Lagging First-time Fix Rates Killing Mid-Size Business Profits

By Emily Lehnen
Senior Marketing Manager

According to research from the Aberdeen Group, mid-sized companies were significantly less likely than larger firms to resolve an issue on the first visit. This results in longer asset downtime for the customer, and can result in missed service level agreements. The costs associated with the missed SLA’s, as well as the secondary dispatch can wipe out an organization’s service profit margin.

What if instead companies could save $3.74 million?

There are technologies, such as mobile field service software and optimized scheduling that can dramatically increase first-time fix rate. But mid-sized businesses, which lack the vast coffers of their larger counterparts, sometimes look at technology options like the ones outlined above and question their affordability and impact on the bottom line.

ROI Calculation
Let’s consider a mid-sized business with 100 technicians who complete the industry average of 4.8 work orders per day.

100 technicians
x 4.8 work orders per day
x 250 working days per year
= 120,000 service calls/year

The Aberdeen study indicates that 40% of these services calls (48,000) would require at least a second dispatch. Research from the Aberdeen Group estimates that the cost per dispatch is $241.

48,000 service calls
x $241 cost per dispatch
= $11.6 million spent annually on secondary dispatch

Aberdeen found that companies who employ field service scheduling and mobile service software experience a 32% increase in first-time fix rate. This would reduce the number of service calls needing a secondary dispatch by 15,360, a cost savings of approximately $3.74 million.

When you look at all the numbers above, the question in your mind should change from, “Can I afford it?” to “Can I NOT afford it?”

Selling in a Struggling Economy

By Larry Laux
President and Founder

Recent developments in the U.S. and world economies brought to mind the opening lines of Rudyard Kipling’s poem, “If –“

“If you can keep your head when all about you
Are losing theirs and blaming it on you . . .”

There are lots of anxious people in the world today, and it seems to me that some anxiety is justified. Certainty 400 point swings (both directions) in the stock market are attention grabbing, as are the difficult-to-comprehend numbers being tossed about as bailout plans.

How do you sell in this economy?

I suggest you start with a simple question – was there a market for your firm’s services last week, last month? If yes, then there is still a need for those services today, and there will be tomorrow, next week, and next year.

Absolutely, your clients and prospective clients will use the market noise as an excuse to negotiate or to delay purchase. However, all using ‘The Economy’ as an excuse means is that you have not made a good enough case that your services provide value well beyond the amount of money you are charging.

Clear communication is a big opportunity for you. Make sure everyone in your organization that does, or even might, have communication with your clients and prospects knows your ‘elevator pitch’, or what you would say to a CEO if he got on the elevator with you on the first floor and punched the button for the 12th floor. That’s all the amount of time you to state the case why they NEED your services, and it is imperative that everyone in your company is saying the same value proposition.

People are claiming that “this time is different”...it’s NOT different. Do you know what the Prime Rate was in December of 1980, when Metrix was 7 months old? 21.5 percent! Companies still made purchases. When companies understand that by spending $X they can make 3 $X in a year, the smart ones are going to do that.

They just need you to remind them of the return on their investment in your companies’ services.

Making the Most of Customer Complaints

By Tom Bowe
VP of Product Marketing and Engineering

I recently came across a good Wall Street Journal article on Customer Service that is worth sharing: Making the Most of Customer Complaints

September 22nd, 2008, by Stefan Michel, David Bowen and Robert Johnston

The article also includes links to additional MIT research (click on hyperlink to go to relevant MIT SMR article summary…then hit the ‘full text of this article’ link on page for a .pdf reprint compliments of IBM). And the online video is short and to the point!

Enjoy!

Five Reasons to Take a Closer Look at Metrix Mobile

By Tom Bowe
VP of Product Marketing and Engineering

I think our website understates our mobile solutions and I’m feeling a little guilty about it…hence the blog. Building mobile applications is difficult with so many design constraints to consider like battery, memory, screen size, wireless sync and device OS. One of our critical to success factors is sticking with what we know – field service automation. Having every employee in the company intimately knowledgeable about service business processes really helps us create practical and valuable features for your mobile workers. If you haven’t taken a look at Metrix Mobile lately…here are some reasons you should...

Embedded GPS Adaptor – Metrix Mobile receives GPS feeds directly from the device including latitude, longitude, speed and heading using the NMEA standard. When the service specialist or inspector records their arrival, we can see if they are actually at the customer address…or not.

Intelligent Barcode Scanning – Metrix Mobile supports 20+ different barcode symbologies like Code 39, EAN/UCC, 2-OF-5, UPC and RSS…simultaneously. Users scan any barcode and the application recognizes the format, parses the data into multiple fields, validates the record and notifies the user with an audible “beep.”

Email Integration – With one touch, mobile users can email the customer contact for their next job. Metrix Mobile opens Pocket Outlook and pre-populates the message. The Tech or Inspector selects ‘saved text’ to add a sentence like “I’ll on my way and will be arriving shortly” or “I’m stuck in traffic and may be a few minutes late” and then hits “SEND.”

Phone Integration – With one touch, Metrix Mobile users on a Smartphone device can call the customer contact for their next assigned job.

File Attachments – Users can receive schematics and forms automatically downloaded along with their assigned work orders and can wirelessly upload completed surveys, checklists, or log files to the customer support group.

