Oracle Industry Solutions - Manufacturing

The Manufacturer’s Guide to Digital Connected Service
Satisfy new customer demands through servitisation

We live in the age of service

Customer demands, changing buying habits and advances in technology have all conspired to make service both your key point of differentiation, and the most important battleground with your competitors. As a manufacturer, it’s no longer enough to simply deliver a product to a customer – even if it performs exactly to specification. The customer’s ongoing experience has become a core part of the value you offer.

What once represented the end of your interaction with a customer – the delivery of a finished product – is now just the start of a lasting relationship. That relationship will require frequent communication, an understanding of what the customer needs from you moving forward, and very likely, a change in the way that you structure and sell your aftermarket services. In practice, those changes might involve anything from dedicating more resources to aftermarket service and exploring new channels for customer communication, to building entirely new service-focused business models.

What is “servitisation”?
If you’ve not come across the term servitisation before, The Manufacturer describes the concept as:
“When manufacturers adapt their business models to offer their customers services on top of the physical product, thereby creating a holistic solution – in some cases even replacing the physical product.”

Servitisation is a major opportunity for manufacturers

This shift towards greater service is a major opportunity for transformation, innovation and modernisation – helping you to better serve customers for decades to come, while opening up lucrative and long-lasting revenue streams and improving relationships. With the help of new technology, you can transform the way you interact with customers – going beyond better communication and enabling proactive, predictive service delivery, adopting pay-as-you-use monetisation models, and delivering the physical products you produce as subscription-based services. In this digibook we’ll explore what customers expect of manufacturers today, how you can start delivering the kinds of connected and convenient service experiences they demand, and where powerful opportunities lie for monetising those services in new and exciting ways.

Rolls-Royce operates a “power by the hour” service, where rather than paying for the engines the company builds, customers pay for the power those engines deliver. It’s a managed service where all aftermarket field service is included and delivered as required. For customers, it means they get an ongoing relationship with Rolls-Royce, they only pay for what they need, and they only ever need to deal with one company to ensure the continued performance of their engine. For Rolls-Royce, it ensures that all work regarding that engine is always done by them, and that the customer keeps spending with them for years to come.

The concept is simple, and can be applied to just about anything you produce. Instead of selling your product, you sell what your product delivers – enabling you to also provide all of the relevant services required to ensure it delivers the right outcomes. The end result is a much closer partnership with customers that lasts for longer, ensuring repeat business, and enabling you to constantly demonstrate the full value of what you can deliver for them – as long as the quality of service you deliver is high enough.

The remote monitoring and data gathering capabilities granted by the Internet of Things has enabled just about anything to be effectively sold and managed as a service.

The shift to servitisation

To understand exactly why service has become so important to your customers, and where the servitisation opportunity has come from, we need to start by looking back a little bit.

Servitisation in action: Rolls-Royce

A choice of servitisation models

Practically, for manufacturers looking to seise the servitisation opportunity, their transformation could take a number of forms:

Improving core
customer service

By improving the basic service you deliver to all customers, you can turn service quality into an effective point of differentiation that will keep customers coming back for more. For manufacturers, this means getting to grips with new service technology such as intelligent chatbots and service apps. It’s also important to consider exactly who your customers are and what they need from you, as any service investments you make will likely need to serve a mixture of partners, resellers and end users.

Building new packages of aftermarket services

By packaging aftermarket services up in a way that customers can pay for in addition to buying your products outright, you can ensure a more consistent and predictable flow of aftermarket work and revenue. These services rely on remotely gathering data through IoT sensors in the products you produce. By monitoring what you sell remotely, you can offer proactive service packages to your customers – so you can solve their issues before use of the product is interrupted.

Delivering your products as services

By delivering your products as services, including all aftermarket service, using subscription or usage-based pricing models, you can boost revenues while giving customers a more modern and flexible way to acquire what you produce. These services require a significant update in your technology – requiring you to master both the Internet of Things to monitor product usage remotely, and explore new finance models better suited to subscription or usage-based payment.

Whether you want to get ahead of your competitors, or just ensure that you’re effectively serving your customers in the way they want to be served, some form of servitisation needs to be on your agenda. The question you need to ask yourself is how much do you want to transform?
Looking to innovate and get ahead of your competitors?
Servitisation is just one way manufacturers are innovating today to generate competitive advantage. Discover more and find out how you can bring your best ideas to life more effectively in our digibook: Manufacturing in the Digital Age.

Changing the way you monetise what you manufacture

The rise of subscription-based “as-a-service” pricing has largely been a response to customer demand – but the manufacturers that have embraced it are also gaining significant benefits for their own business.

