What Happens When You Turn Your Products Into Services

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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