About the author: Sugath Warnakulasuriya, managing director of Thalamus Labs, is a hands-on strategist and business builder focused on digital value creation for industrial and services companies. He is a former McKinsey & Co. consultant and entrepreneur with a track record of 25+ years of identifying and developing disruptive, transformational opportunities for enterprises and mid-market companies across multiple sectors. Sugath has led numerous companywide digital growth initiatives, developing and executing business cases for value capture through the use of emerging technologies including IoT and Advanced Analytics/AI along with the latest innovation techniques. Sugath has a Ph.D. in computer engineering and an M.S. and B.S. in computer science from the University of Southern California, where he also studied entrepreneurship at the Marshall School of Business. Sugath can be reached at sugathw@ThalamusLabs.com.
Although construction and industrial equipment dealers and distributors have taken steps to connect online and digitally market to customers, most are early in their journey to digitally enable field service and maintenance. The good news is that even the fundamental first steps in digital service and maintenance can bring significant value to you and your customers. Wide availability of inexpensive, highly configurable mobile, IoT, and data solutions also opens the door to getting beyond simply eliminating the coordination hassles of on-demand and scheduled maintenance, to big productivity, safety and cost gains through conditional and preventative maintenance. Even bigger is collecting real-time data on equipment use and performance, which allows you to get much closer to your customers’ day-to-day, mission-critical operations and workflow. And when done with care, this type of digital service not only translates into happier, more loyal customers, but also leads to new revenue streams, business models and accelerated growth.
Most equipment dealers and distributors have taken only the very first step in their digital journey, focusing on helping customers buy and rent equipment using websites and online catalogs that share product, parts, configurations and service options. This is now table stakes in just about every industry.
The next worry customers have is about how to use and care for the equipment they’ve just acquired in the most productive and economically impactful way. Facility and operations managers and on-site contractors often lose sleep over whether a critical piece of equipment will go down during a busy weekend or if the equipment is being operated properly and safely, whether they have back-up equipment and parts to handle peak loads, and if the equipment is stored securely. A set of business questions also naturally arises around whether they have enough equipment to eliminate bottlenecks and avoid schedule overruns or overtime, or if they are losing money on a project because the equipment is underutilized.
However, only a very few dealers and distributors have begun to think about how to help their customers address these mission-critical needs and pain points as they consider further digitally enabling their business. For those that are able to take on this challenge, the rewards are significant.
Digitizing Scheduled Maintenance
The first and easiest step to alleviating customer anxiety is to let them know that you are performing scheduled inspections and maintenance on time, regularly. Much of scheduled maintenance is still organized and coordinated with pen and paper, or at best with old enterprise software on desktops. But given that everyone in your service team now carries a smartphone, there are dozens of high-quality, full-featured, low-cost maintenance and service apps that will help you do this regardless of your particular market focus, operational practices or existing tech infrastructure.
While digital apps let your service teams and leaders get organized, better manage your workforce, and stay on top of scheduled maintenance, the biggest value for your customers is their visibility into the fact that you are on it – which can reduce a lot of headaches and real pain in their day-to-day facility or site operations. Rather than them being bombarded with emails, texts and reports with stale data, you can provide them real-time dashboards, preferably on-the-go, with any number of mobile apps.
A natural extension of this, of course, is to allow your customers to report issues and request service directly via an app, which opens up a valuable real-time, online “conversation” between you and the front-line users and managers of your equipment. There is a tremendous amount of information in such a communication channel from which you can glean valuable insights to better understand and serve your customer. Such a move from manual, in-office service coordination using pen, paper and reports to the use of mobile apps by a remote workforce has also become more compelling as health and safety concerns have heightened in recent months.
Creating this type of transparency around the quality and responsiveness of your service operations creates a high degree of trust and “stickiness” between you and your customers, leading to a genuine partnership. In terms of tangible outcomes, getting this right means streamlining your service operating costs, while getting an even bigger win for your customers – less downtime and uninterrupted operations – which ultimately translates into increasing the lifetime value of your customers!
Given how much value there is in this type of close coordination and transparency, some distributors are even developing their own custom apps: one such distributor we recently worked with has developed a robust prototype of a service app and is now piloting it with a selected set of customers, with early indications of the ability to reduce 30% of coordination costs, and perhaps a 10-15% gain in sales and rentals due to better customer service, engagement and loyalty.
