Black Swans Grace Summit '09

A funny thing happened on the way to the Smart Services Leadership Summit last month, perched atop the cliffs of La Jolla, California... Despite record-high surf, we announced to a full house of 300+ delegates that this was to be the last Summit of its kind...

Sounds like an ending. But I assure you we were talking about a beginning -- the start of a joint venture between Qualcomm and Verizon Wireless focused on once-and-for-all solving for the solution fragmentation that has hamstrung the evolution of M2M and Smart Services.

I'll leave the prognosticating to our analyst and reporter colleagues, but it struck me that the Black Swan Theory that keynote speaker Dr. Eric Topol invoked to characterize developments in the telemedicine space also serves as an apt instrument to put the joint venture in proper context.

The first criteria for an event to be a Black Swan event is for it to be, as its namesake, a surprise. As for the Qualcomm Verizon Wireless venture, check... (save for a few enlightened pundits who might claim they saw it coming.) The second criteria is for the event to deliver a major impact. Again, I assure you, check. And the third criteria is that after the fact, the event is rationalized by hindsight, as if it had been expected, or as Dr. Topol worded it, "in retrospect looks inevitable."

Somewhere between one hour and one year following the joint venture announcement on July 28th, the partnership will look to most observers to have been inevitable. The wireless operator with a dominant 3G and 4G position and looking to build upon the saturated voice market meets the M2M wireless services and chipset stalwart. How could they not join forces to deliver what the market has been screaming for: end-to-end Smart Services solutions?

From an economics standpoint, margin-stacking among the multitude of M2M solution providers had been crippling Smart Services business models. And from a technology point of view, reasonable time-to-market depended precariously upon the successful integration of a stable of disparate hardware, software, and middleware piece parts.

I must admit a healthy measure of bias, being employed by this new venture, but from as objective a perspective as I can muster, this is a no-brainer marriage of long-time partners poised to finally shepherd Smart Services to the far side of the proverbial chasm.

Last year for the first time, we accepted an academic affiliate for our Smart Services Leadership Summit – Arizona State University’s Center for Services Leadership (CSL). They brought new perspectives and learning opportunities to our Smart Services community. The response was so overwhelmingly positive that we have invited them back again – and I am excited to announce that they have accepted.

The CSL has established itself as a globally recognized authority on how to compete strategically through the profitable use of service and services, a critical component if you are going to compete and succeed in today’s evolving services-based economy. In partnership with the CSL, we are pleased to extend an additional value-add to this year’s Summit and offer delegates the unique opportunity to learn and apply “services blueprinting” in a Smart Services context.

Dr. Amy Ostrom, a leading expert in an approach and technique known as “services blueprinting,” will be conducting a half-day pre-Summit workshop on July 27th, from 1-5pm, in which she will describe the components of services blueprints, coach you through how to apply services blueprinting in a Smart Services context, and outline how to advance this technique within your own organization. (Click here for more information)

Smart Services promise a closer connection with the customer, for product manufacturers and service providers across industries, ranging from consumer electronics and telemedicine to industrial equipment, smart grid, and clean energy. Services blueprinting enables you to clearly visualize your services and delivery from the customers’ point of view and therefore can help you design Smart Services in a manner that can cement lasting, profitable customer relationships.

Our sponsorship allows us to offer the pre-Summit workshop at a significant discount off the CSL’s standard registration and it is available only to 2009 Summit delegates. Space is limited and we expect it to fill up quickly, so apply today.

I look forward to seeing you in San Diego in July!

Mark Vigoroso
Chief Services Strategist
312-577-1615
mvigoroso@qualcomm.com
Global Smart ServicesQualcomm

Smart Services Leadership Summit Speakers Announced

The face of Smart Services and M2M communications is changing. Leading organizations implementing disruptive Smart Services have successfully crossed the chasm and are entering the mainstream. For the 5th Annual Smart Services Leadership Summit we are assembling the leaders and experts that will cut through the hype and get to the truth about the potentials and risks in this compelling new world, as well as ideas that will help you succeed. We are delighted to announce the following speakers:

Dr. Paul E. Jacobs was appointed Chairman of the Board of Directors in March 2009. He has served as a director since June 2005 and our Chief Executive Officer since July 2005. He served as Group President of the Qualcomm Wireless & Internet Group from July 2001 to June 2005. Click here for complete bio.

Anthony A. Lewis is Vice President of Open Development for Verizon Wireless. Lewis is responsible for executing the open development initiative, including directing the pricing, activation, billing, distribution, device specification, testing, communications planning and financial matters for the project. Click here for complete bio.

Bill Reinert is National Manager of Advanced Technology for Toyota Motor Sales, USA. His primary function is to coordinate Toyota’s various research, development and marketing activities related to alternative-fueled vehicles and emerging technologies. Click here for complete bio.

