Imagine the world as your laboratory. Thousands of installations operating in various environmental conditions, feeding back key performance metrics to the product team. What could you do with that data?
You could better understand failure rates. You could more effectively schedule preventive maintenance actions. You could identify the cause of failure prior to dispatching a technician.
Reducing Service Delivery Costs with IoT
In my last post, Smart Products Need Smart Services: The Remote Services Continuum, I shared the TSIA Remote Services Continuum which provides a framework for companies that have implemented or are considering incorporating smart, connected products as part of their product portfolio. This post will go into more detail on the first and, by far, most common step along the continuum: Service Efficiency.
What is Service Efficiency?
The traditional business model for hardware / equipment manufacturers revolves around make, sell, and ship of the product plus some support and maintenance services. When product companies get started down the IoT path, they naturally focus on reducing service delivery costs and improving responsiveness to service incidents, i.e. service efficiency.
Sensor technology seems to be getting better, smaller, and cheaper every day. Aeris published an outstanding infographic that showed how you can use sensor technology to create a digital representation of physical properties associated with your product . . . from across the entire install base.
- Accelerometers can measure acceleration or change in velocity.
- Multi-Axis Accelerometers that measure the change in speed or vibration in more than one direction or dimension.
- Temperature sensors that can be used when a temperature reading is needed for process control.
- Light sensors have a broad range of applications from automated brightness control to medical diagnostics equipment.
- MEMS sensors are Micro-Electro-Mechancial Systems that are primarily used today in accelerometers, gyroscopes, and pressure sensors.
- Simple switch sensors measure whether something is “open” or “closed”.
This rich dataset enables product engineers to monitor critical components to understand usage rates, failure rates, key component performance, and to enable self-diagnostics.
Ultimately, the analysis of the data can be used to reduce the total cost to serve and improve responsiveness to a service incident, while simultaneously increasing customer satisfaction. These benefits make the implementation of smart, connected products a popular initiative for many hardware / equipment manufacturers.
Service Efficiency Success Stories
In my State of Healthcare Technology paper, I called out an outstanding example of how Varian took advantage of the IoT technology built into their hardware and software systems. They established advanced monitoring protocols for 5,000 conditions across their install base that improved service to their customers, while reducing costs by enabling:
- Machine-to-machine communications that identify service incidents.
- Quicker response with Varian’s Digital Experience and Security Center (V-Desc), initiating proactive contact with customers.
- 60% of hardware-related issues resolved remotely without a field service engineer dispatch.
- 85% of software issues resolved remotely.
Other service efficiency benefits realized by hardware / equipment manufacturers include:
Service Delivery Channel Optimization
A TSIA member from the enterprise hardware industry implemented smart, connected products to diagnose and dispatch service requests without human involvement resulting in improved response time, while reducing 90% of traditional hands-on labor costs.
Spare Parts / First Visit Repair Rate / Mean Time to Repair
Leveraging self-diagnostics to optimize spare parts management is another significant benefit. Leveraging a knowledge base of more than 24,000 known situations, another TSIA members was able to generate Automated Service Requests (ASR), including repair instructions, with 99% accuracy. The ability to quickly and accurately identify a failed part improved First Visit Repair Rates and reduced Mean Time to Repair.
Improved Service Entitlement Tracking and Revision Level Upgrades
Product asset information was made available for analysis and verification of issues for another enterprise IT member. This information provided automatic feedback into the knowledge base to improve future product performance. The product asset information was also used for automatic revision level upgrades and downloads.
Effective Preventive Maintenance
During a recent webinar, I shared how Kaeser Compressors has embraced the concepts behind the Remote Services Continuum. They have the ability to connect and monitor their entire install base in real time at a central location. This has enabled great service efficiencies, including: rapid response to incidents and optimized preventive maintenance programs that are conducted on an as-needed basis vs. on a fixed calendar basis.
But Wait, There’s More!
The pursuit of these types of benefits has led to an explosion of connected devices. It is estimated that there are over 10.7 billion objects connected to the internet today, and that number is expected to grow to 50 billion by 2020. One TSIA member experienced a 115% increase in the number of connected systems in one year. As more companies enable their equipment and software to gather data and diagnose problems remotely, customer expectations for improved performance will only grow.
Focusing on service efficiency is a great place for hardware / equipment manufacturers to start, but suppliers are beginning to run into a few problems:
- Although the customer does experience reduced down time / increased uptime, the vast majority of the benefits described above reduce the cost to serve. By allowing access to data generated on their site, customers are looking for more of a benefit to their bottom line, which can inhibit growth in connectivity.
- This limited direct customer benefit has not only made it difficult to gain approval to connect products, but has also made it nearly impossible for suppliers to charge a premium for these smart services. As a result, these service offerings are increasingly included as part of the base offer.
- This narrow focus on the service efficiency step of the Remote Services Continuum has limited the supplier’s return on investment. In an arguably shortsighted decision, some suppliers are questioning the value of smart, connected products and are substituting additional features and functions in new product releases, as outlined in TSIA’s book, Complexity Avalanche.
In my next post, I will take a closer look at how smart, connected products in the age of IoT can deliver the benefits of service efficiency while more positively impacting the customer in Process Optimization.
Other posts in this series:
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