Telematics and Conditional-BASED Monitoring
The next opportunity and worthy challenge along the digital journey is to “instrument” your equipment to get detailed data on its use and performance, which also unlocks significant layers of new value.
Much of the equipment today comes with built-in sensors and telematics (already “IoT-ized”), able to provide everything from location (GPS), equipment status, performance parameters (e.g., rate of fuel use), and various other alerts and fault diagnostic codes. For mixed portfolios, retrofitting older equipment with digital instrumentation and telematics is also quite feasible now, as there are powerful, inexpensive and configurable computing and telecom solutions suitable for most cases.
Once equipment is instrumented and connected, you are able to get data that allows you to determine, for instance, if it is being operated properly and safely or is experiencing issues. Note that this data contains both direct indicators from the equipment as well as much more valuable data that can be inferred, such as overall usage patterns, peak/time/volume of usage, parts/consumables inventory and depletion, and other valuable signals of customer behaviors and preferences.
Having detailed equipment status and error data, as well as insight into customer behaviors and needs, means you have a renewed opportunity to focus and prioritize service calls, eliminate wasted effort and achieve higher levels of service quality while also optimizing service resources and effort.
We recently helped a company that operates and services a mixed portfolio of several hundred thousand pieces of equipment. They were able to find and tailor a solution that allows instrumenting a myriad of machine makes and models to capture and transmit comprehensive sets of status and error codes in real time. This enables their service team to better understand machines issues, become highly responsive to where service is most needed, increase overall machine uptime and deliver better overall service quality to their 100,000 customers, all while eliminating 25% of unnecessary (“false positive”) service calls.
Leveraging Data-Driven Insights to Accelerate Value
The final step in this digital service enablement journey – which only a very few have undertaken – is to use the vast amount of data being collected regarding equipment use and performance to generate new value, both within and outside of the service and maintenance arena. This includes utilizing data-driven insights to further optimize service (e.g., predictive/preventative maintenance), generating new revenue streams, introducing new pricing and new business models and getting to improved customer outcomes.
Most talked about in this area is the use of advanced analytics/machine learning (AI) techniques to comb through vast patterns of machine and parts failure data, to develop learning models to predict equipment malfunction, and to pre-empt them through preventative maintenance measures. When done properly, this can lead to significant gains in service quality and operational efficiencies, as well as reduced working capital (e.g., optimized parts inventory). However, this requires a carefully considered and well-designed approach, along with considerable patience, to collect vast amounts of data and to develop and fine-tune predictive algorithms. So only a very few have achieved tangible results in predictive maintenance at scale thus far. But we should see significant advances and success stories here in the next few years, especially with high-value equipment or in high-stakes applications.
But the bigger story is that collecting and analyzing data creates many other opportunities. For instance, having detailed data on behaviors in equipment use can lead to new training opportunities regarding proper equipment operation, safety, productivity and cost efficiency (e.g., how to operate equipment to reduce fuel consumption, idle time, and unnecessary wear and tear). This allows benchmarking and optimizing performance at the fleet level as well as across company branches or facilities, further enabling best practices to be understood and shared.
Other opportunities in analyzing and gleaning insights from equipment use and performance data include helping sales teams craft better value propositions for customers and developing new learning to help manufacturers design better products. One such company we recently worked with, having acquired large sets of detailed, granular data on equipment use, is now able to use account-specific performance dashboards to show value delivered to customers in renegotiating contracts to gain to more favorable terms.
A number of industrial companies we work with have extracted new insights from data collected via equipment to introduce new pricing as well as “-as-a-Service’ business models to get to better outcomes for both them and their customers. Getting to this type of shared success in relationships is a very real possibility for those dealers and distributors committed to finding transformational growth opportunities along their digital service and maintenance journey.
Although the prospect of taking the plunge to become a data-driven company may seem dauting at first to many dealers and distributors, there is now a large amount of accumulated knowledge along with inexpensive data infrastructure, services and tools that make the price of entry relatively low. However, most companies approach this simply as a problem of selecting and implementing the right tools and staffing a data team. In reality, it is much more critical to take this on as an organization-wide transformation, instilling new skills, behaviors and mindsets across operating teams so that they can use data and insights to continually learn and iteratively improve service quality and productivity as a day-to-day habit.