Magazine Article | November 20, 2007

Putting The 'Smarts' Back Into Service

Source: Field Technologies Magazine

Electronically tethering your products is just the beginning.

Integrated Solutions, December 2007

Let's face it — manufacturers that think their products will win the day for years to come probably won't be around to find out they were wrong. Leading manufacturers have begun to view their products as ever-commoditizing platforms upon which they can deliver highly differentiated and profitable services in the aftermarket. Against this service-driven backdrop, 'Smart Services' have emerged. Smart Services are postsales product support capabilities delivered by manufacturers to the operators of their equipment. These services are enabled by capturing and analyzing product performance information over wireless or wireline networks.

In many cases, critical product performance data such as temperature, vibration, fluid levels, and fault codes are already forming virtual paper trails within on-site asset monitoring devices like programmable logic controllers (PLCs). By remotely tapping into these data treasure troves — often with the aid of wireless communications devices — OEMs beholden to service contract commitments can begin to make critical maintenance and repair decisions in a more cost-effective manner. For instance, with a wireless link to their deployed assets, companies can diagnose mechanical problems at customer sites, source required spare parts, and alert nearby field engineers within minutes.

Cost savings for the OEM are just the beginning. Here are a few tips to consider when embarking on a Smart Services initiative:

1.  Start with a business model based around cost savings, resisting pressure to charge customers at the outset.
Faced with new revenue targets, service executives often feel they must charge their customers for a Smart Service right away. But OEMs tend to see faster market penetration if they build an initial business case on cost savings realized within the service organization. Offer the Smart Service as a freebie for a finite pilot period, then give customers the option to extend the service beyond the pilot period at a value-based investment level.

2. Establish the owner/operator's business case.
Since an equipment owner/operator might not immediately perceive what they stand to gain from Smart Services, it is the responsibility of the OEM to clearly articulate and demonstrate exactly how Smart Services can impact the customer's business performance. Real-world data collected during the pilot phase will be critical to the OEM's success in demonstrating this case and ultimately in commercializing its Smart Service offerings. OEMs and their service network partners should explore the following building blocks of the operator value equation:

  • Increased asset uptime on overall equipment effectiveness (OEE), and in turn, OEE's impact on profitability and return on capital employed (ROCE) for the operator
  • Improved business continuity, throughput, and revenues for the operator
  • Reduced total cost of asset ownership
  • Reduced operational, environmental, and financial risk


3. Start small. Choose the optimal segment of product, customer, and/or market footprint for phase-one deployment.
It is important for an OEM embarking on a Smart Services initiative for the first time to choose the optimal segment of its product, customer, and/or market footprint as a venue for a pilot or phase-one deployment. A VICE™ (V2IC3E2) analysis studies the following factors to detail the optimal initial phase for a Smart Services deployment:

  • VOLUME of asset types (units sold annually)
  • Monetary VALUE of asset types (selling price)
  • Most accurate INDICATION of scaled, global viability
  • COMPLEXITY of asset types (depth of bill-of-materials)
  • CRITICALITY of asset types (impact on operator's business continuity)
  • Asset footprint at major CUSTOMER accounts
  • EASE and ECONOMY of capturing activity data from each asset type


Over the next decade, simply connecting to serviceable assets over communications networks will become standard for OEMs. What will separate the best from the rest will be how OEMs leverage machine data to drive business value for themselves, their partners, and their customers.

Mark W. Vigoroso is chief services strategist at nPhase, a Qualcomm business, and can be reached at Vigoroso also moderates