27 May 2016Blog

Industrial internet – how to become a winner

Most manufacturers of industrial equipment and machines are facing a fundamental change, the biggest drivers of which include the internet of things and, in the industrial sector, the industrial internet. Traditional value chains and value formation are about to undergo vast changes in the coming years. In addition to typical competitors, traditional operators are looking at the arrival of significant operators beyond the industrial sector, who, through an entirely new business model, will turn the entire operational logic upside down.

Supply chains will also encounter enormous changes when various kinds of value networks and ecosystems start to challenge traditional operating models. You can no longer compete with a product’s properties or efficiency alone; rather, customer value is gaining increasing prominence as the centre of all things. In the middle of this transition, traditional equipment suppliers are engaged in a feverish contemplation of their own status and strategy.

Pioneering companies are transforming their business from the traditional, investment-based product business towards various kinds of service businesses, in which they are moving from one-off transactions towards selling as a service and continuous invoicing.

Regardless of background, every company hungry for success will become a service company

The industrial internet provides completely new opportunities for this. Pioneering companies have tools at their disposal which give customer relationships an entirely new form.  The companies best able to help their customers to run their business successfully will be on the winning side in the future. Instead of selling a customer a machine or piece of equipment, and trying to sell additional services, modernisations and normal maintenance services for it during its life-cycle, we are moving towards a genuine appreciation of customer value and profit.

You have to have a continuous presence and really help the customer to improve the quality of their end product, for example, or the efficiency of a process.

The very same companies also have the ability to understand a customer’s operations and equipment use significantly better than ever before. This, in turn, gives a boost to innovations and enables completely new kinds of invoicing and business models. In addition, the role of customer understanding and customer interface will become increasingly prominent. Cooperation with the customer is continuous, due to which the companies able to manage the customer interface will be successful in the future.

However, this in itself does not automatically mean that the operator in question would be the manufacturer of the equipment or machinery. The customer interface will also come to include new kinds of operators, which will, at least partly, take over the management of the customer interface from existing operators and base their entire business logic on that alone.

When you add to this equation the underutilisation of capital-intensive goods and the enhancement thereof, the result is starting to bear all the hallmarks of a major change.  There are already several examples of such changes in the consumer side, especially in the sectors of travel and trade.

Customer interface management to decide future winners

The issues discussed above are about to change the logic of almost all businesses in the near future. Read more in the IoT and industrial internet -report of Solita’s Think Tank team.

Mikko’s work at Solita focuses on industrial internet business. His fields of interest include, in particular, IoT, the value production and services of the digital world, as well as the new business opportunities offered by the industrial internet. In his spare time, you can find Mikko on a mountain bike, running or at the side of a football field.