Service Revenue is Becoming More Important to Hardware Companies

Blog, Field Service

Last updated Feb 10, 2020 at 12:59PM | Published on Apr 18, 2018 | Blog, Field Service

The trend in the field service management space is that service revenue is becoming more important to organizations who sell hardware than ever before, as revenue and profit margins are falling, while service delivery has maintained its profitability.

Revenue from service delivery has increased for hardware companies, who typically sell a product and in the past, made the majority of their revenue off that. According to the Technology Services Industry Association’s “The State of Field Services 2018”, the percentage of company revenue for hardware companies from service delivery has increased from 28% in 2011 to 41% today. In fact, at that same time, product revenue is down 56%, which has resulted in the need for hardware providers to now offer service as an important part of their business model.

HVAC organizations cannot just be selling heating units, and IT Services can’t be selling servers and not providing the backup support in the future. Not if they want to maximize their profit and grow the business in the future, as to maintain the levels of profitability from just sales, they would have to increase their volume of sales while also reducing prices to compete.

Using field service management software to increase profit margins

It may be a new avenue of revenue for many in the hardware world, who perhaps don’t have the systems in place to deliver exceptional service to customers. It’s not about the product anymore or only worrying about getting the customer the right piece of equipmen. Rather, it’s about delivering a level of efficient service in a timely manner, being ready and on-call for your customers, and getting your teams out into the field as fast as possible.

When you consider that between 2011 and 2017 revenue for service delivery accounted for nearly $50 billion for hardware companies, it’s a tight margin that hasn’t seen a lot of growth in the last five years, except for a few spikes in 2013 and 2016. But with the field service industry continuing to grow well into 2025, it’s as perfect a time as any for hardware companies to become full field service management organizations.

And if the switch is going to be made, a field service management software would be the solution to not only handle any purchases, inventory and parts tracking but also to deliver efficient service delivery.

Field service management software can track costs of inventory and parts, making quoting easier for your technicians who may still try and sell customers on new equipment they could use, and can have all your pricing pre-loaded to ensure accuracy from anyone accessing products or services from either a mobile device on a mobile app, or back at head office.

Manage project installations

Hardware providers can become installers with field service management software’s project module, which allows them to quote parts, labor, and time to complete an installation, which includes the purchasing of the equipment and time and labor to install it. Easily estimate the hours each task in the project will take to complete, the number of individuals needed to complete them, and ensure any equipment needed for the project is on site and ready to go. Finally, a simple drag and drop feature lets you place your technicians into the tasks needed, assigning it to their schedule and sending any work order information to their field service mobile app.

 With the margins on products going down, it’s increasingly more difficult for organizations to just be a supplier of equipment, parts, and hardware. Field service management software is the step to take them from being just a provider to a service delivery specialist. With projects, tools for installing equipment, and scheduling and dispatch tools to help offer exceptional service, hardware companies can quickly become field service organizations, just by adding a software solution to their enterprise.