Sarah welcomes Vele Galovski, Vice President, Support and Field Services at TSIA for a conversation around the findings of his latest State of Field Service benchmark research.
Sarah Nicastro: Welcome to the Future of Field Service Podcast, I'm your host, Sarah Nicastro. Today, we're going to be talking about the state of field service in 2022. I'm excited to welcome to the podcast today, Vele Galovski, who is the Vice President of Support and Field Services at TSIA. Vele, welcome to the Future of Field Service Podcast.
Vele Galovski: All right, thanks, Sarah. Appreciate it.
Sarah Nicastro: Yeah, thanks for being here. So, before we get into our conversation today, tell our listeners a little bit about yourself, your background, your role at TSIA, that sort of thing.
Vele Galovski: Okay, great. I've been at TSIA, the Technology Services Industry Association for just about the last nine years. Which, crazy to think about that someone would keep me employed for that duration time. But what we do at TSIA is we help our members accelerate their revenue performance to help them scale, and help them with their profitability. And we do that through education, assessment of their performance with our benchmarking, we understand what drives those good performance metrics. So we get very prescriptive with our best practices. And then we also develop frameworks to help align organizations, and we're going to talk about that today. There's a lot of alignment necessary when you go through a transformation. So that's kind of what I do here.
Vele Galovski: My background, before I came here, I had 20 plus years of executive experience in companies large and small. I worked in companies as big as Bank of America and Xerox Business Services, and as small as some mid-stage startups selling cloud solutions to oil and gas industry. Just going up and down the oil patch. So, I've been on both ends of the company corporate spectrum, and I think the one thing that's in common with all of those positions is I've really helped to drive transformation. How do you change your business? What do you have to do differently? And we'll talk about it, it all starts with the customer. If the customer ain't happy, ain't nobody happy, right.
Sarah Nicastro: Mm-hmm (affirmative).
Vele Galovski: Align your company along those lines.
Sarah Nicastro: Great. Now, I'm sure a lot of our listeners are familiar with TSIA already, but if any aren't, who are the members?
Vele Galovski: It's a Who's Who in the industry. We got our start over 15 years ago in Enterprise IT. So, you can look at that and the cloud companies, we've got companies like Oracle, like Cisco, like Hewlett-Packard Inc, and Hewlett-Packard Enterprise as members. As well as some big cloud companies like Amazon, Salesforce, and so on. Now, probably about six, seven years ago, helped stand up the industrial equipment and healthcare technology verticals here at TSIA, because what we started to see was everything that was happening in tech, is now happening to industrial equipment companies.
Vele Galovski: This digital transformation is just rolling right through and disrupting every industry it hits. So, in those areas, we do have a bunch of instrumentation companies, like PerkinElmer, like Emerson, like Rockwell, and now TSIA has over 30% of our members from the industrial equipment and equipment manufacturing space. So everybody's full gear, in terms of "Boy, what does this mean for us and what do we have to do?"
Sarah Nicastro: Yeah, okay. Good, all right. So you recently released your State of Field Service 2022 Report, which is a lot of what we're going to talk about today, pulling some of the snippets from that. Before we really get into those specifics though, if you listen to what we're going to talk about today, if you look at the report, there's a lot of change at play right now. And so, I think there is... You and I have talked about the view that complacency is just not an option. So give your thoughts on why that is, and then we'll dig into some of those specifics.
Vele Galovski: Yeah, great question. I think everybody always believes that their business model is going to withstand forever, and just keep on moving ahead and make a good product. And that will change everything, that will rule the day. But, when everybody talks about digital transformation, the one topic that's always missed, I think in this discussion of digital transformation, is what we call democratization of the marketplace. So I'll use the auto industry in an example, I think we can all relate to it. Car companies, what do they like to do? Make, sell, and ship. Let's get cars, let's put new premium features in, and the dealers go out, and what do they want to do? They want to sell extended warranties, financing, rust protection here in the Northeast.
