Changing the Game in Industrial Goods Through Digital Services

Changing the Game in Industrial Goods Through Digital Services

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Changing the Game in Industrial Goods Through Digital Services

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    Digital Technology and the Service Business

    Digitization has been going on for a while, but new service and sales opportunities are arising from several recent technological developments.

    • The cheap sensors and pervasive wireless communication that underpin the Internet of Things are enabling companies to receive massive amounts of data and manage equipment operations remotely.
    • Cheaper and faster computing power—and scalable computing resources through cloud services—are enabling analytics software to capture and process large amounts of data so companies can better understand equipment (and customer) behavior, optimize operations and repairs, and predict potential failures.
    • Mobile and augmented-reality devices are empowering service field personnel, making them more efficient.
    • Advances in 3-D printing technology make possible cost-effective production at low volumes, so a field office can manufacture spare parts as needed.
    • A variety of online platforms, channels, and sales tools is enabling companies to communicate much more easily with customers that are themselves becoming increasingly sophisticated.

    Almost every kind of service-related information can be digitized, which means that existing services can be transformed and new services and new business models can be created. This shift’s potential value to customers is so great that many companies in adjacent industries are either pursuing or actively considering the opportunity. Monsanto, which makes seeds and chemical products, has developed software for capturing and presenting data so farmers can make better decisions. The company recently signed agreements with the three largest agricultural OEMs so farmers could have their tractors and other machines integrated into Monsanto’s Climate FieldView platform. As Monsanto continues to gather data and build its expertise, it may gain further leverage over the OEMs.

    Digitization depends on implementing systems that capture, transmit, and process information. So large software companies are using their expertise with these systems to carve out segments of the service business. SAP, for example, has begun offering software that lets equipment owners carry out predictive maintenance. And niche software companies are developing applications for specific kinds of equipment. Like Monsanto, these large and niche companies can build on their foundations to develop full-fledged platforms that manage the equipment and communicate with the customer—squeezing out the OEM for most tasks.

    The size of the opportunity will appeal to companies inside and outside industrial goods. OEMs that hope to maintain or increase their service business should be entering the field of digital services with conviction—and soon.