the number of women that have had to leave the work force in the past year, because of that situation. So those are real tangible things that you can do, right? They're concessions you can make, changes you can make, that don't detract from that employee's ability to do their job, but are just a different way than the norm, that allows them flexibility that probably was priceless to them. Do you know what I mean?

Sarah: To me, that is what empathy is really about, is taking action on what those needs are finding a way to have that common ground. I think that throughout this conversation, you guys have said again and again, like how much your employees cared and how much they wanted to pull together. That's a two-way street, right? If DiaSorin wasn't wanting to hear what those needs are and make adjustments and be creative, those people may not feel as passionate about their part in everything and vice versa. The more you saw them respond and the harder that they wanted to contribute, the more they wanted to contribute, the more you valued their contribution and thought, "Okay, we need to make this work. Like there has to be a way to achieve the right outcomes for everyone."

Sarah: So I think that it's a really good illustration of what needs to happen in that give and take with valuable employees and just thinking, Jason, to your point about not being stuck in the old way of doing things, or some of those thinkings that maybe, over the last year the company is kind of realizing, "Yeah, we felt that way, but it's not proven to be accurate." So yeah. I think those are really good examples and I think it's a really cool story you guys have about how the company has come together, how the employees have contributed and how you've made it through hopefully, the hardest part of the sprint and now you can, whew, breathe a little bit at least. So just one last question, in terms of what are your final thoughts in terms of the biggest lesson you've learned? The biggest take away you have from this whole experience?

Alesia: The biggest take away that I have is that, there's two things. One is, that we're strong and capable and we're able to do things. So I shared with you once before in a conversation. My son learned how to play piano virtually this entire year. I would have never thought that possible. Okay, so there's a lot that we can do, that we never thought that we would be able to do and we walked away with it. Like don't self-limit, right? Then the other piece of that is that, although the virtual is great and there's a lot to it, the other piece that I've learned is how much I enjoy just being around people and what kind of energy that brings and can bring to an environment.

Alesia: So when there is more people around and in the office and you're able to communicate with them face-to-face, or you're able to have a meeting with somebody who's experiencing something and you want to have that meeting face-to-face, there's nothing that really replaces that. I don't really want to replace that. So although I'm able to do things in a lot of different ways, I want to always be able to carve out time to do things face-to-face, when we can, so.

Sarah: Yeah, that makes sense. Jason, what about you?

Jason: Kind of what I learned from this is, if we have the right people in place across the organization, as Ally said, we can do it. When we had to ramp up, not only from a manufacturing and service and installation aspect, it almost sounded like it was impossible to get all the stuff done that we needed to get done. But then we really saw how good the people that we have within the organization and how committed and dedicated they were to the group. Which makes me very proud to work with the team that I work with, as well as everybody else across our entire organization from that aspect.

Jason: The other piece is kind of like Ally's, is I really miss the face-to-face aspect. I'm okay with the virtual, but it's just not the same. So, I can't wait until we're back to a little bit of normalcy, so I can get the field team together and we can have a regional meeting and have face-to-face discussions and continue to build our relationships from that perspective and hopefully sit at the bar and have a beer or something like that, as well, because we can really do a lot to build relationships in a face-to-face setting, that I truly miss. I miss going to our customer sites and seeing all of our colleagues in the field, as well as internationally. So I hope everything continues to whatever the new norm is, the quicker we get there, the better from that perspective.

Sarah: Yeah, I'm with you on the face-to-face. I work from home as my norm, so pre-COVID. But I always traveled a lot and so it's still been a big adjustment, in terms of I really enjoy getting together with colleagues and people in the industry and going to events and all of that. I really miss it, so. I'm with you guys on that. I think there's something to be said for a little bit more flexibility, or hybrid situations and certain things that really don't need to always be done on a location, or in an office. But there's just certain aspects of this that really are better in-person, so. Hopefully, I'd say I'm counting down until the next time I have a beer at a cocktail hour at an industry event. But I don't know when that will be, so I can't be counting. But I'm very much looking forward to it, so.

Alesia: Absolutely.

Sarah: Well thank you both so much for being here and sharing your story. I think it's a very, very impressive feat that you guys have accomplished and it definitely sounds like there's been some really good lessons that have come out of it and if we had to go through it, then that's all we can ask. So thanks for coming on and sharing them with us.

Alesia: Thanks for having us.

Jason: Thank you.

Alesia: It's been a great conversation.

Sarah: All right. Great. You can check out more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter, @thefutureoffs. The Future of Field Service Podcast is published in partnership with IFS. You can learn more by visiting IFS.com. As always, thank you for listening.

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