When customers buy into something “as-a-service”, a big part of what they’re paying for is convenience. They’re willing to keep paying for something that gives them peace of mind that they will not only get access to a product or outcome, but that those outcomes will continue to be delivered reliably – and that if anything goes wrong, the burden isn’t on them to correct it. Customers aren’t just buying outcomes – they’re buying the promise that they’ll be able to continue receiving those outcomes without hassle or effort.

This opportunity is entirely powered by data. The Internet of Things – and more specifically, the smart sensors and devices that power it – has enabled manufacturers to monitor product usage and status remotely. It’s that data-driven visibility which has made proactive service delivery and the “product-as-a-service” model possible. However you want to monetise your services, it’s essential that you understand the role of data in this transformation – and the IoT capabilities that your products will require to enable this opportunity. For your business, the servitisation of products adds up to more stable and predictable revenues, greater customer loyalty, and a steadier flow of aftermarket service work. But in terms of the financial benefits you gain, it all depends on exactly how you monetise your new or modified services.

Scenario #1:
Improve communication and collaboration
Scenario #2:
Create packaged, subscription-based aftermarket services
Scenario #3:
Provide everything as a managed service
Scenario #1:
Improve communication and collaboration

The most basic approach to servitisation simply involves improving the ways you communicate with your customers, and ensuring you can deliver service on-demand, through the channels they choose. By investing in capabilities for things such as live chat, social service and dedicated service apps, you can ensure you’re always there to help when customers need it. Those channels will help ensure that if they do have a problem, they come to you first – but they won’t necessarily guarantee you any kind of repeat revenues. Pros: Simple, proven, effective for just about any company producing any kind of product. Cons: There’s nothing new to monetise directly, only the promise of increased service custom.

Mattress manufacturer Casper attracts new customers with entertaining chatbot

Chatbots are a great way of providing strong customer service experiences around the clock – but they also enable new and exciting opportunities to attract customers to your brand. Mattress manufacturer Casper is all about providing customers with a good night’s sleep, so it built a chatbot designed to appeal to people that were unable to get one. The insomnobot 3000 offered those having a restless night the opportunity to chat, and subtly introduced them to Casper’s products. The company also uses a chatbot front and center on its main web page, so when people that engaged with the bot are enticed in, they get a similarly smart experience while browsing products.

Scenario #2:
Create packaged, subscription-based aftermarket services

By bundling together support services and selling them alongside your products, you can give your customers the benefits of a managed service, while still granting them ownership of your core product. They still pay for the physical item itself, but you provide on-demand assistance, and are responsible for ensuring its continued performance. These services can be augmented with the help of new technology – enabling you to remotely monitor your products, deliver service proactively, and anticipate maintenance needs instead of having to react to them. For many manufacturers, this is the best of both worlds – giving customers exactly what they want, without reinventing the wheel when it comes to your own core business model. Pros: Builds strong relationships with customers, offers increased service revenue, improves the predictability of service demand and revenue. Cons: Customers can opt out of support while retaining ownership of the product.

Canon connects customer devices to deliver proactive service.
By embedding IoT sensors into over 1 million customer devices, Canon can monitor performance remotely, and deliver service proactively, before the customer is even aware there’s an issue.
Scenario #3:
Provide everything as a managed service

The most radical transformation option is delivering the products you produce as part of an entirely managed service. Customers pay for what your products deliver either by usage, for a fixed period of time, or through flexible subscriptions. In terms of finance, this represents the biggest change, and is a completely new way of monetising what you make. That shift in monetisation – from outright payment to flexible “as-a-service” delivery – needs to be supported by the right systems, and may require multiple new capabilities for your team to manage. Done right, the “as-a-service” model delivers more consistent and reliable revenues for your business, keeps customers with you for longer, and ultimately, ensures that each and every customer gets exactly what they need from your products, for as long as they use them. Pros: Strong and lasting impact on customer relationships, delivers consistent and predictable revenue, encourages loyalty. Cons: Needs to be supported by the right systems and capabilities.

Philips provides “light as a service” to Amsterdam Schiphol Airport.
By supplying all light fittings and maintaining them under a service contract, Philips retains ownership of the hardware it provides, while delivering exactly what the airport needs as an ongoing service.
Read More
Discover more servitisation models
Find out how more manufacturers are moving to a servitisation model in our digibook: The 4th Industrial Revolution: Plan Your Path to Success.

Supporting your services

So, what does it actually take to seise the servitisation opportunity? And most importantly, what does your business need that it doesn’t have already? Well, that’s going to depend on exactly what you want to achieve, and again, how much you want to transform. Each of the three servitisation and monetisation scenarios we just looked at brings its own technical challenges, and will require unique tools and technology.

