What’s Technology Worth? How to Value Your Technology Investments.
I hear customer prospects cry out for “the perfect application for my business that does everything” in nearly every sales call that I make. It does not exist. I have argued again, and again, and again that every business of any size will ultimately buy multiple applications to serve the diverse needs of their business functions.
Look at your phone. One application? Or many? Displaying the weather is different from transferring money from your bank account is different from measuring the intensity of your workout is different from keeping up with your social network.
Likewise, your accounting function is different from your sales function is different from your customer service function is different from your marketing function. The idea that one application will be sufficiently good for your business to remain competitive in all of these different functions is silly, and any software vendor promising you that outcome is a silly vendor. But what about the follow-on questions:
If I am going to buy many applications, how much should I expect to spend?
How do I value applications that make my business more competitive in a world where technology innovation increasingly determines market competitiveness?
Guideline 1: Select Modern Software With Open APIs
Well, before you even consider how much to pay, you need to perform the first and most basic test in the software buying cycle. Go to your favorite online search engine and enter the following query:
[INSERT NAME OF SOFTWARE APPLICATION HERE] API documentation
The first organic link below all of the advertisements from the software vendors that are trying to sell you a competing application should be a link maintained by the vendor of the application in question. That link should lead you to detailed documentation for how the application you are considering can be integrated with other applications that you use. Application Programming Interfaces (APIs) are the key to a new world of connected innovations for your business. Without good APIs that are publicly documented, the application you are considering is worthless. You should not pay anything for it.
Go ahead and try the search for a couple of high-quality applications that are on the market today. Insert “ServiceTrade” or “ZenDesk” or “PipeDrive” or “Marketo” or “Hubspot” or “Slack” into the query above. Check out the first organic link below the advertisements. What do you see? This query is the first test to determine if an application is worth at least a penny.
Guideline 2: Judge the Technology’s Value to Your Business
Let’s say that your application passes that first test. What now? How much is it worth? Well, it sort of depends on how much it increases the value of your business. In a prior blog post, I argued that the questions that determine the value of your business are How Many? How Much? and How Long? How many customers do you have and how many can you attract with your value proposition? How much can you charge those customers for the services that you provide to them? How long can you keep those customers when you are charging a significant premium compared to your low price competition? These are the questions that you should use to evaluate how much a new software application is worth to your business. The more the software impacts these measurements, the more you should be willing to pay because it is going to make your business more valuable.
Does the new application help me attract new customers? Does it help me charge them more because it provides my service with some new features that customers value? Does it help my business become sticky so that it is difficult for customers to fire me and replace my service with a low-cost competitor? If the answer to these questions is “yes, absolutely, definitely” then the application is probably very valuable. If the answer is “no, not really” then the application is only worth some fraction of the money it might help you save by eliminating administrative burden.
The problem is that you are probably significantly overpaying for administrative applications like accounting and underinvesting in applications that drive new customer acquisition, service differentiation, and revenue. And I also bet your accounting application provider is telling you “we have a plugin for sales, and customer service, and technician management, and every other thing you might need” in order to justify the crazy price you are paying for that application. Am I right? Probably.
So how can you alter your portfolio of applications through time to push down the expense associated with administrative applications so that you can reinvest those dollars in applications that actually drive up the value of your business to its shareholders? Applications that enhance your ability to add customers, charge them more for your services, and hold onto them longer?
Conclusion: Recommendations
My first recommendation is to only consider modern software as a service (SaaS) applications that have publicly documented APIs. These will generally be cheaper than the older, legacy server-based applications, and they will deliver more innovations to your business going forward. Software investors are NOT investing any of their precious capital in old server applications, so these legacy applications are going to stagnate and die. No point in throwing your money away on a dead horse.
My second recommendation is to ask the basic questions around How Many? How Much? and How Long? for new applications you are considering. If the applications you are considering do not contribute to these value metrics, then simply look for the low price alternatives that meet the SaaS and API criteria and determine how much administrative expense they might save you. You can spend up to 100% of the savings on the administrative applications to eliminate manpower spending.
If the applications do in fact help you attract more customers, charge them more for valuable new features, and hold onto them forever, open up the wallet and let fly for up to 2 – 3% of the revenue you expect to drive by being the most innovative service contractor in your market. I assure you that the best service contractors will collect a 15 – 25% revenue premium in their market, which easily justifies the spending on the applications that drive that differentiation. I will also assure you that competing on technology innovation is much more fun than competing on price.
