Getting smart…Why the future of field service may lie in smart glasses (part two)

This post originally appeared on Field Service News.

In the first part of this series we looked at the why despite Google removing their Glass Explorer program in field service at least the future of Glass and other competitor products is very much alive and well. Now in the second part of the series we continue our exclusive interview with Pristine IO CEO Kyle Samani as he outlines some very significant savings that can be made through the correct application of smart glasses in field service…

Indeed when it comes to genuine cost savings the early statistics from Pristine make a very compelling case for adoption. Something Samani is clearly keen to get across in our conversation. His business is built on offering significant savings to their client base. “I think the ROI of implementing smart glasses actually delivers far more than a smart phone or tablets did when they first appeared.” He begins

“Our data is still young but looking at our primary customers these companies are going to save millions of dollars by using our technology.”

What is particularly compelling about the smart glass argument, and Pristine’s approach is that such savings are far more tangible than those discussed when we talk about other devices such as smart phones, laptops, tablets etc.

As Samani puts it “It’s not all theoretical efficiency gains, this is money going right back on the bottom line. This is cash.”

“Our general line in the sand we’ve drawn is if the cost of downtime is above $2,000/hour then we get really excited because we know we can deliver you an awful lot of value.” He surmises.

Perhaps we are putting the cart before the horse here though.

Of course such talk of tangible cost saving is attractive to any company, but what exactly does the Pristine product do and how can it be used to offer such significant rewards?

Samani describes the Pristine app as the only pure solution to stream live audio and video from Google Glass (or any other smart glasses) to any other device within the world in a secure capacity so it can be deployed in an enterprise setting.”

Basically the app in combination with a pair of smart glasses will provide a true “see what I see” experience which will in turn enable people to collaborate remotely, whilst the engineer (or even customer) on site are able to keep their hands completely free.

In Samani’s own words “Rather than actually sending a technician to a site now customers can put on the Glass and walk through what the problem is whilst being is remotely connected to a service centre.”

“If field service companies can centralise their workforce somewhat then their field workers can get a better quality of life and their customers are getting better customer support in every case.”

“The goal here is to save field service trips, so to save cost and also to help companies deliver a better customer experience.”

With such remote access tools becoming readily available, this could genuinely open the doors to many companies centralising their operation, bringing their most experienced engineers into a central hub,

One immediate thought around such a proposition is that this could literally change the way field service operations are structured.

With such remote access tools becoming readily available, this could genuinely open the doors to many companies centralising their operation, bringing their most experienced engineers into a central hub, and outsourcing a large amount of work to less skilled (and therefore less expensive) local workers, or even getting the customer to take on the work themselves.

This is certainly something that Pristine are seeing within their growing customer base.

“We’re seeing our customers equip both their existing customers and their existing field engineers with the technology. The goal is to deliver a player to every single case.” Samani explains.

However, the benefits of such a move aren’t solely financial there is also the soft benefit of improving the work/life balance of existing engineers.

“If field service companies can centralise their workforce somewhat then their field workers can get a better quality of life and their customers are getting better customer support in every case.” Samani asserts

“They [the field engineers] used to fly around 50 weeks a year now they fly around 20 weeks a year – it’s a totally different lifestyle for these guys and they spend more time with their kids and their families.”

A noble, if exceptionally forward thinking sentiment of course.

However, there are certainly the seeds of not just change but revolution being sowed as smart glass manufacturers, empowered by companies such as Pristine turn their focus onto field service.

This is a good point to bring up the fact that whilst Google are the most prominent manufacturer of smart glasses they are certainly not alone.

In fact both Epson and Vuzix sit proudly on the Pristine website front page alongside Glass. Pristine already work with pretty much every manufacturer of Smart Glasses available – a market Samani believes will continue to expand.

“Just Like there are 100 different mobile phone makers there will be 100 different manufacturers of Smart-glasses.” He explains “We’re going to be rolling out lots of different hardware to our customers. Our customers are going to get cost benefits from there being more choice and competition and they are also going to be able to choose the device that is right for them and right for their needs”

Of course developing a product to sit across a number of devices has it’s own challenge and as our recent research outlined there is a preference amongst field service companies for native applications (i.e. applications that are developed specifically for the device it is to be used on rather than device agnostic apps).

