Field Service Management and servitization are changing industries.
Darren Roos is the CEO of IFS.
They've just been named a leader in the Gartner Magic Quadrant for field service management.
Darren, tell us about IFS and tell us about your role at the company.
I'm CEO of IFS.
We're an enterprise software business, one of the fastest-growing enterprise software
businesses in our space.
We're really focused on, as you said, field service management but also on ERP and enterprise
asset management.
We have just about 4,000 employees globally, over 400 partners, and what really differentiates
IFS is that we're really focused on our customers, focused on those outcomes, and how do we make
sure that they're deriving value from the solutions that we provide.
Darren, we hear a lot about field service management and servitization.
I think we need to begin this conversation with an explanation of field service management.
What do we mean by that phrase?
I think at its very simplest term, it's about tracking, optimization, and operationalization
of field operations for really any organization.
But I think that now, especially in COVID-19 times, we're moving into a space where service
is much more important, and the way in which service impacts businesses is a little broader
than just that track optimized and operationalized.
Darren, how does field service management impact or benefit customer experience?
It's become really important, Michael, because companies across the board have realized that
service is an area in which they really must differentiate if they want to remain relevant.
It's happened because end users desire really memorable experiences.
They demand guaranteed service outcomes.
Service is very often the face of the brand and the way that they create new opportunities.
Field service done right gets people to the right customers with very clear instructions.
It also helps customer loyalty, reduce attrition rates, and I think the importance of getting
service right is something that really can't be underestimated.
At the financial level, services really shifted from being a cost center to being a very powerful
profit center.
I think that, as consumers, we all recognize the impact that service has.
Those are really important elements that I think can't be underestimated.
Of course, I have to ask.
What has been the role of IFS in this evolution?
We are real thought leaders in this space.
We've invested heavily in getting the right team of people on board so that, irrespective
of the industry, we're able to go in and really advise customers on how they can leverage
service management in order to have an impact on their business.
It's a lot less of a bolt-on now.
It's very much technology that is purpose-built to be able to help customers to really drive
value for their customers irrespective of the industry that they're in, so a broader
range of capabilities, more predictive analytics, more next-generation customer-focused capabilities.
It's much more streamlined and integrated.
With IFS, we're able to bring together these technical capabilities, this technology with
the domain expertise from the people that we've recruited, to bring them together to
really drive a specific outcome for a customer that is focused on enabling this service journey
that they're looking for.
It sounds like you're trying to weave service into the foundation or the core of operations
across many different departments in an organization.
Service has changed a lot.
We all understand that there is wanting to offer a better service or, as a consumer,
expecting a better service.
I think that's something that most people relate to.
Then, of course, you have the angle of servitization also.
It's really the way in which these two things come together.
How can their business bring new models to market that are enabling them to drive new
revenue streams for their business while, at the same time, improving the customer experience?
The obligation changes because the company that's providing that servitized offering
has a much deeper responsibility but the prize is much bigger because they have this recurring
revenue stream that is much more predictable and more resilient to changes.
We see it in more and more industries now and whether you're talking about just better
service or whether you're talking servitization to drive new business models, both are becoming
ubiquitous now.
You've used the term servitization several times.
What do you mean by that?
What servitization is, it's the way in which you're providing a service around a product
so that the offering becomes the service.
I touched earlier on this way in which businesses are able to build a more predictable, more
resilient business by providing a servitized offering.
Perhaps a company that manufactured washers and dryers and sold those washers and dryers
are now providing a price to their customer per wash.
We see these models really becoming ubiquitous now irrespective of the industry.
That's the exciting part because the business becomes more resilient.
They become better.
They become more profitable.
For the consumer, it's a better experience and that's such a compelling value proposition.
I think that for both parties it becomes a much more positive experience.
At the end of the day, is the subscription component important in this?
Absolutely.
I think it goes away from the importance of building a good product and buying it at a
specific price but really encompassing this whole journey for the customer of how are
they going to consume whatever the output is that that product is.
That's the servitization model.
It's the journey that is, I was going to say, the challenge.
I guess it's both the challenge and the opportunity for businesses.
Yeah, I think it is really important to understand that when you come from manufacturing a product
and providing after-sales service, moving towards contract service or, ultimately, a
subscription, it is a continuum and there's a journey that the customer needs to go on.
Frankly, there's a journey that the company needs to go on who is providing that service.
