Blue Dots Partners

Is there a way for tech companies to make money now in the Internet of Things, where connected products “are creating the first true discontinuity in the organization of manufacturing firms in modern business [1] history?”

Absolutely. Look no further than Field Service Management (FSM). Servicing products is a big, expensive, relentless problem. Now, with IoT, there is an evolutionary (not revolutionary) path to transform the aspirational objective of efficient, predictive, and proactive field service into a reality. FSM vendors that excel at aligning their solutions and go-to-market approach with the right customer pain points and expectations are positioned to do very well for a very long time.

Why is FSM such a fertile growth opportunity? The answer is size and stage. This mega billion-dollar market employs more than 5 million field service technicians in the U.S. alone in sectors that are pivotal to the economy [2]. However, FSM is only at the early stages of transforming antiquated processes, while developing new capabilities enabled by IoT. Despite the early stage, there are 259 companies in the FSM software category that are already generating a total of $782 million in revenue, growing at 10.4% annually since 2010 [3].

Are manufacturers ready to adopt IoT for FSM? Yes. Here’s what one early adopter has to say: “…we needed to move from a reactive, sometimes negative, service approach to a positive, proactive service approach. We needed to be able to deploy quickly and globally with a technology that would leapfrog our competitors with an entirely new approach.” What is this leading edge business category that is embracing IoT for FSM? Elevators. Specifically, thuyssenkrupp Elevator which is deploying a system to monitor and manage over 200,000 elevators using next generation FSM to maximize uptime with a data-driven, predictive capability [4].

Manufacturers can see that FSM and IoT were made for each other. First, IoT leverages established enterprise investments in and acceptance of foundational technologies including Supply Chain Management, sensors, cloud infrastructures, mobile communications, and Big Data. Second, there is a distinct capability to measure RoI. IoT connected devices are inherently data generators that enable precise calculations of FSM business outcomes.

What does IoT FSM offer that aligns so well with customer pain points?

• Predictive, proactive maintenance for optimized uptime
• Reduced failure rates and business discontinuity
• More efficient scheduling of maintenance and technicians
• Lower spare parts inventory cost
• Higher “First Fix” rates that reduce costly truck rolls and dissatisfaction
• Precise geo-location data to manage fleets, technicians, and parts deliveries
• Mobility that enables techs to get the data they need anytime, anywhere
• Real-time information and insights for real-time adjustments
• Remote upgrades and repairs, plus collaboration with onsite techs
• Performance and usage data to improve products and user experience
• New revenue from sales of analytics, benchmarks, and customer tools
• Delighted customers

Let’s look briefly at three very different companies capitalizing on the IoT FSM opportunity.

GE may well be the most formidable global IoT thought leader and vendor across the combination of equipment, software, and service. The aftermarket service business for GE is enormous, so getting it right in the digital age is essential. For example in fiscal 2015, the aviation business generated $24.7 billion in revenue, of which 52% was Services. GE Power derived 66% of its $77.1 billion in revenue from Services while, for Healthcare, services accounted for 44% of $17.6 billion in revenue [5].

In 2012, the company began actively promoting its concept of the “Industrial Internet”, combining intelligent machines, advanced analytics, and connected people [6]. GE followed through on the vision by building a software platform (Predix^TM) and an Industrial Internet application marketplace. One public notice of that effort is their TV ad campaign in which “Owen” is challenged to explain to his doubter family and geek friends that he took a job at GE so he could develop world-changing products. In the latest commercials, the tide has turned. When the number eight 2015 Fortune 500 company puts its full weight behind a focus, the results can and should be outstanding.

ServiceMax is a great example of a services start-up that has achieved scale. They raised $204M in 6 funding rounds from a broad array of leading VC and corporate investors [7]. The company is led by Dave Yarnold, a pioneer in the SaaS market who took SuccessFactors to over $100M in revenue and a successful IPO.

ServiceMax wants to enable “Flawless Field Service” that is predictive and proactive. They partnered with PTC ThingWorx to create “the first ever connected field service product” [8]. ServiceMax products manage scheduling, communications, contracts, parts, repairs, remote service, diagnostics, automated service, social collaboration, and communities. ServiceMax delivers a lot for the mobile technician including Mobile for Android and Product IQ for mobile real-time data. Their Remote Service is a good early example of enabling remote updates and repairs that reduce on-site service calls.

Salesforce.com: Watch out, ServiceMax. Here comes Salesforce. On March 15, Salesforce delivered Field Service Lightning, it’s new Service Cloud field service platform to unite the entire ecosystem of customers, connected devices, agents, dispatchers, and field employees.

With Field Service Lightning agents and dispatchers have 360-degree customer views. Field employees can access the relevant customer history and also communicate customer feedback and sales opportunities. Salesforce partnered with ClickSoftware to enable optimized and more intelligent resource management and scheduling. Jobs can be tracked and managed in real-time and field technicians can update their work orders on the fly.

There are dozens of other interesting companies offering or migrating to IoT FSM.

Of course, as with any new market, there is much to do to before IoT FSM fulfills its promise. New products, processes, and even organizational structures will be required to chase the opportunity. “Field service operations remain a bastion of antiquated systems in many organizations. With the advent of IoT and more objects becoming connected, field service will only become more complex and critical to the success of service organizations,” said Mary Wardley, vice president, CRM Applications and Customer Experience Software, IDC.

[1] Harvard Business Review, How Smart, Connected Products are Transforming Companies, October 2015.

[2] Forbes, 6/10/13.

[3] IBIS, Field Service Management Software in the U.S. Market Research Report, 2/15.

[4] Scott Day, EVP of product lifecycle management, strategy, and market development in Field Technologies Online, 3/23/16.

[5] GE 2015 Annual Report.

[6] GE. Industrial Internet: Pushing the Boundaries of Minds and Machines, Peter C. Evans and Marco Annunziata, 11/26/12.

[7] Crunchbase.

[8] ServiceMax website.