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There’s one overarching theme that ties all of our Field Services members together: they are charged with servicing equipment or hardware on-premise. Because of this, every time Equipment-as-a-Service (EaaS) comes up with those in the Field Service industry, it gets ignored or underplayed. Usually we get one of two responses: executives dismissing the idea because they think it refers to a cloud-based offer, or saying they already do it, but confusing EaaS with a subscription or rental.
Let us tackle the second misconception first.
George Humphrey put it best in a blog he authored, “Putting Services In XaaS”:
'Do you know what the S stands for in XaaS?' They look at me like it’s a trick question, mostly because it is. I ask this question to provoke deeper thought on the obvious answer. I tell them it doesn’t stand for 'subscription.' It doesn’t stand for 'solution.' It stands for service. Your technology, as a service.
We find members say this when they have some revenue from subscriptions, rentals, or leases. EaaS is not a subscription. It’s not simply a method to make money or moving from CapEx to OpeX purchasing models. Equipment-as-a-Service is about the value-added service around the piece of equipment that happens to be on your customer’s premises. In its purest form, it is a piece of equipment on premise where you provide the technology-as-a-service and help your customer achieve THEIR outcomes. They want outcome-based services.
This is the segway into the first statement. Of course, your medical device, photovoltaic inverter, flow meter, etc. will never move to the cloud. There will always be equipment on-premise. The play is to tie value-added services to your on-premise equipment, thus achieving an EaaS offer.
In conversations with your customer, have you heard any of these comments?
To put it bluntly, if you have heard these or not, it means the customer does not care about your product. If you have not heard them, you will. Make no mistake, this shift is coming for all OEMs. Customers want value added to the product. They want to achieve outcomes, and they want you to enable that. They do not care about feeds and speeds of the product.
Now you may be wondering, is anyone successfully executing outcome-based EaaS offers? The answer is yes, but it is hard.
Nothing worth doing comes easy.
― Theodore Roosevelt
In "The State of Field Services 2021," we summarize the challenges.
Despite these challenges, OEMs are succeeding in developing and landing EaaS offers. To be successful, it makes sense to start small. You do not need to go all in. The offer does not even have to be the entire piece of equipment. It can be portions of a process or the equipment.
I came from the machine tool industry, so let’s look at an example for this very traditional industrial equipment vertical. The offer is from Trumpf, one of the largest suppliers of fabrication machines in the world. The offer is called Trumpf Power by the Hour. They offer a laser cutting machine as a CapEx sale with a 2kw or 6 kw Laser. However, the machine itself is equipped with a more powerful laser. If the customer gets a new job that requires a higher power laser to cut the material or just wants to cut a thinner material faster, they can enable the additional laser power and pay by the hour for that extra laser power. If they use it enough, all the payment-per-hour go towards the full purchase of the option upgrade in the field. It’s a great stepping stone to their true EaaS offer called Pay per Part.
“As a part of the service offering, the production process is fully tailored to the customers’ requirements. The performance promise of the offering includes access to a fully automatic laser cutting machine, a storage system, TRUMPF’s production know-how, and the necessary service components, as well as equipment maintenance and the required raw materials.”
- Source: Trumpf.com
This second offer checks all the boxes. The offer includes utilization and adoption components, services, and even raw materials.It starts from the input of production to the output of a finished part–a great value-added service.
These are just two examples. If you spend a bit of time searching the internet, you will find many versions of EaaS landscape maps or articles that talk about upwards of 40 different manufactures making these EaaS offers.
If the customer is now paying based on consumption or per-use, the equipment must work in order for you to get paid. When things do not work, often the burden of restoring the equipment comes to field services. The key, as we mentioned above, is connectivity or what we call Proactive Support Technologies.
Let us look at some of the data from our TSIA Field Service Benchmark.
Source: TSIA Field Services Benchmark (Expand image)
The data shows that 1% of the time, the equipment can self-heal. 99% of the time, it turns into a service incident. Here is where the customer solves it, technical support solves it, or a Field Service Engineer is dispatched. We see from this driver tree that a Field Service Engineer has to go on sight almost 1 out of 2 every two incidents. Each step of the way the data collected helps the OEM make informed decisions about driving towards a quick resolution.
The two best metrics to look at are First Visit On-Site Incident Resolution Rate and Resolution Time. First Visit On-Site Incident Resolution Rate is the percentage of on-site incidents that are successfully completed during the first visit without requiring a follow-up visit. Resolution time is the amount of time from first contact until a successful resolution. To get this time down, technical support and field support must work together well and have a smooth hand-off to dispatch. You have to resolve it quickly but correctly the first time. You cannot afford to go back.
First Visit On-Site Incident Resolution Rate shows you if you had the right Field Service Engineer, the right skills, the right tools, and the right part on-site the first time if needed. Do this, and you will start seeing revenue flow again. The below figure graphically represents these and a few other metrics we capture in our benchmark.
Chart of Resolution Rate and Resolution Time (Expand image)
Field Service organizations must be hitting on all cylinders to support these EaaS offers. Our TSIA Field Service Benchmark is a comprehensive look at your service operation where we provide real insights on correlation and causality that can be used to make a business case and transform your business. We have extensive research on efficient service delivery, developing offers, and leveraging IoT.
Additionally, we will be diving more into this topic at our upcoming Technology & Services World Conference, along with speakers and workshops for all of our research practices.
Interested in learning more? Reach out today. Let us help you along your journey and help you arrive there before all you hear are the warning sign described above. It is hard, but it is like the rubber band theory of goal setting: you always need tension to push you to succeed.
