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.
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.
In this article, we are breaking down Connected Services into modular blocks. You can compose them to form a composite offering.
As you’ll see, there are so many different ways to put the blocks together and offer a unique Connected Service.
Some Connected Services are Digital-only Services. This means delivering to customers useful information, insights or integration services via digital systems only.
Other Connected Service are a mix of physical and digital capabilities. This is the case of enhanced maintenance contracts, made more effective through monitoring, preventive, condition-based or predictive maintenance algorithms.
Advanced Service Contracts and Equipment-as-a-service offerings are also examples of composite Connected Services.
The purpose of this classification is to help you define your Connected Service “Mix” in a very practical way.
If you just want to design your Connected Service offering, you can work in detail on each individual block, and then compose the overall offering.
If you also want to develop the Connected Service, in Servitly you will find a set of ready-made functionalities for each block. On our side, in fact, we are using these 6 common denominators as the foundation of our functional architecture.
We are designing and developing Servitly SaaS to give you everything you need to develop your Connected Services offering, based on the composition of these 6 blocks.
On your side, this classification can help you to:
We refer to a typical Product-Service System and we consider the main interactions that occur within it:
Each of these interactions represents an opportunity to offer a connected service.
By Monitoring & Reporting we means collecting data coming from the Connected Product, then organizing and structuring it to provide a report to the customer of everything the product has done.
If you are familiar with the DIKW pyramid, this corresponds to the transformation of Data into Information.
Monitoring and reporting is related to virtually everything that happens in the product and, if relevant, also in its environment. If the customer has purchased multiple products, monitoring and reporting covers both individual data and aggregate data for all products in use. This is the case with a Fleet Management solution.
The value for the customer is to extend its measurement capabilities and have precise and accurate information about its products or fleet of products. Thanks to this service, the customer can measure variables that were previously inaccessible to him or that would have required a large investment in IoT technologies on his side. Instead, in this way the equipment manufacturer provides the customer directly with the information he needs.
The Equipment Manufacturer has the opportunity to differentiate itself from its competitors by:
By Connected Maintenance we mean leveraging Digital Capabilities enabled by the Connected Product, to make maintenance activities more efficient. The end result is a longer lifespan and a lower risk of failure and downtime of the product.
Maintenance activities involve many roles. Therefore, Connected Maintenance services can take many forms. To guide us we refer to this diagram, that represents the main interactions within a Connected Maintenance service.
Data coming from the Connected Products enable the development of Digital Capabilities supporting maintenance activities. We classify such capabilities according to the stage in the life cycle of a failure in which they are useful:
WHENPURPOSEDIGITAL CAPABILITIESBefore the failurePrevent the failurePredictive maintenance algorithms that estimate the Remaining Useful Life (RUL) of the product or a component.
Condition-based maintenance algorithms, based on the wear of the product or a component, canaries and other metrics that signal deteriorating health status.
Preventive maintenance algorithms, based on the number of hours the product or a component has been working.At the exact moment the failure occursReact as quickly as possibleReal-time monitoring of all possible failures.
Alerting functions.After the failureUnderstand what needs to be done to fix the failureReal-time monitoring and historical recording of all the variables useful for diagnostics.
Ability to immediately and ideally automatically recognize the needed spare parts.Fix the failure as soon as possibleRemote configuration.
The final purpose of Connected Maintenance for the customer is a longer lifespan and a lower risk of failure and downtime of the product.
The customer may receive the value of Connected Maintenance in 3 different forms. These corresponds to the marker (1), (2) and (3) in the diagram above.
The Equipment Manufacturer has many degrees of freedom to build its own unique Connected Maintenance offering.
First of all, the definition of the boundaries of responsibility for how does what:
Regarding the development of Digital Capabilities:
Regarding the delivery of maintenance service contracts:
By Insights & Advisory we mean using data collected from the Connected Product to provide the customer with useful information and knowledge to make optimal use of the product. By “optimal use” we mean using the product in a way that improves one or more of product’s KPIs such as:
Digital Capabilities for Insights & Advisory are fed by data about product usage. This is first organized and structured (from Data to Information). It is then given a context and finally synthetic indicators are computed (from Information to Knowledge).
This process could be entirely automatic or require human input at some point.
In the first case, the Digital Capabilities alone are able to give the user all the information and knowledge he needs to make optimal use of the product.
