If you've been reading my reports over the last few years, you know that I've been researching hot topics, such as big data, cloud, mobile, social, and sustainability, but over the last 6 months, most of my inquiries have been about a new topic – how manufacturers are increasingly delivering "products as a service".
If you've been reading my reports over the last few years, you know that I've been researching hot topics, such as big data, cloud, mobile, social, and sustainability, but over the last 6 months, most of my inquiries have been about a new topic - how manufacturers are increasingly delivering "products as a service". Perhaps the shift in inquiries is because I've also expanded my research to include product lifecycle and manufacturers' aftersales services, working more closely with Amy Rowell and Sheila Brennan.
I also think it has to do with the fact that we're increasingly looking at what we can do with the combination of technologies, and this change requires manufacturers to increasingly incorporate new technology into their product or service. In the case of products as a service and connected assets, it's potentially a mix of mobile (for data collection) and big data and analytics (to make sense of the data and prompt business actions), and cloud (to simplify access to the information), and social for collaboration during the process.
"Product as a service" depends upon investments in the Internet of Things, in automating and instrumenting manufactured products, building on the ubiquitous availability of wireless communications, mobile devices, and sensors. This type of a solution requires many IT vendors to change the way they've worked with manufacturers and partners and to identify new partners.
We see this as an ecosystem that includes manufacturers, telecommunication companies like AT&T and Verizon and Vodafone, specialty vendors like Axeda and ThingWorx (recently acquired by PTC), IT infrastructure vendors that will help manufacturers store, integrate, access, and analyze the data generated by instrumenting assets and equipment, and in some cases, service providers to pull it all together or customize it to a specific use case.
We've done some work recently to map out just where manufacturers are going with the data that they can now collect aftersales, and not just where, but also when. If you listened to one of our predictions presentations back in December, you heard us say that 70% of capital and information intensive businesses will make major investments in Internet of Things technology before 2017.
Our analyst Sheila Brennan, who leads our after sales service strategies in IDC Manufacturing Insights, has laid out three core manufacturing aftersales service initiatives that will occur over the next five years (shown in the figure).
- Field service excellence and mobility
- Connected service platforms
- Servitization optimization
Each requires a mash up of new technologies, in combination with new application investments, new infrastructure investments, and existing IT investments.
Although servitization optimization is going to take a few years for most manufacturers to develop, manufacturers are already making investments in the first two initiatives today and building up to servitization optimization. But optimization takes thoughtful investments in people, processes, and technology. There are going to be barriers, and they include skills, security, and scalability challenges. But we know manufacturers are already making progress, including Caterpillar, Rolls Royce, and FUJIFILM Medical Systems. If you'd like to learn more about the investments manufacturers are making and should make to expand their product portfolios to include more services and higher margin services, you can start by taking a look at some of the research we've published to date, and you can also listen to a recording of our 2014 predictions for this market as well. And of course, more research is on its way.