Service As a Product: Evolving Business Models of Industrial Manufacturers & Consumer Product Companies
Generally, large Industrial Equipment Manufacturers have complex products and long equipment service lives. Their current business model can be summed up in two parts a) one-time selling cost of the original equipment (OE) b) service revenue which is typically 3 - 5 times the OE selling price
Most equipment is serviced on a Time and Material basis, creating unpredictable costs for the end customers. Risk is transferred mostly to the end customers.
Futuristic Business Models Due to IoT, Big Data, Cloud, AI and Mobile
With the advent of modern platforms that can process and store enormous amounts of data in real-time and never purge any data like past relational data stores, companies can now monitor & service the critical equipment globally. They can leverage Modern Intelligent Field Service Algorithms and Asset Cloud Applications which can sense anomalies and create work orders automatically in real-time. The right spare parts are scheduled automatically with no human intervention. Field service scheduling will be coordinated alongside drone delivering critical spare parts. This would be from the nearest warehouse, at the right time and right place. These applications will be learning continuously, with every digital interaction becoming smarter and smarter.
Radically New Business Models Emerging
Industrial Manufacturers will start to offer real-time monitoring services, new guarantees and warranty models all with upfront predictable fixed price for the life cycle of equipment. This will drive predictable costs for the end customers, which in turn will become key differentiators in the sales cycle.
Manufacturers who are smart enough to rapidly modernize underlying decades-old systems to these new connected real-time predictive systems will be able to feed close to real-time learning into their product design with reliability improvements at an unprecedented speed. Their services revenue will become highly predictable with greater profit margins and at the same time transferring the risk from the customer. All products will eventually become a commodity, however service coupled with customer experience will be the key future differentiator.
Consumer Products World Will Change as Well
When you need a refrigerator you will not be going to Home Depot or Lowes. Instead, you put on your Oculus VR or Google VR and interact with all models. You will take a picture of your space, the exact depth and size for a perfect fit detected automatically. When you place the order, you will be given a monthly subscription by Samsung, LG, GE, Whirlpool directly which will include guaranteed up-time, monitoring and all spares covered for product lifetime. This will facilitate direct relationships with the end customers, which consumer product companies are lacking today.
I forgot to add that your refrigerator order will be dispatched via a Self Driving Uberized Truck and if you ordered a toaster, it will be drone delivering at your doorstep. Your delivery time will be exact to about 5 minutes with no more 6 hour horrible windows.
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