The Service Economy



The graph shows how industries are changing their focus from goods producing jobs to service producing jobs.  Nowhere is this more important than in the field service segment.  Slowly, manufacturers are from produce and sell, to produce sell and service.  The new economic trend called “servitization” is a smart step to retain brand identity and have influence on the customer experience.  Servitization implementation places the routine and emergency service of those goods in the hands of factory representatives.  What better way to ensure that they are being maintained in the best way possible.  I had reviewed labor statistics previously but felt this was an eye-opening set of data.

Launching Field Service Management Software

1 ron palinkasApproaching Field Service Management Software

It’s a known fact that employees who have better tools at their disposal are more productive and effective on the job and in the field.

Advancements in management software development, machine-to-machine communications and the Internet of Things are equipping mobile workforces with the ability to make more proactive decisions when it comes to diagnostics, maintenance and repair.

According to research from the AberdeenGroup, 82% of field service organizations planned to implement or expand mobile initiatives in 2015. You may be considering implementing a mobile solution, but aren’t sure how to approach it. Before getting started, be sure you’ve explored the value you hope to provide. Having “shiny and new” mobile software is sufficient for some organizations, but without a deeply intentional purpose, the applications won’t gain adoption or provide return on investment (ROI).

So where to begin?

Start with your end users.
What do they want in a tool? What are their biggest pain points while in the field? Can a software solution address any of these challenges?

“The biggest mistake made by executives purchasing field service management software is not talking to experienced field technicians to properly assess their requirements.” – DeWayne Lehman, Independent IT Consultant to Fortune 500s

Don’t strictly interview field technicians; observe them too. Ride along with them in the field to truly get a sense of what their day looks like, how much time is wasted on repeatable tasks, where processes can be improved and where efficiencies can be made.

Campaign for stakeholder support.
Who are the internal audiences that will be affected by implementing software? Who is required to sign off on the project? What do they want to achieve from the software? Do these audiences want to boost efficiency and productivity? Have company leaders mandated IT departments to reduce costs or increase profitability?

Be sure your stakeholders all agree on the business objectives your product intends to address immediately and in the future. Developing a product that is architected to scale over time is critical if you intend to add more users or significantly increase features in the future.

Determine your budget.
Unless you have internal development teams with the capacity to take on new projects, you will likely need a development partner. Make sure you have the budget set aside to adequately address the needs of the project.

 Compile your requirements.
Now that you’ve determined what your budget is and what your users want to see in an application, it’s time to decide what features are critical to success. Do you have a tight deadline? Maybe you want to integrate smart forms preloaded with customer information that allow field service employees to reduce the time they spend on routine tasks. Perhaps you want to leverage a software solution that optimizes scheduling or provides electronic proof of attendance. Whatever you want to achieve, deciding what features are mission-critical up front will help your team both deliver the product on time and plan for future phases of development.

Plan for back-end systems integration.
Enterprise software rarely works in isolation. Likely, your field management mobile product will need to share information across multiple systems. But what are those systems? Are they all proprietary or are there third-party integration considerations? For example, should other departments be alerted in order to have job-specific parts ready for the field?

Choose a development partner.
This is a tricky task, no matter the size of the project. As for non-technical managers, evaluating the expertise of developers is almost impossible. Meet with the team in person, if possible. If you are going to work with the developers over a long period of time, you’ll want to make sure the chemistry and communication is good between your two teams. Ask for references. Have previous client projects been delivered on time and within budget and scope? Did the development team go above and beyond to ensure their client enjoyed the experience? How sound is the product?

Beyond customer satisfaction, does the development team have the capacity and scalability to work with you over time? Do they have full-stack capabilities? What processes do they have in place to deliver a quality product? Make sure they can plan, design, develop and deliver within your timeline. Ask lots of questions – development is a big commitment! For more on how to choose a development partner, read this piece.

Don’t forget about training.
No matter how good the end product is, unless employees understand how it functions, how to use it and why it matters, they won’t realize software’s full value or integrate it into their workflows.