Is this a potential issue for a developer working in a fledgling market that is, by it’s definition, going to be fragmented as a number of companies release their own products?

Well it would seem that here smart glasses have been able to take advantage of the evolutionary path of the smart phones that went before them.

In short for Samani and his team at Pristine the variety of devices doesn’t raise too many issues. Outlining their working process in greater detail Samani commented “Whilst we are not using HTML5 we are using some web technologies, however we are using primarily Android type platforms. Basically we are now starting to see the types of decisions the device manufacturers are likely to make and are able to design for that.”

“Generally we find that our platform will work out of the box with most devices but if it doesn’t it’ll take one business day of tweaking to get it right.. We’ve encountered most of the variables of change and we don’t expect there to be that many more as the market evolves” He adds It all sounds rather exciting. (Something that is also clearly detectable in Samani’s voice is not just the passion he has for his product but the general excitement that smart glasses will changethe world in the not too distant future) But let’s not forget the huge amount of excitement when Glass was first announced.

The Elephant In The Room

There is an old story about a group of blind men and an elephant. One touches the trunk and describes the animal as long and cylindrical, one touches the animal’s side and describes it as a giant wall, and the third touches the tail and believes it is a plant. A man with the gift of sight walks by, sees them and explains to them they are all touching an elephant.

The story illustrates the fact that people can have an entirely different perception of the same experience, and can quickly change their paradigm when receiving another perspective.

In Stephen Covey’s book, The Seven Habits of Highly Effective People, he teaches that we can avoid this with Habit Number 5: Seek First to Understand, Then to be Understood. This is done through empathic listening, a communication style where the listener asks questions to the speaker until they have complete understanding and can empathize with them since they have taken the time to learn the speaker’s purpose and perspective. This communication style is a difficult process for many people. It takes patience to work through the process, and skill to effectively drill down to the root of a complex issue. It is even harder when you are on the phone without face-to-face interaction.

Have you ever been with a group of people, and no one wanted to talk about the elephant in the room? Or similarly, what about a situation in which people want to work through an issue but can’t.

It takes sufficient knowledge of a situation to understand the types of information that should be conveyed to a support representative. This is true for the giver or the receiver of the information, so that each has the right frame of reference to ask the right questions. Having a meeting where a team can sit around a table or sketch out ideas or explanations on a whiteboard is a preferred method in many companies, but getting everyone around a table (or elephant) isn’t always possible.

This elephant in the room is a more common phenomena than most people realize. It’s particularly common when working with complex mechanical equipment.

When a customer calls a vendor/OEM with an issue regarding a complex machine, they end up talking around the elephant in the room.. These complex issues cannot be diagnosed simply through a verbal explanation. Even through empathic listening, customers do not often have the background or experience to convey the necessary information to a support specialist over the phone. To ensure that the issue is resolved properly, technicians must often go onsite, often at great cost to the OEM and ultimately the customer.

Field technicians make trips to client sites on short notice, often bringing tools and parts for the machine or device they’re servicing. It could be an issue as simple as needing to reset a machine or adjust its configuration, but oftentimes field techs must make a second trip: the first trip is primarily diagnostic, and the second trip is a repair.

Thanks to new technology, innovative field technicians are now avoiding these trips by using video collaboration tools. Having a customer push a button on their smartphone, they can easily share what they’re seeing and hearing to the technician who can see what they see.

The customer support model is seeing a shift in the way companies engage with their clients. Rather than clients searching for a phone number, and fumbling through an ambiguous phone tree to try and reach a representative, they can have a rich customer support portal at their fingertips. With one app, clients can reach any one of their products’ manufacturers, receiving immediate assistance through a rich video support platform. With the ability to see a client’s environment through a video stream, support teams can guide clients verbally, or with annotated snapshots and diagrams.  It’s a win-win situation where the client sees less operational downtime and the manufacturer sees increases in customer satisfaction.

Now, everyone can see the elephant, from near and far.

 

Getting smart…Why the future of field service may lie in smart glasses (part one)

This post originally appeared on Field Service News.

The future of field service is going to be very different when the Smart Glasses revolution finally arrives says Pristine IO CEO Kyle Samani…

When Google announced the retirement of their Glass Explorer program some corners of the worldwide media denounced this as an admission of failure.

