Device Relationship Management (DRM) Is Coming into Focus for Business Executives: Topline Results of the AFSMI DRM Survey!

(Originally published in the July/August 2003 issue of AFSMI's Sbusiness.)

By William K. Pollock

The AFSMI Survey on Device Relationship Management (DRM)
In the fourth quarter of 2002, AFSMI and Boston-based global DRM leader, Axeda Systems™ Inc., partnered in the development and execution of an industrywide Device Relationship Management (DRM) awareness, importance and utilization survey. AFSMI-member market research and consulting firm, Strategies For GrowthSM, assisted in the overall survey design and development, and prepared the final analysis as part of the ongoing Axeda DRM Leadership Alliance program.

The rationale behind the survey was simple. According to Pim Bonsel, Vice President and Executive Director of Research & Studies for AFSMI, "At AFSMI we are driven to continually provide information and insight to our members on new business solutions that are having a fundamental impact on field service and support. DRM seemed to be that type of solution, and our members have very strongly affirmed that position. In fact, the number of responses for the DRM survey was nearly fifty percent higher than that of a CRM study we had previously done".

Steven Spector, Axeda's Manager, Marketing and Business Development, concurs with Bonsel, adding that "With deployment of DRM enterprise software, leading service and support organizations are fundamentally changing and accelerating service and support. DRM is unique in that it enables an OEM to have a continuous remote connection to the products they have installed at each of their customer locations. This real-time operational and performance information provides significant cost savings, operations efficiency, new revenue opportunities, and competitive differentiation for those companies already using DRM. Arguably DRM, by empowering the service and support organization, is the enabler for a true S-Business that AFSMI has targeted."

According to numerous industry analysts, DRM appears to be next major step in proactively managing and supporting customers. Among the principal benefits normally associated with DRM are the ability to avoid or limit on-site service calls, increase first call completion rate, and increase service contract revenues. As such, the primary purposes for conducting the AFSMI survey were to corroborate these assumptions, as well as to provide the industry's first benchmark study that statistically:

  • Measures existing awareness of remote diagnostics solutions based on DRM;
  • Determines the importance of DRM to overall business strategy;
  • Estimates present and planned use of DRM systems;
  • Rates the perceived benefits of using DRM systems;
  • Identifies the functional areas that would benefit most from DRM;
  • Assesses the impact of DRM systems on competitive market position;
  • Gauges the likelihood of integrating DRM with CRM or ERP systems; and
  • Identifies the top factors affecting market acceptance of DRM-enabled products and services.
The survey was electronically distributed to a worldwide base of services industry enterprises and organizations. A total of 496 completed responses were collected, representing all types and sizes of services organizations, and supporting all types of customers, as follows:

Annual Sales/Turnover (in US $):

  • Small (less than $50 million): 26.0%
  • Medium ($50 million - $499 million): 30.1%
  • Large ($500 million or greater): 43.4%
Total Employees:
  • Small (less than 100 employees): 17.2%
  • Medium (100 - 999 employees): 27.1%
  • Large (1,000 or more employees): 55.7%
Vertical Markets Supported:
  • High Technology/Computers/Software/Office/Copying/Printing: 43.8%
  • Medical/Healthcare: 42.5%
  • Manufacturing: 30.6%
  • Bank/Insurance/Financial Services: 26.0%
By geography, the survey respondents comprised a worldwide base with just under three-quarters (73.3%) physically located in the United States and Canada, and the remaining quarter (26.7%) spread out among the EMEA and Asia-Pacific business communities.

DRM Is Changing the Services Industry
One thing is very clear, as corroborated by AFSMI and Axeda's independent research - DRM is changing the services industry in many dramatic ways. In 2002, renowned industry analyst firm, Gartner, forecasted that field service and real-time CRM (Customer Relationship Management) networks "increasingly will be optimized by new technologies known as device relationship management technologies (DRMs)".

The firm went on to say that "DRMs increasingly will also automate the interface among machines and manage and control the creation of trouble tickets for call centers and field service crews with far less human intervention" and, as a result, "DRMs increasingly will allow businesses to deliver higher levels of critical support for equipment ranging from a heart monitor to an imaging device, a critical information storage system, medical device monitoring, power plants or surgical equipment". At that time, Gartner also cited Axeda Systems as one of the firms "contributing to this emerging area of technical support".

Also in 2002, Harbor Research reported that "the number of intelligent devices networked for the purposes of remote administration - excluding telephones and personal computers - is expected to exceed 500 million by 2010." The research firm believes this finding to be critical as it confirmed that "the increasing trend towards pervasive computing is creating a demand for DRM products" with applications cutting across several services markets, including medical instruments/devices, enterprise technology, networking and communication service providers, printers and copiers, industrial and building automation, energy, and semiconductor equipment. According to Axeda's Spector, "we believe that any device that can be DRM-enabled, will be over time - and, any electronic device is a candidate. We are seeing rapid ROI in each of these industry segments."

