The Role of Strategic Services Innovation for Machine Builders

Machine builders and equipment manufacturers need to address the true potential of connectivity and information-driven service innovation. By integrating service and support automation directly into the fabric of machine solutions, new asset management platform technologies can help OEM’s leverage the continuously evolving relationship between connected machines, smart services and customer value creation. 

It’s conventional wisdom to say that machine builders and equipment OEM’s should embrace services as a means to generate growth and sustain value. Many have been trying in spite of the fact that culturally services is still an “orphan” at the table of leadership in many machine builders.

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The new world driven by networked services is one in which every connected machine turns manufacturers, and in many cases others along the value chain, into a new kind of “smart service” business. It bends the traditional linear value chain into a “feedback loop” through which the rich data-driven insights will continually flow back through the complex business alliances that create, distribute, and service those machines. Unfortunately, while most “product-centric” businesses are now embracing the concept of growth-creating services, many are not developing new business models and not investing in new digital technologies to realize the true strategic potential and value. These businesses are thinking services, but they’re not thinking “smart services.”  

 Moving Beyond Simple After Market Services

Products and services, while complementary, have historically had opposite strategic goals and divergent operational models. As a result, each business type has had to seek out its own distinct strategies. The traditional machine builder and equipment manufacturing business typically defined services and after sale support as subservient to the product, as no more than a “bootstrap” business with little upfront investment. This model needs to disappear – fast!. 

The ability to closely couple machines and equipment and a wide variety of new digital support services has emerged as a requirement to stay ahead. The two thrusts need to be mutually supportive without inhibiting one or the other. However, trying to coordinate and leverage the respective roles of products versus services often creates contention. Many leading manufacturing organizations have come to understand that each have distinctive strategies, operating modes and organizational requirements, and most importantly, that services cannot rely on products to be its “role model.”  

The best companies have come to see the continuously evolving relationship between products and services as a fertile ground for innovation. The two need to be interwoven and mutually supportive, and increasingly, success in either goes to the company that effectively utilizes the combined potential of both, but only when services has been designed for its own unique destiny.  

As products evolve, so do the attributes of the services required to support the product. Each impacts the other in an ever changing set of relationships. The salient characteristics of each model are often very fluid in nature. Understanding this critical evolving relationship is the key to effective and profitable service delivery. 

Service business design requires organizations to address several critical aspects of their business, including:

• The overall strategic role of services;
• The uniqueness of the business model and the delivery schema; and,
• The required organization structure and skills requirements.

Machine builders and OEM's need to develop forward-looking strategies that fully leverage embedded intelligence and computing capabilities integrated into their assets. As obvious as this path may seem, many are overlooking the most important aspects of innovative service models. Those players that are first to embrace the strategic value of information driven services will create "moats" wide enough to set competitors back for years. This process ultimately requires leaders who are willing to embrace a new vision of after market services where the intersection of data value, services innovation and ecosystems defines a completely new breed of players.

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