Bill Gajda is Chief Commercial Officer of the GSMA. In this role he leads the business development and commercial implementation activities within the GSMA. He is also responsible for several GSMA programs, including mobile entertainment, mobile advertising and mobile innovation. Click here for complete bio.

We’ll continue to announce additional details as this executive-level, invitation only program develops. You will also find updated information at www.qualcomm.com/ssls and you may request an invitation to attend via the web link or inquire with your Qualcomm representative.

Don’t miss this unique opportunity. Apply today.

John Tillotson

Sr. Director

Business Development

Global Smart Services

5th Annual Smart Services Leadership Summit Announced

I am pleased to announce our Fifth Annual Smart Services Leadership Summit, to be held July 27-29, 2009 at Qualcomm’s San Diego headquarters and the La Jolla Hilton at Torrey Pines. Dr. Paul Jacobs, Qualcomm CEO, will open the conference, sharing his thoughts on the continuing evolution of the wireless market, the emerging Internet of Things and the impacts of the recent economic and political changes.

This has been an exciting year with many changes and the timing for this summit could not be better. A new administration is in place with a fresh look at the economy and new priorities. If you wonder how you should alter your strategies amid these economic and political shifts, you are not alone.

Top administration priorities now focus on energy, healthcare, and education – all areas that offer new opportunities for growth and where Smart Services has a dramatic impact. Across industries these new priorities, as well as economic demands, are heightening the pressure that companies already feel to increase efficiency, reduce costs, promote an energy conscious model and convey a societally responsible image – again areas where Smart Services has dramatic impact.

We are broadening the scope of this year’s executive-level, invitation-only summit to include a wider range of topics and industries, including Telehealth/Telemedicine, Smart Grid/Clean Energy, Consumer Products, Fleet and Asset Management, and Industrial Applications. The summit will offer you new networking events, stimulating dialogue, and thought provoking opportunities to explore the growth of Smart Services with other industry leaders, executives, analysts, experts, and academics. Whether you are looking to strengthen your business model, differentiate your offerings, introduce efficiencies or pioneer completely new businesses, you will find pragmatic discussions that cut through the hype and get to the truth about the potentials and risks in this compelling new world, as well as ideas that will help you succeed.

Last year we were pleased by the diverse backgrounds and high caliber of our participants, and we all learned a great deal about how Smart Services can be a part of a company’s growth and success. This year we are developing a program that will take this learning to an even higher and more powerful level.

We’ll be announcing additional details soon as the agenda and line-up of presenters, panelists, workshops, and events develop. You will also find updated information at www.qualcomm.com/qes/ssls. Please note that this is an executive-level, invitation-only event. You may request an invitation to attend via the web link or inquire with your Qualcomm representative.

Save the date. You do not want to miss this one.

Steve Pazol
Vice President
Qualcomm, Global Smart Services

Exit Polls: Summit Delivers

As expected, the sun was shining in San Diego last week. But for 74% of delegates, the 4th Annual Smart Services Leadership Summit exceeded expectations. And I'd have to include myself in that group.

Highlights abound - many of which will be available shortly via online video clips - but here are a few that come to mind:

• North of 230 delegates in attendance. This volume alone speaks to the rising tide of Smart Services in industries ranging from healthcare, to consumer products, to industrial equipment.
  
  
• Spot-on reminders from Dr. Mary Jo Bitner of Arizona State's Center for Services Leadership to design service and sales processes from your customer’s point of view and to "co-create" services with your customers.
  
  
• Spurring words from Jim Sweeney of CardioNet regarding the power of disruptive innovation to not only redefine quality standards in an industry but to give birth to wildly successful business models.
  
  
• The rigorous customer-driven business case - as presented by ABB Power's Bart Gaskey - that's critical for OEMs to succeed at commercializing Smart Services.

Too many others to mention in detail, but contributions from John Deere, Medtronics, NACCO Materials Handling, Gardner Denver, Navistar, Peek, and the other speakers and panelists combined to delight, challenge, and energize the throng in attendance.

For those of you who couldn't make it, hope to see you next time around. For those of you who were there, post a comment and share your own Summit insights and experiences!

Turning the Corner with Smart Service Chains

As I've mentioned in previous posts, industry discourse continues to intensify around how smart services can enable OEMs to become more predictive - and in due course, more profitable - in the way they design, sell, and service their products. For those of you interested in another installment in this ongoing discussion, make sure to mark your calendars on August 5th, 11:30 am ET (10:30 am CT).

At that time, I will be participating in a one-hour webinar - Turning the Corner with Smart Service Chains - hosted by BetterManagement.com, in association with SAS. "Join a panel of industry experts from Qualcomm, Gardner Denver and SAS to explore a major transition taking place in the post-production service chain – smart service chains. Made possible by smart services technologies, these service chains allow companies to anticipate the future actions they need to take to make sure customers are more than satisfied, they are delighted and become vigorous advocates of the products they buy."

