For Organizations that Manufacture, Manage, and Service Critical Assets, Unifying Business Functions Through a Common Digital Thread Can Enable New Revenue Streams and Elevated Customer Experiences
As organizations move forward with digital transformation initiatives, migrating to an asset-centric model can deliver greater value in terms of customer experience and increased revenue streams, according to new research conducted by Harvard Business Review Analytic Services in association with ServiceMax, a leader in asset-centric field service management software. Organizations that are leading in digital transformation are seizing the opportunity to establish asset-centricity as a core organizing principle of their initiatives. This approach enables the entire organization to collaborate, leading to increased benefits across the lifecycle of assets, like industrial equipment, parts, devices, or instruments.
The global study, Refining Digital Transformation through Asset Centricity, was developed through interviews with subject matter experts, business leaders, and academics. Researchers explored the market factors and customer expectations driving digital transformation across organizations with equipment and assets, as well the definition of an asset-centric, life-cycle approach enabled by service. The study also explains why service is the best place to enable asset-centricity and outlines the experiences and best practices of leading service firms and industry experts in optimizing their transformations.
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“In addition to reinforcing the importance of an asset-centric approach to digitization, the research also highlights where many initiatives fall short,” said Neil Barua, Chief Executive Officer at ServiceMax. “Organizations that start digitization efforts with their current business models in mind, can perpetuate silos already built into their operations, which hamper innovation. As outlined in the report, taking a more collaborative, end-to-end approach can help organizations innovate faster, better meet customers’ increased appetites for outcome-based models, and even meet evolving sustainability requirements.”
The report highlights four key areas organizations should focus on to ensure the efficacy and long-term impact of their asset-centric digital transformation efforts:
- Understanding the Asset-centric Approach
- Evolving Roles to Support an Asset-centric Organization
- Advancing Service Organizations to Adopt Asset-centric Practices
- Executing Change Management
One organization already seeing results from an asset-centric approach is Schneider Electric, a global specialist in energy management and automation based in Rueil-Malmaison, France. Schneider began its business transformation in service 10 years ago. The company started by launching a major initiative to capture data about the installed base: the type of product, condition, voltage, service history, warranty status and other information about the asset and the customer. Using this data, Schneider was able to quickly move beyond initial benefits to the service organization, such as improving first-time fix rates, to generating revenue by extending a warranty or proposing an upgrade or new service line. Additionally, Schneider found that asset data is fueling progress toward the company’s sustainability goals.
Servitization is another outcome that often stems from transformation initiatives, whereby organizations evolve from offering products alone to adding as-a-service offerings, like equipment, products, or machines-as-a-service. The concept is that products are becoming commoditized, and the future lies in innovating with services wrapped around products, particularly advanced services.
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At the core, advanced services help organizations understand customer value, specifically attached to the assets those customers use. Leveraging insights derived from these assets to shape customer experiences and outcomes enables an organization to develop longer-term relationships with their customers. The deeper the understanding of a particular customer and its unique use cases, goals, and metrics, the more precisely the entire organization can tailor the value proposition, from the products they design, to the deals they structure, to the type of service model that works best for them.
“Organizations that manufacture and service assets often view digital transformation as an initiative to help satisfy evolving customer expectations and foster new revenue streams. But to truly be effective, digitization must be part of a larger reorientation of business models like adding services, improving product development cycles, or driving greater sustainability, wrapped around those assets,” said Alex Clemente, Managing Director of Analytic Services. “Moving the organization toward an asset-centric model is how they can successfully deliver these new offerings. Service teams are a great place to start, because of their experience with the transition and their frontline role with both the asset and the customer.”