Case Study: Investing 3% of Revenue in Technology
Let’s look at some examples from ServiceTrade’s business to set some benchmarks for how much to pay.
The biggest technology application expense category that ServiceTrade faces is for infrastructure services that power our customer’s experience with our product. Amazon and Google charge us for technology that provides neat features in our application. The ability to send a quote to a customer via an email with a link that presents the quote online with photos and video and audio and a “one click to approve” button that drives revenue for our customers is largely dependent upon capability provided to ServiceTrade by Amazon. The ability to map customer locations for scheduling efficiency, see the locations of the technicians in real time, and prefill the fields for setting up new customer location records is largely dependent upon capability from Google. The applications from Amazon and Google are VERY valuable to ServiceTrade because they help us attract new customers and charge them a premium, and we spend about 6% of our revenue on these types of applications.
Now, ServiceTrade makes about 80% gross margin on the applications we sell, so we can afford to spend heavily on making these applications great. If your service to your customer drives a lower margin, say 35%, then 6% of revenue makes no sense for any technology. The apples-to-apples comparison, in this case, is probably close to 7% of gross margin (roughly), which would equal 2.6% of revenue for an application that really helps you deliver differentiated value to your customer. So for a $10 million dollar service contracting business generating 35% gross margin, the equivalent amount would be $260,000 per year.
The next biggest category of technology expense at ServiceTrade is for sales and marketing applications. We have Salesforce, Marketo, Salesloft, and a handful of other applications that help us present our value proposition to customers in a way that drives new sales. These applications help us increase the How Many customers metric. We spend about 1.5% of revenue on these types of applications. Again, to adjust for gross margin, that would be about .6% of revenue for a 35% gross margin business. So for a $10 million dollar service contracting business with 35% gross margin, the equivalent annual expense would be $60,000.
The next biggest category of technology expense at ServiceTrade is for customer service oriented applications. These are the applications that help our engineers and our support staff keep track of how things are going for our customers and to monitor the application for errors or potential signs of trouble. We spend about .4% of revenue on these types of applications. They are tangentially oriented toward helping with the How Long can we keep our customers question. Clearly, these are far less valuable than Google and Amazon, and also less valuable than the sales and marketing applications, both of which help us drive up the How Many? and How Much? elements of our business value. Adjusting for gross margin again, and you get .16 as the percentage of the revenue in a 35% gross margin business. A $10 million service contracting business should consider spending $16,000 per year on customer service infrastructure.
Finally, there are the administrative applications like accounting, email, file sharing, calendar, reporting, office productivity, etc. These are the applications that every business needs, but their value is simply in keeping the administrative burden of running a “tight ship” as low as possible. ServiceTrade spends about .3% of revenue on these type of applications, and it is unlikely that the expense of these will scale linearly as we grow. When we double in size, I would expect that percentage of revenue to be about .2%. So for a $10 million dollar service contracting company generating 35% gross margin, the administrative applications in the business should be on the order of .08% of revenue, or about $8,000 per year on accounting, email, reporting, calendar, office productivity, etc.
If we total all of these up for a $10 million service contracting business, the percentage of revenue spent on technology applications is about 3.44% of revenue or about $344,000 per year. Now my ears are almost bleeding from the screams and bellows of “That’s Crazy!” that I can hear coming from service contracting customers reacting to this number. But is it so crazy? Are applications that help your business become competitive in attracting new customers, driving new revenue, and charging a premium price really worth that type of spending? Consider these two examples. How much do you pay for an application like Square that helps you collect money from a customer in the field? It consummates the sale by getting the cash now. You happily pay about 2.5% of revenue for this type of application. How about the central station monitoring application that enables you to sell a high margin monitoring service? You happily pay between 30% and 50% of revenue for this valuable addition to your service arsenal. So no, 3.44% of revenue is absolutely not crazy for a full set of applications that help you drive value in your business.
Case Study: Ressac Implements Sage Intacct with ServiceTrade Integration
For more than 85 years, Ressac has established itself as a high quality, low-cost commercial contractor for heating, ventilation, air conditioning, and refrigeration systems. Specialties include low-rise office parks, mall retail, and big box retail sites.
