Strategies For Growth℠ Announces March 1, 2017 Warranty Management Webcast, to be Hosted by Tavant Technologies

Westtown, PA., February 16, 2017 – Bill Pollock, President & Principal Consulting Analyst, Strategies for Growth℠ (SFG℠), the Westtown, Pennsylvania-based research and consulting organization, today announced its upcoming Webcast entitled, “How the Right Warranty Management Solution Can Help Improve Your Organization’s Bottom Line!“, largely based on the findings from the firm’s third annual Warranty Chain Management Benchmark Survey Update.

The Webcast will be hosted by Tavant Technologies, “the world leader in providing Warranty Management Solutions”, and will be held on Wednesday, March 1, 2017, from 1:00 pm to 2:00 pm EST. A complimentary White Paper will also be available for download by Webcast registrants at that time.

According to Pollock, “The findings from Strategies For Growth℠’s 2017 Warranty Chain Management Benchmark Survey clearly reveal that services organizations that have acquired and/or upgraded their Warranty Management solutions within the past three years have begun to see significant improvements among key factors contributing to their respective bottom lines.”

“For example, since the acquisition or upgrade of their Warranty Management solutions, these organizations have realized:

  • A 9% improvement in Warranty Claims Processing Times (and are now processing their claims at a rate more than twice as fast as all others); and
  • A 6% improvement in Supplier/Vendor Recovery (as a percent of total warranty expenses).”

Led by Pollock, this Webcast will focus on the specific challenges that Warranty Management organizations are facing, the strategic actions they are taking to address those challenges, the technologies they are using, and the key drivers that are pushing them to strive toward Best Practices status. The importance of warranty analytics and the establishment of an effective Key Performance Indicator (KPI) program will also be addressed.

The Webcast is intended to provide Warranty Chain managers with the guidance they will need to build an effective Warranty Management operation that can take them to the next level with respect to increased revenue generation and improved customer satisfaction. Among the key areas to be addressed are:

  • What Best Practices Warranty Management Organizations are doing to attain the highest levels of Customer Satisfaction, Warranty Claims Processing Times and Service Profitability
  • What drives these organizations to aspire to higher levels of performance, and what challenges they are likely to be face along the way
  • How to emulate the strategic and tactical actions presently being taken and/or planned by these leading Warranty Services organizations

To register for the Webcast, simply click on the following Weblink: http://info.tavant.com/WCM_Warranty_Webinar_2017.html.

Also, please be sure to watch for more information from the SFG℠ survey results in upcoming issues of Warranty Week: http://www.warrantyweek.com.

About the Presenter

Bill Pollock is President & Principal Consulting Analyst at Strategies For GrowthSM (SFGSM), the independent research analyst and services consulting firm he founded in 1992. In 2015/2016, Bill was named “One of the Twenty Most Influential People in Field Service” by Field Service News (UK); one of Capterra’s “20 Excellent Field Service Twitter Accounts”; and one of Coresystems’ “Top 10 Field Service Influencers to Follow”. He writes monthly features for Field Service News and Field Service Digital, and is a regular contributor to Field Technologies Online and Warranty Week. Bill may be reached at +(610) 399-9717, or via email at wkp@s4growth.com. Bill’s blog is accessible @PollockOnService and via Twitter @SFGOnService.

About Tavant Technologies

Headquartered in Santa Clara, California, Tavant Technologies is a specialized software solutions and services provider that provides impactful results to its customers across North America, Europe, and Asia-Pacific. Founded in 2000, the company employs over 2,000 people and is a recognized top employer. Tavant is the world leader in providing Warranty Management Solutions. The company offers ‘Tavant Warranty’ – a globally leading, complete service lifecycle – on premise warranty management software and, ‘Tavant Warranty On-Demand’, The only 100% native warranty management system on Salesforce. Find Tavant Technologies at www.Tavant.com, and on LinkedIn and Twitter.

Real Time May Not Be Enough When Augmented Reality Can Make It Even More Real!

[This is the full, unedited, version of our Feature Article published in the April 21, 2016 edition of Field Technologies Online. The Blog version includes portions that did not make the publication’s final cut.]

Augmented reality may just be the “next big thing” in field service.

It hasn’t really been all that long since the field services community was introduced to the concept of “real time”. Prior to the introduction of real-time data collection, analysis and dissemination, most Field Services Organizations (FSOs) typically relied on batch-collected and -processed data; generally obtained from multiple sources, over an extended period of time; with data often read and input by hand into numerous paper templates; and having to wait for the proper review and approval before the processed data could be distributed to relevant parties.

Fortunately, those days are long-gone!

The proliferation of the application of the Internet; the advent of machine-to-machine (m2m) communications and the Internet of Things (IoT); and the exponentially growing degree of connectivity between not only machines and machines, but between machines and people – and people and people – has resulted in a real-time environment that has propelled the global services community to its current technological positioning.

However, real time may no longer be good enough for the global community of FSOs and their respective field technicians! As traditional Key Performance Indicators (KPIs), such as Mean-Time Between-Failure (MTBF), have steadily shifted from measurements reported in numbers of days, weeks or months just a couple of decades ago, to practically “never” today for many products, this particular metric finds itself diminishing in importance, and is no longer being measured by a growing number of services organizations. And even when equipment is about to fail, the easy availability of predictive diagnostics, remote diagnostics and real-time communications have made this formerly important KPI nothing more than an afterthought for many FSOs.

This is where Augmented Reality, or AR, comes into play.

According to whatis.techtarget.com, “Augmented reality is the integration of digital information with the user’s environment in real time. Unlike virtual reality, which creates a totally artificial environment, augmented reality uses the existing environment and overlays new information on top of it.” Think of the “yellow first down line” that magically appears when you’re watching a football game; that’s AR, in that it doesn’t create a “new” virtual reality, but, rather, it enhances the perceptual reality that you, the viewer, is able to visualize while watching the next down take place. It’s not a new creation; it’s an enhanced reality that makes it easier to process what’s going on, and what needs to be done next.

This is exactly how AR is able to assist in a field services environment; that is, to provide the field technician (who may not ever have been called upon to service a piece of equipment with such a long MTBF) to actually perform the repair by “overlaying” an enhanced reality – in 3D motion – over and above what he or she would otherwise be able to visualize, in order to make a quick, clean and complete fix.

