Tuesday, February 7, 2012

What is Service Trade Technology?

Since I have claimed time and again that DunnWell is a service trade technology company, I suppose it is time to define the category of service trade technology. It is also important to outline why I, or anyone else for that matter, should care about service trade technology. Why is it a relevant area of endeavor?

Let’s begin with the relevance part. Service trade work concerns the maintenance, repair, and renovation/up-fit of equipment and facilities outside the context of new construction. It is a huge part of the economy. By my estimate (it is nearly impossible to find statistics) and with the aid of the US Department of Labor, Bureau of Labor Statistics Occupational Outlook Handbook, the service trade market in the US represents over $120 billion in annual commerce with over 1,800,000 skilled workers active in these areas. That’s a lot of commerce and a lot of jobs. The productivity of this group matters. One of the best routes to productivity, in my opinion, is Service Trade Technology.

So what is Service Trade Technology? The best way that I can think of to define it is to layout a short statement followed by a longer series of examples to provide context and clarity to the statement. Sort of like the notion of a law (the short statement, in theory) followed by a set of judicial case precedents that further interpret and refine the law. So, here is the short statement:

Service trade technology is information technology that improves the productivity and quality of service trade work through better communication, collaboration, planning, and decision support for both the customer and the vendor.

Recognizing the simplicity and broadness of this statement, let’s work on refining it with some context. These are information technology that would be within the definition:

GPS or Location Based Job/Work Records – Knowing when the technician arrives (or planning the arrival) helps maintain integrity in the billing transaction.

Appointment Confirmation and Status Systems – As above, being able to plan for arrival minimizes dead end runs for the tech. And the customer can be prepared, which also reduces wasteful cycles.

Digital Photography Applied to Validation of Deficiencies or Repairs – Establishing trust through a visual record eliminates the expense of third party validation (second opinions, quality inspectors, etc). Note to vendors – it also drives up quote approvals.

Equipment Monitoring to Optimize Technician Dispatch – Knowing the customer is wasting money on poorly performing equipment (think energy consumption) eases the pain of unplanned technician expense for an ad hoc maintenance dispatch. Or consider technology such as that provided by SepSensor for optimizing grease trap maintenance schedules.

Fleet or Tech Tracking to Manage Dispatch – Minimizing unbillable (or even billable) drive time makes the system more productive overall. Lower overhead for the vendor and more value for the customer.

Equipment/Asset Management to Aid in Repair Decision Support – A complete record of service for a piece of equipment across vendors and trades often lowers the expense of tech diagnostics in the repair cycle.

Likewise, these are information technology that would be outside the definition:

Email – While email is an important capability, it is too broad and too ad hoc to consider outside of the context of a specific application that generates emails to support functions like those above (i.e. notice of a pending job with a confirmation button in the email).

SmartPhones – Like email, outside of the context of an application that specifically drives tech productivity (GPS job clock, or dispatch/route planning for jobs), the smart phone cannot alone be considered as service trade technology.

MultiMeters or Similar Trade Specific Equipment – While certain equipment specific monitoring capabilities could certainly be considered service trade technology (consider the SepSensor example above for grease trap monitoring), trade specific tools used by the technician in the context of equipment repair will not generally be considered as service trade technology.

Historically, many of the applications that have been delivered in this space have focused heavily on helping the facility manager optimize the “soft costs” associated with receiving service trade work. Soft costs are primarily:

Quality Risk – what does it cost if the maintenance or repair is poorly executed?

Administrative Cost – the human capital costs of aggravation associated with inefficient processes for billing, job planning, and service logistics.

Service Management Cost – the human capital costs at the customer for providing expert oversight to assure quality in the workmanship delivered by the service trade vendor.

While I believe that these soft costs are good areas for improvement, overall I think they represent a small piece of the total costs. In contrast to these, hard costs represent what is paid by the customer to the service trade vendor, and these expenses generally break down as:

Labor – the billable time for the technician(s).

Parts – the billable amount for parts consumed in the job.

Overhead – the burden rate for the vendor associated with idle tech cycles, fuel, depreciation of equipment, support staff, facility rent, etc.

Profit – the rate of return above all other costs absorbed by the vendor.

Aiming technology at these hard costs is much more than just working the vendor over with an annual RFP that focuses on labor rates. See my post on fighting inflation. Inflation will ultimately win and quality will lose.

Instead, service trade technology offers the hope of a win-win outcome on hard costs. Since the primary component of these hard costs is labor, a focus on optimizing technician productivity is critical. It is doubly critical because the biggest component of vendor overhead is likely idle technician cycles that are not applied to billable jobs.

The vendor that embraces technology for optimizing technician productivity and quality across its customer base while passing along part of the fruit of that improvement to each customer will capture the biggest customer base for the longest period of time. In my opinion, that is the name of the game in service trade work – cultivate a long standing customer base and harvest it thoughtfully and forever instead of pillaging (or worse, being inept) and getting fired from the account. It’s too expensive to cultivate customers to be thrown out for over harvesting or for lack of thoughtfulness relative to a competitor who works harder to help the customer optimize their expense budget.

So, what do you think about service trade technology? Have I struck a chord? Or am I missing the boat – or, to keep the agrarian metaphor, the tractor?