THE CHALLENGE
Ressac recently implemented ServiceTrade to improve their service management and customer service. While this solved their challenges on the service side of their business, they were still using an outdated version of Dynamics NAV, a server-based accounting platform, to maintain financial records. “We were so focused on making improvements to the service side including customer service and earning more revenue that accounting was an afterthought,” explains Nick Rohan, CEO at Ressac. “We lacked real-time visibility into our financial information,” he says, “and we had to double key everything.”
With no transparency into financials such as working capital and cash flow, decision-making was more like guesswork. In a very competitive industry, and with a profit margin as low as 5-7%, it was critical to know the current situation when making business decisions. And since data wasn’t being shared between the accounting system and ServiceTrade, the finance team carried a large time burden related to too many AP and AR manual processes.
“Connecting to the old accounting system was cumbersome,” Mr. Rohan explains, “and we had a lot of issues getting into the system.” And with no AP approval process in place, service managers had to approve purchases, which took them away from more strategic job-related activities and created time-consuming invoicing of their clients. Additionally, data siloed within spreadsheets led to inefficient and time-consuming reporting processes throughout the organization.
Ressac desired a cloud solution that could streamline its AP workflow and approvals and provide real-time visibility into its multiple locations’ financial results. Sage Intacct’s financial management software was selected and was seamlessly integrated with ServiceTrade to eliminate many hours of manual data entry and reduce costly errors inherent in their old system.
THE SOLUTION
Nick recalls, “We relied heavily on ServiceTrade’s recommendation of Sage Intacct. When we looked at various systems,” he says, “what sold us on Sage Intacct was the reporting.” And selecting Wipfli as the service partner was easy. Wipfli provided full-service implementation, integration assistance, and ongoing support through a collaborative team approach as Ressac navigated through the process. “We liked the feeling from Wipfli, and had confidence in the team we were talking to,” explains Nick.
Everyone worked together to ensure a smooth integration. “The ServiceTrade integration is behind the scenes, so you don’t really notice it,” reports Nick. “With the Sage Intacct and ServiceTrade integration, we’re operating differently now,” he says. “The time we’ve saved on double data entry allows us to code our transactions, which allows for better financial reporting.”
With real-time visibility and transparency into their financial results across their multiple CA locations, Ressac now has the “right information at the right time” to make critical business decisions. “We’re getting more information out of our systems and doing a lot more meaningful work,” he says. The improved financial reporting means Nick Rohan and his team can easily see where their financials stand on a day-to-day basis.
What’s more, according to Nick, “the thing we really enjoy with Sage Intacct is our ability to access it anywhere from a browser, whether we’re at home or out of town. We can get in and see our daily runs and see how cash is doing,” adding, “it’s been fantastic!”
Overall, with Sage Intacct in place, Ressac taps into deeper financial and operational insights and is able to tackle more strategic issues, keeping the whole organization focused on their customers. Now the pressure of competition is less of a burden as Ressac has the insights its team needs to “grow strategically in existing markets and into other regions.”
LEARN FROM RESSAC’S EXPERIENCE
Key Requirements
Implement cloud-based financial solution to automate and streamline workflows and provide financial visibility
Integrate their new system with ServiceTrade to allow for one single set of data to run the business reliably and remove the guesswork
Key Challenges
Remove data from spreadsheet silos and make it available for decision-support across organization
Save time and reduce costly errors associated with manual data entry
Enable managers to focus on strategic initiatives
Key Outcomes
Gained real-time visibility into their financial results across locations
Saved time, money, and effort through automating processes, enabling greater focus on customers
Positioned to make long-term strategic plans for company
EXPLORE INTEGRATIONS
ServiceTrade can help whether you’re looking to integrate your current accounting system with our application or explore a new accounting solution. Call your representative to talk about the best way to start weighing your options and understanding the scope of integrating ServiceTrade with your accounting or other operational applications.
I bet the grocers that had a bad day when Walmart got into groceries about fifteen years ago are having a really bad week now that Amazon has announced their intention to buy Whole Foods. The innovations Amazon is going to bring to grocery buying go well beyond low price and internal operational tweaks. Amazon is going to use technology to transform the grocery buying experience, and the old competitors focused on their tired, old, internal metrics will be toast.
Marc Andreesen, a famous internet entrepreneur and venture capitalist, once said: “Software is eating the world.” You can read his editorial in the Wall Street Journal here. It’s true. Customer service innovations driven by software are transforming every industry. Netflix to Blockbuster. Uber to taxis. Amazon to booksellers, hosting companies, and now grocers. When will it be your turn? Which side of the statement will your company be? The eater? or the eaten?
