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Be Wise: Using the IIoT to Servitize (and Future-Proof) Your Business

When your product rolls off the factory floor, it’s time to begin a relationship with the customer that will last years.

Industry 4.0, the fourth industrial revolution driven by the Internet of Things (IoT), is gaining  huge traction in the manufacturing industry. Like never before, machines have started exchanging information in real-time with each other, the software systems and their users. As a result, new revenue-generating business opportunities for traditional manufacturers through the servitization of products are taking hold.

Real-time categorized data forms the backbone for any Industry 4.0 Initiative, and industrial IoT (IIoT) enables business operations and finished products to work better, fail less often and produce much higher-quality output. It helps create a world of self-sustainable and adaptive systems that continuously learn from each other, and helps businesses interact more with their end-users.

In our Smart Manufacturing Report on Industry 4.0, we are seeing more makers of products deploying IIoT and looking to servitization to future-proof their businesses, improve customer engagement and become revenue-generating service providers.

Think about it: If you buy a car, you’re not just buying a hunk of metal any longer, you’re purchasing a commitment from the company to help maintain and service your vehicle. And, technology is helping to accelerate the transformation into providing services. For automakers, services can include upgrading a vehicle’s software, offering on-demand breakdown service, delivering pre-maintenance reminders, sharing deals on tires, or identifying gas stations in the vicinity.

This is made possible by the IoT on the consumer end and Industrial IoT (IIoT) on the manufacturer’s side. These technologies open up new ways to look at your offerings and operations for future business success, including:

Considering Your Finished Product as Just the Beginning: When your product rolls off the factory floor, it’s time to begin a relationship with the customer that will last years. Your product will require updates and maintenance. Most businesses would rather not deal with this, but the reality is that the Second Law of Thermodynamics dictates that whatever product you create will degenerate into a disordered state over time. Your services can help minimize and control that process.

Leveraging IIoT Data to Be a Valued Business Partner: Until now, there was a level of subjectivity in assessments about technology purchases. But IIoT offers the ability to delineate exactly how much time, energy and money a business is saving by using a more efficient piece of equipment. Coupled with a service offering, you can position yourself as a valuable business partner rather than just another vendor.

IoT/IIoT In Action: From elevators and light bulbs to Teslas

The way manufacturers go from products to service offerings is by changing the definition of what they do. Elevator makers don’t just make and service devices that carry people and objects from floor to floor; they are in the transport business. In this vision, elevators provide a service that should never be interrupted. Sensors and internet connectivity give manufacturers real-time data about usage and can accurately predict when maintenance is required to avoid service interruptions.

Another example is Philips. The Dutch electronics giant a few years ago decided that it doesn’t just make light bulbs, it is a lighting services company. Instead of hardware, Philips provides expertise and IoT technology that saves clients money on lighting. That means the right lux levels delivered in the most energy-efficient way possible and predictive maintenance ensures that there are minimal service interruptions.

Similarly, as Tesla owners know, one of the benefits of owning these vehicles is that there is a minimum of maintenance. Because it’s electric, there’s no need for oil changes, spark plug replacements or emissions checks. In addition, over-the-air updates mean that owners don’t need to go to the shop for software updates. While owners of other cars might go to a local service station, Tesla makes a point of establishing a direct connection with its consumers with annual inspections every year or 12,500 miles.

It’s easy to see how any manufacturer can use IoT and IIoT to become more than just a physical product provider and more of a true business partner for their customers. If you’re in construction, then you’re in the shelter business and can ensure that IoT maximizes efficient use of energy. If you create point-of-sale displays, IoT can transform you into a data-based marketing consultant.

The idea is not new. IBM, for instance, transformed itself from a maker of hardware to a service provider in the 1990s and 2000s. By 2010, services provided 80% of Big Blue’s revenues, up from 50 percent in 2000, and analysts applauded the company for broadening its offerings beyond hardware, which could become commoditized. Similarly, Rolls-Royce’s Power By The Hour Program, in which clients only pay when an airplane using one of its engines is flying, dates back more than 50 years.

Benchmarking and More

For manufacturers, IoT on the back end enables a deeper level of customer service. For instance, recalls can be limited in scope because IoT makes it easy to trace a part back to the original factory. Aggregate data provides benchmarks for service and offers feedback about product performance and consumer engagement.

IIoT is the foundation of a digital transformation that will present new opportunities for manufacturers and redefine future business models. In addition to using IIoT to cut costs and run their factories more efficiently, smart manufacturers can unleash these technologies to add greater customer value, drive significant competitive advantage, build customer loyalty and grow recurring revenue. 

Vinay Nathan is the co-founder and CEO of Altizon Systems, an industrial IoT company. He is a strategic thought leader with 15+ years of global expertise in corporate sales and engineering.





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