what happens when you turn your products into services
TRANSCRIPT
January 2018
What Happens when You Turn Your
Products into Services
Regu Ayyaswamy
Vice President and Global Head,
IOT & Engineering and Industrial Services
Digitization & IOT are Revolutionizing Manufacturing
Companies across sectors are digitally connecting myriad products
Manufacturers are uncovering a new business model
A new business model is created by adding services to products
Combining services and connected products opens new ways to generate revenue
Connected products enable the shift from an open-loop to a closed-loop system of value generation
The Value-Generation Loop
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Manufacturers lack direct sources of customer use data
Chances to build revenue and enhance customer loyalty are missed
Channel partners are unable to gather data for feedback loops
Missed Opportunities in Open-Loop Systems
IoT technologies enable a closed-loop system linking customer and manufacturer
Emerging technologies are encouraging closed-loop systems
Connected Smart Devices Complete The Loop
Closed-loop systems’ opportunities are expressed in ‘servitization’
Servitizationshifts focus to delivering service through a product
Servitization opportunities come in four varieties:
The Promising Potential of Servitization
Improving reliability and uptime
Customer operational enhancement
Distributing new product capabilities
New revenue-generating ventures
Embedded monitoring services can act before product failure begins
Better product reliability, increased uptime, and lower maintenance cost creates customer value
1. Improving Reliability and Uptime
Embedded services can optimize customer value from a product
Smart technologies and connectivity and real time tracking of product usage are examples of embedding services
2. Customer Operational Enhancement
Embedded service delivery capabilities enable businesses to tap into new products, subscription, and streaming revenues
Software downloads, mapping systems, and other applications in products are examples
3. Distributing New Product Capabilities
Most valuably, servitization can help develop entirely new businesses
Smart, connected products improve understanding of customer experience and lead to fresh insights
4. New Revenue-Generating Ventures
Failure to adopt servitizationwill leave manufacturers behind
Manufacturers must overcome any resistance to adopt servitization
Servitizationenables tighter relationships with customers
Technologies needed to embed services in products are available
Servitization is Imminent
What Happens when You Turn Your
Products into Services
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