Industry experts speculate that, by the year 2020, more than 50 billion connected devices will make up the emerging technology explosion known as the Internet of Things (IoT) While much emphasis has been placed on the impact of these connected devices, an associated issue that’s not getting much attention is the expected rise in the need for services attached to those devices, including maintenance, warranties, and support services.
Gartner recently predicted that by 2020, more than 80 percent of the IoT supplier revenue will be derived from services. Beyond preventative maintenance, these services may revolve around providing added value to the customer to further simplify everyday tasks, monitoring consumption rates, infusing new layers of intelligence into processes to enhance their capabilities, or delivering tutorials or education to advance adoption and use. In short, they will be built around driving growth with existing customers through the delivery of services.
For example, consider the automotive industry and the advent of built-in GPS devices, which have presented new service revenue opportunities to auto dealers. The data in these devices is often good for only one year: maps need to be updated, corrected, or adjusted. Whether the driver needs to physically take the car in for the upgrade or have it performed virtually, the opportunity exists for the dealer not only to sell another year’s worth of service, but also to leverage data and analytics to gain insight into how to optimize the cross-selling and up-selling of other products and services. In the end, these additional touch points also will serve to build stronger brand loyalty.
For device manufacturers, the eventual solution the coming services imperative will not necessarily be an expansion of workforce but rather more investment in automation and new service delivery models, better ways of using data and analytics, and innovations in sales force efficiency. Take the emergence of cloud platforms as an example. This market shift has led to IT staff reductions as processes for onboarding, servicing, and managing users have become streamlined. IoT will take this model one step further, turning traditional business processes into service-based initiatives complete with service level agreements – similar to the cloud model – thereby freeing up internal resources and empowering businesses to rely upon more efficient practices such as asset sharing, collaborative consumption, and more.
We are not just talking about sensors and widgets when it comes to IoT. We’re talking about a full spectrum of devices as well as associated services that extend across connected cars, factory lighting, HVAC equipment, medical devices, household appliances, home security, and more. Manufacturers will have the opportunity to add value across the full lifecycle of these products and beyond, with services that help customers keep their investments operating better, faster, and more cost effectively as new advancements are introduced. Together with their dealers and resellers, they’ll be able not only to monitor the new wave of IoT devices, but also to monetize them.
As connected devices multiply at an exponential rate, scalability of services and resources in support of those devices will be essential. Here are three ways the technology industry can align service initiatives accordingly.
1. Extreme Automation. Keeping up with services, warranties, and renewals always has been a challenge, both for manufacturers and for IT leaders. And as the number of serviceable devices grows, age-old service-management challenges become even more problematic due to stretched resources and the ability (or inability) to cope with volume. This will create the need for the entire technology ecosystem to eliminate time-consuming processes associated with service delivery and turn to extreme automation. For example, with the potential for thousands of services for a single customer to expire in any given month, automating the process of sending out service expiration and renewal notifications – complete with the option to renew now with a single click – is quickly becoming essential.
Just as cloud services have enabled businesses to scale like never before, automation also is a growing part of the shift that is already taking place in the market, and it is allowing manufacturers to optimize and standardize best practices across service sales, customer support, technology, and analytics.
2. Customer Data Is Key. For years, many businesses have been capturing customer data and it’s this under-utilized resource that will fuel the extreme automation engines of tomorrow. Capturing, cleansing, and enriching this data to better manage and track the lifecycles of connected devices will become more important than ever in the years ahead. Knowing which products were sold to which customers – and when – will be critical for staying on top of services, and only those manufacturers that can keep pace from a data standpoint will succeed.
3. Business Intelligence on Steroids. If the data is the fuel, then business intelligence tools are the gears that will set the required automation engine in motion. New technology solutions will be required to transform customer data into actionable intelligence to generate recommendations about what course of action is most likely to produce the most beneficial result for a business and for customer satisfaction. This concept, prescriptive analytics, when put in place will enable device manufacturers to predict a customer’s next actions and transform that foresight into service purchase incentives or personalized communications that match the individual’s behavior and predicted needs. Pairing this kind of intelligent insight with automation will be an industry game-changer.
As a result of the IoT movement, the wave of new connected devices headed our way is going to be massive. But equally huge is the potential for a services transformation. Manufacturers will have to manage the lifecycles of their products and services to optimize the customer experience. The question is, which supply-side companies will invest now in their services businesses with the IoT in mind? And which end-user organizations will have the foresight to recognize that protecting their connected devices over the long haul with services will be essential as IoT takes hold?
Scott Herron is CEO and co-founder of MaintenanceNet, Inc., a leading provider of service annuity solutions. MaintenanceNet helps the world’s leading manufacturers and their channel partners expand the scope and success of their service sales initiatives.
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