In the second case, the Digital Capabilities are used by a team of advisors at the manufacturing company. The advisors enrich the digital information with their know-how and experience. In this way the advice given to the customer is based on the combination of actual, accurate data and human experience and knowledge.
Of course, the KPIs that the service want to improve must also be measured. This allows the customer or the advisory team to measure the effect of their actions and to correct them if necessary.
The final purpose of Insights & Advisory is to help the customer improve the way he/she uses or set the product to get more value from it.
The customer may receive the value in 2 forms:
As an Equipment Manufacturer you can build a competitive Insights & Advisory offering by working on these elements:
By Control & Configuration we mean using the IoT infrastructure the other way around: sending commands and configurations from a central system to the Connected Product. Such commands and configurations aim to optimize the operational processes of the product.
Your customers are used to interacting with your product through HMI interfaces. With this type of Connected Service, your customers will be able to interact with their machine or fleet of machines through a Cloud-based application.
If your machine has some configuration settings, you could offer a set of predefined configurations on the Cloud; this way you can keep the configurations continuously updated and adapt them to new situations that might arise.
The value for the customer is to be able to quickly choose the most suitable configuration (or recipe, program, profile) for the job to be done and to have access to the latest configurations prepared by your R&D department.
Another useful utility is to store past configurations, to restore them in case of need. Moreover, the customer could find it useful to have a log of all the changes made to the machine configuration.
Automatic optimization is the union of automatic advices + remote configuration.
The machine sends its operating data to the central system, which processes them, identifies the conditions of use and, based on these, calculates the ideal configuration. The configuration is then sent to the machine, which adapts to the actual conditions of use.
Automatic optimization can be one of the biggest value proposition you can deliver to your customers.
In Control & Configuration, as an Equipment Manufacturer you can create your competitive differentiators by:
By Integration & Interoperability we mean leveraging the IoT connection to let the product interact within the process or context in which it operates. Examples of interactions are:
This kind of connection can take 2 routes:
In the first case these capabilities are delivered directly by the product itself. They are (smart) product features.
In the second case these capabilities are delivered through the form of a digital service. Although this route is longer, it can bring greater benefits to both the Customer and you as an Equipment Manufacturer.
The value of Integration & Interoperability for the customer is the amplification of the benefits of digital capabilities. The digital capabilities we have seen so far offer benefits related only to the product alone. With Integration & Interoperability services these benefits are amplified, extending to the entire process or context in which the product is inserted.
Additionally, having access to information and knowledge via API is of greater value to the customer than having access to the raw data generated by the machine. Turning data into information and knowledge is a complex task, that requires a deep understanding of how the machine works. Digital service gives the customer exactly what they need. In fact, often, having access to raw data, even a lot of it, doesn’t allow the customer to extract value.
In Integration & Interoperability, as an Equipment Manufacturer you can create your competitive differentiators by:
By Advanced Pricing we mean exploiting IoT connectivity to define the price of the service as a function of a KPI.
The advanced pricing model could be used to determine the monthly price of:
The variable price could be a function of:
Finally the variabile price could be purely proportional or tiered.
First, the customer has the advantage of a variable cost. This allows him to better adapt to dynamic and unpredictable market trends (for a business) or habits (for a consumer).
Secondly, the benefits for the customer increase even further when the price-determining variable becomes a function of the final outcome rather than just use. In this case, the customer pays to get a result, rather than paying and still having to worry about getting a result.
The final effect is that the customer feels good about how much he is spending.
In Advanced Pricing, as an Equipment Manufacturer you can create your competitive differentiators by:
We hope these 6 blocks can help you in defining your Connected Service “Mix”. Especially in assessing the most important question: why are you doing this? What value will the customer get from it all? Here’s a final takeaway:
CONNECTED SERVICE BLOCKVALUE FOR THE CUSTOMERMonitoring & ReportingI want to be sure that everything is okConnected MaintenanceI want to ensure that everything will be okInsights & AdvisoryI want to improve the way I use the product to get more valueControl & ConfigurationI want to save time when using or setting the productInteroperability & IntegrationI want to extend the benefits to the process or context in which I use the productAdvanced PricingI want to feel good about how much I spend
We hope we’ve been helpful.
Let us know and stay tuned!