Outsourcing Field Service
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1 Astea Whitepaper: Outsourcing Field Service Outsourcing Field Service WHITEPAPER An Astea International White Paper 1
2 Introduction Outsourcing part (or all) of a company s field service operations is not a new concept; service organizations have frequently turned to third-party providers or independent contractors to help meet seasonal demand or provide coverage in far-flung geographic areas. But the conversation around outsourcing is changing. Instead of simply handing off work that a company can t perform (or doesn t want to perform), organizations are approaching the process from a partnership perspective, and searching for partners that can help meet or exceed customer experience expectations. This evolving view of outsourcing has also made it critical for service organizations to maintain more control over the customer experience and increase their visibility into outsourced service processes. Extending the service chain to outside providers doesn t have to result in a loss of visibility into technician and customer activities. Providing technicians and partners with the right technology to capture customer, product, equipment, and work order information along with the ability to transfer that data to the primary service organization can result in a better connected service network. Field service organizations (FSOs) also have more options available when it comes to structuring their outsourcing relationships, from traditional agreements where third parties agree to complete a set number of work orders, to more integrated scenarios where the third-party provider becomes a true extension of the service organization and its brand.
3 What s Driving the Need for Outsourcing? Companies are leaning harder on their service organizations for decreased costs, increased revenues and competitive advantage. Service organizations have turned to outsourcing to increase geographic coverage, improve profitability, reduce labor costs, and to improve workforce flexibility. At the same time, there is higher demand for service and a shrinking pool of available technicians. According to research from The Service Council, 55% of service companies reported an increase in total field service activity in 2015, despite the increase in the use of remote service and self-service capabilities. Why is this? According to the data, it is the result of an increase in equipment sold, customers holding on to equipment longer (and requiring more maintenance), changes in products and services sold, and increased service responsibilities. There has also been an increase in total service requests and visits. According to The Service Council data, the top drivers of outsourcing are: Increase in Equipment Sold Increased Service Responsibilities Changes in Products and Services Sold Equipment Requiring More Maintenance Increase in Service Requests and Visits 3
4 Astea Whitepaper: Outsourcing Field Service At the same time, there has been very little increase in the resources required to support that demand. The Service Council found that survey respondents reported a number of internal challenges to meeting service demand, including: 48% 48% 32% Lack of Resources Lack of Collaboration Between Service and Other Groups Inadequate Support 28% 28% Workforce Engagement and Retention Aging Technology Infrastructure 70% 70% of respondents also said they expect to face a workforce shortage over the next five to ten years. Automation and improved efficiency will help mitigate the effects of that shortage, but service organizations will still need to think about how they can strategically augment their workforce without significantly increasing their costs. 4
5 A Changing Mix of Outsourcing Partners Not surprisingly, the majority of service companies (76% according to The Service Council) are already having work done by third parties. For those that are leveraging outsourcing, third party providers are performing roughly 32% of work assignments on average. Asked what their top reasons were for outsourcing, 63% of respondents said they wanted to increase their overall coverage, while 56% wanted to increase flexibility in order to meet demand fluctuations. Service organizations also outsource to reduce their labor costs (44%) and increase availability (29%). So while there are cost savings to be had through outsourcing, most service companies are trying to improve their ability to meet customer demand. The nature of outsourced service is changing as new models emerge. Traditionally, service organizations handed some portion of their work orders to a third-party provider or possibly managed them through a dealer network. That is shifting with emergence of contingent labor, part of the so-called gig economy that leverages independent contractors. Top Reasons for Outsourcing 63% Increase their overall coverage 56% Increase flexibility in order to meet demand fluctuations 44% Reduce their labor costs 29% Increase availability 5
6 Astea Whitepaper: Outsourcing Field Service According to The Service Council, companies that are already outsourcing use a mix of third parties (24%), local service providers (20%), independent contractors (17%) and dealers (17%). Independent contractors will likely to continue to expand their presence, and some third-party providers are emerging that actually pool these contractors and manage work assignments via online portals and other tools. As the volume of work increases, there will be more opportunities for service organizations to seek out partnerships in order to meet demand. An increasing share of that work will be handled by technicians who are not traditional employees, so if your company hasn t thought about how to handle the use of third-party providers and independent contractors, you should start that process now. Outsourcing Mix 76% of service companies currently outsource 17% Dealers 17% Independent Contractors 20% Local Service Providers 24% Third Parties 6
7 Connectivity is King When choosing an outsourcing partner, service organizations generally look at a number of important factors, including presence in the regions/areas where service is needed; the ability to complete specific types of work (including product or industry certifications); performance in key performance metrics; and customer feedback regarding service work. Partners should provide consistent, quality service. This can be difficult to maintain if the right controls are not put into place. Service organizations often complaint about a loss of service quality when outsourcing work, so it is critical to establish ways to track processes and controls throughout the service supply chain. Hiring third-party providers also requires total accountability and the ability to monitor and manage their performance. This accountability and performance management can be especially challenging when multiple tiers of contractors and sub-contractors participate in the network. That s why connectivity is so important when working with third-party providers. Primary vendors should be able to quickly communicate information electronically to their partners and receive data back in real-time or near real-time to ensure visibility and maintain quality and consistency. 7