As software replaces archaic processes, it will take employees time to transition from “the old way of doing things.” Look for management experts in your organization who can help you socialize the product roll out. A large-scale roll out of a new product can impact company culture – so make sure you first ask for their buy-in, then teach them how to use it and finally, demonstrate the product’s potential.

What does success look like? Benchmark baseline data and determine what key performance indicators (KPIs) are important to your employees and decision-makers. If you know how to measure the effectiveness of the app, it will be easier to design and develop a solution that will be seen as a good investment.

Assign ongoing maintenance.
Software requires updates, bug fixes, general maintenance and new feature releases during the lifetime of a product. If you’ve outsourced your product development, your internal teams should be able to handle ongoing maintenance once a strong architectural approach is developed by your external product team.

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Sarah Woodward applies more than 16 years managing client relationships and business development efforts to her role as director of business development for stable|kernel. Her strengths lie in bringing together the right people with the right expertise to the right business opportunities. Sarah’s favorite part of her job is evangelizing stable|kernel’s story and finding new ways to help new clients dream big.

Original Article Approaching Field Service Management

Expanding Service Department Metrics

Expanding Service Department Metrics


In our work with dealers in multiple industries we see the same anxiety regarding the management, development and execution of the service department. Especially in periods of service market growth, the anxiety is heightened because of the diverse forces that play on service performance. These forces range from recruiting, selecting, onboarding and training cycles, to billing, expense management and measurement process. In today’s more sophisticated business environment we need to bring the analysis of service and service metrics to a deeper level.

Almost all dealers have relatively complete data processing systems that provide reasonable information on the performance of the service department. However, in today’s fast-paced data processing world, more than just standard reports are needed. All dealers should be engaged in data mining activities that allow us to dig deeper and analyze more specific operational statistics. Certainly, we have to start with a base set of service metrics – the traditional metrics – and supplement them with the new, deeper, richer analysis of service performance.

Traditionally, we have examined a number of key ratios. Service department gross profit benchmark is 65 percent, which is calculated by the following formula:

Overhead expenses in the service department are bench marked at 35 percent of labor revenue. These expenses include personnel expense at 20 percent, operating expense at 10 percent and occupancy expense at 5 percent.

Many dealers also measure technician productivity, which is calculated by:

More critically, an extension of technician productivity that we find more valuable is technician efficiency, which is measured by:

These are service department metrics that have been key measurements within the industry for a number of years. The expectation is that all reasonably run service departments have these metrics and are working with them continuously.

As we work with individual service departments, we have focused many of them on a group of supplemental data points to improve our management and, ultimately, to greatly improve bottom line results.

One of the most critical measures we see in managing service departments is revenue per technician per month. This measure correlates very strongly with service profit ability in all of the analyses we’ve done. It actually is the most strongly correlated – even more so than productivity or efficiency. So, our first recommendation is that you create a descending list by technician of revenue per technician per month. Further, accumulate this data over a period of time so that you can analyze the average revenue per tech per month and see if your trend is improving or not.

A competent technician should yield at least $12,000 per month. Better technicians can produce close to $15,000 per month. So, the first issue to be examined is, “How many technicians do we have greater than $15,000 per month, how many between $12,000 and $15,000 and how many under $12,000?” Frequently, we only see the average number. This tends to limit our expectations to the average number. If, in fact, one-third of the technicians are close to $15,000 per month, then that understanding will push us to drive other technicians to a number approaching $15,000 per month. In other words, let’s prove a benchmark that high performing technicians are achieving and use that benchmark to drive the performance of the rest of the team.

Another valuable measure, and one that is derivative of this analysis, is to take the revenue per technician per month and divide it by the number of billed hours in that month. That analysis produces a yield of revenue per hour for that technician. Let’s assume that your published service rate is $85 per hour. If this analysis shows that you have some technicians yielding $89 per hour, some yielding $82 per hour and some yielding $70 per hour, then the process is to analyze whether those differences are execution related, customer related, type of work related or related to some other factor.

