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Perspectives

From One-Time Sale to a Responsive Relationship: Designing a Product-Service Continuum (Part 2)

2016-08-25


Designed correctly, an IoT-enabled product-service continuum can be the point of entry to the solution-as-a-service economy.

A global fast-food chain comprising 7,000 restaurants with networked kitchen equipment. A packaging company whose products wrap, bundle and package millions of items each week. A medical device company with a worldwide installed base of thousands of complex diagnostic machines. An automotive manufacturer that makes vehicles with more than 10,000 discrete parts – many with sensors that monitor performance and condition.

All of these companies are gearing up for a new future – one based on a digital product transformation. This future will be characterized by connected devices, real-time data streaming, deep analytics designed to improve product life and performance, and the ability to visualize a global cohort of users. 

That’s the opportunity promised by the Internet of Things (IoT), which can help organizations realize a product-service continuum that allows for ongoing conversations with customers that informs design improvements and enables them to monitor, manage, repair and upgrade products remotely, as well as predict the need for maintenance and prevent service calls. The result: a new business model that is dependent on both rich feature sets and service enhancements.

How does such a model apply to manufacturers at a practical level? How would a typical capital equipment supplier – for example, a maker of diesel generators – engineer and architect a meaningful product-service continuum into its business model?

The process begins with defining an ecosystem for the product portfolio, progressing through a series of questions that seek to define, describe and direct how a product-service continuum can be built: 

  • How do your products enter the market – and what are customers’ expectations during the product lifecycle? How do customers interact with the product throughout that lifecycle? 

  • How are products perceived in the world beyond the buyer? By the operator? The end-consumer? 

  • How do spares suppliers and dealers influence the product? What about upstream and downstream products? 

  • Might data from sensors (i.e., on location, weather or other equipment) improve product functionality?

  • What data will your devices provide to the ecosystem? How could this data help improve care and service – and how the device works?

  • How can aggregate data from multiple users inform the customer experience? How can analysis improve product functionality, customer interactions with the product and the quality of users’ lives?

By answering these questions, businesses can develop a newly redesigned and reconfigured product-service continuum.  An example is a device designed for children with early-onset Type 1 diabetes that alerts parents when blood glucose levels dip or spike, and automatically provides remediation. By extending these capabilities to a broader network of wearable sensors, activity monitors, connected physicians and drug manufacturers, the device could create an evolving, optimized model of diabetes care: a true product-service continuum.

Figure 1

The future of the value equation will be defined by a move from reactive to preventive, and then from preventive to predictive, and from predictive to responsive. By coupling sensors and data capture to connectivity and cloud-based analytics, manufacturers can benefit from a multi-faceted view that enables deeper control of the product. 

Beyond Sales, to Business Partnerships

The product-service continuum will enable product-based companies across industries to evolve from manufacturers of items to be sold, to architecting and curating favorable customer experiences. Products are no longer disconnected, isolated pieces of hardware but come attended with a services catalog. The buyer-seller relationship, then, will evolve into a partnership enabled by connected products and quality data. Products become services, and a sale becomes a relationship. Customer experience becomes a deep, long-lasting bond between provider and consumer. 

Manufacturers and producers of goods and services can use smart, connected products and strategies to operate their businesses differently – and enter the “solution-as-a-service” economy. 

For more insights, please read Transcending the Hype: A Transformative IoT Emerges and From Strategy to Action: Driving IoT to Scale or visit the IoT section of our website. 

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From One-Time Sale to a Responsive Relationship: Designing a Product-Service Continuum (Part 2 of 2)