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How to secure budget for your service transformation

Mark Wilding Profile picture for user Mark Wilding May 23, 2024
Mark Wilding of ServiceMax makes the case for understanding how service data can impact an entire organization - and explains why it is the key to building a business case to secure budget for your service transformation.

Accounting - Business people calculating budget in meeting © Urilux -
(© Urilux -

As a service leader your voice perhaps isn’t always heard as loudly as other departments when it comes to asking the board for money. It’s not surprising. Not that long ago, service was only really seen as a cost center and somewhat of a necessary overhead once sales had done their job. Thankfully, those days have (mostly) gone.

But as service transformation has started to mature, the skill sets of service leaders in securing budget, getting stakeholder buy in, and articulating the business case for their service strategy hasn’t always kept pace. When it comes to the fight for IT and CapEx budget, change needs to happen faster for service investment.

For service leaders, funds should – in theory – be ripe for the taking. Unfortunately, in many cases the C-Suite (and other department heads) remain uninformed about the huge impact service data can have across just about every part of an enterprise.

I’m writing this blog to help spell out how service benefits just about every area of the business, and why your line of business colleague in other departments should also be flying the flag for service transformation funding within the business. Let me explain.

Asset data at the heart of product-centric businesses

If we think about it logically, there are three main operations for product-centric businesses. The first is product design and development. This is where researchers, engineers and product designers create concepts and specifications for new products, prioritizing features to meet the specific sales direction of the business. The second is manufacturing, where products are made to spec but also to price points and the required margins. The third is after sales service and support. This is where products are serviced, repaired and sometimes replaced. Warranties are managed, as are customer expectations.

All of these functions should work in tandem, collaborating with insights derived from how customers use products and how those products are performing. Service and data provide that digital thread of insight. Our own research revealed that connected assets and the ensuing service data have a far greater impact on a business than just its ability to repair machines. We found that 84% of organizations see a positive impact on all areas of the business from the utilization of asset data. This research revealed that 33% of businesses see better cash flow decisions in finance departments and also innovation benefits for R&D. Another 34% saw optimized inventories and improvements in the supply chain, while 38% had seen improved customers insights for sales.

There is, therefore, a strong argument that any organization that manufactures, manages and services critical assets, such as machines and devices, should reframe their digital transformations through the lens of those assets. 

An asset-centric approach can unify business functions and support ongoing innovation for stakeholders across operational, commercial and strategic parts of the business. As data is shared across these functions, it enables collaboration and innovation, ultimately delivering improved, end-to-end customer experiences across the asset life cycle, creating greater customer value. Without connected data, organizations will continue to experience product service issues and poor ROI from IT investments.

Service data gives insights for everyone

An effective and efficient product-centric organization needs quality service data to enable good decision making. That means ALL departments – product design, manufacturing and service – are being fed off of shared insights into customer needs and product performance. It makes perfect, logical sense.

As Deloitte suggested in its report Next Generation Customer Service: The Future of Field Service, to transform to next generation field service, businesses need a 360-degree view of customers and assets that can also be applied to the broader business. It suggests that a lot of organizations are approaching data and IT the wrong way round.

How customers use products and how those products perform is the type of intelligence that benefits your service organization, but also all of your colleagues. It’s not sales intelligence. You don’t get this from CRM or even ERP software. Usage insight has to come direct from the customer. How else will product designers and manufacturers know what to do and what not to do with the next iteration of products? Without this intelligence, designers and therefore manufacturers, are flying blind, and that has inevitable consequences in terms of product errors, downtime and also costs.

Research has found that service data increases customer asset uptime and improves cross functional collaboration. Unplanned downtime is already being tackled and in many cases reduced by over 5%, with repair false alarms decreased by as much as 75%. This has a knock-on effect on minimizing maintenance costs, in some cases by 25%.

Service data insights are compelling. Understanding how products are used, where they are used geographically, any regular faults, awkward, expensive or poor performing parts is incredibly valuable. Add to this any customer ideas where products could actually improve and this becomes very powerful information for any product designers and engineers. It can frame thinking around entire product strategies and strengthen sales and support services. It’s almost certainly a more efficient way of running product lifecycles and renewals.

Frame the business case around the whole product lifecycle

So, when it comes to fighting for budget, it’s really important that service leaders frame any argument around the whole product lifecycle. In fact, this is also key to making life a lot easier for sales. Getting the sales team onboard with a service strategy is a smart move because the ability to sell robust reliable products with features that customers actually want has clear advantages. As we know, sales teams usually get the lion’s share of what they ask for from executives.

Service may have been a cost center in days gone by, but today, it’s a leading-edge source of revenue from asset data intelligence to servitization strategies and outcome-based business models. Service leaders need to hone their internal sales pitch in line with service transformation, as well as managing the perceptions of how the service organization is viewed internally. (If you act like a cost center, you’ll be treated like one).

Today, service is not about how quickly a product can be fixed if it breaks. It’s about designing and manufacturing a robust product that does not break, that has a good margin, anticipates demand and improves customer experience and satisfaction. Everything else is an exception.

In conversation with customers I've often found that service leaders are reticent in building a strong business case and so their organizations risk missing out on much-needed service transformation. If this feels familiar, feel free to get in touch and I'll tell you more about what I've learned from helping them.

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