The AFSMI research independently supports these industry forecasts and assumptions by validating that the services industry is ready for DRM; it knows what it is, how it works, and why it is important; and it understands its value. Furthermore, a majority of respondents have already embraced the use of DRM to exchange real-time data/events automatically with either their CRM System, Enterprise Resource Planning (ERP) System - or both. DRM is already here - and it's being well-received.

The Services Industry Is Aware of DRM
The very first question addressed by the survey was on the issue of market awareness of DRM within the services industry. Overall, more than half (53.0%) of respondents indicate they are already aware of DRM as "remote diagnostics solutions that enable devices deployed at customer sites to send and receive data in real time over the Web with their services departments". Another one-third (33.5%) is also aware of DRM, but require some additional detail regarding the specifics of how it works, and what specific benefits it can bring to the table. All told, this constitutes an extremely aware - and fairly knowledgeable - base of current and future DRM advocates (Figure 1).

Figure 1

By services industry, the most informed segment is medical/healthcare at 92.9% awareness. Manufacturer/OEM services organizations, as a group, are 89.8% aware of DRM. These two segments, along with the reprographics/printer and copier segment, have essentially represented the "early adopters" of DRM technology. Most other industry segments are currently in the 75% - 80% range of awareness - still extremely high for such a "young" technology.

DRM Is Important
The next question asked in the survey addressed the issue of the importance of any present or planned DRM initiative to the organization's overall business strategy (Figure 2). Responses to this question were also extremely high, as nearly 83% of respondents indicate that DRM is "important" to their organization - with 18.8% indicating it is "essential." Only 9.1% believe DRM is not presently applicable to their respective organization's business strategy.

Figure 2

For a technology that didn't even exist on a widespread basis only a few short years ago, the services market apparently is not only aware of what DRM is - a vast majority believe it to be important to their overall business strategy. As such, on the basis of the survey results, DRM is believed to be fairly ubiquitous in today's services industry - across all segments, and all around the world!

Most Services Organizations Are Either Using DRM, or Planning to Deploy It
Overall, more than three-fifths (60.9%) of the survey respondents presently use remote diagnostics of some type. However, this percentage increases to nearly two-thirds (65.9%) among Manufacturer/OEM service organizations, and almost as many in the medical/healthcare segment (63.5%). As such, these two segments presently reflect among the highest levels of receptivity to DRM applications.

Dial-up/phone is the predominant communications technology, used by 43.9% of the survey universe to support their current remote diagnostic systems. Virtual Private Networks (VPNs) are the next most prevalent technology, at 19.7%, followed by the Internet at 17.4%.

With respect to future plans for DRM, nearly three-quarters (74.0%) of respondents indicate they either plan to deploy, or will consider a DRM system, in the coming 12-month planning period (Figure 3). The numbers are even higher for the Manufacturer/OEM (81.9%) and medical/healthcare (76.8%) services segments. These are exceptionally high numbers.

Figure 3

An even more significant finding is that among those organizations that are considering deploying a DRM system to provide Internet-based remote service, nearly one-quarter (22.9%) plan to do so within six months; while another 21.3% plan to do so within 6 - 12 months; and 11.4% plan to do so in greater than 12 months. Thus, more than half (55.6%) have already designated a specific timeline for deploying DRM in the near-term future.

The Market Understands the Key Benefits of DRM
Another thing made very clear from the survey results - the services industry recognizes the benefits of DRM. In fact, a majority of respondents agree that DRM is likely to improve customer satisfaction among their respective customer bases. The principal DRM benefits cited by respondents, in rank order, are (Figure 4):

  • Improved customer satisfaction through faster responses to problems;
  • Avoidance of customer downtime by receiving proactive notification of problems directly from devices;
  • Reduced costs from field service through fewer unnecessary onsite visits;
  • Reduced time on phone through direct access to device alarm, event, and usage data;
  • Better leverage of services experts through remote access to devices in any territory;
  • Generation of increased revenue from higher value service offerings;
  • Ability to offer more competitive products or services;
  • Ability to offer new, remote-managed service offerings; and
  • Ability to generate additional, more predictable consumable revenue through continuous usage tracking.
Figure 4

Other potential benefits cited by some of the survey respondents include the ability to:
  • Capture real-world usage data to drive product development; and
  • Utilize auditable, usage-based product billing.
Manufacturer/OEM and medical/healthcare services organizations were the first to embrace DRM and, as such, are also the ones that provide the highest segment ratings for each of these principal benefit areas.