To register for this webinar, visit BetterManagement.com.

Nashville Round-Up

What a difference a year makes. I had the honor of chairing IQPC's Remote Monitoring conference in Nashville last week, which was a markedly different experience from last year's event in my hometown Boston.

To sum it up, the Grand Ole delegates were much more concerned with questions of "how" than were their Beantown predecessors, many of whom were struggling with questions of "why." That is, there was a collective understanding of why remote monitoring makes business sense; it’s now become a matter of how to deploy, integrate, and extract maximum value from smart service solutions. This is a great indication that remote monitoring is making its way into the fabric of our core businesses.

Also, as evidenced by Gilbarco’s “Daily Loss Advisor” fuel loss report and Avaya’s “Expert View” report, just to name a couple, OEMs are beginning to graduate from simply capturing and transmitting machine data to applying intelligent analytics and BI tools to create new value for their customers.

To sustain competitive advantage, OEMs need to stop viewing remote monitoring as a stand-alone capability. Remote monitoring ENABLES “smart services” (see inset image), and OEMs need to integrate smart services into adjacent phases of the product value chain, such as design, manufacturing, sales, service, and marketing. At the Nashville event, it was a good sign to hear some OEMs beginning to talk about leveraging smart services to strengthen service contract offerings and integrating machine data with PLM, FSA, CRM, and other enterprise systems.

To continue the conversation, join us on July 29 - 31 in San Diego for Qualcomm's 4th Annual Smart Services Leadership Summit!

How Smart are your Smart Services?

Since the dawn of the information age, plenty of ink - and blog bytes for that matter - has been dedicated to the differentiation between "data" and "knowledge." Most companies' plates overfloweth with the former, but starve for the latter.

What separates top smart services practitioners from the also-rans has a lot to do with how the OEM, service network partner, and asset operator systematically extract actionable knowledge from heretofore inaccessable machine data.

Well-tuned analytics go beyond basic reporting and provide insights into future equipment performance patterns, operator behavior discrepancies, supply chain improvement opportunities, and unmet customer needs. Machine data trend analysis can enable OEMs to evolve from product suppliers to trusted advisors to their customers, by fueling new information-based service offerings. And herein lies the much-touted opportunity for OEMs and their channel partners to unlock new, highly-profitable revenue streams.

Consider the telephone manufacturer that can now help its business customers optimize call-center performance, or the air compressor manufacturer that can now ensure its customers' compliance with efficiency regulations, or the fuel-dispenser manufacturer that provides its customers with detailed reports on fuel loss, price elasticity, and fuel logistics optimization. In these and countless other examples, the ability to collect and report raw machine data no longer differentiates the OEM. The bar has risen, and keeps rising.

On July 16th at 1 pm ET (12 pm CT), I will be participating on a Webinar entitled Smart Business Intelligence Solutions to Optimize Your Services Operation, and I invite you to attend and ask some questions of your own.

It's Summit Season Again

This time, I have a valid excuse for the long hiatus between posts. I have been chasing down a tangle of loose ends in the wake of my relocation from Boston to Chicagoland. But here I am, blogging for the first time from the windy city, or as I like to call it, Red Sox Nation Midwest.

The Smart Services landscape continues to expand and evolve, often in ways that mystify the industry's leading pundits. The diversity of applications of this technology seems boundless, and the mandate for business leaders to embrace it is rarely questioned... at least in theory.

In response to these market dynamics, this year's Smart Services Summit has taken on a few new attributes. First, it's now called the Smart Services Leadership Summit and will explore the increasing relevance of Smart Services to C-Level executives and their strategic agendas.

Second, there will be industry-specific break-out sessions on Day 2, to allow peer groups to roll up their collective sleeves to grapple with the real-world implications of Smart Services in their unique markets. (See sneak-peak agenda synopsis below.)

And third, the event will be in San Diego - not Chicago as in prior years - and will be held at Qualcomm's headquarters. In place of the storied Cubs Rooftop experience, there will be an invitation-only reception aboard the USS Midway aircraft carrier (see inset).

Hope to see you all in sunny San Diego in July! Here's your sneak-peak Summit '08 agenda:

Day 1: General Session
Some of the most forward-thinking services leaders from a diversity of market venues will come together to continue to define the new business language of Smart Services. They will explore best practices for executing on smart services strategies, key challenges they’ve faced, and what it will take to remain smart services leaders in the future. In this cross-functional session, major corporations will mix it up with entrepreneurs, industry analysts, and academic experts through a combination of practical presentations, interactive panel discussions, and networking events.

