SMART SYSTEMS and
STRATEGIC SERVICES INNOVATION
Asset data management platform strategies enable new services for machine builders and equipment manufacturers
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Smart Systems are a new generation of computing systems and information architectures. These systems benefit from the collision of technological advancements such as machine learning, platforms and predictive analytics, while connectivity allows for the proliferation of data across assets which comprise our economy, providing end-users with enhanced control and insight into their operations.
WHERE ARE WE TODAY?
The new world driven by networked services is one in which every connected machine turns manufacturers, and in many cases others along the value chain, into a new kind of “smart service” business. It bends the traditional linear value chain into a “feedback loop” through which data rich heartbeats and insights will continually flow back through the complex business alliances that create, distribute, and service those systems.
Unfortunately, while most “product-centric” businesses are now embracing the concept of growth creating services, many are not developing new business models and not investing in new digital systems to realize the true strategic potential and value.
THE STRATEGIC ROLE OF SERVICES —
Products and services, while complementary, have historically had opposite strategic goals and divergent operational models. As a result, each business type has had to seek out its own distinct strategies. The traditional machine builder and equipment manufacturing business typically defined services and after sale support as subservient to the product, as no more than a “bootstrap” business with little upfront investment. This model is rapidly disappearing. The ability to closely couple machines and equipment and a wide variety of new support services has emerged as a requirement to stay ahead.
The two thrusts need to be mutually supportive without inhibiting one or the other. However, trying to coordinate and leverage the respective roles of products versus services often creates contention. Many leading manufacturing organizations have come to understand that each have distinctive strategies, operating modes and organizational requirements, and most importantly, that services cannot rely on products to be its “role model.”
The best companies have come to see the continuously evolving relationship between products and services as a fertile ground for innovation. The two need to be interwoven and mutually supportive, and increasingly, success in either goes to the company that effectively utilizes the combined potential of both, but only when services has been designed for its own unique destiny.
As products evolve, so do the attributes of the services required to support the product. Each impacts the other in an ever changing set of relationships. The salient characteristics of each model are often very fluid in nature. Understanding this critical evolving relationship is the key to effective and profitable service delivery. Service business design requires organizations to address several critical aspects of their business, including:
» The overall strategic role of services;
» The uniqueness of the business model and the delivery schema; and,
» The required organization structure and skills requirements.
The electronic linking of machines, users, channels and support specialists, will continue its inevitable march forward, but the value of networking machines and equipment and, in turn, automating and orchestrating support functions will become ever more tightly coupled. This linkage must become more cooperative and interrelate in a mutually advantaged way; “creative” contention, not negative contention.
SMART SERVICES JOURNEY;
MOVING BEYOND SIMPLE AFTER MARKET SERVICES
A networked machine generates information value over its entire lifespan. Machine builders and equipment manufacturers can know where the device is located, when it was installed, critical specifications, diagnostics, availability of spare parts, usage patterns, support status and so on.
Traditional customer relationship and equipment support programs yield only intermittent, uneven and incomplete windows into how customers interact with a machine. Once a machine is shipped to a customer, the manufacturer loses sight of who buys it, how it is configured, what its use is and what the customer experiences with it. When machines become networked and support is automated, the environment in which they are utilized becomes more “aware” and responsive. Eventually, this environment helps customers optimize their processes, save money, and become significantly more efficient.
Up till now, most of the discussions concerning machine and asset data, analytics and customer support automation focus almost exclusively on “simple” monitored values such as alarms and alerts. Return from simple applications, while extremely valuable, is limited to the manufacturer’s service delivery efficiency. Contrary to what current market offerings depict, however, the value of connectivity does not have to end with just simple applications focused on a single class of device or machine.
As technologies mature and open standards become the norm, applications based on deeper, peer-to-peer interactions between devices, machines, systems and people will drive more “compound” and dynamic value streams. This opens up new collaborative business model opportunities that have the potential to drive much greater value for the customer.
Moving from “Simple” to “Compound” applications involves multiple collaborating systems with significant interactions between and among devices, systems and people. No longer is the focus solely on the product supplier’s ability to deliver support for their product efficiently. Rather, value is brought to the customer through business process automation and optimization.
Consider any of the larger diversified industrial players that sell complex machines like turbines, compressors, and the like. In the power turbine business, for instance, major electric utility customers have good reason to loathe equipment failures. At the least, any downtime creates huge opportunity costs for these customers; often it means they have to pay hefty regulatory compliance fines.
To reduce that risk, players like GE have invested heavily in monitoring and diagnostics so they can deploy a technician or engineer ahead of a failure (preemptively) as opposed to doing so according to a schedule based upon prescriptions (pro-actively) or, even worse, after the power has gone off (reactively). For one thing, this has a dramatic effect on the profitability of these players maintenance services. Most manufacturers cannot charge more than $100 to $130 per hour for their technical support because of price and benefit pressures from local competitors.
But because of efficient network-enabled services, leading players can charge $500 to $600 per hour for the same technician who has become a subject matter expert. But, in the end, these are still examples of simple applications largely focused on a machine builders or equipment manufacturer’s own value chain. They are simple “hub and spoke” remote support. While there is value in these models, there are significant untapped opportunities for providing new compound value for the users and customers.