Is service the new cash cow?
We live in a world of ‘service as a something’. At the moment, it’s the turn of the service department to get automated, connected end-to-end, and energised with its analytics. (Music to my ears as I run Sony’s Professional Services operation across Europe). Traditionally, manufacturer service departments have been the Cinderella of most large organisations. They’re usually one of the last parts of the business to get modernised, or can be viewed as an afterthought by different parts of the organisation. In fact, you could argue that that service as a line of business is even a bit late to the whole “as-a-service” bandwagon.
And you’d be right. But unlike other lines of business that are already benefitting from this model, service is itself becoming a rich new revenue stream, and even an entire new business model for manufacturers. Instead of selling a piece of industrial equipment to a buyer, manufacturers might loan it and then charge for repairs, monitoring or maintenance. (Simply making something and selling it is now seen as positively old-fashioned...).
At Sony, we are seeing increasing customer demand for managed services, particularly with our broadcast customers who want managed service contracts rather than break-fix repair service. I’m sure it’s the same for many other types of manufacturers. If you then throw IoT into the mix in the longer term, this will take things a step further with sensors and devices connected to the internet to maintain communication among users, manufacturers, products and service providers for pro-active maintenance before something breaks.
Product as a service is a win-win for customers and manufacturers alike in my view. Customers get the assurance of first class service, the expertise to maintain it, and avoid a large upfront capital expenditure, while manufacturers get a recurring revenue stream, and visibility into any product ‘hot spots’ before they happen. (For example, we support more than 6,200 different products over multi-year service commitments with thousands of customers. As you can imagine, this type of visibility is extremely valuable).
With most companies struggling to grow new equipment sales on a global scale, savvy business leaders are finding their service departments can be much more profitable than ever before. This is one of the reasons – the servitsation of companies as a new revenue model – that’s making CEOs look at their service departments in a whole new light with a service income mindset.
My personal opinion is that service is actually the product. Over time, I think we’ll begin to see a much more widespread understanding and appreciation of this fact. But it will take time. There’s been a prevailing business model been based on putting a lot of effort into just optimising profits from sales. Everything after that, including service, has been about minimising costs.
The shift now is towards an outcomes-based business model, with service providers committing to providing predetermined service levels and prices aligned with customer requirements. This involves longer-term thinking and defining outcomes and relationships: You can see this in more and more industries as people begin to explore how they can move to outcomes-based models. The market has started to question the idea that perhaps the old ways aren’t necessarily the best option anymore.
Of course, for this to happen there must be certain components in place. You need to understand the people, the processes and the terms of the outcomes. And you’ve got to have a system that can accommodate that. At Sony, we are using ServiceMax as our field service management platform for 24 countries across Europe. It supports our move to an outcomes-based model of recurring revenue, (not to mention business benefits of more than €1 million to Sony and its customers through early detection of potential hot spots in product service requirements, increasing speed of resolution, and streamlining our end-to-end service processes). It also means our technicians can have a 360 degree end-to-end view of customer relationships, including insight into products, contract management, past history, as well as fostering better customer interaction and standardising processes.
For manufacturers, this is a longer term view, but it is happening now all around us. As the business landscape has changed, so too have customer requirements. It’s time manufacturers take a fresh look at what service strategy best fits their organisation and customer needs.
By way of example, we are now selling business solutions to a much wider range of customers than ever before, such as corporate education, healthcare for remote 3D surgery, and digital cinema. In many cases, the engineering skills required to maintain some products are simply not available at the customer end. We are now expected to deliver this expertise and do so with a much more customer-centric approach than simply providing equipment. I’m sure it’s the same for other manufacturers.
I’d encourage you to look at your service department and its full potential with fresh eyes. By all means, equip sales teams with the latest Sony tablets, iPads and gadgets to empower them further. But remove the blinkers and limited role definition of your service team or you’ll not only be under serving customers, but also leaving money on the table.
John Cooper is General Manager, Service & Support, Sony Professional Solutions Europe.
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Siemens: Providing the First Industrial 5G Router
Across a number of industry sectors, there’s a growing need for both local wireless connectivity and remote access to machines and plants. In both of these cases, communication is, more often than not, over a long distance. Public wireless data networks can be used to enable this connectivity, both nationally and internationally, which makes the new 5G network mainframe an absolutely vital element of remote access and remote servicing solutions as we move into the interconnected age.
Siemens Enables 5G IIoT
The eagerly awaited Scalance MUM856-1, Siemens’ very first industrial 5G router, is officially available to organisations. The device has the ability to connect all local industrial applications to the public 5G, 4G (LTE), and 3G (UMTS) mobile wireless networks ─ allowing companies to embrace the long-awaited Industrial Internet of Things (IIoT).
The router can be used to remotely monitor and service plants, machines, as well as control elements and other industrial devices via a public 5G network ─ flexibly and with high data rates. Something that has been in incredibly high demand after being teased by the leading network providers for years.
Scalance MUM856-1 at a Glance
- Scalance MUM856-1 connects local industrial applications to public 5G, 4G, and 3G mobile wireless networks
- The router supports future-oriented applications such as remote access via public 5G networks or the connection of mobile devices such as automated guided vehicles in industry
- A robust version in IP65 housing for use outside the control cabinet
- Prototypes of Siemens 5G infrastructure for private networks already in use at several sites
“To ensure the powerful connection of Ethernet-based subnetworks and automation devices, the Scalance MUM856-1 supports Release 15 of the 5G standard. The device offers high bandwidths of up to 1000 Mbps for the downlink and up to 500 Mbps for the uplink – providing high data rates for data-intensive applications such as the remote implementation of firmware updates. Thanks to IPv6 support, the devices can also be implemented in modern communication networks.
Various security functions are included to monitor data traffic and protect against unauthorised access: for example, an integrated firewall and authentication of communication devices and encryption of data transmission via VPN. If there is no available 5G network, the device switches automatically to 4G or 3G networks. The first release version of the router has an EU radio license; other versions with different licenses are in preparation. With the Sinema Remote Connect management platform for VPN connections, users can access remote plants or machines easily and securely – even if they are integrated in other networks. The software also offers easy management and autoconfiguration of the devices,” Siemens said.
Preparing for a 5G-oriented Future
Siemens has announced that the new router can also be integrated into private 5G networks. This means that the Scalance MUM856-1 is, essentially, future-proofed when it comes to 5G adaptability; it supports future-oriented applications, including ‘mobile robots in manufacturing, autonomous vehicles in logistics or augmented reality applications for service technicians.’
And, for use on sites where conditions are a little harsher, Siemens has given the router robust IP65 housing ─ it’s “dust tight”, waterproof, and immersion-proofed.
The first release version of the router has an EU radio license; other versions with different licenses are in preparation. “With the Sinema Remote Connect management platform for VPN connections, users can access remote plants or machines easily and securely – even if they are integrated in other networks. The software also offers easy management and auto-configuration of the devices,” Siemens added.