Despite huge early attention surrounding the smart glasses, the product had never quite lived up to the hyperbole and a growing number of less than sympathetic reports featuring Glass (not least to mention the widespread adoption of the newly coined term Glasshole) had meant that a shadow was being cast across Google’s latest centre piece.

For the naysayers the closing of the public beta Explorer program was a final nail in the coffin for Glass. In fact the truth remains very different.

In fact taking Glass out of the famous Google X research and development facility and moving the division into the main Google HQ was anything but an admission of failure. Actually it was a statement of intent – as was putting Tony Fadell (the creator of the original iPod and the Nest smart thermostat) at the helm.

What Google have done however, is take a step back from the world of the consumer and the increasingly blurred lines of fashion and technology and turned far more of it’s attention to the world of business.

An obvious, yet intelligent move given that a) the potential application of Smart Glasse is massive within industry – especially in field service and b) no one product has truly been able to meet the needs of and exploit the massive potential of wearables in field service.

Of course having the hardware is great, but to unleash the real power of such a device we need dedicated apps. For that we need developers that truly understand the audience they are working for.

So Google established the Glass at Work program.

A program where they selected the brightest and the best development companies working on Glass and gave them the support needed to help them flourish.

It’s a select group with only ten certified Glass at Work partners listed by Google currently. One of those companies is Austin based Pristine.io and to find out more about what the next chapter holds for Glass (and other similar products) in field service, we caught up with their CEO Kyle Samani.

The company is young, but they have a strong vision and are also clearly ambitious. “We started Pristine a little under two years ago” Samani begins “I started Pristine in May 2013 because Google announced Glass in February 2013. I just got really excited about the potential of a hands free computer in the workplace and I’ve been doing this full time ever since and having a blast” he adds.

Indeed Samani has the credentials to do well. As mentioned in the introduction, an understanding of the end-users that Pristine’s product is designed for is a large factor in their potential success and Samani whose background prior to launching Pristine was in the design and development of EMR systems for healthcare organisations was certainly well placed to step up to the plate

“I studied finance at NYU and I’ve been programming ever since I was a kid. I’ve always been at the cross section of business and technology” Samani explains.

So what led him to launching Pristine? Is it a case of being the right guy at the right time in the right place?

“Pretty much the moment Google announced Glass that’s when I had my Eureka moment – I thought that’s what I’m going to go and do.”

He admits “Someone was going to go out there and make the software to make this thing useful for the enterprise and I was dead set from the moment I saw it that it was going to be me.”

And it certainly seems that Samani has getting things right so far as his fledgling company has rapidly grown in the two years since inception.

Pristine now has over 20 employees and perhaps more importantly over 30 customers. Also whilst a background in medical systems provided a natural opening for Pristine, their customers are not confined to this space.

In a way that somewhat mirror’s Rugged Tablet manufacturer Motion Computing ,whilst they exploited a niche within the healthcare sector, it was soon apparent that within the horizontal sector of field service there lay a far greater prize and this is now a core segment.

As Samani explains “Our customer base is pretty broad, it does include healthcare but it also includes a lot of other companies outside of healthcare as well.”

“For example right now we are working with a large manufacturing company that produces conveyor belts, so big heavy industrial machinery, and those guys are seeing a huge amount of potential in the platform. We’re also working with companies now in the auditing space within food production for example.”

He continues outlining the variety of companies that could benefit from adopting Smart Glasses into their work-flow.

“Basically we’re seeing adoption of our technology in any environment where you have heavy equipment that if it’s not functioning, it’s going to effect the profit of the business operation. From lab diagnostics in a hospital to packaging equipment in a factory.”

“We even have one company we are working with in construction and for them a big bottleneck in terms of getting their work done is just getting an architect out on site.”

“So they are using our technology to replace the six hour flight and five hour drive. That’s essentially wasted time and expense for them but now they can have a guy on-site with a pair of smart glasses and an architect dialing in remotely avoiding the wastage”

Understanding the Optics of Augmented Reality

Microsoft recently announced their most technologically ambitious project since Kinect: the HoloLens. The HoloLens is a pair of smart glasses, not unlike Google Glass, Vuzix M100, and the Epson Moverio BT-200. There are also a number of startups and Asian OEMs working on their own smart glasses including ODG, Atheer, Meta, Innovega, PivotHead, Sony, Toshiba and more.