8 Astea Whitepaper: Outsourcing Field Service Connectivity is also important for providing access for the third-party provider to schedule jobs efficiently, retrieve critical customer/asset data, and effectively communicate work order information back to the primary vendor. Visibility will also provide the ability to measure partner performance, but that requires establishing metrics in advance. According to the Service Council, just 59% of respondents had metrics in place for their outsourcing partners. This has to change; without metrics it is nearly impossible to create a successful third-party relationship. Field service organizations need a way to determine what impact each service provider/partner is having on critical service performance metrics. Those metrics typically include SLA performance, response time, customer feedback, resolution time, first-time fix rates, number of jobs completed, mean time to repair, and service profitability. 59% According to The Service Council, just 59% of respondents had metrics in place for their outsourcing partners. 8
9 Technology: The Key to Successful Outsourcing As stated above, successfully managing outsourced service requires visibility and connectivity, and an investment in field service automation technology that can link both internal and external resources in the service network seamlessly. Successful outsourcing also requires a different approach to working with third-party service companies. The Service Council evaluated what partner management capabilities were in place at top performing companies those that were seeing the most success through their outsourcing efforts. Among the best practices in place at these companies: Exclusive training for partners (66% of top performers) Performance metrics were used for renewal (86%) Performance metrics were used to determine quantity of work (73%) Demand forecasts were shared with partners to manage resources (66%) Performance data were shared with partners for benchmarking (40%) Top performers were also more likely than other companies to provide an online portal to access work orders, training, and a company knowledgebase. They were also more likely to schedule work orders for their third-party partners. Partner Management Best Practices 66% Exclusive training for partners 86% Performance metrics were used for renewal 73% Performance metrics were used to determine quantity of work 66% Demand forecasts were shared with partners to manage resources 40% Performance data were shared with partners for benchmarking 9
10 Astea Whitepaper: Outsourcing Field Service Workforce planning tools can be an integral piece of the delivery channel optimization process, since workforce demands for service technicians are not always even from period to period or from branch to branch. With independent contractors or third-party providers thrown into the mix, these processes become even more complex the need for technology is even more apparent. Scheduling can be an extremely complex and demanding environment due to the infinite number of variables, constraints and possible solutions that are typical in field service organizations. Advanced scheduling solutions optimize the efficiency and effectiveness of the field operation, while minimizing labor costs, travel time and penalties, and maximizing SLA compliance and customer satisfaction/loyalty. Having a platform that serves as a single point of truth for the entire service network can provide the visibility and control service organizations crave when it comes to outsourcing. Having a platform that serves as a single point of truth for the entire service network can provide the visibility and control service organizations crave when it comes to outsourcing. In fact, a lack of visibility is one of the key reasons why some companies don t outsource. According to The Service Council s data, the top reason for not outsourcing was a lack of control over quality, according to 64% of respondents. Technology can help provide that control. Field service organizations need to have a high level of upstream and downstream visibility and accountability for service network automation and optimization. Whether that third party is an external service agent (SA) or a vendor that supplies parts, FSOs need to be able to track and manage all of the parties that participate in their service supply chain. Vendors and external service agents should have access to a secure portal that allows them to enter, update and view pertinent information as it relates to a service orders, logistics and reverse logistics functions. 10
11 Astea Whitepaper: Outsourcing Field Service Scheduling and management tools should support the company s unique outsourcing model. Will partners receive scheduled work orders from the primary organization, or will they be able to self schedule online? How will time, travel, and material costs be tracked and invoiced? Some tools allow users to create a database of technician types and skillsets, but that will require input from the partner organizations. Different partners may also have different contract requirements based on the type of work they are doing. Can the system handle these variations in pricing, payment, and SLA compliance? To truly integrate third-party providers, FSOs should make it easy for them to participate in the service delivery supply chain by providing bi-directional communication and visibility into important service functions. Third party providers should be able to log-in and see all of the work orders and activities assigned to them, and then update, add and close those activities. Checklists within these systems can ensure that third party providers follow the same service processes for consistency and ensure accurate data collection. 11
12 Conclusion Outsourcing will increase across the field service industry as demand increases and service organizations struggle to expand their internal workforce to meet that demand. To successfully outsource service operations, companies should establish metrics to monitor partner performance, and invest in technology and automation to make it easier to evaluate those metrics in real-time. Companies can t simply toss work orders over a wall and expect to maintain accountability and quality when it comes to customer service. By truly partnering with whatever mix of third parties, independent contractors, or dealers you establish to provide service on your behalf, you not only can improve your own coverage and responsiveness, but also ensure service quality across every channel. As the service industry faces an increase in volume, more stringent SLA requirements, and a labor shortage, this new approach to outsourcing will be critical for survival. About Astea Astea International is a global provider of software solutions that offer all the cornerstones of service lifecycle management, including customer management, service management, asset management, forward and reverse logistics management and mobile workforce management. Since 1979, Astea has been helping more than 600 companies drive even higher levels of customer satisfaction with faster response times and proactive communication, creating a seamless, consistent and highly personalized experience at every customer relationship touch point. Copyright Astea International Inc. All rights reserved. All other company or product names mentioned herein are trademarks or registered trademarks of their respective owners.
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