It’s a great time to be in Manufacturing
A lot is going on in the manufacturing sectors.
On the one hand, many manufacturers experience pressure on growth, revenue and margins. Their products and services are being commoditised. Competition from lower cost alternatives are arising. On the other hand, there are huge opportunities with new technologies, value propositions and business models.
One of the important trends is that value proposition and offerings become more data-driven and more service oriented. Services are becoming more pro-active, predictive and performance-based. Advanced services are extending beyond maintenance and availability of the equipment and towards customers’ overall value creation process. Potentially the products will even be offered as a service in the near future.
The Challenges in Manufacturing
However, many manufacturers are product-driven businesses which do not fully appreciate the value
service has for their customers and own business.
One scenario: In the continuous battle to win the (products and/or consumables) business of clients and to justify higher prices, many manufacturers have been adding a lot of services free of charge. For example, pre-sales consultancy, application support, extended warranty, discounted maintenance contracts, training of the users.
As a result, the overall costs to sell products have been increasing, while the prices and market-share may have been declining. This is not a sustainable approach any more.
Another scenario: Due to new (data) technology and customer expectations, business models and core business will shift. Manufacturers will develop and grow service and data capabilities with new, expanding teams. Cost-level and structure will change.
Without additional revenue-streams it will become impossible to continue this shift.
Central question: How to monetise Services and IoT
So, one of the central questions is: How to Monetise Services and IoT in order to Grow in a Disruptive World? The capability to monetising service and IoT is mission-critical for sustainable performance and existence of manufacturing:
We hear and read many aspects and strategies around monetising services and IoT. In our experience, we have seen 3 critical steps which make the difference between success and failure:
These aspects are critical to get other aspects, like sales and business models will follow. We will further discuss these three steps in following articles.
Manufacturers which are better in solving bigger customer problems, better articulating the value for customers and staff and have higher momentum for change and monetisation see that they generate more new revenue streams and differentiate more – in the eyes of their customers - from their competitors. They perform better and have more resources to keep innovating their business and hence grow in our disruptive world.
Give monetisation of services and IoT an Impulse
If you want to accelerate the monetisation of your (new) services and IoT, join our upcoming Impulse Sessions on “How to Monetise Service and IoT”. These are full day interactive meetings with like-minded peers, during which we will exchange experience, insights and challenges.
Great offerings and solutions won’t sell themselves.
It’s the various colleagues together that drive the value perception and sell the solutions, because they are eager and passionate to perform, learn, develop and make new things happen. Without encountering unnecessary obstacles which reduce confidence and maintain internal conflicts of interest.