Digital Transformation and Servitization for OEMs

By Ralph Rio

Industry Trends

Field Service and FSM are undergoing digital transformation for proactive services that prevent unplanned downtime and production disruptions.  FSM software suppliers are responding with product extensions or partnerships to enable servitization.

Digital Transformation to Servitization for OEMs

The FSM market for OEMs is in the beginning phases of an upheaval due to digital transformation for servitization.  Today, most original equipment manufacturers (OEM) are in reactive mode.  Their call center gets an urgent, ugly call about an equipment failure, unplanned downtime and lost revenue from a customer. Then the OEM attempts to respond quickly to reduce customer dissatisfaction and the negative impact on their net promoter score.  The alternative is to be proactive with digital transformation using IoT and analytics for predictive maintenance.  The OEM monitors the health of the equipment they provided while operating in the customer’s site.  When a problem is detected, the OEM makes a repair before production is negatively impacted.

Servitization mainly involves the shift from selling a stand-alone piece of equipment to offering solutions that combine the product with services.  The scope of servitization includes designing, building and delivering an integrated product and service offering that provides increased value to the user and more focused on outcomes than just delivering a device.  This can extend to system integrators when they combine projects with post installation support services.

Servitization has a range of approaches.  On one end, an OEM sells the equipment and provides an aftermarket service for monitoring the condition of the equipment at the customer’s location.  On another end of this range, servitization involves charging only based on usage - like charging for cubic feet of compressed air consumed instead of the air compressor. 

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Last Word

Digital transformation has become a disrupting force in many industries – including equipment maintenance.  Critical equipment has become increasing complex with electronics, software and advanced intellectual property (science).  This type of equipment has moved beyond the abilities of an on-site general-purpose technician to support.  It requires a deep understanding of the equipment’s operations that come with training and experience.  Owner/operators should add servitization with remote monitoring and field service to the selection criteria for the purchase of more complex equipment.  Purchase agreements need to go beyond just equipment specifications and include servitization with aftermarket support.

Readers may also be interested in this strategy report which expands on this topic and includes case stories:  Field Service 4.0 Digital Transformation from Reactive to Proactive Services

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