In this session, from the Stockholm stop of the Future of Field Service Live Tour, Sarah talks with Roel Rentmeesters, VP of Services at Munters, about the considerations in creating a remote service strategy. Roel discusses how to navigate resistance to change, how remote service factors in to Servitization, and how delivering outcomes requires an evolution of service delivery.
Sarah Nicastro: All right. So Roel and I have had variations of this conversation many times, but it's always a pleasure.
Roel Rentmeesters: It is.
Sarah Nicastro: Yes. Okay. So, we're going to talk about the balance of working toward innovation, a bigger vision of change, while meeting the demands of the present day business. Okay.
Roel Rentmeesters: Yep.
Sarah Nicastro: So tell everyone a bit about yourself, what you do, what Munters does and then we'll get started.
Roel Rentmeesters: Good. So I work for Munters, it's a Swedish company. We do climate solutions for mission critical processes. So everything that's related to humidity control and temperature control in critical environments is what we do, and of course, we try to do this in a sustainable way, meaning that the way our energy consumption, et cetera, for our units is controlled and help the customer in their processes. And I'm leading the services organization. It's been five years that I work for Munters, my background is however in IT where I've done field service for the last 20 years, which is actually good, because the way IT has developed their service management from call centers and network operations centers and systems to control this, is very standardized using Itel, and I think there's a lot that we can apply from that IT industry in our manufacturing world. So, that's where I am in Munters, and it's really interesting.
Sarah Nicastro: Yes. Okay. All right. So, at Munters, there's this opportunity to servitize the business, as there is for many manufacturers, also probably a fair bit of resistance to that amount of change. So, when we talk about service transformation, I think, particularly for those who are in manufacturing, looking to servitize the business, you're really talking about fundamentally an identity change of the business, and that can be challenging, so how would you describe the opportunity for Munters to servitize and what are some of the things that are driving that opportunity?
Roel Rentmeesters: Yeah. I think servitisation is fairly new in Munters compared to in other industries. We started, I would say, seven, eight years ago, I heard a colleague say in 2000 already, so we are quite new and we are, well, we have been really a traditional manufacturing company, so we build big boxes in our factories, we sell them and sales and service was a support organization, and that changed a bit, I would say 2015, or just before that, the first thing we did was change the service organization, where before it was residing into the BU's and it was pure support, we moved it into a separate business area, and that really made a transformation happen, so separate sales from the service organization, so that they don't abuse each other and started that revenue generation in service, it was quite successful and we are still quite successful in it.
Roel Rentmeesters: So, we have 15% growth in the last years of service, but still mainly in our traditional services. So it is the commissioning, it is a break and fix, it is a preventive maintenance and particularly the upgrades, so how can you maintain your units? And that's where we still are a bit today. So we have not yet evolved into real connected devices and advanced services that need to be delivered, but that is something that we need to do in the next step, and that is what is part of our roadmap right now.
Sarah Nicastro: I was just going to say, Roel was at our Paris event, which was our first and we talked quite a bit there about the journey of servitisation and the continuum, and so the phase you're at, I think, is a phase where organizations tend to reach a level of complacency, because they understand the benefit of focusing more on service and really the opportunity of the end vision, which is to actually servitize, but then they achieve a certain level of success in really that incremental improvement type of thing, and then say, "oh, great. Well, we've succeeded, so let's move on to this next thing", and that goes back to the level of change we're really talking about. So, it presents an opportunity for Munters, what are some of the aspects from the customer perspective that are making service more important, or a bigger opportunity?
Roel Rentmeesters: Yeah. You can clearly see that today in the markets, customers want more than a product, they want product with the services around it, and packaged, and they want to go into moving CapEx to Opex, lease concept, where it embeds the whole service, and they also want to have more than just a box and you repair it when it's fixed, they would like to have a sustainable outcome that you guarantee 99 of X percent of the time, that thing is delivering what it needs. Customer wants to say, "these are my requirements, and you just make sure they are fulfilled", so less down times, more guarantees and even using technologies and softwares where you can certainly even influence their environments, if you have a view on their entire production process, and you have sensors that are beyond your own device, you can do a lot of analysis in the customer environment.