Day 2: Breakout Session - Major Manufacturing
By 2010, almost two-thirds of product manufacturers will have embedded networking capabilities in at least half of their product lines (Harbor Research, 2007), collecting health, performance, and location data to support aftermarket service delivery, product quality improvement, and value-added asset management services. This breakout session will give like-minded manufacturing leaders the chance to collaborate with their peers on such pressing issues as commercializing smart services in product-centric environments, empowering dealers and distributors as go-to-market allies, and cultivating the end-customer value proposition to engender stronger relationships and long-term competitive advantage.

Day 2: Breakout Session - Remote Health Services
Societal, environmental, economic and other forces have given birth to the rapidly expanding world of telemedicine. For instance, as much as 40 percent of today’s American-based home health agencies employ some form of telehealth in their daily operations. This breakout session will explore the role Smart Services is playing in unique life-saving applications, as well as some of the technological challenges and business opportunities that might await product and service providers in this evolving arena.

Day 2: Breakout Session - Disruptive Innovators
In most cases, the technological backbone of a Smart Service is a machine-to-machine (M2M) managed network communications service that connects a physical device to an enterprise application. As such, today’s entrepreneurial marketplace is rife with innovative companies leveraging Smart Services to solve a vast range of business and consumer needs. This breakout session will showcase best practices employed by early- to mid-stage outfits, and will give these companies the opportunity to explore potential synergies among their unique solutions.

Braving the Wild Blue Yonder

One of these days, I'll be able to post to this blog without apologizing for the time elapsed since the last installment... But not this time.

It certainly has been a hectic start to 2008, due in large part to the hours I've already logged at 30 some-odd thousand feet. What this airborne time has afforded me though is the ability to catch up on some reading, and I recently read from cover-to-cover for the first time Blue Ocean Strategy.

As is the case with most business books I read, I discovered some solid take-aways, as well as a handful of leave-behinds. The reality is that for many product manufacturers, smart services can provide the foundation for a bona fide blue ocean strategy.

For those of you who haven't read the book, a blue ocean strategy is a way for a company to distance itself from the "red oceans" of bloody competition by increasing or decreasing its focus on certain elements of its business in order to more consistently deploy its resources towards the creation of customer value.

To test the applicability of blue ocean thinking to the world of smart services, I tried my hand at creating what the Blue Ocean authors call a "strategy canvas" for a typical product manufacturing company (see inset). This framework lays out the primary drivers of market competition (note x-axis) and plots red ocean and blue ocean strategies against each other according to how much or how little investment is made (note y-axis) in each of the competitive areas. The goal is to visually depict the separation that exists between blue ocean and red ocean practitioners.

As you can see in the inset image (click on it for larger version), smart services-enabled product manufacturers invest much more aggressively in areas like product lifecycle performance, gaining knowledge about customers' businesses, reducing customers' total cost of ownership, and introducing value-added services. Why? Because they can. Without reliable intelligence on the behavior of deployed products, red ocean manufacturers find it very difficult to build the asset knowledge base required to deliver value in these areas. Hence, we have the beginnings of a blue ocean.

Now, it's entirely possible that all this ocean talk is resonating with me because I'll be leaving the Atlantic Ocean I know and love for a new home in the Mid-West in a couple weeks. But I still think manufacturers might stand to gain some clarity around their smart services efforts if they think about them in terms of what creates and sustains value for their customers. Agreed? Or am I all wet? Post a comment and let me know.

2008: The Year of...

How does that saying go? "If you don't learn from your past, you're doomed to repeat it." Here's hoping that we all can retain at least a few of the hard-learned smart services lessons of 2007 and break new ground in the new year.

I suppose it makes sense to round up some of these key learnings, since this is the time of year for "Best of" lists, but I'd rather look forward. On the cusp of the leap year 2008, what should we expect from the next 366 days in smart services? At the risk of repeating past prognosticative pitfalls, I can't help but to offer up the following holiday food for thought:

1. Green is the new black

It's hard to pick up a newspaper these days without reading about another corporation's ostensibly earth-conscious efforts to "go green." Whether or not we have Al Gore to thank for this is open to debate, but the reality is that there are plenty of green-backs to be won in the new green economy. As discussed on this blog earlier this year, law-makers are contributing to this heightened consciousness with legislation aimed at holding corporations more accountable for their impact on the world around them. Increasingly, smart services will figure prominently in this landscape, elevating the responsibility of and opportunity for OEMs to partner with their customers on energy-saving, pollutant-reducing initiatives.

Further, as "clean technology" emerges as its own industry category, smart services will prove invaluable means to efficiently monitor and control the first generations of widely dispersed physical assets needed to provide and sustain alternative energy sources. In fact, I expect to see these new OEMs adopt smart services much more aggressively and unilaterally than have manufacturers in mature categories like industrial, medical, or construction equipment.