Do you suppose the first innovation Amazon is going focus upon is how Whole Foods does accounting? Is that where they are going to put their innovation muscle? I ask the question because it seems that accounting remains the first priority of service contractors when they think about how to apply technology to their business. But it sounds really silly in the context of the Amazon acquisition of Whole Foods, doesn’t it? As I have said before, your perfect accounting process is perfectly irrelevant to your customer. You should have a good one, but it will not save you from an innovative, customer-focused competitor.
I am not going out on a limb when I say that Amazon understands that accounting is irrelevant, and their focus with Whole Foods will be transforming how customers buy groceries. They will eliminate aggravation and uncertainty for the customer through technology. I bet there will be an awesome mobile app for pricing your groceries in the aisle and eliminating the checkout line. I bet you will use that app to find the groceries you seek without wandering up and down the aisles. I bet you will get interesting recipe ideas based on the ingredients you buy often. I bet your buying preferences will lead to deliveries to your house via drone for the items you buy on a regular basis. I bet the best customers with the most money to spend on groceries will gravitate to Amazon and their innovations. I bet I cannot even imagine the things they will do to make grocery shopping more convenient, and none of it will relate to how they do accounting.
So when will it be your turn? Will you be the eater, or the eaten? Are you considering how to upgrade your customer’s buying experience with your services? Or are you piddling around with how to extend your accounting to wring a small bit of extra margin from your internal processes? Are you building an innovative and growing brand that attracts customers to you? With an experience that they cannot easily trade for the low price guy? Think about it. Who do you want to be in your market? Amazon, Uber, Netflix? Or the other guy?
WannaCry? Servers will make you.
WannaCry? You will after this so-named ransomware takes over your Windows computer, encrypts all your important files, and charges you $300 to decrypt them, if you’re lucky. This virus is sweeping the globe and making headlines because of its widespread impact. Before you read any further, make sure you have run the latest Windows update if you are using a version older than Windows 10.
Losing your family photos and personal files on a PC to ransomware is unfortunate. Losing the critical infrastructure that runs your business because you’re still using local servers is catastrophic. That’s right, these viruses are indiscriminate and business servers are not exempt from these attacks. Local servers are especially risky because they represent a single point of failure if they aren’t backed up. And how confident are you in your backup systems? Do me a quick favor and go unplug your servers. Are you 100% sure they are going to start up where they left off? If you’re at all hesitant, then ransomware is only one of a host of concerns that you should have:
Disgruntled employees – Is there any way for you to prevent an unhappy employee from stealing your data or wreaking havoc on your company’s servers?
Natural disaster – Fire, flood or tornado. Enough said.
Disk failure – Computers degrade over time and will eventually break down.
Failed updates – If you didn’t update your servers with the latest Windows patch, you are susceptible to WannaCry. On the other hand, every update has the potential to introduce compatibility issues.
Other viruses – WannaCry is just the latest example in a growing trend of PC and local server hacks. And, while it’s possible to recover your files from a ransomware attack, other viruses are less forgiving and will destroy files outright or render your machines completely useless.
How do you avoid these risks? Dump the servers and adopt cloud-based applications like ServiceTrade. Why are they less risky? Without going into detail about the advanced technology they use for security and backup, the easiest way to understand how they work is to compare them to banks. Is your money safer under your bed, or in the bank? If your home is robbed or burns down, you lose your money. If the bank is robbed or burns down, your savings are insured (backed up) and your checks and debit cards still work. It’s that simple.
Don’t keep your business data under the bed. Dump the servers and move to the cloud.
In case you’re curious how WannaCry works, here’s a video of it in action:
All-in-One is Pre-Internet Ideology
One of our most quoted blog posts is this one – where Billy says that in all-in-one software, the ALL will be SMALL. You should reread it, but the summary is that all-in-one providers can’t offer the same innovation as a suite of connected applications from providers who focus on one part of your business.
When was the last time you saw a TV-DVD-VCR combo? It’s a throwback to when innovation moved at a snail’s pace. The VCR was introduced in 1964. The DVD player – the next widely-adopted element – came along THIRTY-FIVE years later in 1999. That’s hardly a blazing trail of innovation in home entertainment. The all-in-one unit was a good idea when you didn’t expect anything to change. Ever.
