A Connected Service is a service offered to the customer of a connected product, made possible, or enhanced, by the data that such product generates.
The key: harnessing data
The basic principle behind a connected service is to harness the data generated by the connected product to expand the value proposition for the customer while at the same time keeping under control or reducing the costs and risks involved in the provision of the service.
Several elements can make up the value proposition of a connected service offering. Some are purely digital, others are mixed elements, where a “traditional” service component is made richer, more effective or more efficient by the digital component.
Digital Services vs Digitally-enabled Services
Thus we distinguish:
Digital services: services delivered only through a digital (IoT-enabled) system (typically a DPS system integrated in your Customer Portal) and a digital interface → in this case you sell the digital system → the value of the service is entirely generated by the digital system
Digitally-enabled services: “traditional” services that are enhanced by the use of digital (IoT-enabled) technologies → in this case you use the digital system (typically a DPS system integrated in your Digital Control Room) to make your service richer, more effective or more efficient → the value of the service is the sum of the value generated by the digital system and your activities
We can further divide Digitally-enabled services into 3 areas:
smart spare parts and consumables supply
connected and smart after-sales services (eg support, warranty service, maintenance contracts)
advanced services (such as outcome-based contracts and Equipment-as-a-Service)
Elements making up a Connected Services offering
Elements making up a Connected Services offering: Digital services and Digitally-enabled services
Digital Services
Base digital services
At a first level we find base digital services, which typically include remote monitoring, visualization of near real-time status and data in dashboards, remote control, alert notification. These capabilities are made available within a Web portal or a Mobile App.
Base digital services are provided free of charge, together with the sale of the product, as a digital extension of it. In fact, we can equally consider base digital services as digital products.
Offering base digital services for free is often the best way to motivate the customer to connect the product to the internet.
Value-added digital services
At a second level we find value-added digital services, which includes digital capabilities that positively impact the customer’s business, helping them reaching the lifespan, performance, efficiency and quality they expect from the product.
Examples of value-added digital capabilities are: product fleet management, detailed reporting, aided maintenance and troubleshooting, performance / sustainability / quality advisory.
Value-added digital services can be provided free or charge, with the objective to strengthen product sales and customer relations, or sold through a subscription.
Smart Spare Parts & Consumables Supply
The permanent connection with your products is an excellent basis on which to set up a recurring spare parts and consumables supply service.
Data enable you to measure precisely the health or wear status of components, the available level of consumables, and to estimate precisely when replacement is needed.
Connected and Smart After-sales Services
Your after-sales services (support, warranty, maintenance contracts) can be greatly enhanced by data collected from connected products.
We can identify 2 levels.
Reactive Connected After-sales Services
At a first degree, data and information extend and deepen the knowledge of the actual situation in the event of a support request or failure report from a customer.
At this degree, your approach remains reactive: you only act when called upon by a customer.
Proactive Smart After-sales Services
Thanks to a permanent connection, a radical change in approach is possible, which favors the delivery of much greater value to the customer.
The transition from a reactive to a proactive approach. This means permanently monitoring your installed base and intelligently performing maintenance activities so as to significantly reduce the probability of failure.
The results of this renewed approach are an increase in value for the customer and, consequently, the opportunity to increase your revenues from service contracts.
Connected Advanced Services
Connected Outcome-based Contracts
In outcome-based contracts, you take responsibility for guaranteeing the outcomes achieved by the customer by taking over all necessary maintenance activities.
The key here is to reach the optimal balance between acting too infrequently or too late, and thus not guaranteeing the result, and acting too frequently or too early, and thus having a too high cost.
When implementing a “connected” outcome-based contract, you harness the data from connected products to achieve this balance.
Connected Equipment-as-a-Service (EaaS)
In markets that are ready to accept it, and with the appropriate financial support, a permanent connection is the solid base on which you can build an Equipment-as-a-Service (EaaS) offering.
The data from connected products are in fact fundamental to calculate the periodic fee, as well as to help you perform all the maintenance activities you take care of in the offering.
Connected Services and Servitization
Connected services are typically the result of a servitization journey. In fact, although theoretically servitization can also envisage non-connected services, these are significantly more expensive, less scalable and less effective in ensuring a positive business impact for both the customer and the provider.