Save Thousands of Dollars with Special Depreciation Rules in 2008 Stimulus Act

By Emily Lehnen
Senior Marketing Manager

In addition to paying out to individuals, the 2008 Stimulus Act passed earlier this year provides extra incentives for businesses. Two special depreciation rules apply for assets put into service in 2008, allowing companies to garner thousands of dollars in tax savings. Following is an explanation of the rules, and an example of the potential savings.

While lots of capital assets qualify for the special depreciation, I’m going to discuss how they relate to software purchases, one of the qualifying assets.

The incentives include:

• A 50% first-year bonus depreciation
  Software normally depreciates at a rate of 33% per year. With the incentive, for the first year an asset is placed into service, companies can depreciate 50% of the cost of an asset in addition to the regular 33% depreciation and any Section 179 deduction.



• Increase in “Section 179 Expensing”
  A company can elect to treat an asset as an expense and depreciate the asset in one year instead of over several years. This practice is referred to as “Section 179 Expensing”, very cleverly named after the IRS code that explains it. If a company chooses to do this in 2008, it can expense up to $250,000 of the cost of the asset, up from the general limit of $128,000. Again, a company can take advantage of this special allowance in combination with the 50% first-year bonus depreciation./LI>

Real World Example of Savings
Before your eyes completely glaze over from looking at IRS codes, let me show an example of the potential tax savings. Let’s say you spend $300,000 on upgrading or purchasing new software, and that software is put into service in 2008. Below is a calculation of the maximum depreciation allowed in 2008.

Purchase Price: $300,000
Section 179 expensing: $250,000

Remainder to use for calculating
other depreciation: $50,000

50% Bonus depreciation: $25,000
33% Standard depreciation: $7,500

Total depreciation amount
($250,000 + 25,000 + $7,500): $283,250

Total 2008 Tax Savings
(assuming 32% tax rate): $90,6400

Without the two 2008 incentives, this same software purchase would result in a tax savings of only $58,880. These incentives are a great way to bolster your ROI justification for starting a software project.

The Discipline of Project Justification: Part 7 – Creating Story Boards

By Tom DeVroy
VP of Sales

When selling software, the most difficult kind of users to win over are end users. Senior managers tend to have some vision or preset notion of how they would like things to run in the future versus how they run today. They think in terms of efficiencies, overlapping processes and increase productivity. The Future-State model.

End users, on the other hand, don’t think in terms of change. They think about how things work today, and the steps they need to take to get their job done. The Current-State model. Therefore, the prospect of change, especially is not explained well by management, creates a lot of anxiety for end users.

To dispel this anxiety, managers need to help end users look past the Current State, and help them visualize the Future-State. To so this, it is essential that management and project leaders clearly map out the path for change and how it will affect the end user. They need to explain to the user community how their job will look in the future, and that the new system is just a tool to help them do their jobs better, faster, more easily.

At Metrix, we use the creation of story boards to help explain the path for change for new processes. This usually takes the form of a flow chart or some other diagram that explains how processes will be performed and by whom. It’s even better when the application software vendor can demonstrate these new processes so people can visualize the new model, and their job function in it.

So if a simple narrative doesn’t do it, take the time to define the future state, lay out how it affects people, and define what their new job responsibilities will look like when the new tool is selected.

3 ways to save money by reducing service inventory in the field

By Tom Bowe
VP of Engineering

Most service companies track inventory in the field to some degree and most can report cost variances and usage trends each month. Occasionally I run across service business that expense all of their field inventory, but most track at least their highest cost items with some care. Few have real-time visibility and closed-loop logistics, which is essential to eliminating surplus stock, recouping warranty reimbursements, reducing shrinkage and uncovering hidden costs.

Service parts management is complex and difficult to understand, let alone fix, with a lot of people involved across multiple departments. However, its impact on cash-flow and profitability causes service executives to spend a significant amount of time white-boarding, analyzing and brainstorming ways to optimize field inventory. When the normal process fails (i.e. stock out, urgent, NFO, hard down, etc.), split-second decisions often have a negative, cascading effect on service levels, first time fill rates, customer satisfaction, and cost. Here are three suggestions that make for a better running service logistics organization:

1. Closely track the number of parts requested vs. the number of parts used to fix each customer problem. It used to be difficult to link these transactions together because they occur at different times; different places and can involve different systems. But now, Metrix (for example) can require technicians to disposition each part that was shipped, pulled, installed, repaired, tested or swapped before they can close the call.


2. Implement periodic cycle-counting in the field. This used to be tedious, but now it’s easy to automate and requires little user effort or training with intelligent barcode scanning. Service part cycle-counting has a number of advantages over traditional physical counts, especially if the field doesn’t see it as a waste of time and frequency is based on value, like ABC.


3. Enforce approved stock lists and levels. Ideally, on-hand inventory in a service van or a technician’s trunk consists of low-cost/ high-use parts and essential tools…that’s it. Everything else is delivered on-demand, purchased as needed, or consigned to customers and parts are consumed or returned immediately.

Sometimes it’s best to manage these critical service parts functions in your service systems. Traditional supply chain systems don’t account for the nuances of managing service parts, and are often times are too complex for the job. Good forward and reverse logistics management is a key driver of customer satisfaction, and overall service profitability. We think closed-loop service parts and logistics should be a core component of all field service automation projects.