RTInsights: Why is there interest in moving to proactive services, and why now?
MacDonald: Service and aftermarket are becoming
important aspects of modern manufacturing businesses.
Customers are demanding greater value, and manufacturers
realize that long-term closer customer relationships
are more profitable and sustainable. And if they
are not, at the very least, they are a way of ensuring
customers return to generate consistent revenue.
You have margins on the products that are continually
squeezed. Companies and executives look towards
service as a place to offset margin pressure by delivering
greater value, forging closer customer relationships,
offering opportunities to embed solutions deeper into
those customer operations and provide additional
products and services that are related to their core
The problem for many manufacturers is that much of
the service and aftermarket business has been offloaded
traditionally to third parties, who may not do things
exactly the same way or follow guidelines to a tee.
Going proactive is a way to regain control. It is actually
regaining visibility at the very least, and then some level
of control that allows you to standardize services.
If you take service, which can have margins of 2.5x of
new product sales, and you see many manufacturers
generating 40 to 50% of their overall profit from the
aftermarket, it's easy to see why manufacturers start
with proactive insights and proactive services. That
gives them the ability to listen to equipment and assets
in the field and adapting operational motions to
patterns they discover. A proactive approach also offers
a way to protect profitability of service business. They
can then offer more aggressive SLAs. If they do that,
they're much more likely to win profitable business
and keep it over the longer term.
RTInsights: What are the benefits of using a proactive approach?
MacDonald: I'm going to use an analogy. Let’s take a
step back and think about these physical assets or
smart, connected products. You have telemetry data,
and potentially other data about service from systems.
That’s the equivalent of being able to hear. The question
becomes, what do I listen to? There's a lot of noise, so
how do I pick out and listen to only what’s important?
Without even considering predictive and prescriptive
analytics, think about features and statistical importance
related to performance. It gives you the ability to hear
clearly which notes are in or out of tune amidst the
Of course, you can always hear a scream. But usually, a
scream comes from someone (or something) already in
some sort of crisis, experiencing harm. So, you are
dealing with problems reactively.
There's a benefit of being able to truly listen to the
right things. You can start to identify performance
patterns and behaviors to diagnose what’s happening.
Customers expect seamless operations. They tend to
penalize the manufacturers who they believe, whether
it's right or wrong, caused them unplanned downtime.
Hearing notes that are out of tune will allow you to
address a problem before there’s a scream - from the
equipment or from your customer.
Analytics deliver the diagnostic insights I was talking
about. It can spot deviations from best practices or
how equipment should be operated or used in an
environment. Proactive services based on those
analytics spot problems before they arise.
With a connected product, you get a view into what is
happening in the environment where the asset is operating. Analytics, especially advanced analytics,
allows that data to be processed to identify statistically
relevant anomalies, patterns, and events. That ultimately
provides a more objective lens into what a problem