It won’t be long before IoT will become part of our computing fabric. Sensors are being placed on many parts during the manufacturing process so that it’s not just one sensor creating an alert (like M2M) but a network of alerts combined with artificial intelligence predicting a failure. This web of networked sensors may soon saturate how we function not only at home but at work.
“When the incremental cost of smart connected functionality gets built into everything and doesn’t need to be retrofitted, we won’t remember what it was like without it. Almost like asking someone to recall today what it was like to have a car without a radio, a kitchen without a microwave or a computing device without email or messaging,” Chris Kocher, Co-Founder and Managing Director, Grey Heron, 2017 IoT predictions: nothing is new but everything is different
However, there are incremental steps necessary until we reach this state. Field service provides an often overlooked component of many IoT implementations.
However, products are becoming utilities. In many capital-intensive markets such as industrial manufacturing or healthcare, there’s a need for the transformation of service—a disruptive business model to propel them towards a new servitized strategy.
Field service technology may be the underpinning of creating an effective IoT strategy (Could the Glue of IoT be Field Service?). One Gartner analyst suggests that 50% of the value of IoT is asset optimization, and one of the most complex challenges surrounding assets is the difficulty of managing parts.
Parts bounce between customers, sites, and trucks — new parts, recycled parts, used parts. Frequently, these parts are under customer contract for manufacturer warranty or dealer warranty. As anyone who manages a field service business will tell you, in many cases those warranties go unclaimed. This hits the entire supply chain: manufacturer, distributor, vendor, customer, and so on. Every touchpoint is a potential breakdown. Couple this parts situation with the need to generate new services, and we have an opportunity to create an entire business model.
With the advancement of IoT cloud dashboards (eg. AWS, IBM Watson, Microsoft Azure IoT Suite, GE Predix IoT, etc.), and the ability to make sensor-related data actionable, organizations are beginning to view field service as part of the groundwork in recognizing not only the ROI they expect from their IoT platform deployment, but as an ongoing recurring revenue model. They’re asking, once we have this data, how can we best capitalize on it, and how can we increase revenues?
The recent uptick in AI abilities may have an impact in cutting down the number of predictive or proactive service requests with some self-healing mechanisms (most of which are still 5-10 years out) but as products become utilities, all customer touchpoints become magnified and more significant.
The need to wrap products, services, and knowledge – in essence servitization – to create a recurring revenue stream becomes mainly dependent upon two areas:
- an organization’s ability to offer “services” to this supply chain and their customers as an enticement, and
- the supply chain buy-in and its ability to adapt to a simple, consolidated portal access.
This is where integrated field service technology platforms can add significant value. IoT alerts can be refined and fed to a field service system with an entirely separate set of business processes focused on providing the best customer experience.
Today, field service technology and functionality are becoming more available to track and wrap all of the service-related components for customers to invest in “service availability”. Analysts predict these recurring, outcome-based investments will ultimately replace traditional license-for-sale + maintenance and SaaS pricing.
Perhaps 89% of companies now compete on the quality of their service experience¹. Airline engine manufacturers, for example, have been selling uptime for several years. How will other industries selling “uptime” or “availability” fare during the next 10 years? It’s going to be interesting to watch.
¹ Jake Sorofman, Blog: “Gartner Surveys Confirm Customer Experience is the New Battlefield”, Oct. 23, 2014