Technology has driven rapid change in every industry, but the manufacturing sector has seen the most change, from IoT and automation to AI and the complete digital transformation of production lines and processes. Manufacturing organizations have tackled these shifts head on and made impressive gains.
But the manufacturing industry is once again at another inflection point. The COVID-19 pandemic has caused massive business disruptions around the globe, and manufacturers must respond by making rapid changes to their operations and go-to-market strategies. The stakes are high, and what manufacturers decide to do now has the potential to impact their organizations for decades to come.
Fortunately, the news is far from all doom and gloom. In fact, in a recent survey conducted by AppDirect, 72% of manufacturing companies said that COVID-19 had either spurred them to launch new digital initiatives or accelerate ones that they already had. Twenty-four percent said that the pandemic caused them to delay or cancel a digital initiative.
Even more heartening, 82% of manufacturers are focused on making long-term investments to prepare for the new digital normal that will emerge once the pandemic is brought under control. But where are companies making these investments?
Subscription services emerge as a key post-pandemic strategy
For many, subscription services are an appealing business strategy. For IoT in particular, monetizing data and services is becoming an increasingly critical source of revenue. As digital transformation accelerates, these trends will gain momentum. Subscription services will become table stakes for manufacturers, and strong execution across a larger subscription commerce strategy will be the differentiator.
Moreover, as customers face ongoing economic fallout, providing them with hardware as a service (HaaS) options will also be key. With HaaS, customers can lower Capex and transition to a more flexible, operations-aligned cost model, which can help absorb some of the economic shock.
Even with a bold digital-first strategy that focuses on subscription commerce, success isn’t guaranteed. Here are three guidelines businesses can follow to effectively navigate current uncertainty and ensure future success.
- Stay focused and be patient. In the rush to counter the disruptive effects of COVID-19, manufacturers can’t forget the fundamentals of strong go-to-market execution. Manufacturers that experience the best results — and eventually see the best financial ROI — are those that focus on delivering a superior customer experience. Getting the basics right will always provide immediate value as a new digital initiative gains market traction.
- Invest in digital ecosystems. Nearly two-thirds of manufacturers — 64 % — worked with a third party to bring a new digital offering to market, according to AppDirect. Digital ecosystems in manufacturing have been steadily growing, but COVID-19 is accelerating that trend. As manufacturers enter the new normal, a digital ecosystem of partners and providers will be a key differentiator.
- Prepare for the next disruption now. Few anticipated a global pandemic, but it’s a given that more disruptions are on the horizon. As a result, manufacturers must prepare for whatever the next big event. Of course, it’s hard to plan for an unpredictable future, but manufacturing companies can start by addressing the challenges they know they currently have. For example, 43% of manufacturers had difficulty automating the sales and delivery of digital products, according to AppDirect. As a first step, manufacturers should move technology and operational improvements in these areas to the top of their priority lists.
In the midst of a global pandemic, manufacturers are rising to the occasion. Many are making rapid changes to better serve their stakeholders, from enabling remote work for their employees to launching new IoT devices and digital services.
Yet, 74% of manufacturers are somewhat or very concerned about sustaining the current rate of change, according to AppDirect. To succeed, manufacturers should be bold, work with partners to offload the burden in areas where they need more expertise and remain focused on the opportunity that the new normal will bring.
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.