As IoT becomes increasingly pervasive, a new and alternative services sector is evolving, called servitization – also known as outcome-based services, writes Joe Kenny, the senior director for Global Customer Transformation at field service management specialist, ServiceMax.
By integrating services with products, you can create bundles that are of greater value than products alone. As manufacturers move from being purely product providers to becoming service providers as well, it adds value to their products and generates additional revenue. In other words, service-based outcomes take you out of competing on price alone.
According to Ashton Business School, servitization delivers a 5-10% jump in annual services revenue, profits two to three times greater than those on product sales alone, cost reductions for customers as high as 30%, as well as the opportunity to increase service revenues even further by supporting existing third party or competitive products. This creates an ongoing relationship with the customer that effectively locks out competitors.
Machines are already able to self-diagnose themselves, and report back when they need servicing or require action to be taken to avoid breaking down. This is a game changer for any company with a service department, as well as the wider field service management industry. But shifting business models requires thought and planning. So let’s look at some of the key considerations on the business transformation journey to servitization.
First, validate your business model. Chances are you’ll be making potentially more money but in different ways which will require a rethink. Machines, products and consumers are now all able to communicate with each other in real time, which opens up a myriad of possibilities for monetising revenue in different ways.
Think through the customer experience, and look to add value or provide value in the ecosystem either upstream, downstream or both. By building a better customer experience that’s of value or creating more viability of an asset’s use, you’ll not only be able to unlock new value for your customer, but also potentially profit from it. Be careful not to create vulnerabilities or unnecessary technical baggage to a customer transaction or service. Opt for simple logical value. In my view, simple, reliable and consistent wins over cool every time so don’t over complicate things.
Second, look at security around how the data is collected, protected using encryption, stored and communicated. A good reference is The IoT Security Foundation, which is vendor neutral, non-profit and full of expert resources for knowledge sharing, best practice and advice.
Third, take a look at who owns the data captured and the consolidated trends. We now have laws that cover control data captured, data protection, ownership and the protection of personal information. Talk to your legal department and review these aspects, and include them in your end user agreements – clearly state what data is collected and how relates to protection and usage rules.
Fourth, ensure you understand the technology you are using. Have you designed for quality of reporting, and for failure, scalability, reliability? How will you know the sensors are reporting back with valid measurements? It’s really important to test, test and test again – everything from sensor locations, fixings, power supply, communication methods and circuit redundancy.
Fifth, check Industry 4.0 for ideas. In other words, check for standards and emerging templates or blueprints. You can be creative but it’s worth doing your research to get plenty of advice. Always build trial or proof of concept on small scale then methodically learn what business outcomes you can drive or improve – but keep a holistic focus on improving value. And consider how are you going to install, maintain, upgrade, retrofit, or decommission your solution, and once deployed, make sure you recalibrate your expectations on a continual basis.
There are a few obstacles to overcome, but the reality is we have been monitoring sensors in machines for years. As an industry, we already know what good, reliable data looks like and most companies are familiar with the thresholds of proper testing and validation.
The convergence of IoT and servitization is transforming business models in the service arena, opening new possibilities for proactive maintenance, prescriptive management and recall management. Your only decision is how to transform your business to take advantage of them.
May 19, 2016
Posted by: George Malim
The Internet of Things (IoT) has continued to snowball over the past couple of years, and it’s the buzzword that continues to dominate the tech world. It was alarming just how big a focus it was at Mobile World Congress this year, writes Robin Kent, the director of European operations at Adax. (more…)
April 21, 2016
Posted by: George Malim
Adoption of the Internet of Things is proceeding quickly and although most people don’t yet have a smart refrigerator or toaster in their home, smart has taken off in certain market segments, writes Christian Fredrikson, the chief executive of F-Secure. TVs, fitness tracking devices, home monitoring systems and personal wearable devices are all hot products for connectivity, and it’s only a matter of time before other segments follow. Gartner tells us that by 2020, 25 billion devices will be connected. (more…)
March 1, 2016
Posted by: George Malim
Phill Pexton’s research covers the broad topic of machine-to-machine (M2M) communications and the Internet of Things (IoT). Specifically, his current remit allows him to delve deeper into IoT security, service enablement platforms and the industrial internet, with a focus on the monetisation and new business opportunities as well as underlying technologies.
Prior areas of research have included network infrastructure, data centers and unified communications. Phill holds an MSc in International Economics and Public Policy from Cardiff University and a BSc in Accounting and Finance.
November 24, 2015
Posted by: George Malim
Nordic Semiconductor, a global contributor in low-power wireless connectivity solutions, now offers support for Samsung’s SmartThings Find SDK across its next-gen nRF54L15 and nRF54L10 wireless SoCs, as well as its widely adopted nRF52840 and nRF52833 SoCs. This software-level integration enables developers to build advanced location tracking solutions, using Nordic’s ultra-low power wireless technology and Samsung’s global SmartThings ecosystem.
September 4, 2025
Posted by: Marion Webber
True Digital Group has announced a landmark partnership to take its living technology platform TrueX forward under the vision of “Empowering Every Home, Redefining the Future Living.” In collaboration with China Mobile International (CMI), T3 Technology and Tuya Smart, TrueX will evolve into a new, more comprehensive ecosystem for smart living with full support for over 3 million users of the Tuya – Smart Life, Smart Living application – enabling them to switch to the TrueX platform and enjoy a wide range of additional services and benefits.
September 2, 2025
Posted by: Marion Webber
SKBM Smart Technology, the nation’s only vendor-agnostic smart building aggregator operating nationally, has announced that Asset Living the second-largest property management firm in the United States (U.S.) with a portfolio exceeding 300,000 units—has selected SKBM Smart Technology as its preferred partner for all Smart Building Projects.
July 1, 2025
Posted by: Marion Webber
Morse Micro, a provider of Wi-Fi HaLow chips, has announced that its MM6108-EKH05–Light has officially received Matter certification from the Connectivity Standards Alliance. This certification marks a step for Wi-Fi HaLow technology, demonstrating seamless interoperability, security and ease of integration for smart home and Internet of Things (IoT) devices.
June 26, 2025
Posted by: Marion Webber
June 5, 2025
Posted by: IoT global network
Morse Micro, a provider of Wi-Fi HaLow chips, and Gateworks Corporation, a supplier of industrial single board computers (SBCs), has announced that they have partnered to bring Wi-Fi HaLow (IEEE 802.11ah) connectivity to the toughest industrial environments. Together with Silex Technology, they are launching a high-performance ecosystem that makes secure, low-power and long-range Wi-Fi a reality in smart factories, transportation systems and energy infrastructure.
Posted by: Marion Webber
