Traditionally Industrial and Consumer equipment manufacturers have built and sold high quality equipment worldwide, managed services under Annual Maintenance or Service contracts. Customer’s bought equipment, used them and in case of a breakdown or performance degradation, requested for services within or outside service contracts. This traditional business model is now changing and evolving into a service oriented rental equipment model or PaaS (Product as a Service) model.
The PaaS business model is performance oriented with payments linked to equipment uptime and performance. In order to support this change in the operational model, OEM’s need to move from a transactional relationship with customers to a much more strategic relationship where they play a major role in their customers success. This shift requires OEMs to accept and adopt new operating paradigms to support outcome-based pricing models. This includes:
- Build the ability to collect data in real-time from their equipment to monitor health and performance.
- Making their equipment self-aware and smart in order to generate service work orders automatically without the need for manual intervention whenever the equipment malfunctions.
- Digitize service operations in order reduce response times, bring in operational efficiencies and reduce cost.
- Use data driven models to predict equipment failure and increase equipment uptime and utilization.
The shift from traditional business models to service oriented models combined with increased automation of business services will require OEMs to invest significantly in upgrading man-power skills and in IT systems and infrastructure.
OEMs across verticals – Energy, Smart Lighting, Consumer products, Industrial/Plant equipment etc. are already building and executing plans to make their products smart. We have come across several use cases have been successfully implemented.
- Lighting as a service – Smart Cities
- Pay per part – Manufacturing equipment
- Water & Air as a service – Consumer segment
- Dosa (South Indian delicacy) as a service – Dosa/other food vending machine
Within the next 4-5 years, we feel that those OEMs who don’t connect, monitor, control, upgrade and service their equipment remotely using cloud based remote monitoring platforms, will no longer be able to compete effectively with peers who are implementing or have already implemented their Connected Products Strategy.
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