2. Unexpected category leaders emerge

In most manufacturing industry categories, one or a few companies stand apart from the rest of the pack, usually determined by a combination of market-share and mind-share. And although they might not admit it publicly, the also-rans take their ques from these category leaders.

What might not be surprising is that I expect 2008 to be a smart services leadership year for companies in a few key verticals, like construction equipment and industrial HVAC. But what might surprise you is that in some cases, the company that emerges as the smart services leader might not be the category’s incumbent.

For some enterprising product manufacturers, smart services represent a growth platform upon which strategies to topple giants can be executed. It’s been said before – even on this blog – that changing from a product-dominant to a service-driven business is a complex undertaking leaving very few, if any segments of the business unchanged. With everything to lose and unsure of what's to be gained, often overly inertia-reliant category market-share leaders might be unable or unwilling to make these changes. Historical B-players on the other hand might just have the agility and gusto required to harness the potential of smart services and chalk up a win for the ages in 2008.

3. Get to know your neighborhood CFO

As corporations increasingly submit to the scrutiny of financial regulators, CFOs are becoming more involved in strategic company decisions earlier in the decision-making process. Line-of-business executives who've grown accustomed to acting first and getting forgiveness later have already begun to change their ways to include financial stakeholders.

This cross-over culture might place some CFOs outside their comfort zones. As such, when financially justifying smart services strategies, service and product execs should prepare to take leadership roles in educating financial management on the appropriate metrics to gauge success. For instance, finance team members might encourage using payback periods and ROI calculations, but these methods are often too simplistic or even misleading. LOB execs should develop deeper relationships with their financial counterparts in order to begin to socialize more comprehensive business case justification tools including NPV (net present value) and scenario forecasting.

All the best for a prosperous... and smart... 2008!

The "Smart" Product Lifecycle

Have you ever noticed the four unassuming words that serve as the sub-title for this blog: "redefining the product lifecycle"? It occurred to me that we have yet to sufficiently address what this means. So here goes...

Much of today's business-value dialogue surrounding smart services revolves around aftermarket service - the final stage of the product lifecycle. And rightly so, as OEMs and their service network partners stand to gain innumerable near-term benefits from increased machine intelligence.

But what about the other key stages of the product lifecycle? Namely, Design, Manufacture, and Sell (see inset). Can smart services drive business value upstream as well? Without a doubt!

For the purposes of this discussion, I'll focus on the "Design" and "Sell" stages. First, Design. Most manufacturers employ Failure Mode and Effects Analysis (FMEA) to help them identify and analyze the causes and impacts of failures throughout the value chain. As part of design-for-quality (DFQ) initiatives, design and engineering teams use FMEA to predict product performance problems that might occur in operation.

More than half of companies that participated in a recent Aberdeen Group study have already deployed technology and tools to support FMEA. With access to timely machine performance data and trends afforded by smart services, these tools could allow design engineers to more accurately guard against future product failures. This kind of feedback loop between service and design seems intuitive enough, yet nearly three-quarters of companies studied by Aberdeen exhibit ad hoc or no collaboration among service, manufacturing, and design. Smart services might eventually bridge these costly gaps.

In addition to design-for-quality, many manufacturers also have design-for-serviceability (DFS) initiatives underway, whereby engineers model service scenarios using virtual prototypes. The goal is to anticipate service requirements at the point of design to minimize support costs and complexities. For example, some manufacturers try to optimize the mix of field replaceable units (FRUs) and customer replaceable units (CRUs) in order to minimize the burden on the field service force and maintain service margins. Instead of virtual prototypes - whose accuracy and currency are approximate at best - smart services-enabled machines could provide real-time and ongoing field service intelligence to design teams working on new product designs.

Now, in the "Sell" stage, machine intelligence can be integrated with Customer Relationship Management (CRM) systems to more accurately qualify cross-sell and up-sell opportunities for such items as service contracts, consumables, and the like. Further, as more manufacturers are experimenting with pay-for-performance contracts or PBAs (performance based agreements), historical equipment usage trends can be analyzed to ensure profitability on future PBAs.

These are just a few examples of how smart services can dramatically reduce latencies and gaps in the product lifecycle. There are many others. Have some of your own? Disagree with the ones discussed here? Post a comment and let us know.

Got "muda"?

Got what? Muda. It's Japanese for "waste." I didn't expect to pick up any foreign languages at the Field Service Long Cycle Forum in Atlanta this week, but "muda" stuck with me. As many of you know, muda is a foundational concept of Toyota's touted production system, originally developed by Toyota’s Chief Engineer Taiichi Ohno. The system has since spawned widespread adoption of lean manufacturing, Six Sigma, and other process improvement programs.

According to Ohno's system, there are seven main categories of waste that can erode efficiency and profitability in a manufacturing environment: Material, Inventory, Transportation, Motion, Waiting, Overprocessing, and Overproduction. While Ohno's venue was manufacturing, service executives can apply the same concept to service and support, particularly as it relates to justifying a smart services strategy.