But HoloLens is different. It’s the first *true* augmented reality (AR) hardware platform. None of the commercially available smart glasses, nor any of the other devices that have been announced offer anything even remotely comparable. Although they’re all technically glasses, the HoloLens has been designed with very different use cases in mind, which in turn drove different product decisions in hardware and software.

Other platforms render the screen display in a single plane that floats directly in your line of sight (e.g. ODG, Meta, Atheer) or peripheral vision (e.g. Glass, Recon). But Hololens is different: the “screen” is designed not to be perceived as a screen. Rather, HoloLens tricks your eyes into seeing virtual objects layered into the physical world. In HoloLens, there is no (perceivable) screen. The difference between these two optical technologies can be hard to grasp, so I’ll walk through an example to illustrate the difference.

The commercially available large-screen hardware devices – Epson, Atheer, Meta, ODG, etc – are literally screens that float in front of your eye at a fixed distance. The screen resides in a single plane, even if the glasses can simulate 3D. To understand this, picture an 100” TV that’s 10 feet away from you and travels everywhere you go. Next, imagine that you’re watching a video of someone throwing a dodgeball at the camera (your face). Although the screen consumes the majority of your vision, it won’t really feel like the ball is going to hit you. Your eyes can clearly perceive that the screen is still 10’ away, and that the ball is trapped in the plane in which the screen exists.

Now imagine the same thing in HoloLens: you see your opponent throw a ball at you from across the room. Your instincts kick in and you move your head to avoid the ball because you actually think it’s going to hit you in the face.

The difference between floating screens that simulate virtual objects and holographic virtual objects is profound for AR applications. Games, for instance, can become incredibly immersive. Why stop at virtual dodgeball? Why not virtual Call of Duty or virtual Street Fighter?

HoloLens AR adds similar depth (pun intended) to remote collaboration use cases. Imagine virtual hands guiding you through construction – “place these boards together at this angle between those boards” – or a surgery in the OR – “drill there at this angle and stop . . . now” (Disclosure: we’re working with industry leaders in both of these use cases today without HoloLens. Microsoft, hurry up!). Enterprises will see *tremendous* ROI from this capability, particularly in field service, but even more broadly where teams need to collaborate for hands on activities such as audits, tool diagnostics, and more. With HoloLens, interactive virtual hands will guide your physical hands through the exact process necessary to fix the device in front of you.

But HoloLens isn’t the only game in town. Magic Leap raised a whopping $542M to commercialize what it calls “cinematic reality.” Although the optical technologies that Magic Leap is pursuing are different from those in HoloLens, they seek the same end: virtual objects layered into the real world that appear real.

Holographic technologies will reshape the design process across many industries, transforming architecture, interior design, city planning, industrial design, and more. In 10 years, we’re going to look back and wonder how creatives in each of these industries ever designed anything using 2D renderings of 3D objects in virtual space. In 10 years, these creatives will design everything in pixel perfect 3D holographic space.

 

The Strengths and Weaknesses of HLS in Real-Time Communications

Part one of a two part series….

When considering in-browser video solutions, HLS and WebRTC are the two contenders for modern standards-based solutions. Each of these technologies has a set of advantages and limitations which shape their optimal use cases.

Part 1: The Strengths and Weaknesses of HLS in Real-Time Communications

HTTP Live Streaming (HLS) is a client-server protocol that was originally designed by Apple to deliver streaming video to their mobile endpoints. HLS uses HTTP to deliver its content, allowing it to be implemented with relative ease, as streaming video is represented as a series of regular file downloads. Since HLS is HTTP-based, video can be securely transmitted over HTTPS to end clients. In addition, this allows HLS to send an individual stream to multiple clients with ease.

Since it is a TCP-based protocol, HLS allows for “reliable” delivery of video content. When chunks of the video are not received by the client, the delivery server attempts to retransmit the video until the client either receives it or times out. Unfortunately, this is a double edged sword, as it introduces delay into the delivery of the stream. For real-time communications, this results in a real-world lag that ranges from hundreds of milliseconds to 30+ seconds. While the adaptive nature of HLS does allow for degradation of video quality in poor network conditions, it does not mitigate the latencies introduced by constant retransmission.