Specific examples of the types of benefits that are currently being realized by users of DRM systems are provided in the accompanying sidebar. From these examples, it is clearly evident that DRM has widespread applications, ranging from improving response time and reducing the number of service calls; to increasing customer satisfaction and raising levels of ROI; to maximizing uptime and reducing the total cost of ownership; - even to making our drinking water and airport travel safer!

Key Services Functional Areas Believe DRM to Be a Strategic "Fit"
On the basis of the survey results, it is also clear that all of the respondents' services-related functions are perceived to "fit" with the organization's present or planned DRM strategy. For example, functions such as tech support (92.5%), field services (90.7%), customer care (88.3%), service design for supportability (83.5%), Web-based e-Service (76.6%), professional services (74.8%), engineering (71.6%), and marketing (71.4%) are all perceived to be directly "fitted" to the organization's DRM strategy by at least 70% of respondents.

Other functions, such as deport repair services (69.8%), sales (69.4%), logistics (66.1%), inventory control (60.7%), and order processing (54.2%), are also perceived to be a direct "fit" by a majority of respondents. Only, manufacturing operations (48.2%) is cited by somewhat less than a majority, as many services organizations do not necessarily have this function in place.

Overall, and in most of the services industry segments analyzed, there are four distinct functional areas that typically stand out as representing the best "fit" to the respondent's DRM strategy. These are:

  • Tech Support Services;
  • Field Services;
  • Customer Care; and
  • Service Design for Supportability.
Access to Real-Time Information Is Important to Market Position
Overall, more than 90% of respondents believe that Internet access to real-time information from deployed products is important to their competitive market position (Figure 5). In fact, more than a third (38.3%) believe it to be "essential to creating a future competitive advantage". This high level of perceived market advantage is fairly consistent across all of the services industry segments analyzed, with no individual segment indicating less than 90% importance for this key Internet-driven capability.

In fact, industry segments as diverse as medical electronics, bio-life sciences, wastewater treatment, semiconductors - even the Paris Airport Authority - all recognize the value that DRM brings with respect to real-time information, and its ultimate impact on competitive market position.

DRM Is also Reported as an Important Component of both CRM and ERP
Customer Relationship Management (CRM) systems are presently being used by more than two-thirds (69.2%) of respondent organizations in the services industry, nearly evenly divided between primary sales (34.5%) and services (34.7%) applications. Of this group, more than three-quarters (76.7%) are either presently using, or considering using a DRM system to exchange real-time data or events automatically with their CRM systems (e.g., initiating service requests or sending status, state or usage data; etc.).

In addition, nearly another quarter (22.0%) of respondents already have formal plans in development to implement CRM in the foreseeable future and, all things being equal, it is extremely likely that at least two-thirds of these new entrants into the CRM world will consider integrating DRM into their CRM systems as well.

Figure 5

Similarly, Enterprise Resource Planning (ERP) systems are presently being used by approximately 40.5% of organizations within the services market. Plus, another 10% have formal plans in development. More than three-fifths (61.7%) of these services organizations are also considering DRM to exchange real-time data or events automatically with their ERP systems.

From these findings, the implication is very clear: DRM is not merely a standalone means for monitoring, tracking, and communicating data and events in real time - it is a tool that may be used to support all aspects of the business, ranging from sales and services; to professional services, and technical support; and, ultimately, to customer care. It is fully integratable into an organization's CRM and ERP systems, and is already being widely used in these applications.

Axeda's Spector adds that "DRM is an enterprise-wide solution that enables the automated platform so many companies are seeking for a proactive real-time enterprise. Most importantly, Axeda DRM™ avoids providing another silo of customer information by seamlessly integrating timely, accurate, and historical information into customer relationship management (CRM), enterprise resource planning (ERP), manufacturing execution systems (MES), supply chain management (SCM), and asset management systems. If a customer has already deployed any one of these systems, Axeda DRM leverages that infrastructure and investment."

This is why Axeda has partnered with some of the leading CRM and ERP solutions providers, including Siebel and SAP. With respect to the latter, Axeda DRM drives hard-dollar ROI and accelerates payback around SAP's Service Management offerings. Integrated with SAP, the Axeda DRM solution enables preventative maintenance, proactive customer support, auto-generation of service requests, and real-time visibility into the spare parts and consumables supply chain. These benefits map directly into SAP's CRM, SCM, and PLM (i.e., Product Lifecycle Management) products, which comprise their Service Management Solutions.

The result is a business transforming platform which OEMs can leverage to provide heightened levels of service to the end customers, thereby engendering customer satisfaction and loyalty - the cornerstones of improved financial performance. Currently Axeda is a certified SAP partner, providing a combined solution that is well suited to address the needs of customers in the high tech, medical, industrial, energy, and oil & gas industries.