If your service organization is anything like some of the companies convened in Atlanta this week, post-sales product support issues are often resolved by "throwing people and parts at the problem." This is muda.

Consider this scenario: a machine goes down at a customer site, and based on the customer's description of the problem, you or your channel partner promptly dispatches a technician with a trunk-full of spare parts. The technician arrives on site, troubleshoots for an hour, swaps 4 or 5 parts one at a time until he determines which one is the culprit, and restarts the machine.

What's wrong with this picture? At least 3 or 4 flavors of muda, all of which could be averted with more timely and accurate machine activity data. To start, those handful of potentially new spare parts that the technician ruled out as the cause of the problem cannot simply be re-stocked as new parts. They've been used, albeit for a matter of minutes, and have instantly depreciated in value. This might not seem like much of a hit for a few parts, but if this is standard practice, it can add up in a hurry.

There's already elements of transportation-, waiting-, and motion-muda in this scenario, but what if the customer's diagnosis had been wrong and the technician didn't have the appropriate parts in trunk stock or even the appropriate skills or experience to fix the problem. You get the picture.

Try this exercise: lay out a complete process map for your service operation today, and try to identify and categorize all the muda. Look for wasted time driving, waiting, flying, diagnosing, etc. Or excessive overtime in certain regions or with certain field technicians. Or imprecise spares inventory decisions. And then in each case, try to quantify the value of the wasted resource or activity, and ask yourself if timely indicators of your products' history, performance, health, or other activities could have mopped up some muda. I suspect you'll find that muda is money.

Beantown Bliss to Peachtown Preso

Tens of thousands of Red Sox Nation citizens (this blogger among them) lined the streets of Boston today to welcome home our victorious hardballers.

Present in the rolling cavalcade among the players, coaches, and front-office execs were Barry and Eliot Tatelman. Who? Anyone who owns a television in the northeastern U.S. knows that these brothers are the owners of local furniture retailer Jordan's Furniture. What does any of this have to do with Smart Services? Let me explain...

Back in the Spring, Barry and Eliot ran a promotion that entitled anyone who bought furniture before tax day to a full refund... if and only if the Red Sox won the World Series. So, on the morning of October 29th, the Tatelman brothers woke up owing a sum of more than $20 million to 35,000 customers. Of course, Jordan's had taken out an insurance policy that would cover their "losses," so no harm done.

As I watched the beaming brothers Tatelman rolling through the confetti blizzard, it struck me that this kind of marketing hubris is exactly what's needed to jumpstart the adoption of Smart Services among many OEMs' customer bases. I've mentioned before that the stakes in the Smart Services game are high and getting higher and the time for OEMs to place their bets is now. I've seen several examples of OEMs willing to take a short term risk by offering Smart Service-enabled support packages at no incremental charge to their customers for a finite period of time. And they're now enjoying the spoils of hearty recurring returns. Smart Services is part of a Horizon 2 business and needs to be run accordingly.

There will be plenty of time to explore this idea further at the upcoming Field Service - Long Cycle Forum 2007 in Atlanta, where I'll be making the presentation, Smart Services: A Game-Changer for Long-Cycle Service Organizations on November 13th. We're also hosting a dinner on November 12th at the nearby Spotted Dog. To reserve your spot on the guest list, just send a note to smartservices@qualcomm.com. Hope to see you in Peachtown!

CSOs in the house?

Sorry for the long hiatus between posts. It's been a busy start to Fall '07, including such happenings as:

- The 2nd Annual Chief Service Officer's Summit

- The 37th Annual S-Business World Conference

- A characteristically dramatic ALCS victory for my hometown Boston Red Sox.

As much as I'd like to devote today's post to the latter, there's just not much left to be said, with Boston's legion of storied sports writers penning hourly on new sub-plots and pre-Series melodrama... Except maybe, Go Sox!

So, on to the topic of the day: key insight from the CSO Summit. Keynote speaker Michael Treacy - author of Discipline of Market Leaders and other business books - encouraged delegates to Innovate, Learn, and Adapt in their service strategies. Against this backdrop, it struck me that many of the attending OEMs still hold the precarious view that service is mainly maintenance and repair.

The discussion panel in which I participated touched on the issue that the same forces of commoditization that squeeze products are acting upon mainstream services as well.

So, what does it mean to constantly innovate services? In the context of Smart Services, connecting serviceable equipment to a network is indeed an innovation, but not a competitively differentiable one, at least not over the long term. OEMs must constantly uncover new ways to exploit machine data to deliver new value-added services to their customers.

