For Manufacturers, IoT is the Key to Launching Product-Service Systems

Research from IDC found 40% of discrete manufacturers will deliver product-service systems this year, in large part, due to the IoT.

Kyle Irby, an advisor with PTC’s IoT Transformation Advisory Practice, isn’t surprised. He’s hosting a session at LiveWorx 2018 on how the IoT is enabling manufacturers to turn their service organizations into revenue drivers.

In lieu of his session, I had the chance to ask him a few questions about why the IoT is such a good facilitator of product-service systems.

There’s always been the opportunity to transform service into a revenue driver, but what is it about the IoT that makes product-service systems easier to implement?

The tricky thing about turning service into a revenue driver is that it can’t just be about efficiently fixing products when they break. You need to rectify issues before customers even know about them. To do that, you need real-time performance data, historical utilization data, predictive analytics, and all these other technologies that weren’t available until the last couple of years.

Back when I was at Sears Home Services, we were trying to figure out how to do IP over electrical lines because we wanted to get data off appliances. We were trying to do this at a time when there was no Wi-Fi, no Bluetooth, no 4G – nothing but copper wires. Still, we understood the value and power of predicting when an appliance was going to break 20 years ago.

Which industries do you believe are in the best position to start using the IoT to develop product-service systems today?

I’d say the best positioned are those that have a legacy of being connected:

  • Medical devices. That industry’s been connected for at least 15 to 20 years. Plus, all those devices are installed in networked locations.
  • High tech is another obvious choice for IoT-driven service. Server manufacturers just need to focus more on pulling performance data from their machines to predict failures.
  • Aviation. Aerospace OEMs have been building sensors into their products for a long time (since 1980, if we’re talking about Boeing), and need to focus on turning that data into information they could use to run service businesses.

Connected service does have technological and fiscal hurdles for some industries. I see a lot of potential in construction and heavy equipment, but the problem with those sectors is that the assets themselves are mobile and geographically dispersed. The cost of getting data from a bauxite mine to a data center is, generally, pretty cost-prohibitive.

What advice would you give to service executives who understand the value of IoT, but have little control or influence over their organizations’ IoT strategies?

Look for IoT capabilities that focus on operational efficiencies, which can increase margins for current operations. There are a few ways they can use the IoT to drive bottom-line results:

  • Use augmented reality and digital information to guide service technicians. This has been proven to increase first-time fix rates, reduce mean time to repair, and lower time-on-task.
  • Allow customers to access your product data. What if you had an app that notified customers of impending issues and sent them graphical instructions on how to solve those problems?
  • Ship parts directly to customers. If you give customers the information they need to fix problems themselves, then provide materials as well.

Again, these are just efficiencies, but they set the foundation for product-service systems. It gets organizations using IoT; building processes and solutions that systematically pull and process data from connected products. So, when the time is right to launch a product-as-a-service model, service executives will be able to use the IoT to facilitate that transformation.

Want a chance to hear insights from Irby and other service experts? Register for LiveWorx below for exclusive access to sessions about connected service, service parts optimization, and augmented reality: