By
Michael R. Blumberg, CMC
Chief Operating Officer
D.F. Blumberg Associates, Inc.
Fort Washington, Pennsylvania

Managing a Field Service Organization (FSO) can be a tricky business. There are some FSOs that operate within a mature market, where profit margins are low and market growth is static or declining, while other FSOs operate in emerging or growing service markets where profit margins and revenue grow at a healthy pace. All too often FSOs, regardless of whether they are in a mature market like IT services or emerging growth markets like Industrial Automation, become complacent about their future. It is very easy for an FSO to pursue a strategy based solely on the principle of survival regardless of whether it is in a “down” market or an “up” market. This type of strategy is counter productive and can lead to a situation where the FSO becomes a commodity business, regardless of whether the market is maturing or emerging. The way out of this malaise is not by transforming an FSO into a Professional Services Organization (PSO) as some gurus want you to believe, but by turning the FSO from a commodity business into a franchise with a sustainable competitive advantage.

Please don’t misunderstand me; I am not downplaying the role of PSOs. I think this is an excellent service model if the market requirements for professional services exists and the organization is empowered to transform from an FSO to a PSO. The problem is that these conditions do not necessarily exist for every company in every market. So the only way out of a zero or no-growth market, in my humble opinion, is to build your FSO into a franchise with a sustainable competitive advantage. “How is that possible?,” you may ask. The answer can be found by looking at basic principles of Strategic Management. In his book Competitive Advantage, Harvard Business School professor and leading management guru Michael Porter asserts that there are three (3) competitive strategies available to any business enterprise:

An FSO also has the ability to implement any one of these strategies to create a sustainable competitive advantage. Any one of these strategies requires a company to focus on both external and internal issues facing the company. In essence, a good business strategy must take into account both market requirements and internal capabilities. The great thing about an FSO business is that technology can provide the mechanism for a company to deal with both external and internal issues facing the company and thus become an enabler in helping the company to successfully implement any one of the three strategies listed above. In essence, the technology provides the mechanism by which a company can collect data on customer requirements and expectations as well as provide the process and infrastructure by which these requirements are met.

For example, let’s take the concept of optimized scheduling technology and apply it to the strategic management principles described above. This technology provides an FSO with the ability to offer a guaranteed two-hour response time via its advanced scheduling capability. This would enable the company to become a premium provider. Alternatively, the FSO could utilize the technology to improve the efficiency and productivity of its scheduling process and pass these savings on to the customer in the form of lower prices, an example of a low-cost strategy. The niche strategy is realized because technology can ensure that an FSO has the ability to provide all customers in the same category (i.e., hospitals, banks, etc.), who all have similar requirements for service, with the same level of service without jeopardizing contractual obligations to the customers.

Technology is indeed a powerful tool in the service manager’s arsenal. Market research by our firm suggests that technology plays a critical role in the selection and evaluation of service providers by the end-customer. It is absolutely critical that FSOs take this into account when developing their business strategy and considering the various options available for achieving profitable revenue growth and a sustainable competitive advantage in the market.

© Copyright 2004 D.F. Blumberg Associates, Inc.

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Michael R. Blumberg, CMC, an authority on marketing research/strategy formulation in the high-technology service market, is COO of D.F. Blumberg & Associates, Inc, a Fort Washington, PA based management consulting firm that provides client services in strategic planning, market research, productivity improvement, and management systems design and implementation. You may reach him at michaelb@dfba.com or (215) 643-9060.