Preventing equipment from failing is a given. But OEMs that embed themselves in their customers' long-term asset management strategies will win in the end. Here are some ways leading OEMs are leveraging Smart Services to accomplish this:

- Track performance discrepancies among work shifts, to uncover training gaps

- Monitor energy consumption to comply with green regulations

- Provide system of record for customers' financial audits

- Identify asset interdependencies, and provide systemic asset performance optimization plans

- Maintain centralized asset knowledge repository in order to optimize the utilization of high-cost resources

What are some ways your company is going beyond break/fix with its smart service offerings? Post a comment, and tell us about it.

Party like a... Service Exec?

If it were left up to conference companies, you and I would find ourselves at a different one-of-a-kind exclusive symposium of senior grand poobah mucky-mucks every week of the year. But alas, we have day-jobs.

That said, allow me to implore you to consider joining us in Orlando next month - September 17th and 18th to be exact - at AFSMI's annual World Conference. It'll be the first in the long-running series since AFSMI joined forces with three other services associations (SSPA, TPSA, and ESCA). So this won't be your father's or grandfather's AFSMI.

One reason you might consider attending is I will be giving a presentation on the 17th called Leveraging “Smart Services” to Drive Product and Service Sales, which will feature best practices for packaging, selling, and marketing Smart Service-enabled product support capabilities.

Still not convinced? On Monday evening, September 17th, we will be hosting an exclusive dinner and rock-and-roll memorabilia tour in The John Lennon Room at The Hard Rock Café, Universal Studios. The room actually replicates John Lennon's Manhattan apartment. Plus, a guy with "Rock Dude" on his business card (seriously, I've met him) will be on hand to provide colorfully narrated tours of the Hard Rock's treasure trove of musical mementos.

Please don't mistake this for a shameless promotional pitch, but space is limited. We really can only accommodate 25 guests. Just picture John Lennon cramming that many people into his apartment! Even if you can't make it to the AFSMI event, come out for a truly one-of-a-kind exclusive experience at the Hard Rock. Reserve your spot on the guest list by replying to this evite. Hope to see you there!

Cubbies Edge Giants, Despite 2 Bonds Round-trippers

For the 16th year in a row, the nPhase Smart Services Summit culminated in a rooftop view of Wrigley Field (see inset), sans precipitation I might add. Barry 'roid-rage Bonds crushed two homers to inch within 2 of Hank Aaron's record, but Summit delegates were still treated to a 9-8 home team victory.

The Summit itself was attended by a record-high 120 people, representing such companies as ABB, John Deere, Siemens, Electrolux, Air Products, Diebold, Xerox, and Bausch & Lomb. Too many nuggets of wisdom to share in one blog post, but here are a couple highlights:

• Metric that Matters. Equipment uptime/availability -- the percent of scheduled production or calendar segment a machine is available for production -- tends to dominate discussions about the Smart Services value proposition for equipment owners/operators, but Reid Jaiko of ABB Robotics reminded us that availability is just one of the three building blocks of Overall Equipment Effectiveness (OEE), along with Performance and Quality.
  
  Performance is the quantity of output produced during the machine's running time, versus the potential quantity, given the designed speed of the equipment. And Quality is the amount of good products versus the total amount of products produced. So, for all you quant-jocks out there, here's how the OEE calculation breaks down:
  
  Availability Rate = Operating time - Downtime / Total Operating Time
  Performance Rate = Total Output / Potential Output at Rated Speed
  Quality Rate = Good Output / Total Output
  
  OEE = Availability Rate x Performance Rate x Quality Rate
  
  Why is OEE important? It has a direct and substantive impact on the operator's profits and ROCE (return on capital employed). So if OEMs can demonstrate Smart Services' impact on OEE to their customers, game is on!
  
  
• Smart Services on the chasm cusp. Some of you might be familiar with or even devoted followers of Geoffrey Moore's "crossing the chasm" concept, which he first popularized in his 1991 book. As Joan Waltman, president of QUALCOMM Wireless Business Solutions, shared at the Summit, the basic concept is that with any new disruptive technology, there exists a daunting market-penetration gap between early adopters and what Moore calls the early majority. While you might not realize it, if your company has already adopted Smart Services, you are perched advantageously on the near-side of this chasm. And if your company hasn't yet adopted Smart Services, you're somewhere between just-across-the-gorge and six-time-zones-away.
  
  If the latter describes your company, what can you do about it? Joan aptly quoted Moore in her presentation, saying, "When confronted with market disruption and technology revolution, your biggest challenge is letting go of comfortable old behaviors before they kill you."

If you missed this year's Summit, you can rest assured along with all the other Cubs fans, that there's always next year. In the meantime, you'll soon be able to check out more of the highlights on nPhase's Web site.

Smart Services Adopters are Bullish on Brand

If product support is going to fulfill its promise of providing an OEM with new competitive advantage, then the brand must embody the service message. To make certain that a new Smart Services offering is favorably received in target markets, most OEMs would be well-served to organize a cross-functional brand strategy team – comprised of representatives from marketing, service, and sales – tasked with determining the most effective packaging and positioning.