Think of it this way: When field technicians are called on for service, they may be facing either a piece of equipment that they have rarely seen in the past; a device that is inherently complex and difficult to disassemble and/or reassemble; or a system that is so business- or mission-critical, that a single delay or misstep could bring a factory’s total production line to a screaming halt – or any combination thereof!

The ability to “see” this Augmented Reality – in 3D motion – with accompanying instructive text, metrics and repair parameters overlaid and easily articulated will undoubtedly provide, at the very least, an extra measure of comfort to the technician, as well as access to a readily available tutorial for performing the repair as quickly, accurately and safely as possible. As such, another historically important KPI, first-time-fix-rate, may also go quickly into the twilight, same as MTBF! And all it takes is the appropriate pair of special glasses for the technician to “see” what needs to be seen!

However, talking about Augmented Reality – rather than actually seeing it in action – is like trying to tell a Southerner how cold the Northern Winters are – in words. It’s just not possible. That’s why AR is best understood by actually seeing a demonstration of it in action.

At a recent field services conference, I was asked to cite what I believe would be the “next big thing” in field service. I suggested “Augmented Reality”. Why? Because we really can’t do things any quicker than real time; and we can’t make repair tutorials any smaller, more compact and/or transportable than they already are. What we can do, however, is make it easier for the field technician to “see” what needs to be done, in real time, and with an “augmented” view of what reality alone cannot, and does not, necessarily provide.

AR has already made it easier to follow – and understand – football games. Isn’t time that it was also used to make it easier to perform field service activities? The answer is resoundingly “Yes”!

PTC’s SLM Market Strategy – Built Solidly on the Intersection of SLM and the IoT (and Its Partnership with ServiceMax Doesn’t Hurt, Either!)

[With permission; excerpted transcript from an internal PTC Podcast, recorded on October 9, 2015, by Bill Pollock, President & Principal Consulting Analyst, Strategies For GrowthSM (SFGSM).]

Foundation of PTC’s SLM/IoT Strategy

The most important component of PTC’s evolving strategy is that it is built on a foundation of powerful technology as well as its existing base of more than 28,000 customers. And upon this foundation, PTC provides a full suite of solutions to an expanding global marketplace. As a result, I believe that PTC has been able to leapfrog the competition in a number of ways:

  • First, through the early recognition that the adoption and use of the Internet of Things, or the IoT, will be pervasive and ubiquitous;
  • Second, that it will need to actually guide and help the industry understand the potential of the IoT. And by that, I mean, using a consultative sales approach to tell customers how to begin their IoT journey, as the customers may not actually know their respective needs themselves; and
  • Third, by continuing to build its portfolio of IoT-supported Service Lifecycle Management, or SLM, solutions to provide total support for its global customer base.

However, the success of PTC’s vision will ultimately lie in the execution. That is, its ability to build such an all-encompassing strategy on a solid footing to ensure homogeneity, consistency and, ultimately, acceptance by the global marketplace.

Early on, PTC recognized that the IoT would have the most significant impact on, and fastest adoption in, Service Lifecycle Management (or SLM). In fact, PTC CEO, James Heppelmann has repeatedly said that the first use case for IoT is SLM. Why would a manufacturer/OEM want to embrace an IoT strategy? The answer is to better serve its products – and, by doing so, its customers.

Accordingly, the company took several ground-breaking initiatives to prepare itself – and its customers –through a well-planned, and highly orchestrated, mix of internal development and external acquisitions.

PTC recognized that the pervasive adoption of the IoT in SLM would lead to a succession of sea changes that would ultimately change the industry forever – quickly, completely, and with little tolerance for laggards, late bloomers or followers. Further, based on the extensive analysis of market research conducted both internally, as well as by us at Strategies For GrowthSM, PTC foresaw the coming disruptive change, and took concrete steps to prepare itself, as well as its partners, and its customers.

For example, one shining moment for PTC in the SLM space was its January, 2013, acquisition of Servigisitics.

Acquisitions of Servigistics, ThingWorx and Axeda Systems

The Servigistics acquisition, in retrospect, was a critical component of PTC’s strategy to help manufacturing companies capture the enormous revenue potential in after-market services. It also set the stage for PTC’s vision in building out a technological infrastructure, based on the IoT, to enable these firms to transition to, and realize the big opportunities coming from, an outcome-based services strategy. This is generally referred to as “Servitization”.

Over the past year or so, the main message that the market is hearing from PTC is that it is “extremely serious about the importance of the IoT” – and that it is driven to strengthen its continuing leadership role by integrating the IoT into all aspects of service.

While PTC may have surprised many industry observers by acquiring ThingWorx back in December of 2013, in retrospect, that was the move that propelled PTC into the forefront of the IoT – and all of its numerous lifecycle management applications. The IoT is extremely important, not only to the company’s SLM solutions, but also to its PLM and ALM solutions. This acquisition, more than any other, served to communicate the following two messages to the services community in a big way:

  • First, it solidly positioned PTC as the global leader in each of its respective sectors within the Enterprise Lifecycle Management world (that is, Product/PLM, Service/SLM and Application/ALM, ).
  • Second, it clearly put the global business community on notice that PTC was placing the future of its entire solution portfolio in the connected hands of the IoT.

The acquisition of Axeda Systems in June of 2014, further bolstered PTC’s IoT hold on the marketplace by filling in one of the few remaining gaps in the company’s ability to support connected products, people and technology – that is, the software solution vehicle by which its IoT offerings can make their way into the marketplace.

Together, the ThingWorx and Axeda acquisitions have paved the way for PTC to execute on its pervasive IoT- based strategy. But there’s more to it that finally cements everything together – namely, the partnership that PTC has just forged with ServiceMax in April of this year. I believe this partnership represents the capstone of what provides PTC with the ability to fully support the global SLM marketplace.

The PTC-ServiceMax Partnership

ServiceMax and PTC share a common vision for changing the relationship that companies have with their customers by shifting service delivery from reactive, to proactive and predictive. The two companies have highly complementary technology offerings, and the combination of ServiceMax’s innovative service execution capabilities with the proven technical information, parts management and revenue optimization solutions from PTC stand to be unparalleled in the industry.

