A new business model is taking root in the industrial manufacturing world as an increasing number of companies transition from being product-based to adding services in their offers. The focus on selling the solutions that products offer rather than just the products is part of a global trend toward a functional or solutions-based economy.
Industries in many sectors are adopting this service mind-set. Industrial equipment and power-generation companies, for example, are using predictive maintenance, breakdown assistance, usage-based billing and spare parts fulfillment to enhance product quality and lifetime. General Electric, for example, uses cloud-based services, analytics and online sensors to report usage and status for its jet engines, helping to predict potential failures. The result is improved uptime and lower cost of ownership.
The growing digitization of manufacturing processes and the interconnectivity of the goods they produce, often referred to as Industry 4.0, is powering this transformation. It is fueled by the explosive growth of connected devices in the Internet of Things (IoT) and artificial intelligence (AI).
Armed with this technology, companies can use data and software in predictive analytics and proactive, AI-powered maintenance to immediately identify issues and maximize product uptime. Instead of only selling a piece of industrial hardware, manufacturers can also sell customers a contract for maintenance and repair services for that specific product. Customers have less downtime because of reduced machine failure and lower repair costs. Manufacturers are able to leverage the data generated by IoT sensors placed within products into revenue generated over the life cycle of a product.