HLS is a protocol that adapts to client bandwidth restrictions by providing streams with varying video and audio quality on the server side. On the client side, the client requests the highest quality stream that it can handle, based on its assessment of its performance. Since the video and audio must be encoded in different qualities, this introduces latency, either at the encoding-client or at the server. This latency can be mitigated by reducing the number of different quality options offered, although that effectively cripples the adaptive nature of HLS.

HLS uses H.264 as its video codec and can use either MP3 or AAC as its  audio codec. Since HLS is an older standard, chip manufacturers have had time to implement support for H.264 and AAC encoding and decoding in silicon. This allows HLS to provide relatively high quality audio and video with less CPU and battery impact. Although H.264 is a video codec that can be appropriate for real-time communications, [AAC and MP3 are audio codecs that are not designed for real-time communications. AAC and MP3 take >10x more time to encode a given audio sample](http://www.opus-codec.org/comparison/), when compared to real-time codecs like  Opus. Another disadvantage about AAC is that at the same bitrate, Opus performs better [in subjective quality tests](http://people.xiph.org/~greg/opus/ha2011/).


Overall, HLS excels in situations where guaranteed transmission of video and the transmission of an individual stream to multiple clients is required. From a use-case standpoint, this applies to one-way live-event broadcasts (sports games, concerts, keynotes, online education etc.). Due to the latency issues that come with the inherent design of HLS, it is not appropriate for a real-time communications scenario. This is doubly true for bi-directional communication, since latencies are effectively doubled.

What Infrastructure Do Manufacturers Need To Implement Servitization?

This post originally appeared on Field Service USA.

This is the third post in a three-part series exploring servitization. The first post dove into the underlying problem that begat the need for servitization, the second post dove into what servitization is and the impacts to manufacturers (OEMs) and their customers. This post will explore the infrastructure OEMs need to build in their organizations in order to bring servitization to life.

We’ll start with the implications of servitization on financial infrastructure, then dive into org structure, and lastly technology tools.

At the most basic level, servitization is about growing long term, recurring revenue while reducing short term business risk. More specifically, this is about moving from just selling capital equipment to selling equipment and services on top of that to maximize the value that customers can extract from a given piece of equipment. In the most extreme servitization models, this may even involve subsidizing capital equipment sales with service revenue, incurring a short term cash hit for even more long term recurring revenue.

The move to servitization has substantial impacts on cash flows. Traditional OEM cash flows tend to revolve around end-of-quarter as capital equipment purchases can take significant time to approve and typically revolve around quarterly budget meetings. Note that the numbers below are for a hypothetical OEM.

This stands in stark contrast to a more typical servitization based cash flow model, where revenue between equipment sales and service blurs and normalizes.

Although there is still seasonality in the servitization model, the month-over-month cash flow changes are tempered significantly. This reduces cash flow risk to the OEM, normalizes customer payments for the customer, and presents an opportunity for greater long term revenue capture per customer. Everyone wins.

Although every organization is different, it’s possible to paint broad strokes on the management structure needed to deliver servitized performance. The key to delivering servitized product delivery is organizational alignment. The lines between sales and service must blur: sales teams must learn, appreciate, and sell the value of service and customer-value-extraction. Service, on the other hand, must recognize that the company’s financial performance will depend on their ability to execute and ensure that customers extract the expected value from the OEM’s equipment.
If service fails, revenue will be negatively impacted. As a result of this interdependence, sales and service organizations need to work more closely together. These two organizations should report into a single unified head – with a title such as VP of Customer Success – whose two largest components of variable comp should be service delivery and sales, in that order. It must be clear from the top down that customer service is king.

Lastly, OEMs will need a new set of tools to succeed in a servitization world. Traditional field service management software will not be enough. Servitization is about customer service; as such, OEMs will need new tools to more effectively engage and support their customers. On demand support tools such as those offered by Pristine will become ever more important. So will tools that empower customers to diagnose and repair equipment on their own. These tools will become mission critical as OEMs won’t be paid if their equipment isn’t working as advertised. OEMs must find and implement the right tools so that their customers can service equipment on demand with OEM support and guidance.