Here are a couple of tactics this brand team should consider:

1. Tap R&D budget: Some level of investment will be required to define and execute a Smart Services branding strategy. Marketing dollars are the obvious source of funding, but increasingly, leading OEMs are claiming research and development funds that historically have been reserved for product-related initiatives.
   
   How can this approach be justified to a CFO? In essence, Smart Services can be “productized” and heavily leveraged to drive additional product sales. And in product categories approaching commodity status, investments in new product features and capabilities will yield far less returns than investments in new higher-margin, faster-to-market, and more competitively differentiable service offerings.
   
   
2. Create unique Smart Services brand: Most OEMs have been selling numerous flavors of service agreements for years, from extended warranties, to preventative maintenance, to dedicated call center and field service support. Among these legacy service approaches, Smart Services stand apart, able to deliver unprecedented improvements in asset uptime, business continuity, and overall performance within the asset operator’s enterprise.
   
   But one of the obstacles is that over the years, product-driven sales representatives have conditioned the market to under-value post-sales service by gifting service offerings to prospects during late-stage negotiations in order to ink a product sale.
   
   To differentiate Smart Services from vanilla service agreements and to begin to undo end-users’ misperception of the value of service, OEMs must create a new premium brand for their Smart Services offerings. Many leading OEMs have created clever acronyms, logos, and department names for their Smart Services programs.
   
   ABB Robotics uses "ARM," which stands for ABB Remote Monitoring. Respironics chose "Respi-Link" for its smart service solution. And Gardner Denver is positioning its "ESP 20/20" offering as perfect machine visibility.
   
   Let’s face it. Smart Services are not your grandfather’s maintenance agreements. Build a bold brand and stand by it.

Where's your company at in the Smart Services branding process? Post a comment and share your marketing lessons learned.

OEMs: Appeal to your customers' "green" side

Struggling to quantify the impact that Smart Services can have on the asset owner/operator's enterprise? You're not alone.

After three solid days at IQPC's Remote Device Monitoring & Management Summit here in steamy Boston, I came away with a few realizations. One of these pertains to the multi-faceted business case for Smart Services that OEMs are in various states of building and defending. Of the four "Value Blades" that I presented at the Summit (see illustration), customer value remains the most difficult component of the value proposition to quantify.

But with today's increasingly environmentally-conscious law-makers, the timing might be just right for OEMs to position their Smart Service offerings as critical tools for their customers to comply with emerging "green" regulations.

As we speak, U.S. Congress is considering a stack of proposed bills including the Global Warming Pollution Reduction Act, the Safe Climate Act, the Climate Stewardship Act, and other legislation aimed at reducing greenhouse gas emissions by as much as 83% by 2050.

In the U.S., carbon dioxide emissions represent about 84 percent of total greenhouse gas emissions, according to the Energy Information Administration. And 98% of carbon dioxide is emitted as a result of the combustion of fossil fuels. Therefore, carbon dioxide emissions are tied directly to energy use. Theoretically, by monitoring and limiting energy consumed by its machines via Smart Services, an industrial OEM could aid its customers in curbing CO2 emissions.

But an OEM's role in ensuring its customers' green-friendliness is not limited to the realm of airborne pollutants. In the case of one manufacturer's equipment, the cleanliness of hydraulic fluid directly impacts the machine's usable life. Contaminated fluid increases the frequency of filter changes and oil disposals. In this instance, a Smart Service-enabled OEM could monitor and potentially avert causal factors that elevate sediment levels in the machine fluid, and thereby help its customers to dramatically reduce their toxic waste discharge levels.

The Pacific Northwest Pollution Prevention Resource Center (PPRC) is one entity that offers end-users some tips on working with their equipment suppliers to minimize negative environmental impact.

Is going green a top priority for your customers? Have you talked to them about how Smart Services might help them reach their goals? Post a comment and share your experiences.

Are your machines co-dependent?

Early generations of remote product diagnostic solutions required the service-providing entity to proactively "call" a machine to find out if it was operating within acceptable limits. If there were multiple machines installed at a location, the pulse of each one would have to be checked individually.

But there's a fundamental flaw in this approach. A machine that appears to be healthy on its own might actually be hindering the performance of a related machine. Herein lies the value of taking a systemic enterprise-wide approach to Smart Services.

Take air compressors for example. They tend to hog energy if they are not operating at full load. The problem is, monitoring unit efficiency will give a skewed view of systemic efficiency. The performance of one air compressor impacts and is impacted by other co-located compressors. The metric that matters is dynamic efficiency.

John Donne was the first to say that no man is an island. You should determine if this applies to your serviceable machines as well.