Now think about the ways that your home entertainment system has changed since 1999. There are dozens of components and streaming services you can incorporate into entertainment, gaming, and audio systems. Things started developing on Internet time.
The same is true in business operations applications. The idea of all-in-one software is from the pre-Internet era when innovation was slower to occur and slower to be adopted. Technologies evolve at different rates – an all-in-one eventually hobbles the entire system with the limitations of its weakest parts. You can’t just throw out the VCR, you have to let it sit there and draw power from the rest of the system.
All-in-one platforms keep you from adopting new applications that would help your service business do new things in better ways. Connecting a mobile solution for field service management to an all-in-one would be like trying to connect Netflix to your TV-DVD-VCR unit. You might be able to pull it off, but it will be a hassle to setup and to work with.
Billy said that “the ALL will be SMALL.” I’m saying that “pieces of the ALL will become OBSOLETE and keep you from ADVANCING.” Maybe mine doesn’t have the same ring to it.
What’s holding your service business back? Is it double data entry and other accounting inefficiencies in the back office? If you solve those problems, are you going to create more value for your customers, make your techs more productive, and differentiate yourself from the competition? Nope. Accounting doesn’t drive better customer outcomes. So, why do accounting issues get all of the attention? Well, it’s easy to fall into the trap of prioritizing those back-office problems because they are in your face every day. They are like a thorn in your foot; very obvious. However, they are just the tip of the iceberg. Under the water is something much more deadly.
Since a picture is worth a thousand words, I decided to show you what I’m talking about:
Hiding under the surface is what’s really holding you back. Scattered customer service data slows everyone down. The symptoms are pervasive, and the costs are enormous. Why do you think the front office is always behind, techs waste time on callbacks, and sales is struggling to win new customers or make upsells? Well, when service history, customer quotes, contact information, recurring service schedule, and asset details are all stored in different places, it’s no wonder there’s so much confusion and so many slowdowns. Instead of a central system that helps your team collaborate, you’re stuck with ad hoc calls, emails, conversations, txts, and paper.
On top of that, when your service information is disorganized, it’s impossible to give your customers any visibility to the value you provide. When you don’t even know exactly where your techs are, what they are doing, or what work they’ve completed, how are you supposed to share that information with your customers? Remember what it used to be like to schedule a taxi? It was miserable. Calling the taxi dispatch took forever, you’d have no visibility to where the taxi was, no idea what they were going to charge you, and they may not even show up. It’s no wonder Uber is dominating that entire industry. All it took was a change to the process that removed risk and aggravation for customers.
Icebergs perfectly demonstrate what’s going on with most commercial service contracting businesses. It’s easy to get stuck thinking about back-office problems. They are the tip of the iceberg. But, hiding below the sea is a mess of customer service data that is slowing down the entire organization and limiting your ability to provide a better experience to your customers. When you organize that data and move it to the cloud, you can cut your costs and Uber your competition.
I bought the wrong software.
Last year, I made a huge mistake. I purchased a marketing automation platform (I won’t name names, but it rhymes with harpstring) for our company and wasted a lot of time, money, and effort in implementing something that, ultimately, failed. I know I’m not the first person who’s ever made a bad software decision, but I hope that anyone who reads this blog post can learn from my mistake.
Made just for you.
My first mistake was not assessing the market that the product was built for. In this case, the software was designed for a completely different set of users, but I was enticed by the cool feature set. Without getting into further detail about why this product was a bad fit for ServiceTrade, I learned that you MUST consider the following when buying business software with large feature sets:
Is this software developed for a market or industry that is specific enough to support my company, but broad enough to support innovation and growth?
For example, there are quite a few field service management applications out there, but some of them, like ServiceTrade, are built specifically for service contractors as opposed to internal field service divisions of large companies like Comcast. Furthermore, some are built for commercial contractors, (again) like ServiceTrade, while others are built for residential contractors, like ServiceTitan or Jobber. Because these platforms are designed for targeted markets, new feature development will benefit their customers that fit their market definition. These target markets are also large enough to support ongoing innovation and growth.
On the other hand, there are software companies that target markets that are too niche. For example, we’ve seen broad business applications that attempt to target smaller industries like fire protection or kitchen exhaust cleaning companies. Yes, some of the features they offer are very unique and fitting for the industries they serve, but these platforms will not innovate as much as a competitors targeting a larger market. These applications also represent a risk because there is a chance that they will not make it in such a small niche.