Modernizing Power Plant Construction Practices: How to Guarantee Results on Time and on Budget

In 2010, the Argentine government awarded a $350 million contract to build the world’s southernmost combustion coal power plant. Located across the road from a state operated coal mine, the project was slated to take forty-two months to complete. Fast forward to 2015 and the plant is still not in service.  The majority of new coal power plant construction takes place in remote locations because demand for cheap power is high in rural underdeveloped areas. In addition, proximity to coal sources keeps costs low. With limited access to building materials, labor and electricity, delays in construction are very common. Consumers in developing countries are growing tired of consistent power shortages and outages.  States are feeling increasing pressures to build faster and service their citizens. As the demand grows for reliable, safe and sustainable power, companies need to look for innovative ways to complete projects on-time and on-budget.

Like skyscrapers and urban developments, power plants have to be scoped, assessed and designed to suit environmental demands and grid infrastructure. For this reason, the design, bidding and construction process is often lengthy and involves multiple vendors and stakeholders.  Large international companies, such as Doosan submit proposals that identify eight to ten contracting companies selected to provide specialized parts and services. To ensure that construction proceeds smoothly, contractors are required to provide parts and on-site expertise.  The combination of remote location, unique design and specialized labor, makes the building process expensive and prone to delay. What can project managers and contractors do more to keep costs low and improve efficiency?

Reduce Labor Costs

Most contracting companies have to send at least one expert to provide on-site support. Contractors have to pay salaries, high travel costs and cover living expenses. Instead of sending a piping expert from Finland to southern Argentina for seven months, why not send a specialist for a three week intensive training visit to train a local engineer on site? With advances in wireless and mobile technology, as the project progresses he can provide technical support remotely from Finland via live video. It costs significantly less to work from home. Additionally, the piping expert can consult on multiple projects at once, amplifying efficiency.

Improve Efficiency

With a variety of contracting vendors, seamless communication is crucial. A breakdown in communications can delay projects weeks and months, costing millions of dollars. Picture this scenario. The boiler team uses specs provided by a conveyer belt company to ensure the coal belt from the mine will seamlessly integrate with the boiler system. Four months into constructions the conveyor company decides to install a belt with higher temperature resistance but fails to communicate the updated specs to the boiler team.  Progress on the boiler gets delayed two weeks, as the team waits for a new fitting to complete the coal belt-boiler integration.  A cursory review of the on-site log book indicates that the site manager was notified of the equipment change but not the spec upgrade.

Different technicians and subcontractors move in and out of construction sites throughout the project lifecycle. To avoid lapses in communication all the relevant stakeholders need to be regularly updated on project progress. Detailed walkthroughs help stakeholders monitor progress, plan ahead, and keep contractors accountable, but physical log books with follow-up conference calls and emails are not sufficient. To produce detailed reports for vendors, site managers can use a combination of smart sensors, project management software and advanced video technology. Devices like smart glasses, make virtual walkthroughs easy. Prior to arriving on site, the engineer accompanying the generator has been regularly reviewing construction footage and has a strong grasp on the unique features of the plant.  Rich visual documentation and schematic overlays can bridge language barriers and communication breaks. When a problem arises, time to resolution can be halved if technicians and engineers can readily view construction and maintenance history.

Differentiate to Remain Competitive

In the next fifteen years, Myanmar hopes to build an additional 41 power plants to meet the demand of a fast growing, modernizing country.  As the demand for construction in remote areas increases, power plant builders and part suppliers need to leverage technology to improve efficiency and cut costs. To remain competitive, companies need to show they have the experience and technology necessary to complete project deliverables on time while keeping costs low.

How Can Field Service Organizations Reconcile The Incompatible Business Models of Yesteryear?

This post originally appeared on Field Service USA.

This is the second post in a two-part series exploring the two incompatible business models that coexist in most field service organizations. In the first post, I described the incompatible business models in depth. In this post, I’ll outline how some of the leading field service organizations are reconciling the diverging business models of field service.

How can service organizations align these models into a single model that rewards their best and highest margin customers, while encouraging their lowest margin customers to invest and improve? To answer that, we must first understand the crux of the problem.