PTC’s Heppelmann has said that “Empowering the entire portfolio with Internet of Things (IoT) connectivity, will revolutionize service. Service organizations will now be able to capture new business, increase revenue and heighten customer loyalty faster, more effectively and with more ease than ever before.” And I believe that its partnership with ServiceMax will make that happen – not only sooner, but better, as well!

What the partnership brings to PTC and its customers is both a powerful and modern cloud-based field service management solution, fully supported throughout the implementation, management and delivery of services. For ServiceMax, the partnership broadens its portfolio with the addition of service information and parts management functionalities, extends its market reach to a global base of more than 28,000 PTC customers, expands its distribution channels multifold and, most importantly, empowers its entire portfolio through PTC’s state-of-the-art ThingWorx IoT platform.

But, why ServiceMax? ServiceMax was the first complete field service software solution to help companies of all sizes manage workforce scheduling, while also providing solutions for social, portals, and analytics – all delivered in the cloud, to any mobile device. And PTC offers the “book ends” to that critically important scheduling function: that is, technical information on one end; and parts management on the other end.

This combined functionality now allows customers to directly leverage product information to ultimately transform service from a reactive product repair function, to a proactive and predictive customer success function – all IOT-enabled, with the prospects of blowing everyone else out of the water. As a result, the company’s customers can expect to fully realize the promise of predictive service – as well as the lofty goals of Servitization.

With its corporate strategy built on the solid foundation of the intersection of SLM and the IoT, we can only expect PTC – and its customers – to continue to evolve as quickly as the IoT itself!

3D Printing and The Future Of Field Service

[The following is a transcript of the 3D Printing-related material we submitted to Field Technologies in response to their request. The full article was published in the August 24, 2015 issue of the magazine; however, only some of this material actually made the cut (i.e., there are three other industry experts who also had their say in the Field Technologies piece).

Read our responses first, then read the Field Technologies piece to gain a perspective from among the four of us. A link is provided at the end of our Blog, for your convenience.]

What’s the Buzz about 3D Printing?

The thoughts about the buzz surrounding 3D printing’s use in field service are reminiscent of a similar buzz about RFIDs some years ago. Everybody is talking about 3D printing in terms of “Is it for real”, “Is it affordable?”, “Is it practical?” and “When will it be readily available?” And, of course, the answers to all of these questions are “yes”, and “now!”

As was in the earlier case with RFIDs, while everybody continued talking about the what, where and when of its ultimate adoption by the industry, the technology simply kept rolling out, first among the more progressive organizations (i.e., either on their own, or by the “mandate” of some of the larger, market leading organizations such as Walmart). However, while the debate raged on, the market seemed to embrace the “new” technology without much fanfare, on a steady and nicely paced-out basis. Before the less progressive organizations in the marketplace even knew it, RFIDs became fairly ubiquitous – and I see the same adoption scenario for 3D printing as well.

There are, however, some important differences that distinguish 3D printing from other “new” technologies. For example, the cost for implementing a global 3D printing capability is far more expensive than it was/is for an RFID network. Accordingly, while field service organizations of all types and sizes could launch an RFID solution fairly inexpensively, 3D printing – at least for the moment – may find itself used more prolifically by larger organizations at the start.

Further, RFID solutions are typically designed and implemented for the masses – that is, to track a large variety of products, parts and components in the field; whereas 3D printing – at least so far – is designed primarily for the special needs of organizations that cannot easily, or cost-effectively, stock infrequently-used parts, parts in remote places, or deal with the logistics of a growing installed base under their current management and support.

In any event, the buzz is certainly warranted! 3D printing is quickly becoming an important component of large organizations’ parts management programs and, as the cost for implementation and maintenance decreases over time, it will likely spread throughout the field service industry as more and more uses come to the forefront. Once again, while we’re all still talking about it, others are doing something about it! It’s already here!

What are Some of the Potential Use Cases for 3D Printing in Field Service?

It seems like services organizations have been forever struggling with the best way to manage spare parts availability and accessibility. For many, 3D printing can assist in both of these areas.

For decades, many services organizations have used the 80/20 rule when it comes to parts planning for the field. That is, have the field technicians carry the 80 percent of the most commonly used parts in their van, and maintain a stash of the 20 percent less frequently-used parts in a regional or national hub with availability via overnight delivery.

Over the years, this 80/20 rule may have morphed to a 60/40 or even a 50/50 rule for some organizations, due to increasing parts, inventory and logistics costs. However, even at these lower ratios, the associated costs for managing parts inventory have skyrocketed. As such, many organizations have been looking for alternative means by which they could still provide the necessary parts to their field technicians, cut the time required for accessing these parts, and getting the customer’s equipment back up and running as soon as possible. For many, 3D printing is not merely the best solution – it is the only solution!

Among the most attractive potential uses of 3D printing is the ability to print parts for users at remote locations, thereby cutting the time to complete the repair from several days to within hours. While the customary remote locations most often cited are typically somewhere in the plains of the great southwest, or the snow-covered northwest provinces of Canada, as the world market for field service support continues to grow exponentially, virtually any location not situated near a commercial hub may nowadays be considered as a “remote location”.

Perhaps the greatest remote location currently supported “in the field” is the International Space Station (ISS), which has already had several parts printed in deep space – along with some of the tools required to put them in their place! Talk about an otherwise expensive “truck roll!”

In some cases, the most intriguing uses of 3D printing in field service have come in the aerospace segment. In addition to NASA, the United Kingdom’s Royal Air Force (RAF) has also used 3D printing to print components such as protective covers for cockpit radios and guards for power take-off shafts, resulting in cost savings of more than £300,000 (US$491,364) since adopting the technology, with another £1.2 million in savings expected by 2017. Rolls Royce is also using 3D printing to provide parts for its jet engines.

Further, as driverless cars begin entering the marketplace, empowered by the Internet of Things (IoT), what would make more sense than supporting these new technology transportation systems with 3D-printed parts? This, and other “new” applications of technology, will likely provide a significant breeding ground for highlighting the use of 3D-printed parts and components.

What Benefits Could 3D Printing Bring to the Field Service Industry?

