1. The product lifecycle service provider
When OEMs talk about their service business, they are referring to product-centric services. Throughout the product lifecycle they may provide installation services, maintenance contracts, replenishment of consumables and parts management. Over time, they could upgrade the equipment, and enable the customer to dispose the equipment in a safe manner. When customers start to look at lifecycle services as an opportunity, they typically centralize service delivery to manage customer SLAs and operational costs. A dedicated sales for services also evolves under the leadership of a business head who is responsible for services revenue (top line and possibly bottom-line) and service delivery. As the different kinds of service offerings in this category evolve, individual service line structure may also come into place.
By synthesizing data from machines and enterprise systems, manufacturers can leverage IoT to improve operating efficiency, customer satisfaction and revenue for their lifecycle services business. If you are a construction equipment OEM, you can use IoT technology to improve your aftermarket business in several ways. You can predict machine failures and fix them before they fail or you can also schedule preventive maintenance, not every 6 months, but based on the actual condition of the machine.
Looking at the real-time health status of all the machines in a region, a parts manager can estimate which parts are likely to be required in a particular quarter. A service despatcher can improve engineer productivity by combining reactive service tickets with condition-based proactive tickets, thereby, preventing expensive emergency calls later. You can also keep track of when the engine oil needs to be changed for a machine and send an alert to your dealer to contact the customer.
2. The product outcome enabler
Looking beyond the lifecycle services of the equipment, a manufacturer has the opportunity to help customers maximize output and optimize the usage of their equipment. The kind of services offered by a manufacturer includes – operating the equipment, training the operator, process consulting to improve output, efficiency and safety, and providing benchmarking services for machine output. To build these offerings, manufacturers have to develop a deeper understanding of how their customers are using their products, build domain capabilities in the end-user applications of their products and also process consulting capabilities to improve output.
The value of Connected Equipment to the product output enabler lies in empowering them to get a better understanding of how customers are using their products, the kinds of environment that they operate in, the kind of constraints that they face and the workarounds that they deploy. A construction equipment OEM can look at excavators across customers and correlate machine performance with hours of operation, soil conditions, driver behaviour, the right and wrong use of attachments and use this insight to help customers improve their operations or change the specifications of the product to address an attractive segment.
3. The ecosystem lifecycle service provider
As manufacturers start focusing on particular industries and build a product line which solves different problems within the customer ecosystem, (for example, different kinds of equipment used in a power generation company) there is a scope to go beyond their own product-centric approach to services and look at a broader ecosystem, such as the power plant itself.
From integrating their own equipment with the customer ecosystem, to providing managed maintenance services for all the equipment of a plant under a single contract, there are multiple opportunities to be tapped by manufacturers in managing the lifecycle of the broader ecosystem. Some of the more advanced applications would include asset management or total plant maintenance management of a customer who has different kinds of equipment, from multiple OEMS.
The size and scope of these kind of opportunities are significantly higher and requires strengthening of the account management program, the capability to maintain third party equipment across different categories, building the aftermarket supply chain for them and developing the field services and repair channels, as well as large program management and governance.
Consider an industrial automation and power equipment manufacturer who provides total plant management services and guarantees uptime of a power plant. At an equipment level, the manufacturer can leverage the same kind of use cases that we had discussed earlier for product lifecycle services, such as predictive maintenance for their own products as well as third party products. Modeling the plant uptime with machine data feeds from the equipment, a manufacturer can also make decisions to repair or replace a part, taking into consideration the overall SLAs and not just machine-level SLAs.
4. The business outcome enabler
Here, manufacturers take accountability for business outcomes of broad customer ecosystems.
In this case, going beyond a maintenance contract for the entire plant, companies could provide operations/run services, deliver signed-off outputs and can be compensated for the same. They could look at objectives like output and yield management, capital and operational expenditure management, risk management moving well away from equipment centered services to business services. At this point in time, a significant footprint in this opportunity area is an aspiration, rather than a reality for most manufacturers.
Delivering business outcomes at this level requires strong vertical /customer based SBUs which will pull in the products and services required to orchestrate high value customer outcomes with complex, multi-year contracting. There is a need to build vertical focused structures which will house domain consulting, domain delivery, operational outsourcing, and program management. Governance is centered on effective management of financial value to the customer rather than uptime SLAs.
Here, the combination of machine and enterprise data, is used to manage financial outcomes like revenue maximization, risk management, opex management rather than uptime. Connected Equipment is a must for enabling new business models like Power by the hour and the enterprise business systems for billing and costing needs, as well as factoring in machine data inputs.
For example, going beyond plant maintenance, a service provider can provide risk management services for a hydro power plant by using analytical models to predict the type, timing, likelihood and consequences of equipment failure. The service provider can also decide if a power plant is to be modernized or disposed based on the remaining lifetime of the equipment, the market demand conditions and the estimated capacity of the plant.