Nowadays the lifespan of the top companies on the index is approximately 20 years. Mr. Cox notes that the main reason behind is based on“a lot of mergers and acquisitions and companies getting displaced in the marketplace, which is very much driven by the adoption of new digital technologies such as automation“.
The driving force of changes was also in the center of the research conducted by the IDC. They did a survey of manufacturing companies that were looking to change their business model and their go-to-market model. Over 2000 manufacturers, about 30 percent of them, said that they were looking to start offering the products as services.
“These are not just the products that they’ve traditionally offered, the capital asset, but also to offer complimentary or even in some cases replacement services alongside the physical product”, adds Mr. Cox.
Moreover, a Capgemini survey from 2018 found that 50 percent of products that are going to be brought into the marketplace in the future will actually have connection capability within them.
“These days connectivity is pretty much ubiquitous. We’re getting into the world of 5G now and this is driving new capabilities that are being designed and manufactured into the products before they’re brought into the market”.
Nearly three-quarters of the managers surveyed said that they were looking to make some fundamental shift as a strategy – over half of them were looking to continue to sell their products but complemented with additional services to their customers’ services.
This can allow the customers to get connected better and understand the use of their products throughout the lifecycle to optimize things like uptime availability and reliability. More radically 18 percent of those surveyed were looking to shift entirely to a service-based business model.
“There’s not a lot of data sharing that’s passed back from the service lifecycle into the engineering or manufacturing domain and there’s not a lot of understanding from the customer’s use of the product being passed back to the OEM”. Therefore, the through-life operation of assets and equipment in service is still often disconnected.
This is where IIoT and new digital transformation solutions step in: “By having the connectivity and digital data being passed right through the lifecycle we’re able to get a better understanding of the performance of the assets or the availability of the way in which the product is being serviced and maintained”, the presenter concludes.
Cutting cost is still important but service and maintenance can be a major contributor to revenue growth and profits when powered by technology in the right way.
The value chain is changing