Vele Galovski: And when you look at it, what do customers want? Customers want to use that product to get from point A to point B. And so they end up buying a product, that when you really think about it, sits idle for 22 out of 24 hours a day. So, is that the best use of my capital? Is that the best way to do this? So now, out of nowhere, or out of a completely different place, come these ride sharing apps. Things that are focused on the customer need to get them quickly, easily, safely from point A to point B. And guess what, they don't care about building or selling cars. They don't have huge factories to keep in motion and supply chains and all that other stuff.
Vele Galovski: So what ends up happening is, an entirely new set of competitors comes into a marketplace. And if you just sit idle and wait, you're going to be surprised. And you're not looking in your rear view mirror, your side view mirror, you're not looking at all this. And the example's kind of abound, you've got Amazon doing prescription delivery. You've got Google getting involved in manufacturing execution systems. Once again, they don't care about making the pills. They don't care about making whatever in the assembly line, but they all care about, "How do I use data to inform better performance and to do stuff, that doesn't require all that CapEx, and the transfer of the asset."
Vele Galovski: So, I'd like to coin this idea of complacency in terms of a race. When everybody's a tech company today, will these other new entrants learn your industry faster than traditional OEMs learn technology and data? Who's going to win that race, and if you're complacent, you don't stand a chance. Right?
Sarah Nicastro: Yeah, that makes sense. And so these customer needs, and the way that they're being met in a lot of consumer ways, a lot of the things we have access to day in and day out, is one area that's sort of driving the shift in business model transformation. The other is digital, so digital is the enabler of transforming these traditional business models.
Sarah Nicastro: That being said, digital transformation is one of those things that is tough, because there's different definitions, there's all sorts of layers to it that really make it something easy to understand on paper, far harder to execute in real life. What are some of the things that you think make digital transformation harder in reality than it seems on paper?
Vele Galovski: Yeah, it's one of those things, every time I hear something like that, it makes me think of a Will Rogers quote, "It ain't what you don't know that hurts you, it's what you know that ain't so." And I think there's a lot of people out there that talk about digital transformation and think it's something that it's not really. But to your question, the idea of what makes it harder for specifically manufacturers, and it's hard for everybody, but for manufacturers, think about it, the technology is on site. So when a customer buys the asset, and they operate it on their facility, as a manufacturer, I don't know how it's being used. And didn't have feedback, and knowing what we have to do different is important. So not knowing how it's being used is challenging, and that's different as opposed to some cloud consumer type application that was built in the cloud.
Vele Galovski: The second related piece of that is that the technology's not connected. So the capability exists, we've been talking about smart connected products, sensors can really replicate the physical properties of that product. But only a third of the install base is actually connected, where you're getting meaningful telemetry coming back out of that. And so, that's another inhibiting factor that makes it a little bit more difficult.
Vele Galovski: And then the third thing that we see is that the technology was sold by the channel. And everybody uses the channel, which is a great thing to expand distribution, but who bought it? Where's it installed? Are they using it? Who's using it? Is it still there? And all those questions need to be answered, and without the telemetry, without the connectivity, it makes it really difficult.
Vele Galovski: And then I think, the last thing is focus. Many people, and this is where the Will Roger's quote comes in, they think that digital transformation is all about automating processes. And then everybody gets really disappointed that, "Man, what happened? I thought this was going to change my world. What's the deal here?" And so we felt like we had to redefine digital transformation. We needed a new definition out there, which we've introduced over the last few months.
Sarah Nicastro: Okay, so tell us about that, and what you refer to as the digital transformation north star.
Vele Galovski: Yeah, it was a couple of our conferences ago, we do a number of different sessions, and I had a coffee session with Frederic Godemel, the EVP of Power Systems at Schneider Electric. And during that session, I sprung the digital information north star on him, "Frederic, with this new data that you're able to collect today, with this new data I can X, and no longer have to do Y." And so one of the things that he really liked about this, and that we hopped on was from his perspective, they can now remotely monitor distribution systems, and collect that data. And as a result of that, they can provide reactive optimized performance and reliability recommendations, and they no longer have to put somebody on site to operate, and shut down, and lock out live electrical equipment, and do that to begin to assess the system.
Vele Galovski: So, by using this definition, instead of just making it easier to see what's in the panel box, what he's able to do now is eliminate the task completely, and to monitor it remotely. And to keep it safe, and to provide good recommendations. So this idea of a north star focused on eliminating completely, as opposed to just automating, I think is really what people have to begin to look at and say, "This is what digital transformation is not about. Not just speeding things up and showing me what's in the panel box faster."
Sarah Nicastro: Mm-hmm (affirmative) Yeah. So we say the term work smarter, not harder. This is working smarter, not faster, right? So using digital not just to move faster, but to look at what work can be eliminated, and how you can accomplish tasks differently.
Vele Galovski: Yeah, and I think that the other aspect is, when we do digital transformation in this manner, we're talking about eliminating tasks. We're not talking about eliminating people. What we want to do, is we want to use this to automate the mundane, why use people to do things that are so easily eliminated and provided, and let's use people to do things that only people can do. Build relationships, assess situations, provide some additional value add. If all we ever do is focus on the idea of, "Automate something, make it faster." We really haven't fixed the system, and I think you'll continue to be disappointed. So that's why we came up with that north star, that's what you got to look at.
Sarah Nicastro: Okay. And you break digital transformation into two waves, so tell us what those are and why you segment it that way.
Vele Galovski: Yeah, wave one is the old definition, and the old definition is very product focused. And I think it's an important stepping stone in the whole program. So when you think of wave one digital transformation, let's make it smart, let's capture the right things off of that piece of equipment. Let's make it so that we can collect the data, let's see if we can become predictive of what's going to happen, and can we prevent it? Can we take proactive steps? All of that is really important, but that's not the beginning and the end, it's very much the foundation that you're building off of. So we call that wave one. Important, lot of work, lot of investment, but it's only wave one.
Vele Galovski: Wave two, which is going to be the big deal, is how do we take that wave one capability, and turn it into a focus on improving the customer's business outcome? And so you got to move further and further away from your product, which is really hard for a lot of equipment manufacturers because that's all we ever focused on is the product. And now we're saying, "No, go beyond the product. How do you interact in the customer's workflow? How do you participate in the ecosystem? What skills, what knowledge do you have that can influence the ecosystem, and start to help them get more value out of your product and your company."
Vele Galovski: And get paid for it, we're not philanthropic organizations. We're nice people, but we don't do it because we're nice, we're doing it because we think it's the best way to make money.
Sarah Nicastro: Right, okay. That makes sense. Now, you have a book coming out around what you call digital hesitation. So I'm sure you don't want to give it all away because we want people to get the book, but give us an idea of what you mean by digital hesitation, and what purpose this book is going to serve.
Vele Galovski: Okay, well it comes out-
Sarah Nicastro: And apologies to everyone for my sniffles. I told Vele at the beginning I have a bit of a cold, so sorry if I'm sniffly on this episode.
Vele Galovski: No, not a problem. I'm glad we're able to continue on. So, the digital hesitation, it's really a play on digital transformation. It'll become really obvious on the cover, where we cross out the transformation piece and put the hesitation over it. Because everybody talks about digital transformation, they say they're doing it, but few are committing to it. They hesitate. So, the simplest view of digital hesitation is really a half-hearted attempt at transformation. So that's kind of what we're positing out there. And if you really think about it, if we were to tell you that 40% of company revenue was being wasted by not fully committing, would you do it differently? Would you fully commit?
Vele Galovski: And if you think about it, we've got all these organizations very well established, and because of our half-hearted attempts... We create customer success organizations to help customers use the product. We need support organizations, which 36% of every case that comes in to support is, "How to use the product that we just bought." We have field service organizations that have to go on site to figure out what's wrong with the product before we can fix it, just to get to level.
Vele Galovski: And if you were to look at it and say, "Man, I'm spending 40% of every dollar that I earn propping this stuff up," would you hesitate? Or would you say, "Man, maybe I got to look at this a little bit differently." And that's what the book is about, the book is calling these items out, and then going into every single part of that digital customer experience to look at what can we do differently. How do we change from go to market, to onboarding, value realization, all the way through to renewal and expansion. So it really looks across the whole thing.
Sarah Nicastro: Now, would you say that digital hesitation... What you see happening is more companies committing to wave one and not wave two, or hesitating altogether?
