Companies that successfully transition from traditional, manual processes in asset and equipment maintenance management generally see remarkable results. Increases in as many as 30 separate performance indicators are not uncommon. In this post, I will focus on four metrics that can result in significant customer value.
1. Service Completion to Invoice Cycle Time
This is the amount of time it takes to bill a customer for service, once that service is complete. In organizations that have not implemented digital transformation, that time can range from a few days to a few weeks. I worked with one customer whose service completion to invoice cycle time was 57 days!
On the Digital Transformation Scale of Maturity discussed in my last post, a service company at the “visionary” maturity level is able to achieve same-day billing. They are able to do this because all of the information required to invoice is collected in real time during the service call, the customer “proforma” invoice is created automatically, a digital signature is captured while onsite, and then this is all digitally transferred through a mobile application and integrated to an ERP system for immediate billing. This significantly reduces Days Sales Outstanding (DSO), simplifies the entire AR process, reduces the workload for back-office staff, and frees up an enormous amount of cash flow. That cash is now available earlier to pay for commissions, incentives, marketing, salaries—basically to be put to work for the organization to make more money faster.
2. Technician Utilization
With a mobile app for field service management, the technician in the field now has no job tickets to fill out, no manuals to carry around, no parts order forms to submit, no maps to refer to—all the information they need is at their fingertips. The mobile device tells them where the next job is, when it is, how to best travel to get there, what parts they will most likely need, as well as provides manuals and technical information, all digitally, all up to date, and all on-demand.
In addition, the device may have the ability to display videos of maintenance tasks, provide augmented reality guided maintenance sessions, and allow the technician to “phone a friend” and enable remote Tier 2 support with both audio and video capability. Taking into consideration the amount of time that technicians in less “visionary” organizations spend on administrative tasks—searching for information, ordering parts, looking up schematics and job aids—it’s not unusual at all for us to see greater than 20% improvement in technician or engineer utilization. That’s real, actual wrench time increases.
This may pave the way for more jobs completed per day/week/month. It may allow for more time spent with the customer developing better and deeper relationships. It may even enable technicians and engineers to focus on additional cross-sell and upsell opportunities. It basically allows organizations to do far more with the people they currently have at no additional cost.
3. Back Office Utilization
While there is a marked increase in technician utilization due to digital transformation, that increase flows directly to their back-office counterparts. In less advanced operations, all of the data that the engineers write down on job tickets, order forms, testing, and inspection reports, etc. has to be read, interpreted, and typed into ERP systems, procurement applications, and data repositories.
That duplicate effort is an enormous drain on back-office staff. When back-office staff is not fully engaged on “swivel chair” data entry, they can be found searching for contracts, validating customer entitlements, locating schematics, following up on parts orders or expeditions, and or investigating invoicing discrepancies.
In a fully digitally transformed company, these activities are a thing of the past. All data is entered one time, captured, saved, and repurposed as and when needed. Contracts and entitlements are available instantly. Customers have access to their contract history and can look up all of their transaction histories on their own. The need for and role of the back-office staff changes from administrative support staff to a business development machine. We have seen the amount of back-office utilization improve two-fold.
4. Service Contract, Warranty, and Parts Leakage
The ability to “see” what is happening throughout the service organization is an amazing change once digital transformation has occurred. Often, when we discuss leakage—the failure to bill for everything that a company is entitled to bill for—with prospects we find that they know it is occurring, but they have no way to capture that leakage.
We come across terms like goodwill, concessions, or write-offs to categorize what they think are services they should have been billed or parts that they should have had on hand, but were not realized. One comment we regularly hear is, “You are asking us to quantify something that we cannot see. Obviously, if we could, we would stop it.”
Digital tools allow for instant validation of contract entitlements and accurate tracking of parts utilized against a contract. The ability to measure the profitability on a work order by work order basis is available now. Every dollar not billed is both a revenue hit and results in a 100% loss of profit. We have seen a reduction in leakage in some of our customers of 15% – 20% based on the inability to validate contracts and/or track parts utilization.
A Journey, Not a Destination
Embarking on a digital transformation can lead to significant improvements in operational performance, which leads to huge financial benefits for asset and equipment services companies. The removal of non-value-add work allows your teams to focus on their customers, fixing equipment correctly the first time, finding additional revenue sources, and ensuring that you can bill for everything that you should be billing for—leaving no money on the table.
There are many stages of digital transformation, from the organizations just dipping their toes in the water to advanced practitioners who have already benefitted from significant improvements and are looking to continue to refine and improve their performance. The one constant is that there is no “end” to digital transformation, it is a process that will keep on evolving, progressing, and expanding. Companies that have, for whatever reason, not taken advantage of it will find that they will fall further and further behind their competition. It is a journey and not a destination, and we here at ServiceMax are eager to help you take those first steps.