All in one? The all will be small.
We’ve preached this point over and over again, yet I still got caught by this trap. The product I purchased offered CRM functionality in addition to the marketing automation I was looking for. As it always does, the all in one was too good to be true. Because the feature set was so broad, none of the features performed at the levels of competitive products.
The idea behind an all-in-one software is interesting, but the features always fall short in practice. Take a look at your smartphone. How many apps do you have? Just one? Of course not. Why would you expect the same from your business applications?
We speak with commercial service contractors on a daily basis that are searching for the mythical unicorn that is the perfect all in one. It doesn’t exist. Any product that claims to be one will disappoint you. This includes bolt-on modules to your accounting system.
Modern applications are designed to coexist in an integrated ecosystem that allows them to communicate the necessary information with each other while excelling at their core competencies. In other words, best-in-breed applications that can integrate will outperform all-in-one software.
What’s the big idea?
When considering a software application that my company would be using for years to come, I failed to consider the long-term vision of the product. As it turns out, the vision for the product was completely misaligned with my expectations which led to disappointment when I realized new features didn’t benefit me.
Service contractors often reach out to us after having had a similar experience. They purchased an application because of the features it had and didn’t consider how the product may change, if at all, to help them tackle evolving challenges. Here are a few red flags to look out for:
Software products that are at the end of their development life. These products receive little to no ongoing R&D and the owners are simply trying to sell as much as they can before the market catches on. Even though these products may have many of the features you are looking for, they will fall short of the competition quickly. Server-based software ALWAYS falls into this category.
Customer service software that doesn’t actually improve your customer’s experience. If a company tells you that their grand vision for their customer service platform is only to help you operate more efficiently, you need to reconsider. Efficiency is important, but software that fails to meet the evolving expectations of your customers will leave you at a competitive disadvantage.
What happens WHEN it breaks?
Ultimately, the straw that broke the camel’s back with the marketing automation software I purchased was the complete lack of support I received for some technical issues I encountered. For weeks, I was stuck without a system because they refused to answer my calls and emails. During the sales process, I had no reason to think that the support was going to be so bad, but then again, I never asked.
Like many business software buyers, I assumed that I wouldn’t need support. I figured that good software doesn’t need support, right? I’ve never called Uber or Google for help, why should this be any different? I was wrong.
Good business software will have lots of features that require in-depth understanding to fully utilize. You and your team shouldn’t expect to know every little detail. Support through online documentation, courses, and training are important, but responsive phone support is a must. Case in point, ServiceTrade. Despite being ranked as one of the most user-friendly field service management applications on Capterra and having an average “Ease of Use” rating of 4.5 stars across 136 reviews (as of the time of writing) on Capterra, our customers that receive training and take advantage of support far outperform those that don’t.
Expect good support. You’ll need it. If you’re considering a product, give the support line a call before you buy to see how responsive and helpful the support team is. If it’s not available, or you have any concerns about the quality, buyer beware!
Yes, a reference please?
Before I purchased this infamous marketing automation platform, I was smart enough to ask for references. However, I should have put my guard up when, after nagging them, it took several weeks for them to provide me with a couple contacts. After all that time, the references I spoke with weren’t able to answer some of my most important questions. I should have dug deeper and requested more references.
Learn from my experience. Good references and reviews are important. We love providing prospects with reference customers because we work hard to
ensure that customers will be a good fit for ServiceTrade before they ever buy and
make sure all of our customers are happy, as is reflected in our numerous positive reviews.
If you happen to make a bad software purchase, don’t become a victim of the sunk cost fallacy like me. Instead of realizing that I made a bad decision, I dug my heels in deeper and wasted months of time trying to make it work. Eventually, I “saw the light,” but after wasting more time than I’d like to admit.
Learn from my mistake! Buy great software.
Rise of the Machines in Service Industries
A few months back, I wrote a blog post about the Tesla lesson for service contractors. Tesla has a direct-to-customer model for sales and service, and they support this model with a high tech connection to the car that allows them to deliver certain over-the-air updates while also monitoring the vehicle for proper performance. Every manufacturer in the world today envies Tesla’s sky high stock value, and they are all seeking ways to mimic their success and business model. This means that they are trying to use data and Internet connections to become more valuable to customers.