Vele Galovski: I think everybody dips their toes in to wave one. Everybody does it, but the lack of vision going forward hamstrings a lot of these companies. I don't know, tell me a company that doesn't have some type of sensor on their product, right? There used to be a lot of dumb pieces of equipment out there, dumb meaning it stands by itself and it does its thing. Everybody's got sensors, even a car. I use that example again, a car has more lines of code than a Dreamliner now. Everything's loaded up, so everybody's kind of engaging in it, but they do hesitate. They stop short because it's like, "Well, how big does this thing get. What do we do with it?" And that's what we want to do, is just expand the definition and the thinking to go where the customer is ultimately going to pull you.
Sarah Nicastro: Yeah. Now, I know this is a loaded question, but if you look at what will it take to eliminate that hesitation, and to help companies see the wave two vision, and make more progress in converting digital transformation efforts into business model change and revenue growth... Because I think one issue I see though, is that people confuse the two. People think that just through digital transformation, they are changing their business model.
Sarah Nicastro: And the reality is it gives you the ability to do it, but it doesn't do it for you. And that's where I think people get stuck, because, like you said, they're, "Well wait, we connected all of this stuff. We have this data, why didn't it change the world?" And then it's like, "Oh, there's this whole other set of change that has to occur." So, what is it that's going to get more organizations to see the potential of going all-in on wave two?
Vele Galovski: I think, fundamentally its leaders have to lead, and you have to look at it. And it's hard, because if I've spent my entire career making it up to the C-Suite because I'm the best CapEx product seller, product development engineering manager out there, now all of a sudden I get here and you're telling me the rules have changed? Wait a minute here, I only got three years to go, I got five years to go. Whatever, I'm going to ride this one out.
Vele Galovski: So first of all, it does take leadership because this is a company-wide thing. I think another piece is you got to commit. You can go back to the Iliad, burn the boats. You can go back to Sun Tzu, knock down the bridge, force your folks to change and to make that happen. And so that's another way. And then I think, unfortunately, some places are just going to fail. You're going to have some big failures out there that may encourage other people to move.
Vele Galovski: So, some of those are things that have to happen. And what we try to do in the upcoming book, Digital Hesitation, is really to talk about some of these factors, and really just articulate it that says, "You got to lead, you got to burn the bridges and the boats." And don't be on the heap of history, "Congratulations, you got there, but are you going to be the one who drove him under, or are you going to be the one that saved the place?"
Sarah Nicastro: Right. I think the point you made saying, "This is a company-wide thing," that's a very important point, because what I see with the people I interview is unfortunately, there's a lot of organizations that are approaching this in a very siloed manner. It's the service function that is trying to drive this change, and it just doesn't work. It doesn't work, unless you're talking about acknowledgement of the overall identity of the business, the value proposition that the company's customers want, and a cohesive look at what it takes to get there.
Sarah Nicastro: And so I think that that's definitely one of the biggest challenges that I see play out time and time again, is there's pockets of really innovative thinking, and change-ready folks, but they're fighting against legacy that maybe doesn't see it at the top. And that has the change too.
Vele Galovski: Just a quick comment on that, I see one of my unofficial charters, at TSIA, is to help these field and support organizations be meaningful contributors at the corporate table. And to give them the data, and the confidence, and the backing to say, "This is what we're doing, and this is what you're asking me to do. And these are the things that have to come into play." So, without that, a lot of people rightfully struggle. We've talked about it, we've seen it in the past, this idea of people have talked about shift left for a dozen years. And so the reason I got on this particular unstated mission was a guy comes to me and says, "Okay, I've been tasked to eliminate 40% of my dispatches in the next year and a half."
Vele Galovski: Because the CFO did a spreadsheet exercise and says, "Wow, dispatching on site with a spare part is really expensive. I want to do that remotely." And I'm like, "Oh, okay, great." Well to shift left, I go, "What percent of your install base is actually connected, and giving you telemetry so that you can resolve it remotely?" 2%. I'm like, "Dude, you better update your resume, because you're not going to make that goal."
