The business benefits of Servitization plus the availability of IoT technologies (sensors, embedded systems, gateways, connectivity, platforms) are pushing Equipment Manufacturers to develop and deliver Connected Services.

Our definition of Connected Service: a Service enabled by a Connected Product

We define “Connected Service” a service delivered by an Equipment Manufacturer, or a Service Provider, that is based on, or enhanced by, the fact that the product (machine, appliance, system) related to the service is connected to the Internet (“Connected Product”). In this way, the Connected Product and the Connected Service form a Digitally Enhanced Product-Service System.

A few examples of Connected Services offered by leading equipment manufacturers are:

What these value propositions have in common? Are there any common denominators?

Yes, we identified 6 common denominators across all the Connected Services cases.

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We are a software vendor, our job is to provide our customers with a SaaS that empowers them to offer connected services to their customers.

We are committed to the continuous improvement and enrichment of our software. We feel satisfied when customers express their appreciation.

But what motivates us even more profoundly is knowing that we are contributing to a revolution. The transition of the manufacturing industry towards a service culture and economy, or in one word: servitization.

We love servitization for many reasons, and you should too!

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WSC 2020 was probably the event with the world’s highest concentration of companies at an advanced servitization stage. We really enjoyed being a part of it!

In fact it’s fundamental for us to understand how far companies are along their servitization journey and what they need to progress faster. This is what nourishes our development roadmap. We found so many inputs!

In summary, from WSC 2020 we bring these take-aways home:

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Servitization and digitalisation - a two dimensional space

Servitization and digitalisation often come together, but not always at the same pace. Distinguishing them as 2 independent dimensions helps you better understand and plan your servitization journey. Let’s see how …

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In this article prof. Federico Adrodegari, Mario Rapaccini, Nicola Saccani and I have for the first time introduced the concept of DPSS (Digital Product-Service System) as a new software category.

This is definitely a minor event to celebrate, but I am still very happy with it. My motto is always “let’s give things a name“. To be able to communicate better, and even “think” about them better. The definition of Digital Product-Service System is a great step forward for us.

But if you are interested in servitization, it matters to you too.

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Massive remote monitoring, smart services and equipment-as-a-service can be the key ingredients of a recipe for restarting the equipment manufacturing business in the post-Covid-19 era. Let’s see how.

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If you are an OEM and want to offer services in addition to your products, you will certainly need a software that will manage your connected products and allow digital servitization.

For this type of software, you will face with the choice “Make or Buy?”.

You may be tempted to choose “Make”, considering that a proprietary solution allows more control, lower costs or having 100% of the intellectual property of what you develop. However, by choosing “Make”, you will have to face some relevant issue, like:

  • Lack of experience and internal knowledge regarding servitization, with the risk to waste a lot of energy, falling into avoidable errors, and solving problems already solved by others.
  • High development and set-up costs, resulting from the lack of experience and knowledge mentioned above.
  • Release times often inadequate compared to the desired timing, with the risk of getting a result too late.
  • Maintenance costs to ensure the quality, reliability, and evolution of the system.
  • Scalability of the solution according to the growth of the business (100, 1.000, 10.000 connected products), also on a worldwide scale.

The advantages of “Make” do not always overcome these problems. Furthermore, a “Buy” solution could also guarantee the same advantages: control of the solution, sustainable costs, and the intellectual property of the solution.

Leaving aside initial costs and times that could be sustainable for you, if you want to undertake the servitization journey, the most critical part to consider, once the product is connected, is how to create services that can evolve over time, while remaining competitive, up the delivery of a “Product as a Service”.

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You work for an OEM manufacturing company that is defining or has already implemented an IoT-enabled “connected product” project. You are evaluating the possibilities to create new revenue streams to achieve a positive ROI. You started collecting data from your products and you want now to understand how to monetize data. In this post we have already made a comparison between the potential and the value of IoT raw data monetization and IoT-enabled services monetization. Now let’s dig into IoT-enabled services.

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Many consider data to be the new oil. Others refute this thesis and animate a debate on the correctness of this metaphor. Try typing “data new oil” in Google and you will see the result.

Oil or not, there is no doubt data contains an enormous intrinsic value that can be exploited. Thus, let’s keep this debate aside and address a fundamental question: how can I generate revenue from IoT data?

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Servitization is a transformation journey that takes place in various areas of a company: organization, human resources, business model, field services, research and product development, and more. The introduction of new digital technologies is one of the areas you will have to face.

This work can be divided into steps. The first digital step towards servitization is certainly making your products “connected products”. Once this is done, you will also need to manage connected products in their after-production life cycle.

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