Improving Customer Value
This is a summary of my white paper on this topic (linked below) to determine how stakeholders in the building services sector will change the nature of procured and delivered value — part of the ‘New Deal for Buildings’ in our future!
Critical Observation: Services is a “delivered value” business, not a “sell, execute and repeat” business. Outcome-based Services or “Service Level Agreements” (commonly, “SLAs”) are moving closer to standard practice for hiring technical services. Honeywell, which introduced its model for building systems in May 2017, fully expects to migrate its service portfolio.
Service providers in our industry today are best positioned by understanding that buildings must be considered as prime assets to the organizations that they serve. The objective of service providers is increasingly focused on helping buildings to deliver on customers’ organizational business objectives, and improve upon infrastructural performance, reliability and efficiency factors.
More than ever, service provider success and profitability depends upon a deep understanding of “why?” customer buy services (now and in the future), not “what?” providers are selling as services.
Innovation is an increasingly important element in services construct and delivery. Those providers who are quickly institutionalizing services innovation are building momentum to sustainably differentiate their positions in their respective, evolving markets.
The services industry is missing the boat on pricing-to-value, as they adhere to outdated pricing models related to incurred costs as hours, tasks, truck rolls and other non-value substantiating variables. Customers of services are telling those who will listen that it is the value and results that deliver on the business case for services vs. simply delivering hours and completing tasks. There is a great opportunity to reconstruct how services are priced and sold.
Technology is changing our options for this opportunity, as well as customer’s options for hiring and securing services. Most conventional, hourly tasks/hours services are becoming quickly commoditized, and will eventually be the target of some form of “services-on-demand” providers. The margins and price options for these services is has been degrading for 10+ years. The value is becoming more related to using data-enabled insights to improve performance metrics as the basis for customer value.