The vast majority of equipment manufacturers organizations aren’t selling what their customers are buying. This sounds like an inflammatory statement, but it’s not: customers are buying a capability – which happens to manifest as a physical tool – in order to accomplish a task. Customers extract value from the capability each time they use the capability. Customers are buying value extraction, not tools and service contracts.

On the other hand, vendors & suppliers are selling capital equipment and service contracts. These two items are enablers for customers to extract value, but they are not perfectly aligned. For example, customers often have to invest hundreds of thousands of dollars – or in some cases millions – before they can extract a single dollar of value. Once a customer buys a piece of equipment, they have transferred all of the leverage over to the manufacturer by paying a large fee up front. Once the manufacturer has been paid, there is a lot less incentive to guarantee that the customer extracts the expected value from the system.

How can service organizations rectify this discrepancy? In a word, servitization.

Servitization is a not a new concept, but one that is still only being pioneered by the earliest .1% of service organizations. It’s a material shift from the traditional model of selling capital equipment and service contracts.

So what exactly is servitization all about? It’s about aligning what equipment manufacturers sell and what customers buy to be 100% aligned. It has material impacts on cash flow, revenue recognition, business operations, hiring, culture, and more.

Let’s walk through a few examples of servitization to understand what exactly it is, and what the impacts are:

What if airlines didn’t buy planes, but rather paid Airbus for a certain number of flight hours, with Airbus supplying the necessary equipment to achieve the request number of hours?
What if hospitals didn’t pay for MRI equipment, but bought a certain quantity of clinical hours per year?
What if manufacturing facilities didn’t pay for conveyer belts, but paid for hours of belt rotation?

In each of these examples, traditional capex is converted into opex.

What does this mean for the manufacturer?

1) The traditional payday from the sale of a piece of equipment now becomes amortized over the course of many years. This has serious cash flow implications.

2) Ongoing revenue from a sale indefinitely.

3) An incentive to ensure uptime at all costs.

4) That the solution needs to deliver value as quickly as possible; otherwise the customer will return the solution.

5) Solution vendors can generate more revenue per customers (over time) by providing a potent combination of equipment and associated service.

What does this mean for the customer?

1) No capital budgeting or capex.

2) Reduced risk associated with purchasing equipment.

3) Closer collaboration with the vendor.

4) Ability to return equipment without eating a massive sunk-cost.

But perhaps most importantly, the servitization model aligns incentives completely. In this model, customers pay as they extract value from the product, which means that manufacturers are incentivized to ensure that customers can extract as much value as possible. In this model, service organizations are incentivized to work with their customers to ensure success, rather than simply minimize service cost (whether by shaving staff or trips). Rather than look at service trips as a cost with no marginal revenue, service trips become revenue enablers for all customers.

So, what companies are implementing servitization models? How are they doing it? What are the outcomes? I’ll explore that in the third post of this series.

New Technology Enables April Fools To See Into The Future

“Jimmy translating his revolutionary time travel equation into Node.js”

“Jimmy translating his revolutionary time travel equation into Node.js”

Pristine is proud to announce today that we are expanding our best-in-class remote collaboration solution, EyeSight, with ForeSight, a best-in-class time travel solution.

Pristine’s EyeSight solution is changing how companies across the country collaborate to solve hands on problems in challenging work environments such as operating rooms, factories, power facilities, and ambulances. “I’ve saved a ton time and money on business trips into the field by remotely collaborating with my clients, even using smart glasses to do hands-free video calls. I can solve the issue at hand, be home for dinner and watch the game. If only I knew what the score was going to be before the game started, that’d be great.”

Our customers have spoken and we have listened. That’s why we’re unveiling Pristine ForeSight, a bleeding edge time travel solution.  Using a simple date picker, ForeSight enables our customers to pick the time and date they’d like to view using the application.

“I’ll never get rid of my Tardis, but being able to see into the future with my iPhone or a pair of smart glasses is awesome. I haven’t been this excited since my iPhone 9” said Doctor Who.

Pristine’s newest client, Merlin, is ecstatic. “I’m so happy to see this new product. Being born at the end of time and living backward through time, I can now use Pristine ForeSight to see into my past!”