The proliferation of 3D printing is not only limited to the manufacture of parts and components, but, even more importantly, to the design and refinement of these items before they even see the light of day in the marketplace. For example, according to Forbes, GE has developed a “radical new fuel injection systems for a jet engine” initially designed and built from an industrial 3D metal printer. Previously, the system had “21 separate parts, which needed to be produced, shipped to the same location, and then assembled.” However, the 3D-printed system has only one part – but is five times stronger, resulting in increased fuel efficiency of 15 percent, or just over US$1 million per year – per plane!

While most people look to the availability of parts for remote locations to represent the major benefit of using 3D printing, it is more likely that the most beneficial attributes will be manifested through advances in design and engineering (i.e., more easily demonstrable “what-if” scenarios, quicker design-to-test times, reduced R& D costs, etc.). However, where 3D printing could potentially be most disruptive (i.e., borrowing from the terminology normally associated with the IoT), is in the areas of how future design and engineering operations will be staffed and funded (i.e., less people and less funding needed?); the ability to make parts, components and systems less complex and more efficient (e.g., one part, rather than 21 parts, etc.); and the simplification of the overall parts supply chain (i.e., the reduction – or elimination – of some of the channel players currently involved in parts management and logistics, etc.). In fact, the entire parts supply chain could find itself disrupted by this new technology.

Do you See this Trend Taking Off? Why or Why Not? If So, When or How Rapidly?

This trend is already taking off! The early adopters have already been quite successful in implementing solutions that save time, save money, streamline the service supply chain and keep customers happy. If managed properly, this could be both the CSO’s and the CFO’s dream come true!

As more and more consumers learn more about 3D printing from features in trade journals like Field Technologies, through various LinkedIn posts and via social media, the push toward adoption is likely to get stronger.

It also won’t be long before consumers will be able to print their own souvenirs at seaside resorts or tourist attractions – you can even print your own life-size Paul McCartney figure. The double-sided push and promotion of 3D printing through both the commercial and consumer channels will likely lead to a higher demand for the technology as well.

Are You Aware of any Real-World Examples of How 3D Printing Is Successfully Being Used in Field Service Today?

So far, most industry observers have been focusing on the most dramatic uses of 3D printing to convey to the marketplace. However, the real story is the one unfolding at many organizations around the world who are finding that they can employ this new technology not only to save logistics and transportation costs, but design and engineering costs as well.

3D printing is not only to be used for manufacturing parts, but for the printing of the tools that are used to install them. It will also be used in the back rooms with respect to design, engineering and applications.

With the great success already experienced in, arguably, one of the most demanding vertical segments (i.e., aerospace, aviation, etc.) it will only be a matter of time before usage becomes even more widespread throughout all major services segments. Currently, people are using 3D printing to print complete homes, cars – and, yes, even Beatles! With great interest expressed by both the commercial and consumer segments, the receptivity to the use of 3D printing in both the B2B and B2C segments is likely to remain strong.

What other Comments Do You Have about 3D Printing that Our Readers Should Be Aware Of?

Of course, before any “new” technology can be successfully embraced by the marketplace, it must also be properly packaged, promoted and marketed. One trend that I foresee in the not-too-distant future is the packaging of product sales and service, in a 3D-delivered world. For example, the customer (i.e., business or consumer) would buy the 3D-printed product, and sign on for an extended warranty program based on 3D-printed service and support. It even sounds like they should be packaged together!

Oh – and by-the-way, while you’ve been reading this, more organizations have silently embedded 3D printing into their core service and support offerings (along with RFIDs)! Just saying!

[To read the Field Technologies article for which this information was prepared, please visit: http://www.fieldtechnologiesonline.com/doc/d-printing-and-the-future-of-field-service-0001.]

The Acquisition of Axeda Makes Things Work for PTC

On July 23, 2014, PTC, the Needham, Massachusetts-based provider of Product Lifecycle Management (PLM), Application Lifecycle Management (ALM), Service Lifecycle Management (SLM) and related offerings announced that it had signed a definitive agreement to acquire privately-held Axeda Corporation, a pioneer in the development of solutions to securely connect machines and sensors to the cloud. PTC will pay approximately $170 million in cash for the company.

This follows, by only seven months, PTC’s acquisition of ThingWorx, developer of the leading Internet of Things (IoT) rapid application platform, for approximately $112 million in cash. Together, these two acquisitions now firmly position PTC as the global leader in Enterprise Lifecycle Management (ELM) services through its wide range of offerings supporting both the Product and Service sides of the equation.

In a global services market increasingly being characterized as ‘connected’ (i.e., via the IoT), this acquisition makes a great deal of sense for PTC, as Axeda’s offerings complete (i.e., at least temporarily) the ‘hat trick’ of resources that PTC now has in its arsenal that allows it to support all facets of the enterprise manufacturing sector that it targets as customers.

PTC’s Leadership in the SLM Space

PTC historically has been a global leader in the PLM segment, competing head-to-head against companies including Autodesk, Dassault Systèmes and Siemens PLM, among others. Its acquisition of Servigistics in August 2012, rocked the SLM world as one of its principal vendors was ‘swallowed up’ by an unknown (i.e., to the SLM market) company on a near-unexpected basis.

The acquisition, in retrospect, was a critical component in PTC’s strategy to help manufacturing companies capture the enormous revenue potential in after-market services. It also set the stage for PTC’s vision in building out a technological infrastructure to enable these firms to transition to (and realize the big opportunities in) an outcome-based services strategy.

Other prior acquisitions, made by either the acquiring or the acquired company, have provided added depth to PTC’s current global Product- and Service-focused suite of offerings that also features Application Lifecycle Management (ALM) and Computer-Aided Design (CAD), among others. Most notably, these included PTC’s acquisition of 4CS, a leader in contract and warranty management solutions, in September 2011; Enigma, a developer of software that aggregates and delivers technical content in aftermarket service environments, in July 2013; and Atego, a UK-based developer of model-based systems and software engineering applications, just a month ago.

Prior to its acquisition by PTC, Servigistics had also just recently acquired MCA Solutions, a best-of-breed provider of service parts optimization solutions, in March 2012 – a good two-to-three years following its acquisitions of Click Commerce (2009) and Kaidara (2010).