One more critical measure we are using with dealers when consulting on service departments addresses the yield per hour per customer. Here, we want to begin with the descending customer list. We know in analyzing data in dealerships that the Pareto Principle applies. In fact, in most instances, even in service, 10 percent of the customers are 70 percent of the business. So, first complete a descending sales list, but cut off this analysis for the top 10 percent only, or the top 70 percent of revenue, whichever you prefer. Take this short list, divide labor revenue by billed hours and develop your yield per hour per customer. Again ask, how many are greater than $85 per hour, how many are at $85 per hour and how many are less than $85 per hour – more critically, why are they at this level?

So, as we examine service departments we want to reconfirm the traditional measures around which we drive service success. Plus, we want to introduce these three new measures to see what additional insight they give us into driving service performance.

Data is available. Be creative in seeking information that answers key questions. Don’t be surprised if this data also helps answer questions you haven’t even asked.


Matthew Hicks is with Currie Management Consultants, Inc., located in Worcester, Massachusetts, and on the web at

posted at MHEDA Journal

If It Matters, Measure It: Tips to Determine Field Service KPIs

blog-agile-implementation-lego-edition-00 are several sayings out there about measuring company performance:

“What gets measured gets done.”

“You can’t get what you don’t measure.”

“An acre of performance is worth a whole world of promise.”

And, my personal favorite, “If It Matters, Measure It.”

As your company continues to grow, quantifiable data will become more and more important to owners, customers, and other stakeholders of the business. By measuring key performance indicators in all areas of your field service business now, you can count on more predictable results in the future.

What are KPIs?

Key Performance Indicators (KPIs) provide a means to quantify and measure business performance toward the attainment of organizational goals.  Goals can vary from every industry and company. In the service industry, businesses may evaluate themselves on KPIs that measure customer satisfaction, technician performance, and operational efficiency.

No matter what KPIs your company chooses to measure, the most important factor is that the metrics align with organizational goals. What are you looking to accomplish in the next quarter, 6 months, or year?

Goals Drive KPIs

The goals you set will drive the performance metrics you choose. For example, if your goal is to improve technician performance, the metrics you measure could include average time to respond (AVR), Mean Time to Repair (MTTR), and number of calls or revenue generated per technician.  A standard rule of thumb is to choose 4-5 KPIs. Otherwise, your metrics, at some point, will start to contradict each other.

KPIs Must Be Quantifiable

In addition to aligning metrics with organizational goals, it’s good to keep in mind that the chosen metrics are quantifiable. It would be extremely difficult to measure success if targets are not quantitative in nature, or associated to a number on a rating scale.  For example, if you’re looking to improve customer service from good to great, it would be difficult to distinguish one level of satisfaction from the other.  By associating the level of satisfaction with a number, such as 1-5, you can quickly determine the average customer satisfaction rate.

Compiling KPIs

The ability to obtain these figures is another important factor when measuring KPIs.  Most field service managers do not have time to review multiple pages or spreadsheets of data. Dashboards and reports that are systematic and automated provides easy to digest information that can be processed quickly so leaders can make informed business decisions. Larger organizations have the luxury of collaborating with IT to build customized dashboards and reports. Small to mid-sized field service companies can utilize field service management software that comes with built in reports.  Since the company manages all aspects of the field service within the software, managers can quickly pull reports on open invoices, revenue generated by technician, and customer satisfaction surveys.

Gaining Employee Buy-In

None of the above matters if your team does not buy into the organizational goals. By incenting service technicians to complete individual goals, such as upselling, renewing service contracts, or completing a certain number of jobs per week, the business can ensure that all employees are working to meet the company’s overall goals. For example, a FieldLocate customer supplies weekly bonuses to his contractors when they surpass their regular job quota. This information is stored in FieldLocate so the manager can quickly run a job report to determine the bonus amount.

Does your organization measure KPIs? If so, which do you find most important for your business?