In recent years, to stay competitive, capital equipment manufacturers have adapted their business models to provide some level of service to their customers. This has sparked what Cambridge Service Alliance calls “a servitization revolution.”
What exactly is servitization? At its most basic definition, it is the process of creating value by adding services to products. Manufacturers offer “fuller market packages or ‘bundles’ of customer-focused combinations of goods, services, support, self-service, and knowledge in order to add value to core product offerings.”
It has advantages for both service providers and customers. Service providers can increase their revenues and gain better margins over a longer time period, while customers can maximize equipment performance and lower the total cost of ownership. Consumers get better products and services more suited to their needs.
According to a new report from the Cambridge Service Alliance — “The Future of Servitization: Technologies that Will Make a Difference,” — at the heart of offering servitization is technology. What’s most interesting, however, is that the academics and large manufacturing firms surveyed for the report disagree as to which technologies will be most significant in helping companies remain competitive.
According to the panel of capital equipment manufacturers surveyed, the top five technologies that are most important to the future of servitization are:
Predictive Analytics - Used to predict specific failure modes.
Advanced Data Analysis - Analyzing data to find causality and patterns of failures, instead of simply tracking trends.
Remote Communications - Used to remotely adjust, fix, or send software updates to machines and or products.
Dashboarding Technologies: Used to provide KPIs to make services more tangible and visible.
Case Based Reasoning: Using historic data in failure pattern recognition, and frequent failure pattern analysis.
While the panel of academics overlapped on two responses, they listed three different technologies that they thought were important. Their top five include:
Predictive Analytics: Used to predict specific failure modes.
Remote communications: Used to remotely adjust, fix, or send software updates to machines/products.
GPS or Geo-Spatial technologies: Used to track machines/products, people, or components.
Consumption Monitoring: Used to create consumption-driven supply chains for consumer specific offerings.
Mobile Phones (or other mobile platforms): Used to receive internal data or customer information in real time, e.g. control system data or information pushed to customers.
The two overlapping answers — predictive analysis and remote communications — show that both CEMs and academics see the future filled with more automated control and repair of equipment. Predictive analysis would allow companies to closely monitor specific failure points in equipment, while remote communications would allow them to “remotely adjust, fix, or send software updates to machines/products.” This would support greater autonomy of machines, and also provide an opportunity for the creation of new services.
Consumption monitoring is another technology that CEMs and academics agree on, though among CEMs it ranked sixth, just missing the top 5. When companies have a better understanding of how their customers use machines and products, it’s easier for them to suggest personalized service offerings, tailoring servitization to the needs of the customer.
But what about some of the answers that didn’t overlap? It appears that CEMs are much more focused on getting a clear picture of the state of their serviced products, monitoring and pinpointing weak points, being able to fix weak points remotely, and demonstrating problems that had been fixed. Hence, CEMs list “advanced data analysis” as their second most important technology. They want to understand the patterns of causality, why and how products fail. Similarly, they list case-based reasoning as another important technology - again to ferret out patterns of failure. Finally, dashboarding KPIs is important to CEMs who want to be able to measure service performance and demonstrate that an agreed upon service was delivered.
The academic panel, on the other hand, listed a few technologies that may take longer to see the benefits of their use. Position tracking in which GPS or geo-spatial technologies are used for “tracking machines/products, people or components” was listed in the top five. The study noted, however, that 44% of the panel was composed of manufacturers of stationary equipment, who clearly obtain fewer benefits from tracking technologies. In the future though, the use of GPS is likely to play a greater role in areas such as autonomous vehicles and service robots, for example. Both of these are emerging servitization technologies ranked 80th and 81st by the CEM panel.