Most manufacturers' service organizations today are tasked with delivering higher profits and innovative service revenue models. Fortunately, smart technologies, such as sensors and data acquisition systems, along with ubiquitous connectivity and data analytics have become increasingly viable and affordable, providing these companies with new platforms for value creation. However, most companies are not yet equipped to deliver these, nor do they fully appreciate the organizational transformation and investment required to successfully go from a product-centric to a service-centric organization.
IDC defines smart technologies as devices, such as phones, sensors, and chips, that capture, store, process, transmit, and/or present (real time) information (e.g., transactions, trends, and alerts) from equipment, partners, suppliers, customers, etc, to enable better data analysis, for faster, more accurate business decisions or automated action. Smart service is the application of smart technologies to instrument and connect assets and resources in the service life cycle to increase visibility and quality for improved service delivery and customer satisfaction, optimize workforce operations, and create new business models.
While a large majority smart technology applications have been to support outbound supply chain activities, manufacturers are also beginning to leverage these capabilities to support aggressive service goals. Research from our global study shows:
- Over 70% of manufacturers are evaluating, planning, or implementing smart technologies for maintenance and optimization of their own assets and their customers' assets.
- Of the companies that have already invested in smart technologies, notably one quarter invests 25% to 49% of their IT budgets; two-thirds spend under 25%.
- Over the next 12 months, manufacturers plan to leverage smart technologies to generate a larger percentage of after-sales service revenue through content-aware applications and services, such as monitoring equipment for consumables replenishment and location-based services, as well as instrumented platforms for remote diagnostics and condition-based maintenance (CBM) of customers' equipment.
In our study (IDC Global Technology and Industry Research Organization IT Survey), the top reasons 628 manufacturing executives across industries state they are investing in smart technologies are to make faster and better decisions, be more efficient, have visibility to new information, and enhance services and offer solutions for enhanced revenue.
In order to realize gains in service revenue and profitability, modernizing the service supply chain with smart technology will require leveraging corporate IT expertise and initiatives - Big Data/analytics, cloud, mobile and social - and strong executive support. But be warned; Service has long been a neglected organization of manufacturing companies. Many have disparate systems and processes in this area and still fail to harness the valuable touch points that service events provide. Companies must first ensure foundational system and process integration occurs or is part of their roadmap to achieving smart service.
For more data and guidance on this topic, subscribers can click here for the report Modernizing the Service Chain with Smart Technology. As always, we want to hear from our community about your experiences, so please post below.