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
When something is invisible, exercise caution and do all you can to reveal it and render it harmless. That’s the lesson the human race has learned from infectious micro-organisms—in many cases, the hard way. In enterprises today, writes Rob Greer, the chief marketing officer and senior vice president of products at ForeScout Technologies, where devices are constantly gaining access to networks sight unseen, fear of the invisible is certainly justifiable. But the good news is, IT administrators can put those fears to rest with currently available network access technologies that can largely “disinfect” the environment by making the invisible visible. (more…)
March 30, 2016
Posted by: George Malim
As the Internet of Internet of Things continues to pervade our daily lives, a number of industries including traditional industries are beginning to adopt IoT enabled technologies to help improve customer engagement, writes Christophe Bianchi, the CEO of Feeligreen. (more…)
March 22, 2016
Posted by: George Malim
Event date: January 23-24, 2017
London’s Olympia
The leading IoT event series returns to London’s Olympia with Global show on 23-24 January 2017
The IoT Tech Expo Global; conference & free exhibition returns to London on 23-24 January 2017, for its 2nd annual event where it will host two days of top level content and discussion, introducing and exploring the latest innovations in the Internet of Things arena. (more…)
March 21, 2016
Posted by: IoT global network
Event date: October 20-21, 2016
Conference & Exhibition in Santa Clara, CA
Europe’s leading IoT conference will be arriving in San Francisco, North America , on 20-21st October for two days of top level content and discussion, introducing and exploring the latest innovations in the Internet of Things arena. (more…)
Posted by: IoT global network
Event date: June 13-14, 2016
Conference & Exhibition lands in Berlin
IoT Tech Expo Central Europe Conference & Exhibition lands in Berlin, 13-14 June (more…)
Posted by: IoT global network
Event date: 12-13 April, 2016
ExCeL Centre, London, UK
The Internet of Things is radically redefining just what it means to be connected. It will present unmissable, undreamt-of possibilities for businesses all over the world. But it will need explaining. (more…)
March 14, 2016
Posted by: IoT global network
KORE’s announcement today of its acquisition of Wyless has been a while in the making, but hugely significant now it is here, writes Robin Duke-Woolley, the chief executive of Beecham Research. (more…)
March 9, 2016
Posted by: George Malim
The humble automobile has come a long way since the first public test – which saw the very first car, crash, into a wall, due to human error. Our cars have become increasingly more complex over the past 100 years, but that original point of failure still exists today: The ‘problem’ of human capability, writes Matthew Duke-Woolley, an analyst with Beecham Research. (more…)
February 29, 2016
Posted by: George Malim
In the second part of his blog on IoT security, Rob Greer, the chief marketing officer and senior vice president of products at ForeScout Technologies explains how organisations can stay ahead of the IoT invasion. (more…)
January 12, 2016
Posted by: George Malim