Roel Rentmeesters: And one of the areas that we have it's in the food industry, it's called food tech departments. They have sensors in the entire production from the egg, up to a filet of a chicken, and they can say, if you give more water or your air quality, or your airflow is like this, what is the influence on the filet that comes out in the end? Does it take longer? Is it becoming bigger, too big to produce, so they can pinpoint what is influencing your process, and we can do the same, if a door opens, and there's a lot of external air coming in, you can say to customers, "well, this is influencing your production, why don't you have your deliveries at night?" As an example, because we see the peaks in our unit saying, "oh, something is changing in the environment, making that I need to work harder, I use more energy or I even can't guarantee the outcome performance anymore."
Roel Rentmeesters: So that's why we need to go, it's more than a box, it is things around the box that we need to deliver and customers want it, and they want also fast response times, they want to avoid even technicians going on site, that's something that you specifically saw during COVID where people were afraid of having foreigners coming into their environment. So they want different ways to deliver service than you're doing traditionally today by sending out your technician with his parts and his screwdriver.
Sarah Nicastro: So, I don't create models. Okay. We'll leave that to Tim Baines at the Advanced Services Group, but if I were to just make the continuum quite generic, so you start as product manufacturer, service as a cost center, then you move to the phase of identifying more opportunity of service and its revenue contribution, and so putting more emphasis on it, which is really where you are today.
Roel Rentmeesters: Yeah.
Sarah Nicastro: Then you would move toward true servitisation, which is, you're not selling products and services, you are selling the outcome.
Roel Rentmeesters: Yeah.
Sarah Nicastro: Okay. And then the point you brought up is a very good one is that there really is a fourth phase of this journey for those who choose it, which is, if you connect devices in the way you would need to servitize, you also, in certain industries or applications, often have access to information that your customers find a lot of value in.
Sarah Nicastro: So this is where you can bring that insight, data, knowledge into the value proposition to achieve that trusted advisor business partner type relationship.
Roel Rentmeesters: Yep.
Sarah Nicastro: Okay. So let's talk about the point you made, which is maybe in the future of field service, we go into the field less.
Roel Rentmeesters: Yeah.
Sarah Nicastro: So during the very early points of COVID, Munters recognized the opportunity to deploy remote assistance, which is an augmented reality tool, because the realities were, you had technicians that could not travel, et cetera. Now this is something that had been on your future roadmap, so it had already been a consideration, but you recognize the opportunity to get right to that. So tell us a little bit about that journey and getting it deployed initially, and then we'll talk about how, now that travel is possible and things have normalized to a degree what that means for that solution.
Roel Rentmeesters: Yeah. It was an interesting time. So, like you say, I had been looking into remote management solution before and I wanted to use this mainly internally. So we have a third line support organization for our service technicians, and we thought, "how can we have a better interaction with them, guiding them, using mixed video, two signals being sent?" And I've been looking into different solutions, and then in the World Conference in Boston, from IFS, there was a third solution that I saw, but we would be rolling it out at some point, smaller scale, it was not so urgent, it would come and then COVID hit us. So I was in Italy when the first patient came on the cruise ship in Italy, and I was with my president and we said, "if this thing's hit it's Europe or Chinese technicians were already sitting at home, they could not travel anymore."
Roel Rentmeesters: We were like, "yeah, how are we going to guarantee service to our customers?" Because this preventive maintenance is really key in our units, otherwise they break down and you get problems in your production. So he said, "why don't we roll that thing out, you have been looking for, why don't you roll it out faster?" And so I contacted IFS and I said, "I saw this solution, I like it because it integrates with your field service management solution", meaning that if you have service calls and you would use this the time you spend it to whom you called, there would be a lot of registrations done from the video link that you put in, so I liked this for a future concept, and so IFS was responding very positively to this, we got 20 licenses for two weeks that we could test for free.
Roel Rentmeesters: We liked the solution. We gave it directly to our Italian engineers who were immediately stuck at home to start doing a service with our customers, then we bought the licenses, and I think within a couple of weeks we had rolled it out for 200 technicians worldwide. A very intuitive, easily to use solution, it is, it contains already training packages inside the application, you don't need an app to be installed on the customer environment, so you can just use his web browser that he has on his phone, and just a simple tablet, something with a camera, you can use it and you can interact with your customer. We asked our technicians to train, to use it before. So they started calling each other using the solution and playing a little bit with it, and then we organized seven training sessions where they could dial into, came in with concrete questions, because they had been playing with the system, and so within two weeks we had rolled it out for 200 technicians in 15 countries.
