Evaluate Weigh the pros and cons of technologies, products and projects you are considering.

Rolls Royce does it, GE does it: Why you should embrace outcomes-based delivery

You’re a manufacturer of industrial refrigerators or wind turbines. You’ve built your business on selling goods to other companies or households, promising customers a high-quality product and the satisfaction of at least five years of function. And when parts snap or fridges stop cooling food, your business guarantees that a professional will arrive on the scene to fix the issue to restore function to the machine.

When something that you made breaks, you should fix it. But the reality is that all equipment will fail at some point. You will have to dispatch technicians right and left last minute. If these machines break enough and techs don’t have the abilities to fix them right then and there, it won’t surprise you that customers are quickly turned off.

To deliver the kind of service that will keep customers happy, it’s time to start thinking about the outcome that your products promise, rather than the products themselves. Reframing how you sell, deliver and service your products could transform your business, your relationships with customers and your bottom line. And in today’s world, where manufacturers are transforming faster than the latest technology hits the market, adopting an outcomes-based approach to service delivery could be the key to differentiating your offerings from competitors.

An outcomes-based service model can really only happen by way of technology — specifically the internet of things. The gist: Rather than manufacturers selling products to customers, they’ll sell outcomes. What does this look like? You, as the industrial refrigerator manufacturer, will sell “fresh, sanitary food that makes healthy dishes” to a restaurant in need of a fridge. It sounds like a small nuance, but this is where technology comes in.

Outfitting these refrigerators with sensors that monitor machines, and then connecting those sensors to the internet of things will allow for the manufacturer to keep a close eye on how your machines are running. If a part stops functioning, you’ll be the first to know — and eventually, learning these patterns and using a machine’s history can help you anticipate outages before they actually happen.

Now that your devices are all connected, here’s where the real change comes in: Your entire business model gets disrupted. You’re offering a service contract as part of your revenue stream, paying you for ongoing maintenance, service and functionality. It becomes an upselling of your business and services.

What this looks like: A restaurant pays you $5.99 a month for “cold food,” which means that you as the manufacturer deliver a refrigerator, connect it via IoT and collect data overtime. You’ll constantly monitor the health of the machine, and you’ll dispatch a technician to service the machine before the customer has to call you and complain. As your technology advances, you’ll replace the machine with a new model and continue the responsibility of delivering “cold food” to the restaurants you serve.

The major difference here isn’t just semantics — it’s an entire process and structure of a business. And with the move to service comes major benefits for consumers, manufacturers and service technicians alike. Sounds like a win-win for all.

And when it comes to winning, manufacturers in particular have the chance to do it big. Because instead of selling goods à la carte, you’re signing customers up for an open-ended subscription. It’s a SaaS model, only products-based, and will bring your company up to the modern technology standard.

Outcomes-based delivery is the way of the future. As manufacturers begin to see the benefits of using technology, connecting machines and evolving to a service subscription model, the way all of us live our lives and do our jobs will change — for the better.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close