An In-Depth Look at the ROI of Field Service Software
- Field Service Insights
The software selection process involves a flurry of questions: What features do we need? Which vendor should we work with? How much can we afford to spend? All of those are important to ask and answer. The final decision, however, comes down to just one question – what is the ROI of field service software?
Return on investment (ROI) is a metric that indicates the success or failure of an investment based on how much it returns in the form of cost savings or revenue gains. And while there can be many things that go right or wrong about choosing and implementing field service management (FSM) software, all of them are reflected in the ROI. That is why it is the most revealing performance metric. And in pure dollars and cents terms, what matters most from any investment is getting the largest return. Someone searching for the right field service software can (and probably should) base much of their decision on which product/vendor delivers the highest ROI. Everything else is secondary.
We explored the ROI of field service software in a previous post– in relatively simple terms, though. It offers a good introduction, but anyone seriously navigating the software selection process will need to take a much deeper look at ROI from multiple angles. That is a necessary and worthwhile process, but a complicated one as well with high stakes for selecting the wrong software. That is why we wanted to keep writing about the ROI of field service software.
This is the first of a new multi-part series from Next Service designed to give field service providers an in-depth understanding of ROI. We will explore how investments in field service software can (or cannot) return value when applied to critical parts of the business such as scheduling, inventory, safety, and back-office administration. We aim to give readers the knowledge and tools they need to calculate, with confidence, how much the investment in field service software will return. Because once the numbers are clear and comparable, the best choice is obvious.
In the rest of this post, we will cover some of the ideas and concepts that inform how companies calculate ROI. More than just math, it is a process that looks different at every company.
A Closer Look at Costs and Returns
The simple formula for ROI (returns divided by investments) obscures how much information goes into both sides of that equation. Accurate ROI calculations are not possible without knowing everything it costs to stand up field service software, followed by everything it does or does not return over the course of its lifecycle:
The costs to consider include:
- One-Time Costs – Things like implementation and data migration require an upfront investment but are not incurred again afterwards.
- Recurring Costs – Paying for a software subscription along with maintenance and support happens on a recurring basis throughout the software lifecycle.
- Soft Costs – The internal resources a company spends while adapting to new software – e.g., training. Soft costs are harder to predict and quantify but still important to estimate.
Returns to consider include:
- Cost Savings – Money that companies save by doing things more efficiently and effectively. In field-service terms, every truck roll saved is a return realized.
- Revenue Gains – New revenue that companies gain through smarter resource allocation or through exceptional service delivery that brings in more business.
- Strategic Impact – The degree to which field service software helps a company achieve strategic objectives factors heavily into the overall ROI it delivers.
One of the hardest aspects of calculating costs and revenues – and something we will cover extensively in this series – is that some things are easier to quantify than others. Information that factors into ROI calculations falls into two categories:
- Tangible – These are the costs and benefits that can easily be put into numbers – things like the price of the software subscription or the cost savings from improving administrative efficiencies. However, even tangible variables can be difficult to estimate accurately, and there may be variables that get overlooked.
- Intangible – There are the costs and benefits that are harder to express as numbers but remain key drivers of ROI. For example, how does a company estimate the cost of getting techs onboard with using new software? Or calculate the benefits of having better visibility into data thanks to new software? Intangible variables have an undeniable, often significant impact on ROI. Gauging that impact, however, can be a guessing game – and sometimes impossible.
All these points underscore the need to be thorough and thoughtful when calculating ROI. And, most importantly, objective. When selecting software, it is easy to be seduced by flashy features and bold promises. But the whole point of calculating ROI is to look past the sales pitch and instead get an accurate, honest assessment of the value (or lack thereof) that a particular field service software delivers.
The Biggest Misconception About the ROI of Field Service Software
Companies often underestimate how much ROI they can or should expect because they misunderstand what field service software is meant to do. They assume that software should automate or otherwise replicate the tasks they handle every day, like figuring out how to schedule techs and load their trucks with the right parts and equipment. And they hope the software will solve the problems that arise most often, like a poor first-time fix rate. Logical as this approach may seem, it is based on the idea that software should do what a company already does – only better. That sets the bar too low.
The field service software with the highest ROI does not just solve problems or speed up the status quo. Rather, it produces business impacts and helps a company evolve into a more competitive entity. Features do not define the software or drive the ROI. Becoming more adept, agile, and innovative does.
What does that mean for field service software buyers? It means the search for software should be accompanied by an equally rigorous internal review. Looking at everything a business does – from routing techs to calculating profits – in a critical light reveals what can, should, and must improve given the present and future outlook. Providers ready to adopt field service software are already at a pivot point. Leaning into that fact by updating processes, practices, and business objectives around what the new technology can do leads to a drastically higher ROI as a result.
Field service software should be evaluated based on how much it can push a business forward – not just prop it up. Likewise, ROI targets should aspire for business growth – not just business improvement.
How Vendors Affect ROI
Another misconception about ROI is that it starts and stops with the software. Important as the product may be the vendor behind it has a major impact on ROI as well. It begins during the sales cycle. While some vendors resort to sales pitches, others help prospects explore the possible ROI, breaking down where, when, how, and to what extent they should expect a return on their investment.
Next, during implementation and deployment, the vendor customizes the software to maximize ROI over the shortest horizon, prioritizing the features with the most immediate impact for the buyer’s business.
Returns begin to accrue once the software goes live. How high those returns climb depends, to a large extent, on the amount of vendor involvement. Support keeps the software up and running. Customer success, on the other hand, ensures it delivers the anticipated ROI – and pushes returns higher than expected whenever and wherever possible. Vendors that remain actively involved with both the operational team and the executive team throughout the software life cycle build a strong synergy between the software and the people using it. No surprise, then, that more involvement produces more returns.
What is the Acceptable ROI of Field Service Software?
That depends on a few things. First and foremost, the software buyer. Each will decide for themselves what an acceptable ROI looks like. And while the higher the number the better, obviously, it will be important to set realistic targets, along with minimum acceptable amounts. Industry plays a role as well. Field service software often has a different ROI depending on what industry it is deployed in due to significant differences in costs and revenue. For example, pool cleaners might see a smaller ROI than industrial generator installers since the second one has much higher margins. As a universal rule, however, no provider should invest in software that cannot pay for itself, meaning deliver at least a 100% ROI.
A Continuing Series from Next Service
What is the ROI of field service software? By the end of this continuing series from Next Service, the answer should be obvious. Each post will focus on a different aspect of service delivery, how technology could improve it, and what that does to the bottom line. When our series concludes it will be an unprecedented resource – comprehensive and free – for helping field service providers achieve the greatest ROI from their software selection. Check back often for updates.