Improving customer communications

The first step towards stronger customer service experiences is ensuring that your customers are able to communicate with you wherever and however they choose. Today, that means being available through the channels they’re using – putting yourself where they are. While some customers may still choose to use traditional channels such as the telephone to contact you, many prefer the convenience offered by web chat, support apps, and other modern channels. The contact center solutions you need to deliver that support will depend on the channels you want to start providing service through. However, whatever your mix of channels looks like, the key to delivering consistent service exactly when customers need it is a connected view of that customer. As your customers embark on multichannel service journeys, you need the right platforms in place to ensure that their experiences are both consistent and connected. By building a single customer view and empowering all of your agents with it, customers can receive fast and convenient service through all channels – avoiding annoying things like the need to repeat basic information about their problem. Mastering customer data also enables you to lay the foundation for AI-driven service using tools like chatbots. With speech recognition technology now so advanced, AI-powered bots can deliver answers to your customers incredibly quickly, when backed up by the right customer data and knowledge platform.

Making service proactive

The Internet of Things has ushered in a new era of innovation in manufacturing. The ability to deploy discrete sensors and devices across your manufacturing environment has transformed the way companies monitor operations, and understand and improve their processes.

Discover the digital factory of tomorrow
Find out more about how IoT is transforming manufacturing operations, and discover the rest of the technologies shaping the future of manufacturing, in our digibook: The Digital Future of Manufacturing

The factory floor is far from the only place where IoT can transform what you do. By using sensors in the products you produce, you can monitor and maintain them remotely with unbroken visibility of how they’re performing, and what action needs to be taken to ensure their continued operation. The same sensors can also monitor exactly how and when those products are being used, enabling you to explore “pay-as-you-use” monetisation models for just about any kind of physical product.

With huge numbers of products in use, all gathering and reporting data back in real-time, you also need a way of managing and making sense of all that data. By turning raw data into actionable analytics, you can power proactive maintenance services, and understand which of your customers need your help, before they’ve even got in touch. When sensors detect an issue, they alert you so you can help the customer proactively – but they also do so much more. By putting deep diagnostic data into the hands of the people conducting maintenance tasks, IoT sensors help ensure that jobs get completed faster – boosting the efficiency of field service operations.

Supporting modern monetisation

Internet of Things devices may be the technology that actually enables you to start delivering new proactive service packages – or your products as a service – but if you’re going to change the way you monetise what you offer, you’ll also need the right finance solutions to support that. Whether you’re signing your customers up to fixed-term service agreements, enabling them to pay using flexible subscriptions, or just charging them based on their usage of your product, any new payment model is going to mean significant back office changes.

With an integrated, modern finance platform, you can support all kinds of new payment models, and effectively monetise service in any way you want to. For many manufacturers, this is currently a key missing piece in the puzzle, and without it, they simply can’t start making the most of the servitisation opportunity.

What servitisation success looks like

Executed and managed correctly, servitisation and the improvement of customer experiences will yield significant benefits for your business, your aftermarket service teams and your customers.

Here’s what it looks like when it all comes together.

Customers have a choice of channels through which to engage with your business

Tools like live chat and AI-powered chatbots help everyone get the answers they need, when they need them

A unified view of customer data enables agents and bots to serve people quickly and effectively

Discrete devices monitor product status in real-time and help you deliver support proactively

Field service teams have access to customer and IoT data, so they can deliver the right service, first time, every time

Sensors monitor product usage, enabling customers to only pay for what they use

Data gathered at every point is used to continuously improve service, and the quality of the products you manufacture

Customers build lasting relationships with your company, and your field service teams

Modern finance systems support the monetisation of your services, enabling customers to pay flexibly in a way that works for them

Oracle Can Help

Whichever part of the servitisation and monetisation puzzle you need assistance with, Oracle can help.

Transform service delivery with a connected platform approach

New service delivery and monetisation innovations bring a range of benefits for both your customers and your business – but they also introduce new challenges. If you take a bolt-on approach to data and systems, you simply won’t have the connectivity and integration required to support modern connected services. By adopting a unified platform for all of you manufacturing operations, you can create a strong, scalable foundation for service innovation. Developing a connected manufacturing platform can help you deliver innovative service experiences, stay connected to products being used by customers, deliver a superior customer experience and monetise your products in exciting new ways.

Oracle’s complete digital solution for manufacturing

Oracle delivers a complete cloud-based solution for manufacturing that enables the integration of CX, workforce, finance, supply chain, and data systems and solutions. This tightly-integration suite of solutions enables manufacturers to transform the way they operate at every level – from improving core processes and operations, to driving innovation in service delivery and mastering data to enable new product delivery models.

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