However, once all of these acquired resources were housed under a single roof (i.e., PTC’s), the company surprised many in the industry by going after – and buying – ThingWorx, the up-and-comer platform provider that was taking the explosive IoT world by storm. This acquisition, more than any other, communicated the following two messages to the services community in a big way:

  • First, it solidly positioned PTC as the global leader in each of its respective sectors within the Enterprise Lifecycle Management (ELM) world (i.e., but let’s not forget about Cisco Systems!); and
  • Second, it clearly put the global business community on notice that PTC was placing the future of its entire portfolio in the connected hands of the IoT.

This latest acquisition of Axeda Systems further bolsters PTC’s IoT hold on the marketplace by filling in one of the few remaining gaps in the company’s support of connected products, people and things – that is, the software solution vehicle by which its IoT offerings can finally make their way into the market.

Focus on a Powerful IoT Strategy

Axeda bills itself as a provider of “the most advanced cloud-based service and software for managing connected products and machines and implementing innovative Machine-to-Machine (M2M) and Internet of Things (IoT) applications.” Its customers use the Axeda Machine Cloud™ “to turn machine data into valuable information, to build and run innovative M2M and IoT applications, and to optimize business processes by integrating machine data.”

The acquisition of Axeda also brings far more to the table than just its M2M offerings and existing customer base – it also instills a more familiar and ‘warm and fuzzy’ feel to the expanding PTC portfolio of IoT-based offerings. For example, most service managers in the SLM market would find it much easier to describe and explain the Axeda offerings than they would the ThingWorx platform offerings.

M2M has been around much longer than IoT and, as such, represents a more familiar topic for them to explain, explore and wrap their brain around. IoT – and, for that matter, ThingWorx, on the other hand – represents a much more complex, broadly-defined and to some, nebulous, platform-based technology that can be much more difficult to understand. Historically, SLM managers have had a far clearer understanding of the solutions they use than the platforms they run on (e.g., decisions that are typically made by their respective IT departments).

According to PTC, “Axeda’s technology innovation, extensive customer base, and powerful partnerships directly complement the PTC ThingWorx business, and will accelerate PTC’s ability to deliver best-in-class solutions across the entire Internet of Things technology stack.” The two companies expect the transaction to be completed in PTC’s fiscal Q4 2014.

Why Axeda?

James E. Heppelmann, PTC’s President, Chief Executive Officer & Director, describes Axeda as “a leading brand today in the IoT market and an almost perfect fit to PTC in terms of what they contribute as compared to what we already have. When we factor in the scale that we will gain from Axeda in terms of technology, employees and IoT expertise, customers, partners and revenue, we believe that this acquisition will reinforce PTC’s clear leadership position in this dynamic new world of smart connected products in the Internet of Things.”

In his statement, Heppelmann cites what most of the industry would agree are the top reasons behind the company’s acquisition of the Foxboro, Massachusetts-based M2M connectivity pioneer, namely:

  • Technology – Axeda had been a leader in the M2M space for the better part of the last two decades, and was a pioneer in the development of the technology, ultimately positioning itself as the global leader in Device Relationship Management, or DRM (i.e., while riding on the wave of Customer Relationship Management, or CRM, for most of that period).
  • Employees – At the time of its acquisition, Axeda will have approximately 160 employees, primarily located in the United States and, as such, represented far more personnel than that acquired by PTC as a result of the ThingWorx acquisition. When the Axeda deal closes (i.e., in just a few weeks) PTC’s total IoT organization will increase to more than 250 people, virtually overnight.
  • IoT Expertise – Axeda is an acknowledged innovator in the IoT technology market, providing its long-time customers with “secure connectivity, and the ability to leverage machine data to create new business value” as “critical components of the Internet of Things (IoT) technology stack.”
  • Customers – Axeda currently counts more than 150 customers on its books, “processing hundreds of millions of machine messages daily across multiple industry sectors.”
  • Partner Base – Axeda boasts a “broad partner ecosystem” that includes leading mobile network operators (AT&T, Bell, Deutsche Telekom, Sprint, Verizon, Vodafone); edge device and design-in device makers (Cisco, Intel, Lantronix, Microsoft); systems integrators (Ericsson, Genpact, Tata Consultancy, Wipro); and business systems/ analytics providers (IBM/Cognos, Oracle, SalesForce.com, SAP, ServiceMax), in addition to its ‘new’ internal PTC and Servigistics resources); the company’s technology leadership has also led to several strategic OEM agreements with other leading IoT technology and solution providers.
  • Revenue – The Axeda acquisition is expected to add US$25 million to US$30 million of revenue to PTC in its FY’15.

Need for New Pricing and Deployment Models

The acquisition of Axeda, however, will also likely lead to some restructuring – or, at least, rethinking – about the pricing model for the company’s offerings. For example, PTC’s (and Servigistics’) historical pricing schedules have essentially been built on a perpetual license platform. The ThingWorx model, on the other hand, has developed its pricing model exclusively on a subscription basis.

The Axeda pricing model may ultimately serve as a ’normalizer’ for future pricing, as its joint Axeda-ThingWorx solutions will most likely require “some upfront cost, but then scale typically according to the number of connected devices.” In other words, PTC’s future solution pricing will tend to “scale with the number of devices” involved or, possibly, with the number of users (i.e., the more users, and the more devices, the more the cost of the system).

Research conducted by Strategies For Growth (SFG) confirms that the SLM market (1) is moving more toward a preference for a Cloud-based delivery system for its SLM solutions (i.e., by a ratio of greater than two-to-one over Premise-based), and (2) prefers a subscription pricing model over a perpetual license model by roughly the same ratio.

SLM and IoT: The Strategic Intersection

One other factor that Heppelmann only alluded to in his statements may also be of critical importance to the prospects for success of the market’s acceptance – and adoption – of the broader IoT technology; that is, that Axeda is a longer-tenured, better-known quantity in the global services community than either the term, ‘Internet of Things’, or the brand name, ThingWorx. As such, it may ultimately serve as an easier ‘selling point’ for PTC in promoting its IoT technology to the global services community – they already know the company, they ‘get’ the technology, they’ve already seen them at remote services trade shows and conferences, and they understand the rationale behind why PTC has targeted it as an acquisition candidate. This was not so much the case in the market’s perception of the acquisition of ThingWorx – and its IoT platform – just this past December.