Last week, I was visiting with a ServiceTrade customer in the fire protection service trade. They informed me that they had found a good solution for collecting alarm inspection data to create the annual compliance inspection report for the fire marshal. I asked them who provided the solution, and they responded that it was offered to them by a manufacturer of alarm equipment for which they are a distributor. I asked further if they had checked into the ownership of the inspection data they collect with that equipment because it has been my experience that manufacturers are trying to displace the distribution channel wherever possible to get closer to the customer.
Sure enough, when my customer dug into the terms and conditions of the license that he signed for the inspection technology, he discovered that the manufacturer licensed the data collected to the owner of the alarm equipment, not the service company collecting the data. The license terms further stated that the alarm manufacturer also had a license to the data to assist the equipment owner in migrating the inspection and service work to a different service contractor than the one that had licensed the system in the first place.
WOW! As a service contractor, you have to be very diligent in protecting your direct connection to your customer. Your relationship in the future is going to be defined by data, Internet connections, and technology enabled services. You need to find applications that allow you to collect and own data that you put to work for the benefit of the customer and your business. Beware the rise of the machines. It can be a blessing, or it can be judgement day.
The Ups and Downs of a Service Contractor’s Software Buying Journey
I’ve watched a decent amount of Oprah in my life, so I’m pretty well trained as an armchair psychologist.
Today’s episode is about the ups and downs of committing to a field service management solution. Friends, you are not alone in your rollercoaster of thoughts and feelings as you consider making a change. If you’ve talked to one of our sales reps, you’ve seen what the application can do, you’ve built excitement about customer engagement, streamlining operations and knowing exactly what is going on in the field. This is when the fear, uncertainty and doubt can start to creep in. It can feel a bit like you’re about to
The Ups
A good field service management software solution (and we think ServiceTrade, in particular) opens up possibilities for the business beyond solving the pains and problems that inspired you to start looking at field service software in the first place.
It becomes a strong differentiator for you among the competition because of the customer engagement it enables.
Those engaged customers are very happy customers that stick with you.
Of course, you will streamline operations through modern, mobile technologies.
And you will understand more of what’s going on in the field.
All of this awesome potential probably makes you feel like:
The Downs
After talking with our sales team, that darned Fear, Uncertainty, and Doubt starts to rear its ugly head. FUD can easily chip away at the couch jumping you felt just a couple of days ago. How on Earth can you possibly handle the changes that would be required to handle 2x the revenue from your best customers, or have a 3x quote approval rate? You start to hear either in your head or from your staff that:
Change is hard! Change while you continue to operate and serve your customers can be scary, but here’s the thing. Go back to those issues that have been driving you crazy and holding you back and compare the pain of continuing down that path for another year to the pain of initiating change for the next 1-2 months.
Don’t move my cheese! Technicians, dispatchers, accountants and even owners are used to things being in a certain place, being done a certain way. Go ahead and rock your boat, and turn it into a sleek, efficient yacht.
We’re not techy! That’s ok, we are techy enough for both of us. ServiceTrade’s service team has been unwinding data hairballs since the company started. You might not do this every day, but we do.
I don’t have the time! Boy, do we get this one. The fun irony is that the time you’re spending managing schedules and jobs and clowning around in the phone call rodeo will be minimized when you’re up and running.
The Plan
Even as I write this today, I hear a group of three new users sitting in our Durham, NC office going through a daylong training course. They’re in the ServiceTrade application looking at their company’s data, asking questions, and laughing with our Support Tech Aaron Shoemaker.
Each new implementation goes through a 30-day step-by-step plan that you’ll get from your sales rep (if you haven’t already, ask them for it). You and your services tech will work through it one step at a time. We know about how long each step should take from our side, but we can work at your pace if you need more time to complete anything.
If you’re on one of our paid plans, you’ll have access to our services team when you need help troubleshooting issues or advice on the best practices.
The Payoff
You get a field service management solution! You get a field service management solution! You get a field service management solution!
Just kidding. Our goal is for ServiceTrade to pay for itself. It does that when you’re able to:
Streamline your operations so you aren’t missing any recurring work, are scheduling techs more efficiently, and are no longer chasing paperwork so you can bill customers more quickly.
Send electronic quotes that have a 3x approval rate when they’re delivered quickly, include photos and have an easy approve button.
