The CEO of ERP provider IFS explains how field service management (FSM) and helps companies meet the increasing expectations of demanding customers with higher revenue and customer satisfaction.
As companies seek higher loyalty, retention, and loyalty from their customers, service has become a critical path forward. Field service management (FSM) solutions can help firms take the servitization journey and meet the expectations of demanding customers.
We spoke about this with Darren Roos, the CEO of software provider IFS. Previously, he was President of SAP’s global ERP Cloud business.
- What is field service management?
- What does servitization mean?
- Servitization and culture change
- Lessons for the servitization journey
This transcript has been lightly edited for length and clarity.
Michael Krigsman: 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.
Darren Roos: I'm CEO of IFS. We're an enterprise software business, one of the fastest-growing enterprise software businesses in our space. We're 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 differentiates IFS is that we're 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.
Michael Krigsman: Darren, we hear a lot about field service management and servitization. We need to begin this conversation with an explanation of field service management. What do we mean by that phrase?
Darren Roos: 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 how service impacts businesses is a little broader than just that track optimized and operationalized.
Michael Krigsman: Darren, how does field service management impact or benefit customer experience?
Darren Roos: 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 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 elements that I think can't be underestimated.
Michael Krigsman: Of course, I have to ask. What has been the role of IFS in this evolution?
Darren Roos: 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.
Michael Krigsman: It sounds like you're trying to weave service into the foundation or the core of operations across many different departments in an organization.
Darren Roos: 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 how 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 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.
Michael Krigsman: You've used the term servitization several times. What do you mean by that?
Darren Roos: What servitization is, it's how you're providing a service around a product so that the offering becomes the service. I touched earlier on how businesses can 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.
Michael Krigsman: At the end of the day, is the subscription component important in this?
Darren Roos: Absolutely. I think it goes away from the importance of building a good product and buying it at a specific price but 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.
Michael Krigsman: 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.
Darren Roos: Yeah, I think it is 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 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.
Michael Krigsman: Darren, how much of this is a cultural change, a mindset change, rethinking the relationship between your organization and your customer?
Darren Roos: 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 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.
Michael Krigsman: It sounds like there's a dual-link that's going on all the time here because, on the one hand, it is beneficial for the customer. You're creating that stronger link, that stronger relationship. That then engenders the virtuous cycle of producing loyalty back to the organization that's providing the servitized offering. At the same time, it creates a responsibility for that providing organization to do the right thing then for the customer to maintain that positive cycle.
Darren Roos: 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 receiving it.
Michael Krigsman: 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?
Darren Roos: It's got to be a cultural change. You've got to be thinking about what is the process that you're 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 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 eight times more likely to increase profits directly linked to digital transformation in these servitized companies.
The value is 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 prepared 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.
Michael Krigsman: Then I have to ask you. Give us the 30-second sales pitch on IFS.
Darren Roos: Our commitment to service management and the experience that we have is 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 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.
Michael Krigsman: As we finish up, give us your final thoughts on servitization and advice for companies taking this journey.
Darren Roos: 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. Still, you must have a partner, a technology partner who can leverage lots of experience 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.
Michael Krigsman: Darren Roos, CEO of IFS, thank you very much for taking the time to speak with us.
Darren Roos: Thank you, Michael.
Published Date: Jul 29, 2020
Author: Michael Krigsman
Episode ID: 664