Heppelmann also acknowledges that, “On the strategic side, we’re very pleased to announce the Axeda acquisition. With one foot in the Internet of Things, or IoT, world and the other foot in Service Lifecycle Management or SLM world, Axeda is a great complement to both ThingWorx and PTC.” We agree that the positioning of Axeda, surrounded by the PTC/Servigistics SLM offerings, and the ThingWorx IoT platform, will be well accepted by the SLM market as a whole.

Heppelmann goes on to say that, “The Axeda deal will be synergistic for us on multiple levels. Because we don’t really have a pre-established fiscal year 2015 financial baseline to compare against, it’s hard to say in a meaningful way how many pennies of accretion it might add, but I can tell you, first, that there is a meaningful cross-sell opportunity, because our research indicates that Axeda customers generally love ThingWorx and vice versa.”

Smart, Connected People, Products and Technology – The PTC Strategy

Thus, the acquisition benefits both PTC and the existing Axeda customer base with a strong market reputation and positioning aspect as well. In fact, Heppelmann adds that, “In less than a year, PTC has quickly scaled to a position of leadership in helping manufacturers seize the opportunity presented by a smart, connected world,” and that “We believe the combination of ThingWorx, Axeda and our existing SLM and PLM solution portfolio, will establish PTC as the only provider of true closed-loop lifecycle management solutions for the Internet of Things.” As such, he continues, “PTC intends to leverage the Axeda technology portfolio to complement its existing ThingWorx® rapid application development platform and its existing Service Lifecycle Management (SLM) and extended Product Lifecycle Management (PLM) solution portfolio.”

The press release announcing the Axeda acquisition further emphasizes that, “Core to Axeda’s IoT technology is the ability to enable companies to establish secure connectivity and remotely monitor and manage a wide range of machines, sensors, and devices. The Axeda Machine Cloud Service includes machine-to-machine (M2M) and IoT connectivity services, software agents, and toolkits that enable companies to connect their products to the cloud using virtually any communication channel (e.g. cellular networks, the Internet, WiFi, or satellite). Axeda’s end-to-end security strategy covers all levels of the IoT technology stack, including network, application, user, and data security. Axeda has attained ISO 27001:2005 certification, supporting the company’s focus on delivering the highest levels of security, performance, and availability.”

What’s Next for PTC? And SLM?

In many ways, what’s next for PTC will also foretell what’s next for SLM, as the company comprises a significant share of both the current – and the expanding – global SLM marketplace. The easy bet would be: more acquisitions to come, as PTC has historically set its sights on the technologies, platforms, expertise and customer bases it covets – and, then, goes after each of them full throttle, yet thoughtfully.

However, in moving forward so quickly after such a major series of acquisitions, it can be too easy to let some things fall between the cracks. As such, there are a few observations – and recommendations – that can be made, based on what we all (i.e., both the research analysts and the marketplace) have seen thus far.

To take full advantage of its dominant place in the world market, PTC may wish to:

  • Communicate to the marketplace – (i.e., not necessarily ‘spilling the beans’ beforehand, or giving away too much information – just continue conveying the ‘why’s’ as things happen, and providing updates at 90/180/365 days or so after the fact (e.g., via announcements, newsletters, podcasts, etc.).
  • Combine ThingWorx and Axeda into a single entity – which will help the marketplace better grasp and understand the PTC strategy.
  • Tie PTC’s expansive portfolio of technologies, applications and offerings to the growing phenomenon of big data and analytics – thereby assuring its customers (and the market, as a whole) that its IoT strategy, emboldened through its well-thought-out acquisitions, will support all aspects of its customers’ businesses.
  • Embrace the subscription pricing model – but recognize that much of the market will still need to be ‘educated’ as to exactly what it is, and how it will benefit their bottom line.

Other recommendations could also be made. However, now would be a good time to focus on the ones that will have the most immediate impact.

Summary

For some, what makes PTC’s acquisition of Axeda so appealing, is that it provides the company with something it did not necessarily attain as a result of the ThingWorx acquisition – that is, (1) a much larger customer base; (2) a more familiar and aware general market base of service organizations that may have just started their initial due diligence into prospective vendors and solutions for IoT; and (3) an already existent IoT platform-based firm with a strong reputation, and a well-established presence at industry trade shows, remote services conferences and in M2M-related trade magazines.

As such, by acquiring Axeda, PTC not only acquires its technology, employees, expertise, customers, partners and revenue – it also acquires a strong market voice for promoting the acceptance of remote services, M2M and the Internet of Things to a quickly learning – and hungry – global services community. Between Axeda and ThingWorx, PTC’s message can be more clearly communicated to interested parties in all aspects of the connected world – from both a technical and marketing perspective. The combination may be unbeatable!

The Internet of Things (IoT) Is Also the Internet of Payment Options

When it comes to Product Lifecycle Management (PLM), Application Lifecycle Management (ALM) and Service Lifecycle Management (SLM), everybody talks about the need to be fully connected to the Internet of Things (IoT).

It seems that everybody wants to embrace it; everybody wants to implement it; and everybody wants to deploy it. However, some organizations are more sophisticated than others with respect to their understanding of the realities of the IoT, and some are not – but the common thread is that everyone acknowledges that it is (or, at the very least, will be) a necessity for developing and designing the products that the market wants, the software that makes them work, and the services that will keep them up and running over time.

However, there is one key area regarding the IoT where the market still remains largely fragmented in its understanding; that is, how do you pay for the IoT? And this may be particularly true on the SLM side of the equation.

Let me explain.

It may be argued that each business component supported by the IoT has its own lifecycle, and that each lifecycle, in turn, reflects its own conceptualization, development, implementation, duration, complexity and ongoing need for management and support moving forward.

The findings from Strategies For Growth’s (SFG) 2014 Field Service Management Benchmark Survey reveal an industry migration from an historical premise-based SLM user market (i.e., roughly 70 percent of existing SLM implementations are described as premise-based, vs. 30 percent as Cloud-, or SaaS-based) to a Cloud, or SaaS-based, SLM user market quickly evolving over the next 12 months (i.e., 67 percent planning to implement Cloud, or SaaS-based vs. 33 percent premise-based). The numbers are surprising in their magnitude, essentially representing a sea change from the “way things used to be”, to the “way things will be” (or already are, among the more sophisticated users).