Sarah Nicastro: So, the need for change management is minimized when there is no option for business as usual.
Roel Rentmeesters: Yeah.
Sarah Nicastro: And it was impressive that you were able to recognize the need, move quickly, get it in place, and that helped you with business continuity during those lockdowns, but now that things have changed to be somewhat more normal, it gives you the opportunity and/or challenge of looking at how does the opportunity for remote service fit into the broader service delivery strategy.
Roel Rentmeesters: Yeah.
Sarah Nicastro: So what are your thoughts on that today?
Roel Rentmeesters: Yeah. First I need to say, we saw a significant reduction in the usage of the system, because our technicians and our customers still like you to go on site, often they have this relationship as well, so it's not just anybody who is picking up the phone and doing this remote session with your customer, and in the end, technicians will always have to go on site, will always have to do field interventions, commissionings, and trusted advisor, as you mentioned, customers still like this, but it doesn't mean that this is not a solution that you can use and still use for the future. You need to have a good business model behind it, is what we talked about earlier today. You can't sell, "we deliver remote managements", you need to sell a response commitment, you need to sell a fast response commitment, proper diagnose, faster potential resolution.
Roel Rentmeesters: So you need to have something behind it, an offering and a usage behind it. So we're building up our 24 by seven service towards customers, and that will be for me, twofold. It is connected units in the future where you can interact with the unit directly, it sends you an alarm or an alert, and you do something with the unit directly, or you use a customer that calls you at night and is standing in front of that device, and you do either your diagnose, help him maybe do certain things. So that is something that I see definitely as a business case and an offering for customers. Also, when you go into outcome based services and you want to reduce that downtime, you cannot permit yourself to send a technician who goes on site, maybe has to travel for two hours, does a diagnose, comes back, orders a part, goes for a second time to fix it, you don't have that luxury anymore at that time.
Roel Rentmeesters: So you really need to have solutions that can help you reduce the downtime, and don't forget, at the same time, that technician that maybe does this one visit during the day, if he's on duty to do remote management, he can maybe serve 20 customers that day, so from a value proposition for your customers, you have a different model.
Sarah Nicastro: Yeah.
Roel Rentmeesters: Look at it also for warranty claims. Warranty claims it's a pure costs. So again, if you need to send a technician, you spend the time, you spend the costs, we now impose actually that, when a customer comes with a claim, the first thing we will do is set up this remote session, so we will diagnose with him before we really say, "okay, this is a potential claim", and we continue further with our root cause analysis and all these things. And the last thing is internally we use it, our technicians still use it between each other. The third line support is still using it, they haven't stopped using it. So there is definitely use, but I can feel that my technicians, they still like the interaction with their customers on site rather than doing the remote sessions.
Sarah Nicastro: Yeah. And I think part of the resistance around remote service is that people think remote only instead of remote first, and so it's interesting if you go back to the outside in view and putting the customer first, having these capabilities and making sure that, if it's a quick and easy resolution, they're not waiting two hours or four hours for someone to arrive just to flip a switch or what have you, and/or when you do send someone on site, they know what they're going for, so they can make sure that they're achieving resolution the first time. So what's interesting is, when you're at the phase of this continuum that you're at, it is tricky, because there's a focus on service, you've achieved some good results in terms of improving service revenue, but you haven't yet servitize.
Roel Rentmeesters: No.
Sarah Nicastro: Okay. And so, from a customer perspective, a lot of times that service is still perceived as billable hours, face time, time in person. When you servitize, the potential for self-service and remote service increase exponentially, in the sense of, you're no longer having to justify the reduction of cost of service to your customers, because you're only responsible for the outcome, and so, the difference between that phase and the next and the role that remote service can play are pretty significant. Now that being said, the one other point that I do see a lot of people having success with is, using it for training of new technicians. So we haven't talked about this a lot today, but in most of the cities that we've been to, most of the conversations I have, there are real challenges in recruiting and hiring and retaining frontline workers.