Vele Galovski: And that's sad because, I think a lot of field and support people really put their heart into it, and want to do the right thing. But it's a matter of, "Hey, if we're not connected, and we're not doing this the right way, this is not all on my shoulders." And that's why it's important to get the whole picture out there.
Sarah Nicastro: Yeah. Now that being said, what is the role of field service in all of this?
Vele Galovski: I've put it out there that says, sooner or later the industry is going to figure out that I need service revenue. Sooner or later. So, who are the people who know the customer better than anybody else in the company? Field service. They go on site, they've seen good implementations, they've seen bad implementations. They know who uses the product well, who doesn't, and what really works. So what I tell field service organizations, I said, "Get ready, because you know, this is going to happen."
Vele Galovski: There's going to be this balancing act of utilization versus the service levels, and what are you going to do when you're on site? Are you going to get in, get out, get to the next job? Or are you going to fix the problem, but then start adding value when you're in there? These are capabilities that need to get implemented right away. Make it okay for people to do that adoption and expansion when on site, give them the skill sets that are not only technical, but are looking at the process, because we want to influence the business outcome. Give them some of those skills, teach them what it means to uncover leads, to build relationships.
Vele Galovski: All those things have to happen, expanding beyond that core charter of fix stuff. And when you start to build those capabilities into that charter, people are going to say, "Oh my God, this is what we have to do. Who can help me?" And they're going to look around and the only person that's going to know what's happened is that field service person. That manager or that leader, and they're going to say, "I'm the pedal to put to the floor, I got that."
Sarah Nicastro: Yeah. Now, can you give folks sort of a high level overview of your Field Service Maturity Model?
Vele Galovski: Yeah, sure. One of the recognitions that we all have in field service, we don't have infinite resources. We can't focus on everything all the time, so what we do at TSIA, we help them focus their scarce resources with our benchmarking process. And that benchmarking process is looking at not only your performance, we put that on the Y axis, and we say, "How are you objectively performing against the industry?" And then and we also along the X axis, look at what's your adherence to industry best practices? Just like any good consulting organization, you got to have a two-by-two.
Vele Galovski: So as an example, if I have high performance and I'm in the upper-left hand quadrant, but low adoption of best practices, this means I'm getting good results, but it's probably going to be pretty hard to scale. And maybe we're getting it just out of pure effort coming out of those engineers, and it's going to be hard to do that. So our recommendations is we look at the performance that you want to maintain, and we start to show, "Hey, these are the industry best practices that will maintain that performance, and help you improve at scale." So, that's a theoretical discussion. As an example, in that upper left-hand quadrant, those are the people that have great customer satisfaction. People are doing a wonderful job, in spite of poor product performance, in spite of not knowing what's happening until you get out there. So those companies in that upper left-hand quadrant, don't regular have formal input into the product team on serviceability.
Vele Galovski: Those percentages are so much lower. So they're doing well, but they're not getting any help. The companies that move over into that upper right-hand quadrant, meaning they're adopting certain practices and still maintaining those results and can scale, those are the companies that, as an example, have formal input to the product team on serviceability. What were the causes of all these break fixed incidents? How can we do reliability? What should we be monitoring? Here are things that work well, if we can incorporate these data streams into our product, we can do X, Y, and Z. So that's what we look at when we do that type of assessment, and say, "Okay, good performance. You can scale doing these things because you're not doing them today."
Sarah Nicastro: Right. Which really is representative of service being better incorporated into the overall business strategy, business decision making, business operations. And so it's similarly representative of the need to ensure you're not having that function operating in a silo, right? So that's interesting. So-
Vele Galovski: I got a bunch of these little things, Sarah, as you know. But I talked about being a contributing member on the corporate table. And someone told me this a long time ago, and I never forgot it. And they said, "You have to be at the corporate table. Field service has to be at the corporate table because, if you're not at the table, you're on the menu."
Vele Galovski: I think you can fit it in with exactly what you just said, that if you're not given this feedback, if you're not part of this whole enterprise approach, guess who's going to get blamed for poor uptime? Guess who's going to get blamed for bad satisfaction? Guess who's going to get blamed for that? You're on the menu, and it doesn't work that way. We all have to work on this together, and that's a great example of what I mean by being a contributing member at the corporate table.