Even more surprising is the lack of clarity currently resident in the SLM marketplace, among both vendors and users, with respect to how to price – and how to pay for – the desired SLM solution. Historically, services organizations sought either an (allegedly) all-inclusive SLM solution from a single provider, or a cherry-picked custom solution from among two or more of the best-of-breed providers. Depending on the specific case (e.g., type, size and complexity, etc. of the services organization) one could easily argue the respective benefits of either type of approach.

The thing is that times have changed – but the old habits and precedents harbored by long-time services managers sometimes stand in the way of their knowledge – and understanding – of the newer ways for acquiring SLM software (and other) solutions.

For example, when asked on a non-prompted basis, how they would prefer paying for their new and/or upgraded SLM solution, 33 percent of survey respondents cited perpetual license over subscription basis (which received only 12 percent), representing a ratio of nearly three-to-one for the traditional, tried and true payment model. While 30 percent were uncertain as to their preference, one-quarter (i.e., 25 percent) stated they still would prefer to own or lease the software.

However, when the same question was asked on a prompted basis in a follow-up survey interview – essentially with the same base of respondents – the results come out virtually 180 degrees diametrically opposed.

This is important because the only difference between the two modes of asking this one particular question is very straightforward: on the non-prompted basis, respondents were simply given a list of multiple choice answers from which they were asked to check the one response reflecting their preference. The choices were perpetual license, monthly subscription, own or lease, or don’t know/unsure.

For the same question, but asked on a prompted basis, each of the two main choices were described in the following manner:

  • “I would prefer to pay on a perpetual license basis (i.e., paying a large capital expense upfront, with ongoing monthly, quarterly or annual maintenance charges that could be expensed)”, or
  • “I would prefer to pay on a subscription basis (i.e., where there is no large upfront capital expense required, and I can expense the ongoing maintenance payments via credit card or other payment mode)”.

In the latter case, simply by defining how each of these two very different payment models work, we were able to, first, educate the potential SLM user that they have choices; and, second, that one of the choices may represent a new alternative (i.e., to them) that they may not have thought of before. As a result, the responses to this otherwise unchanged question totally flip-flopped to 44 percent preferring a subscription basis, compared with only 28 percent preferring a perpetual license. An additional 6 percent cited no preference, and only 22 percent responded don’t know/unsure.

What this shows is that while the market may be fairly sophisticated with respect to what features and levels of functionality they require from their SLM solution, many remain fairly uneducated about the payment options available to them and, as a result, tend to rely on their historical experience in paying for any service management solution on a perpetual license basis.

Regardless, the differences between the two alternative modes of payment could not be more pronounced. Say the desired SLM solution was available for roughly $1 million. Most, if not all, of this amount would be invoiced and payable within a timeframe virtually equal to the implementation and burn-in period – with a steep initial payment required up front. For such a large capital expense, the VP of Services Operations would need to present his or her case for acquisition to senior management, including the CIO, CFO and Procurement.

The acquisition cycle would likely be lengthy, complicated and hard fought from a value vs. cost basis, with each camp arguing from its own perspective. Further, even after the implementation, there would still be monthly, quarterly or annual maintenance fees required to ensure the efficient use of the solution over time. This approach is often a hard sell for the services manager, who just simply wants to implement a state-of-the-art solution that powers the company’s services operations.

The subscription model, however, offers an entirely new way of pricing and structuring the acquisition of the solution. Made possible through the proliferation of Cloud-based technology (and promoted in a big way by Salesforce.com for most of its offerings), going with a subscription model does not necessarily do away with any of the potential inter-departmental infighting between Services, Procurement and the CIO or CFO, etc.; however, what it does do is take away much of the financial burden associated with having to pay a steep upfront cost that, for some companies, could present a major cash flow or other bottom-line-related problem.

In fact, more than one respondent to the survey reveled in the possibility of having the option to pay for a much needed state-of-the-art SLM solution on a monthly basis – on his corporate credit card – rather than having to go head-to-head with management and Procurement over an extended period of time – with no assurance of winning their case.

Of course, subscription pricing is neither a miracle cure nor a panacea for the overall costs associated with acquiring and running an SLM solution; but it affords a “new” option that takes a more readily available Cloud-based solution, and makes it more easily affordable to the marketplace.

This example clearly shows that when the market is well-educated as to its options, it can more easily make a choice regarding these important types of decisions. However, it also shows that when it comes to pricing “new” technologies, or those being offered via “new” modes of delivery, they will require a bit more education from the vendors as to what options are truly available to them, and with what specific value propositions.

Running a Global Services Organization

Globalization is becoming the norm in the services industry. A market once content with relying on a local, regional – or even national – services organization is increasingly becoming even more reliant on a global support infrastructure. Continuing advances in technology and the proliferation of cloud-based Services Lifecycle Management (SLM) solutions have empowered even the smallest of services organizations with new and expanding possibilities to improve their global service and support operations.

For example, as a result of this trend, we have seen a growing customer demand for global service agreements that result in uniformity in the delivery of service to customers all around the world. In many cases, the unique local or regional service and support needs are rapidly disappearing for many customers who no longer wish to deal with local organizations anymore but, instead, are looking for consistency in global service and support performance, as well as (relative) uniformity in pricing across regional territories based on single contract negotiation.

Customer requirements for service and support will never be the same from one country to another, any more than they will be the same from one customer to another. However, one thing remains very clear – the requirements for service are becoming increasingly standardized on a global basis. A growing number of businesses are going global each year in terms of sales, marketing and services capabilities, supported not only by the proliferation of new Internet-based tools and multinational strategic partnering, but also by the increasing demand for global services and support as evidenced by the market as a whole. However, there are many key functions that will need to be consolidated into a global organization.

Another factor supporting the movement toward globalization is the ability to improve internal efficiency. In a typical decentralized organization, many functions are duplicated and performed independent from each other, which leads to increased communication efforts and differing ways of operating. We have seen organizations where product support documentation was developed by at least three different regional organizations, in some cases, providing conflicting information. For these organizations, operating on a more uniform basis would serve to both improve efficiency dramatically and, at the same time, provide a higher level of consistency in the way in which certain activities are performed. Through improved information and communication technology, new opportunities are also being created that allow services organizations to perform certain business functions more efficiently at a global level, while maintaining local control over their individual market segments.

