Strategy & Leadership

How Service Leaders Can Exploit the Sharing Economy

We hear a lot about the so-called sharing economy in a consumer context. It’s a new, some say better, way to hail a cab (Uber) or rent a hotel (Airbnb). But the trend is also having a significant impact on field service management.

“The field service industry is at the forefront of the trend,” says Michael Blumberg, president of Blumberg Advisory Group. “Some may even credit our industry with birthing the sharing economy.”

Here, he discusses how service leaders are tapping into a vast network of full-time freelancers to eliminate downtime — not of their products, but of their employees.

On how field service set the stage for companies like Uber:

“In the early 2000s, the concept of the variable workforce model emerged as an effective way for OEMs, integrators and resellers to gain access to contingent labor to fill peaks and valleys in field service demand. This contingent labor workforce was then and it is now provided through an Internet platform that enables freelance technicians to accept service requests from multiple customers. This is not very different than the Uber model which emerged almost a decade later.”

But the model is still maturing:

“Currently, only a small portion of field service jobs is performed through sharing economy business models. We estimate that between 900,000 and 1 million field service engagements were performed through these types of platforms in 2014. Most of this work was performed within the IT sector. However, this number will likely increase significantly over the next five years as more companies adapt this model. One of the leaders is Field Nation. The company has built a freelancer management system that has the ability to recruit freelance technicians, match field service requests with specific contractors, issue work orders to them, and administer payment,” says Blumberg.

The freelance trend is not a passing fad:

“The sharing economy has shown to have staying power since it’s been around for more than a decade. A study conducted by the Freelancer’s Union shows that within five years more than 40 percent of all workers in the United States will be classified as freelance contractors.”

Managers will have to get smart about it to about to stay competitive:

“The demand for field service is becoming increasingly variable in nature because of economic, market and technological trends. As a result, field service executives can no longer justify maintaining a large workforce of technicians. They need to recognize that variable demand is best fulfilled through variable supply, or labor.”

On solving a big problem for service managers:

“Technician utilization has the biggest impact on scalability and profitability. If utilization rates are too high, field service engineers are not available to meet demand. But if utilization levels are too low than, managers have excess capacity and pay for labor they don’t use. During periods of low demand, field service executives are often faced with the decision to lay off field technicians — but they risk jeopardizing SLA compliance if there’s a peak in demand. Their technicians just aren’t available. With a sharing economy solution, service leaders have immediate access to on-demand technicians.”

Could the model threaten field service businesses?

“The sharing economy competes with traditional businesses in the consumer world, but it solves a real problem that every field service company experiences: scaling rapidly and efficiently. One benefit is that service companies do not have to lay off talented employees. More importantly, the characteristics of field service demand have changed (and will continue change), making it necessary for field service leaders to consider sharing economy businesses as a hiring mechanism. The bigger threat to field service businesses lies in hanging on to outdated business models that are no longer viable in today’s market realities.”

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