It is hardly news that a firm’s installed base, which holds detailed information of sold equipment running on the customer’s premises and serves as a basis for service provision, is one of its most successful bets for steady revenue streams in the aftermarket. Experts clearly state that industry players with an ambitious bid to drive recurring revenue have “[more than] 80% of their installed base under service contracts.”
The recent economic uncertainty has given new urgency for industry players to convert their installed base into secure revenue. What now adds to this pressure is fixing the lack of data transparency still prevalent in many organizations. Limited access to installed base data is a particularly acute threat as it may put a permanent dent in a firm’s plans to achieve sustainable gains. For many, the ongoing momentum of aftermarket service improvement marks a pivotal step in acknowledging the limitations of non-transparent data and building a sound foundation for revenue growth.
A Transparent View of the Entire Installed Base Holds Great Promise for Industry Players
Every single day, industry players collect a plethora of data about customers, as well as the equipment installed on site, and subsequently use it in aftermarket service and sales operations. Gathering standardized equipment data is a vital effort in properly servicing customer requirements. But it won’t be enough to drive consistent revenue growth. A firm’s commitment to data transparency is what truly shapes its revenue potential in the aftermarket.
Data transparency is the primary attribute lying behind an installed base that actively drives faster and durable aftermarket growth. Firms make progressive attempts in narrowing the data transparency gap after becoming more familiar with the promise held by this move. Assuring a transparent view of installed base data plays a particularly indispensable role in:
- Identifying customer service needs
- Anticipating maintenance requirements
- Improving service delivery
- Reducing warranty leakages
- Driving repeat sales
What matters most is coming to accept that installed base information should not be exclusively owned by the service or sales department; data is used to its full potential when everyone authorized within the firm has timely and easy access to it. Firms are, therefore, largely encouraged to set up a single source of data-based truth. Not only would this shift give industry players complete and reliable access to the installed base repository, but it would also stimulate knowledge sharing and proactively assist firms in making well-informed decisions.
Many are likely to be mired in ineffectiveness without transparency surrounding their continuously growing installed base. Firms may rarely find common ground on which approaches are more appropriate for selling and servicing in the aftermarket if transparency is not maintained—thereby increasing the odds of poorly planned and executed practices commonly reflected in dwindling revenues.
Obsolete Machinery Flips Gains Upside Down, But There Is Growing Intent to End the Use of Inefficient and Uneconomical Equipment
Old generation machinery has been rendered obsolete by technological change, yet several practices used in handling redundant equipment remain mostly inadequate in industrial settings. Some delay the removal of phased-out equipment—putting themselves in a prone position to experience unexpected system outages, increased costs, and steep security worries. Others using obsolete equipment put off a system upgrade under the claim that their machinery still operates satisfactorily, whereas most let redundant systems sit idle for months on end.
More providers offer to service inefficiencies or replace obsolete parts, but concerns linger. A study finds many of those who intend to service in the aftermarket struggle in their efforts to profitably assist customers as they also grapple with obsolete software.
Those who plan on changing this reality may put a few concerns to rest as they viably and responsibly choose to:
— Retrofit Outdated Systems
A machine retrofit facilitates the continued use of existing equipment as it aims to update the system’s functionality with improved features and capabilities.
Jumping headlong into the decision to replace all machinery with the latest digitally-enabled tools is hardly ever a feasible commitment. A digital retrofit is a less cost-intensive alternative to outrightly benefit from the characteristics of smart machinery without a new and potentially expensive acquisition.
— Sell Unwanted Equipment
A piece of equipment may be doomed to be disposed of on the grounds of redundancy as soon as it becomes ineffective in addressing a firm’s demands. But there is plenty of financial value left in used equipment.
Old machinery is reusable. Industry players may choose to sell unwanted equipment at a fair price to those who can still make use of it.
— Replace and Dispose of Obsolete Systems
A time will come when firms have to replace and dispose of irreparable equipment. Finding ways to discard old machinery responsibly, such as sending it to a recycling center, is fundamental to avoid harmful waste disposal.
Firms may also consider donating obsolete equipment that is in a stable working condition.
Irrespective of the method selected, handling end-of-life machinery becomes difficult without careful planning and regular obsolescence audits. Experts have lately been signaling that an in-depth audit of the installed base is an essential part of any proactive obsolescence management plan. The purpose is to identify redundant equipment while systematically planning for substitutes without disruption to existing systems or operations.
It Is Possible to Stabilize Gains in a Pressured Environment
Firms keeping afloat in the present climate weren’t necessarily immune to dwindling financial results, but they persisted in their efforts to achieve steady growth.
Sustainable growth is a moving target—meaning industry-leading players have to shift priorities as market demands repeatedly change and maintain a balanced view of growth.
Any firm can be constrained by limited data transparency into a progressively larger installed base or even wrestle with handling obsolete machinery. But a balanced approach, grounded in a common understanding of how vital data transparency is in stabilizing gains, leads industry players to more steady revenue streams. Getting into the habit of regularly auditing machinery also provides a chance at curbing issues of obsolescence management.