Engage your customers online before and after the service call and give them insight and information that they can’t get from another vendor who might try to lure them away by undercutting your price.
Earn more customers by turning your service delivery into highly visible and valuable online reviews that make you stand out to prospects who are searching for your services.
So maybe you’ve seen a bit of yourself in the journey that so many of our new customers have gone through? When you feel the FUD taking over, have a seat on the yellow Oprah couch with someone at ServiceTrade, and let’s talk.
Beware of “All in One” Software – The “All” will be “Small”
The demand for “all in one” software in the service contracting space must be high, because I see lots of vendors claiming to be such. These vendors proclaim to prospective customers that a single integrated system from a single vendor that performs every software function (customer service, accounting, time sheets, fleet management, e-commerce and so on) is the only successful software path possible.
Most are VERY SMALL, with fewer than 25 employees. Some are bigger with as many as 50 employees, but still TINY in the sense of what it takes to deliver a comprehensive software platform that provides “all in one” functionality. It is literally impossible in the modern, connected world of high frequency innovation for such a small vendor to effectively deliver even half of the software features that a service contractor should expect to run in their business.
Consider NetSuite. A publicly traded company with over $600M in annual revenue and more than 1,000 software engineers on the payroll. They claim to be an “all in one,” and you would like to believe that maybe, given their large size, they can pull it off. Now, take a look at the NetSuite partner page of applications that provide functionality that NetSuite cannot. Over 320 applications listed across 32 pages of partner apps. Huh? Wonder why such a large and successful company that markets itself as “all in one” (hence the “suite” name) needs 320 partner applications?
The answer is simple. No software company can stand alone to provide all your needs. Not even one as big and powerful as NetSuite. Not even Apple, the most valuable company on the planet. Here is a screenshot of my phone. Only three of the apps on that screen are provided by Apple. They all work nicely with the Apple technology, but Apple does not deliver an “all in one” solution.
Why is there not one simple button on my phone that says “All in One” for the weather, traffic, mapping directions, playing music, watching videos, transferring bank balances, trading stocks, monitoring my exercise routine? Of course, the answer is obvious. These are all very different apps that require a different approach to data and the user interface. In the same way that accounting is a VERY DIFFERENT application than customer service, with a different data set, different users of the data, and different user interface requirements.
What is the lesson in these observations about NetSuite and Apple? Both market themselves as being the “superior integrated system” that all consumers seem to desperately want. Yet both of them develop massive partner ecosystems to deliver the applications that they cannot.
Service contractors should seek software vendors that are the best in class for their particular solution: Customer service applications from field service management companies, accounting platforms, contracts management, fleet management, customer resource management (CRM), email marketing, and human resources to name a few. The initial setup of those integrated systems will make changing individual systems much easier in the future than a forklift of an “all in one” that seemed like a good idea at the time.
The lesson is that “all in one” is simply a marketing term to grab your attention because that is what you seem to be seeking, but it is misleading because it is not possible to have “all” from “one.” The lesson is that you should ignore the marketing, and instead observe the reality.
If a small company offers “all in one,” remember it is just a marketing pitch to get your attention. If NetSuite and Apple cannot do it, the small firm courting your business certainly cannot. Not even close. But it is OK provided that they behave in a manner similar to Apple and NetSuite and embrace partner applications that work seamlessly alongside their application.
I cannot fault a company for good marketing, but you can certainly fault them for locking you into a trap where many of your needs are not met because the “all” is very “small” and no partner applications are available because they actually believe their marketing hype. Ask about partners and application programming interfaces. If you get a blank stare, caveat emptor! The “all’ will be “small.”
Nick recalls, “We relied heavily on ServiceTrade’s recommendation of Sage Intacct. When we looked at various systems,” he says, “what sold us on Sage Intacct was the reporting.” And selecting Wipfli as the service partner was easy. Wipfli provided full-service implementation, integration assistance, and ongoing support through a collaborative team approach as Ressac navigated through the process. “We liked the feeling from Wipfli, and had confidence in the team we were talking to,” explains Nick.
With real-time visibility and transparency into their financial results across their multiple CA locations, Ressac now has the “right information at the right time” to make critical business decisions. “We’re getting more information out of our systems and doing a lot more meaningful work,” he says. The improved financial reporting means Nick Rohan and his team can easily see where their financials stand on a day-to-day basis.