“I don’t even have to say ‘scalpel.’ My physician assistant is already handing it over,” said a doctor that uses ForeSight

Pristine’s DevOps Engineer, Jimmy, says “When using our revolutionary new Foresight app, I don’t even have to DevOps any more, cause I can see that I’ve already DevOps’ed”

 

Disclaimer: We at Pristine do not condone our clients using Pristine ForeSight for use in predicting stock prices and lottery numbers. Pristine ForeSight downloads will be limited to only 20,000 available; however, if you download the app you will be able to see all of the updates we will be providing to the product, the future dates and times of product releases, and our future speeches at the United Nations. Using Pristine ForeSight to watch your favorite TV Shows may result in SPOILERS. Also, seeing yourself in the future with gray hair can accelerate the amount of gray hairs you have in the present. Do not try using Pristine ForeSight without the consultation of a Tarot Card Reader.

 

About Pristine: Pristine is pioneering the “wearable worker,” with enterprise software solutions for smart glasses. EyeSight, Pristine’s flagship platform, powers secure and scalable audio/video streaming for hands-free collaboration and remote support in life sciences, industrial and manufacturing environments, field services and healthcare. With on-demand expertise from off-site specialists, Pristine’s clients are reducing costs and driving ROI through case pre-screening and guided service workflows. EyeSight is available across every platform: Mac, PC, iPhone, iPad, Android, Google Glass and Vuzix, and is HIPAA compliant. More information can be found at on Pristine’s website (www.pristine.io), Pristine’s blog (www.pristine.io/blog), and by following @PristineIO on Twitter (www.twitter.com/pristineio).

Field Service Organizations Are Burdened With Incompatible Business Models

This post originally appeared on Field Service Blog.

pristine eyesight smart glassField service organizations encompass two distinct business models that are intrinsically incompatible, yet the norm. How is this possible, and how can service organizations reconcile these models?

I’ll start by explaining the business models that service organizations are burdened with. They have two types of customers: those on contract, and those off contract. Sales divisions are asked to sell service contracts because they’re intrinsically high-margin, and in some cases, 100% margin if the customer never calls for support. And yet, once the equipment sale has been made, if the customer is on contract, the service organization is incentivized not to come out and actually service the customer. Why? Because the trip is purely a cost and is eating into what was 100% gross margins. I’m not suggesting that service organizations act unethically and violate service contracts by not sending staff out; rather, I’m saying that on a marginal basis, with a service contract in place, service organizations would rather not come on site to service a customer than come on site because on-site trips incur significant costs that cannot be recouped on a marginal basis.

On the other hand, service organizations are happy to service customers who are off contract. Why? Because the service organization can gladly mark up the cost of the ad-hoc visit to cover the marginal costs of the trip. For off-contract customers, service organizations profit from every service trip. The irony of this is that although service organizations profit from servicing off-contract customers, service organizations are always trying to upsell service contracts!

Thus is the paradox of service organizations: they’re incentivized not to service their best customers – those who have agreed to pay for a service contract – and are incentivized to service their worst customers – those who won’t pay for a service contract.

How did these incompatible models come to coexist?

In short, the current divergent business models are based on legacy assumptions. Decades ago, field service was different than modern service:

1) equipment wasn’t as complicated, and was thus more capable of being fixed by local technicians rather than experts employed by the manufacturer

2) there were fewer electronics. Electronic components are increasingly difficult to fix by non technical experts, requiring professionals with entirely new skill sets

3) customers were less demanding in terms of guaranteeing reduced downtime and response time

Over the last few decades, these assumptions have broken. Equipment is more complicated than ever, and businesses are increasingly less willing to deal with downtime. Despite these changes, the field service model hasn’t materially changed. Service organizations still try to up-sell service contracts, and still do everything they can to avoid on site trips since on-site trips are so expensive on a marginal basis.

The output of the structural changes is that field service has for many organizations devolved into a cost center, or at best a marginal profit center. But given the antithetical models that service organizations have to house, service has lost strategic relevance.

In the next post of this two part series, I’ll explore how some of the leading equipment manufacturers and their service organizations are re-inventing their service models to align with customers more effectively, and as a result, drive strategic value of service organizations.