The Field Service Automation landscape looks very different than it did 25
years ago when I began my career. Back
then, the market was in its early growth stage. Today, the market is mature.
Field Service functionality can be found in different types of applications
which we categorize into ERP/CRM (e.g., SAP, Oracle, Microsoft Dynamics, etc.),
Integrated Service Management (i.e., Astea, Metrix, Vertical Solutions, Amdocs,
etc.), Field Mobility (e.g., Antennae Software, Agentek, etc.), Service Parts
Optimization (e.g., MCA, Servigistics/Click Commerce, Baxter, etc.), and Field
Service Optimization (i.e., Service Power, Click Software, TOA, etc.). Applications are available for purchase either
through an On Premise (i.e., License) or On Demand (e.g., SaaS) solution. As
such the decision making process is much more complex.
In the past, the business user had a very vocal voice in the selection of Commercial Off the Shelf Systems (COTS). Sure
the perspectives of technical and economic decision makers were considered but
now these participations have a greater role in placing constraints and/or
mandates on the types of systems that are purchased. The technical platform on which the field
service application is written is often more important as the feature
functionality of the application itself. The ability of this application to integrate
with other corporate systems is also extremely important consideration and
constraint. One thing which is continued
to remain certain is the applications will continue to evolve and new vendors
will continue to enter the market while others disappear.
Given all these complexities, we believe end-users can benefit from working
with an independent and objective third party advisor such as ourselves to help
define the solution, recommend a qualified vendor short list, and evaluate proposals. We believe our understanding of where this
market place has been and where is it heading, combined with our knowledge of
the current state of the art and vendor market is critical in helping clients
to select and implement solutions which meet the needs of today and the
requirements of the future.
After checking around the web and other industry sources, I was surprised to see that no one had ever written about the evolution or history of Field Service Automation. I think this is an important topic because like so many things in life, you can't understand the present until you grasp the past. So, at the bequest of a few clients and my own passion for this subject, I've decided to do a series of blog post exploring the history of Field Service Automation.
My first assignment as a neophyte management consultant back the mid 1980'sinvolved a benchmark evaluation of the state of the art of Field ServiceManagement Systems (FSMS). Back then, commercial off the shelf technology(COTS) was just coming on line to automate the process of managing a fieldservice organization. The technology automated basic processes from handling ofa customer service request, to dispatching a Field Service Engineer, tomanaging their spare parts inventory, to depot repair of defective reports, toreporting and analytics. Up until this time, only the very large, manufacturers(e.g., IBM, H-P, Xerox, etc.) with large field service organizations couldafford to develop automated solutions that were often mainframe based and veryexpensive to design, implement, operate, and maintain. Others were using manualbased processes such a pen and paper or magnetic scheduling boards to managethe service delivery process.
While our consulting firm played a key role in designing and implementingsome of these early enterprise systems, we could see that the emergence of thePersonal Computer would reduce the overall lifecycle cost associated with FieldService Automation. We also observed the emergence of a number of softwaredevelopers who offered COTS systems which could be implemented much faster thancustom designed solutions for the fraction of the cost. Thus, I was handed theassignment to benchmark the state of the art as we anticipated that more andmore of our consulting assignments would be around the recommendations ofCOTS. I remember counting over 24 vendors focused on Field ServiceAutomation. Mind you this was waybefore the days of Enterprise Systems like Oracle and SAP. Over the years, many of these initial24 vendors where either acquired by others or disbanded. However, a number of these initialvendors, such as Astea and Metrix, have been able to stand the test of timebecause they have been able to adapt to market needs and requirements anddevelop enhancements to their applications via acquisition and/or organicdevelopment.
Be sure to check back here at Reverse Logistics Today for the next post in this series. We will be looking at the next wave of development and how our firm continued to emerge as experts in this field (no pun intended).
During most of the 1990's and early part of this decade we saw a tremendous interest among OEMs and 3rd Party Service providers (3PSPs) in the Multivendor Services (MVS) Market. MVS is essentially the business of providing hardware services (i.e., depot repair, field service, remote support,etc.) on products from multiple OEMs. Over the years MVS played a key role in generating incremental streams of profitable service revenue to both OEM and 3rd Parties. Our research has continously showed that end-users prefer to deal with a single point of contact for the provision of a broad array of aftermarket service & support.
OEMs and 3PSPs like the concept of MVS because it allows them to build economies of scale, improve market share, and increase profits. More importantly, the provision of MVS enables a service provider to increase their customer or installed base "density" which is a key toward building economies of scale and increasing profits. Density provides the service provider with a large volume of customers with the similar needs and thus requiring the same type of services. As such, the service provider can be more effective in managing service resources on a effecient and productive basis, and acheiving optimal levels of profit.
Around the middle of the early 2000s (circa 2002), MVS started to lose favor among service providers. This was due to several factors. First, many service providers began to realize high profit margins via the provision of managed services and/or professional services such as Business Process Outsourcing (BPO). By comparison, basic services such as field service and depot repair offered lower margins. Why focus on the plumbing when managing the whole apartment complex was more lucrative? As such, OEMs began to out-task these lower margin services to low cost 3rd Parties. Second, OEMs were in the unique position of having year of year growth in new product sales. Usually, service revenue is less of a concern for OEMs with products sales are booming. As long as products were selling, OEMs just needed to fullfill service demand and outsourcing and out-taskings was percieved to be the most effecient and economic way of meeting growing demand for suppport of new products.
The current recession and long term outlook that economic growth will be very slow for the foreseeable future is forcing many OEMs and 3PSPs to rethink their Afermarket service strategies. In board rooms and meeting rooms around the world, executives and managers are rethinking the value of MVS. Without revealing any client confidences, we are certain that a number of OEMs and 3PSPs will be aggressively entering or re-entering this market space either directly or thorugh strategic partnerships and/or acquisitions. Certainly, some very large service providers will continue to offer managed services and BPO. However, it has become increasingly obvious that it is better for these providers to concentrate on very large transactions and higher end, long term, strategic consulting assignments. We are beginning to see that some of these large providers are ceeding market share of more basic services like break-fix to mid-tier service providers and/or divesting of their infrastructure service business to indepedent organizations.
The implementation of an MVS business strategy or even a strategy involving the provision of a broad array of value added services beyond basic repair forcing OEMs and 3rd Parties to operate thier Aftermarket Service Organizations as strategic profit centers or lines of business. This has very positive effects on the industry as a whole. First, it requires service providers to add new business functions to their organization such as service marketing, human resources, finance, and IT. This in turn leads to new hires which should be a boom to employment. Second, it requires service providers to re-evaluate their service delivery infrastructure. As such, many will find they need to deploy new technology to automate processes and achieve optimal level of service qaulity and profitability. More importantly, the avaibility of increamental profits allows service providers to build a stronger business case for investment in new technology which in turn is a plus for software vendors.
History truly repeats itself. Over the years we have helped a number of OEMs and 3PSPs build very profitable aftermarket service strategies based on a provision of multivendor services. We are bullish on growth opportunities within the Aftermarket Service Industry provided that OEMs and 3PSPs seize the opportunities created by today's challenges.