I think it's important to understand that while your subscription offering might be
the end goal that you're looking for, depending on the industry that you're in, there may
be a few steps in between that you need to go on.
Darren, how much of this is a cultural change, a mindset change, rethinking the relationship
between your organization and your customer?
Yeah, I think that's a great point, Michael.
It's very much a cultural thing.
I think that if we think about the software industry, that's a great example of servitization.
Historically, what we would have done is we would have built software, sold it to a customer,
and then they would have done whatever they did with that software.
Potentially, they would have gotten their maintenance and support offering, but that
was just another transaction every time you shipped new software every few years.
But when you think about the cloud, which is an example of servitization, companies
that operate in this way have to think very differently.
They have to think about adoption.
How is the customer using the product?
They have to think about their customer experience.
Is it a good experience to use it?
They have to think about how do they really keep their customer getting the value that
they'd anticipated getting rather than just making a product and selling it.
It's a very different proposition and that requires a cultural shift.
I think that those shifts are always customer-focused, always focused on how the customer is going
to have a better experience.
It sounds like there's a dual-link that's going on all the time here because, on the
one hand, it is clearly beneficial for the customer.
You're creating that stronger link, that stronger relationship.
That then engenders the virtuous cycle of engendering loyalty back to the organization
that's providing the servitized offering but, at the same time, it creates a responsibility
for that providing organization to then do the right thing for the customer to maintain
that positive cycle.
I think that's exactly accurate and it's why servitization has been so successful because
it is such a virtuous circle.
There is real value for both the company that's providing it and the customer that is receiving
it.
Darren, you speak with many organizations that are undertaking this servitization journey.
What are some of the lessons that you've seen that can make it successful and make it as
easy as possible?
It's got to be a cultural change.
You've got to be thinking about what is the process that you're really trying to impact
here.
How is this going to impact the customer?
Are you sure that that virtuous circle that we've touched on is in fact being created?
Is there value for your customer in this discussion?
I think that's really important.
What we see is that there is tangible value.
In the analysis that we've done with IDC, we see that service revenues are, on average,
a third larger than their peers in companies that are adopting servitization.
We see an eight times more likely to increase profits directly linked to digital transformation
in these servitized companies.
The value is really tangible but I think that what is particularly important is they have
to be thinking through the entire value chain.
Are we an organization that is ready to do this?
Do we have the processes that are ready to do it?
Are we culturally ready to do it?
Then are the customers going to see value?
Maybe you start with the customer and work backward, but all of those different levels
have to be there.
Otherwise, it's not going to work.
Then I have to ask you.
Give us the 30-second sales pitch on IFS.
Our commitment to service management and the experience that we have is really unmatched
in the industry.
If you look at the Gartner FSM Magic Quadrant, you'll see that we lead it.
But really, it's not about that.
It's about the depth of talent that we have, the extensive experience that we have that
really has the battle scars on taking customers on this journey, and how we help them to drive
servitized value in their customers.
You can't do that without the domain expertise.
That's why you should go with IFS.
As we finish up, give us your final thoughts on servitization and advice for companies
that are taking this journey.
What I would say is, you need to find a partner that has the experience of doing a lot of
these projects.
IFS has had a lot of examples of where we've helped customers and that gives us this institutional
knowledge that we can draw on, but it is really important that you have a partner, a technology
partner in this journey that is able to leverage lots of experience in order to help you on
the journey.
It needs a solid tech foundation.
That's going to be important.
You're not going to be able to do it on an Excel spreadsheet.
If we think about larger organizations particularly, some of the complexity that you have to deal
with around the customer relationship management, around the accounting treatments, around the
complex scheduling, parts management, all of those elements are things that come in
a robust field service management suite.
They're not the kinds of things you can cobble together without the technology.
I think that you've got to be very outcome-focused.
It's not a race.
You can't try and do it overnight.
I think, during COVID-19, we've seen customers start to go on this journey.
We've seen some great, positive steps.
But you do need to take the time.
The reason the time is so important is because of this cultural change that we spoke of.
You can put technology in, you can come up with a new business model, but really to get
the institutional change to happen where you're more customer-focused and are focused on the
adoption and value is something that takes a bit more time.
That's a journey that organizations have to go on.
Darren Roos, CEO of IFS, thank you very much for taking time to speak with us.
Thank you, Michael.