Many Factors Are Impacting the Widespread Acceptance of DRM
A majority of respondents indicate five principal factors as those most responsible for impacting their acceptance of DRM-enabled products and services (Figure 6). They are:

  • Cost;
  • Ease of installation and operation;
  • Security of corporate network;
  • Need for uptime and improved service response; and
  • Security of device information.
These are the five most influential factors reported virtually across all survey segments.

Figure 6

Other key influencing factors, cited by at least one-quarter (25%) of respondents, include:
  • Amount of customer IT involvement;
  • Reduction of administrative functions (e.g., usage monitoring, forecasting supplies, billing, etc.);
  • Competitive differentiation;
  • Privacy; and
  • Need to reduce internal debug and phone time.
These secondary factors are also widely cited as being factors of influence for embracing DRM.

As such, the services industry appears to have made its choice: it has embraced DRM - and on the basis of some very powerful reasons. However, while "improving customer service" is universally noted as the most important benefit of DRM, cost - as in reduced cost - is especially singled out as the number one influencing factor for accepting the technology at all.

"Ease of installation" is also noted as a principal benefit, although the market apparently realizes that this is basically a one-time effort that does not necessarily make DRM more attractive, but at least makes its implementation less disruptive. Security issues, such as security of the corporate network, and security of device information, are also key benefits. But, again, these are primarily initial concerns that are very early mitigated by the ease with which DRM may be implemented, and the levels of privacy and security that are inherent in any DRM implementation.

Ultimately, aside from the relatively low cost - and high rate of return - associated with the use of DRM, the ability to maximize system uptime and improve service response time are the "real" influential factors that drive the widespread acceptance of DRM - across all industry segments.

Conclusion
While the DRM industry is still relatively "young", the services market is surprisingly "mature" with respect to its awareness and understanding of the need, application, benefits, and return it can realize through its use. There is nothing like the phrase "improvement to the bottom line" to entice any business into considering a new technology or application. However, coupling reduced costs with improved customer service and satisfaction - all delivered in a relatively easy, non-disruptive, and secure mode - is essentially what makes DRM a "no-brainer" for most services organizations.

Harbor Research supports the case for DRM by stating that increasingly, throughout the decade, "all things will be connected and dynamically communicating in order to improve customer satisfaction, enhance productivity and efficiently allocate resources." By integrating these intelligent devices into a unified solution, DRM places the information businesses need directly into the hands of the people who need it the most - when they need it, and wherever they are located.

DRM also extends the breadth and depth of the information systems that businesses are already using to allow for direct access to remote device information - without the need for human invention, or the costs associated with it! Through DRM, managers can now gain instant access to up-to-the-minute business information, and turn it into business insight - instantaneously. As a result, Axeda DRM can eliminate the traditional lag that typically impedes a manager's ability to make a timely, informed, and proactive business decision.

Industry segments such as medical/healthcare, reprographics, industrial and building automation, and semiconductors have been using remote diagnostics in general - and DRM in particular - for many years; and leading vendors such as SAP and Siebel Systems have fully integrated DRM into their respective CRM and ERP solutions. The AFSMI survey results clearly prove that the rest of the world has also either already caught up, or will be doing so in the very near future.

What is your organization waiting for? The technology is here; the benefits are real; your customers are continually looking for higher levels of satisfaction; and the cost savings can be easily defined and justified. Nearly three-quarters of your competitors are already using, or considering the deployment of, DRM. The time to think about it has passed - the time to act is here.



William K. Pollock is president of Strategies For GrowthSM, a consulting firm specializing in strategic, marketing and business planning; market research and customer/market surveys; customer satisfaction measurement and tracking; services marketing; and Customer Relationship Management (CRM). He may be reached at 610-399-9717, or via e-mail at wkp@s4growth.com.

Axeda SystemsTM Inc. (NASDAQ: XEDA) is the world's leading provider of device relationship management (DRM) enterprise software and services. Axeda helps businesses become more competitive by using the Internet to extract real-time information hidden in their intelligent devices. The company's flagship product, the Axeda Device Relationship Management SystemTM, is a distributed software solution that lets businesses remotely monitor, manage and service intelligent devices, deployed around the world, allowing them to optimize their service, development, sales and manufacturing operations. Axeda customers are Global 2000 companies in many markets including Medical Instrument, Enterprise Technology, Printer and Copier, Industrial and Building Automation Equipment. Axeda has sales and service offices in the US, Europe and Japan, and distribution partners worldwide. For specific information on the Axeda DRM Leadership Forum, or on DRM in general, visit the Axeda website at www.axeda.com.


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