A third factor supporting the case for globalization is the ability to reduce costs while maintaining or improving service level. The greatest area of opportunity involves the logistics operations where local policies have historically resulted in high investments in inventory, especially for slow moving items. Based on what we have seen in the industry, it makes sense to elevate certain of these functions to a global level in an effort to:

  • Meet customer requirements
  • Increase efficiency
  • Improve consistency

The details of each of these functions obviously will vary by company, but the basic functions do exist in virtually all of the companies in the services sector.

There are many functions that may be offered on a global basis

The best way to determine which functions can be offered on a global basis is to evaluate them from both an efficiency and consistency point of view. However, this does not mean that all tasks must be performed at a global level. Dependent on the individual situation, certain tasks may still be outsourced, or executed at the regional level. A good example is training, where the overall structure of the training programs and material should be consistent all around the world, although the courses can be fine-tuned and provided at regional or local training centers to reduce travel cost. Still, there will likely be increasing pressure on services providers to ramp up to their customers’ increasing global needs by offering a full range of global service and support solutions.

Among the principal functions that may be offered on a global basis are:

Business Development

The Service and Support function is critical for all businesses and has to be an integral part of the overall business strategy. For this reason, it is important to be actively involved in the planning activities that result in the development of a Service and Support Business Development Plan that addresses:

  • Service and Support product portfolio
  • Global marketing plans
  • Global Customer Care and Sales

This business function is most critical at the global level because it ties everything together and establishes a framework for setting the goals and objectives for the other parts of the organization.

Product Management

The Product Management function is also critical at the global level. Historically this function has been highly technology-oriented, and tied very closely both to the business’ development and manufacturing environment as well as its regional and local operations. With the implementation of global systems, this function can now be most efficiently managed at the global level. The function includes tasks such as:

  • Lifecycle management
  • Product documentation
  • Product analysis
  • Sustaining engineering

As stated earlier, the information and communications systems presently available allow for a faster and more reliable information flow to be managed at a central point, thereby requiring the need for only minimal additional investments in research and communications tools to support a global operation.

Logistics

The Logistics function probably represents the greatest opportunity from a cost reduction point of view. Historically each segment of the organization was responsible for its own planning and execution, which generally led to the implementation of multiple independent logistics systems requiring additional safety stock and a huge risk for obsolescence. Based on our consulting experiences, and supported by information culled from our ongoing surveys, creating a Global Logistics System, supported by the right automation systems, commonly reduces the inventory requirement by 20% – 30% without jeopardizing customer service levels.

At the same time, the risk for obsolescence is reduced which also creates additional cash for a company on the basis of lower reserves kept in the books. Dependent on the situation, most of the specific operational aspects of the logistics function may be outsourced to logistics service providers, which ultimately changes the focus of this function from one of execution to basically one of managing the function. At a global level, the Logistics function should include, at the very least:

  • Forecasting and inventory planning
  • Procurement
  • Repair management
  • Inventory control
  • Vendor management

The benefits of a global operation are obvious through the elimination of safety stock at all levels, automatic replenishment based on planning and forecasting, alliances with global parts and services vendors, etc.

Training

Training also needs to be consistent on a global basis. However, the development of good training programs and tools requires specific knowledge in addition to product knowledge. For this reason, it is most efficient to develop training programs at a global level, which will allow for specialization where required, and will improve the overall quality of the individual courses and material. This would encompass:

  • Customer training, and train-the-trainer
  • Technical and Partner training
  • Licensing (if services are outsourced to other companies)

Newer developments in training techniques via distance learning and the Internet are just an extra motivation to centralize this function at a global level.

Field Service

The Field Service function should also be managed on a regional or local level. The principal reasons are that labor restrictions and language barriers are still important geo-centric issues. The challenge is to determine what the appropriate service level should be from a management and support perspective (i.e., second/third line support).

In most situations a hybrid model may be developed where first-line support is provided at the local level, while second- and third-line support are concentrated at the regional or global level. Dependent on the specific type of business, the availability of new technology and expanding Internet capabilities may offer opportunities to increase operational efficiency in an environment where the location of the actual support person becomes less important.

Customer Support

The Customer Support function is a front-line function that is very dependent on the regional and local situation. Similar to the field service function, the level of centralization will be dependent on the local situation and culture. It remains important, however, to link all of these functions together via centralized automation systems and rolling out the appropriate communication systems to allow for local optimization.

Regional and local functions must also be carefully integrated


Because of key factors such as cultural differences, language barriers and the importance of a local presence, certain functions may still be best performed on a regional or local level. Although the trend is typically geared more toward the centralization of certain functions at a regional level (e.g., Pan-European, ASEAN) some cultures still require a local presence to do business. The challenge is to determine which front-line functions are absolutely necessary at the local level, and which can be combined at a higher geographic level.

Although some customers will do business on a global basis, the majority of sales will still occur at the local level, dependent on the culture of the region or country. Some markets might even have local requirements that point to a local sales function. However, all local sales functions supporting the business’ service and support products should be in line with the company’s global programs.

How does your organization get there?

Looking at each of these business functions and determining which can more effectively and efficiently performed at a global level is easy – you simply take a step back and apply some common sense, and the conclusion is almost the same for every business. However, in most cases, managers have to deal with an existing organization that has historically grown to where it is now operating on a non-global basis, and the change to a global environment is likely to greatly impact both the organizational structure, and all of the people in the organization.

In addition to these more tangible effects, there will also usually be many underlying issues that have to do with other, harder-to-define issues, such as philosophical and geo-political factors, changing roles and responsibilities, new reporting structures, etc. To address these issues, a careful approach will be necessary, and it might take some time.

The transition from a regionalized to a globally-managed operation is not easy. There will be a great deal of roadblocks that require attention, and the sensitivity of certain solutions will require a well-crafted and thought-out approach. For this reason it is generally helpful to seek assistance and support from an external party to manage the overall effort and ensure the development of the most appropriate global business model.