(Adopted from the Smart Services Forum press release)
The Growing Need For Smart Services in Business
The ability to monitor, repair and control equipment remotely over the Internet - particularly using Wireless Machine-to-Machine (M2M) technologies - has changed the concept of service for manufacturers in key industries around the world.
Problem:
Many OEM manufacturers of products and machines in particular find it difficult to see how such smart services apply to them. Yet many of these companies are also finding it increasingly difficult to compete in their market niches, with their profit levels constantly squeezed and their product life cycles getting ever shorter. They are in fact right at the centre of a new opportunity space.
Smart Solutions
Embedding smart networking technologies into their products opens up major new profit opportunities that can dramatically change their businesses..and their competitive business landscape.
By increasing customer satisfaction with faster turnaround times and enabling concrete savings on service costs, these new clusters of core technologies have allowed implementers to introduce "smart services" and gain competitive edge over those still using traditional "non-intelligent" or "unconnected" service methods.
What's different about Smart Services?
"Smart services" go far beyond the kinds of upkeep and upgrades often sold alongside products today, both in their value to customers and in their cost-efficiency to the supplier. However to be in a position to provide them, intelligence-that is, awareness and connectivity- must be built into the products themselves. And you must be prepared to act on what the product then reveals about its use. (see our Idea Lab and Opportunity Clinic)
"As an example, consider Heidelberger Druckmaschinen, the well-known maker of high-end printing presses. Throughout its history, the company has offered repair services to customers. When it developed the ability to monitor the equipment remotely, it could provide maintenance much more cost-effectively. Today, with its machines communicating continuously over the Internet, Heidelberg has the access and insight to optimize their performance in the customer's shop. The total product life cycle support Heidelberg now offers-extending even to decommissioning and resale-represents a step-function change in value. It is the network context that has made the difference and created true intimacy with the customer."
The rewards of becoming a smart service provider are hard to ignore.
According to the consulting firm, Harbour Research, their researchers have documented dynamic double digit growth rates for many companies that incorporate smart design into their products and services. The leaders are establishing new performance benchmarks for their industries, deriving more than 50% of their revenue, and 60% of their margin contribution, from services as opposed to product sales. For most management teams in product-centric companies, numbers like these sound like heaven.
Smart services are a wholly different animal than the service offerings of the past, and customers perceive them as having entirely new value. To begin with, they are fundamentally preemptive rather than reactive or even proactive. Preemptive means that actions are based upon hard field intelligence; you launch a preemptive strike to head off an undesirable event when you have real-world evidence that the event is in the offing. Smart services are thus based upon actual evidence that a machine is about to fail, or that a customer's supply of consumables is about to be deleted, or that a shipment of materials has been delayed, and so on.
Smart Services Forum - Hannover, Germany April 27
Joining the ranks of smart service companies is not primarily a technical challenge. The technology, while critical to the task, is now well enough established. Rather, in most companies, the biggest challenge is in getting management to adopt a new perspective on the nature of the business…the need for a new revenue model and a new business model The companies in the vanguard of smart services think differently about why they exist, what they do for their customers and how they profit from it-but they have come to this by degrees.
To share some of these experiences, and to outline the new business models they represent, a one day Smart Services Forum is being organized at this year's Hannover Fair, the largest Industrial Automation Show in the world. The Forum is also linked to a key theme of this year's Fair, that of Wireless Automation.
The companies taking part in this event are Heidelberg, Air Products, ABB, Mitsubishi Electric, Invensys, Schmitz Cargobull and McDialog.
This forum will examine the new business opportunities that emerge once remote smart services have been deployed. These opportunities transcend the traditional notion of a device and its role in the enterprise to encompass entirely new ways of doing business ( new business models). The forum will focus on some of the emerging applications, the market disruptions they are causing, and look at how companies are changing the way they do business to take advantage of the changing landscape.
The impact of these smart services will be explored in a special, Forum organized at the Hannover Fair in Germany on April 27. (see Forum).
Is it time to re-design or update your Revenue and Business Model becasue of encroaching smart technologies or smart services ?
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© 2005-2006
Walter Derzko
Expert, Consultant and Guest Speaker on emerging Smart Technologies, Strategic Planning, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "
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