Sarah Nicastro: And so using remote assistance, augmented reality, as a way to have, one, very experienced technician mentoring five or six, or whatever new technicians in the field allows you to speed their time to value when they come on board. So there are some really strong uses, it's just a matter of, like we talked about, the technologies here, the business model and everything else is here, and so when you have the capability, but that's not yet connected to your go to market strategy, that's where some of that friction comes into play.
Roel Rentmeesters: Yeah.
Sarah Nicastro: Okay. So we talked earlier about people process technology. So in your position, you are responsible for all three, right?
Roel Rentmeesters: Yeah.
Sarah Nicastro: Which do you find the most challenging?
Roel Rentmeesters: The people one is the most important one to start with. Today, we are running initiative inside Munters, where we look into the entire end to end process and the systems that need to support that end to end process. So it's not just in the services organization, it is throughout the entire organization. It's a huge project, but we define that, if we want to move into that next stage for servitisation, the basics needs to be in place, you need to have a steady field forest, you need to have really good processes and you need to have the systems and the technology to support your way of working and systems is not one, it's not one ERP that does it all, you need to integrate it all, so technology is amazing, but bringing it all together and having it support your entire end to end process is a challenge.
Roel Rentmeesters: We've been busy with this for two years now, there's 250 people working on that project. We're about to start a pilot in end of January. So all three are a challenge, but the people are the most important one, and we've discussed it already all day long, if you don't have the buy in, if you don't include the users in this process, get their business requirements, help them see the testing, the end user testing, change management to communication, if you don't do these things, then you can have the brilliant technology and the best process, if they don't understand why and what it brings for them, they will not use it, and you will fail in such a project.
Sarah Nicastro: Yeah.
Roel Rentmeesters: So for me, people are the most important ones.
Sarah Nicastro: Yeah. I agree. Okay. So what would you provide as your biggest lesson learned?
Roel Rentmeesters: I wanted to say that change management, and I think it's something that is very cumbersome today in Munters also, because the team is working so hard on trying to get this thing to work that I think they forget about the communication, they forget about the inclusion, another thing I want to say is, break it into pieces. If you have a long term vision like servitization and it's a lot of things together, it's your process, your system, how do you connect your devices, what is the customer value you want to bring for it? It's a lot of things, you need to chunk that down and work in sprints and clear agile way, like we said before, because if you want to do it all, you're bound to fail as well. So break it down and make sure you communicate properly and do your proper change management.
Sarah Nicastro: Sounds so easy when you say it. All right, any questions for Roel?
Audience question: What is your biggest challenge, do you think, going into servitization?
Roel Rentmeesters: We've been talking for five years to connect our units and none of them are connected. So, I think the problem is a little bit the silos that we were working in, we had, I analyzed 20 initiatives that started in local organizations to say, how do I connect our units? So what are the sensors? Where should we put them? And they're all really good, but they were local little things that were done.
Roel Rentmeesters: They form a good base for what we want to do now. So we are about to start the digitalization and connectivity, we call it digital services project, and this time we're going to try to do it right. A bit like the concept you've set up where you bring different departments together and stakeholders together, you don't use only internal resources that have been in the company for a long time, but you bring in new blood with new ideas, you have a longer term vision of what it could be, but you break it down into pieces to say, okay, this and this, and it doesn't need to be low hanging fruits, just, what is it we can really do? What could bring benefit and value? And then it's communication. So that for me is key to make it happen, so to go to this next stage, and that's where we are not today.
Sarah Nicastro: I was going to say too, the customer connectivity that's required, one of the challenges I see is, Berit, it goes back to your point of bringing in sales and marketing to the conversation, because what happens is, you're going to customers saying, "we need connectivity", and they're saying, "no, it's our data." So it's leading with the need, not the value to them. So it isn't about the value it brings you to reduce truck rolls, because they don't care.
Roel Rentmeesters: No.
Sarah Nicastro: But if you can ask the question framed in how it will help them, what capability it gives you to serve them better, I'm not saying it's an easy fix, but I think that's the starting point of getting to a different response.
Roel Rentmeesters: Absolutely. Yeah, absolutely.