Sarah Nicastro: Yeah, that makes sense. Now, over the next 12 to 18 months, what are some of the of biggest... I don't know, I don't really love predictions. But what are some of the most interesting things you think we're going to see in field service over the next 12 or 18 months?
Vele Galovski: I think that what you're going to see, and I use like Enterprise IT to be a predictor of future because they've been dealing with this for about six to eight years. And now a lot of the manufacturers and everybody else are starting to deal with this today. And so what's going to start to happen, I believe, are time and material engagements are going to hit the road. It's too hard to do cost plus, it's too hard to scope out how many people you need, it's too hard to predict what's going to happen with the revenue, and so on. So I see time and materials, which have essentially disappeared from enterprise tech, also going away from industrial equipment, healthcare, even though a lot of people use it today.
Vele Galovski: That's going to shift from time and material contracts to annual recurring revenue contracts, things like here's a support and maintenance contract where I'm going to guarantee resolution time. Not response time, but resolution time, that's another trend that's going to start to change. And then customers, we see hints at this today, they're going to start putting clawbacks into contracts. It's like, "Wait a minute, you promised me this, and if you don't hit that level, we're going to start the clawback."
Vele Galovski: We're just going to put more pressure on the enterprise to get to connected, to get really good at what they're doing. So over the next 18 months I see less time and material. Oh, by the way, who wants to play in that space, anyways? Because anybody with a tool pouch plays in that space, and it's hard to maintain the margins people want. So I see time and material going away, I see more annual recurring revenue type contracts coming in. I see focus on resolution time, instead of response time, i.e. closer to business outcomes. And, I think that there's going to be more and more penalty clauses and clawbacks for lack of performance there. So if you think of that, it's a lot of pressure, right?
Sarah Nicastro: Yeah, yes it is. And that's what makes our jobs interesting. So, that's-
Vele Galovski: And I thank you for bringing it up to everybody.
Sarah Nicastro: Yeah, it is a lot of pressure, but like we said at the beginning it's not really optional anymore. All right, so, last thing is I want to have you tell folks you have a live event happening in May. So tell our listeners where it is, when it is, how they can find more information so that they can check that out.
Vele Galovski: Everything you want to know is at TSIA.com. You can look at the conference tab there, everything is there. It's going to be in Orlando, May 16th through the 18th. It's going to be an in-person and hybrid event, we did our first in-person event in October in over two years, and we did that in Las Vegas. That was also hybrid, so we felt that this is a good model. COVID's changed everything, so we've adapted. And we're going to be doing that as well here in May. I referenced Frederic Godemel from Schneider Electric, he's on the main stage for us this year. Talking about that digital transformation, and what they need to do, or what they have done within a traditional equipment manufacturer. Well over a hundred years old, what have they done to transform?
Vele Galovski: So, that's going to be a great talk. And then we're going to have what we call pathways, seven pathways that you can register for and attend things on, like digital customer experience. How do you accelerate annual recurring revenue? How do you navigate the transformation? So, it's a great event, we're expecting over 1,000 people in-person at Marriott World Center in Orlando. So we're excited about the event. I'm excited because it's on the East Coast, and I'm excited because I love Disney world.
Sarah Nicastro: Yeah, there you go. That sounds good. So everyone that isn't already engaged with TSIA's content, you can find all of that, like Vele said at TSIA.com. You can check out the State of Field Services Report, you can find blogs that Vele and his team write, different research that you can take a look through, and information about the event in Orlando in May. So, that's excellent. Well Vele thank you for coming, and spending some time with me today. I appreciate it.
Vele Galovski: Yeah, thanks for having me, Sarah. And I hope you feel better, I couldn't tell.
Sarah Nicastro: Well, good. It's nothing major, I wanted people to know that if they heard a lot of sniffles, it was just my little cold, so all as well. All right, so thank you again. I appreciate you being here with me.
Vele Galovski: Thanks, Sarah. Take care.
Sarah Nicastro: You can find more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn, as well as Twitter @TheFutureOfFS. The Future of Field Service Podcast is published in partnership with IFS. You can learn more at IFS.com. As always, thank you for listening.