Connected Products and Digital Services

Situation and Challenge

New soft digital products as a complement to hard products offer the vehicle industry new opportunities to forge closer ties with the customers and increase earnings during the lifetime of a vehicle.

In the manufacturing industry where vehicles and equipment are sold to customers, the problem is often that margins decrease over time due to competition. Aftermarket services are becoming increasingly important for profitability. One way to develop the aftermarket services offer is to gather information about the vehicle and equipment utilization, and automatically send this to a central server (for example via telematics). With this information database as the basis, aftermarket service offers can be produced based on the actual utilization of the vehicle or equipment.

Transforming the business

For an organization accustomed to “hard product” development (vehicles, spare parts, equipment, training), producing a service bundle based on utilization data is no easy task. Existing tools (PDM) do not support service development satisfactorily, and other IT systems might need to be changed so they can handle all customers, receive payment and activate new services. A new business model is introduced similar to that used in the telecom industry (agreements, subscriptions, end customer), and it places new demands on both processes and IT systems.

What is a structurally correct approach?

How can this be done? Business operations frequently need help in terms of structuring the best working method in an operations-driven manner. Someone needs to facilitate and be in charge of change management, but the organization itself initiates which services are to be developed. Working from a blank sheet of paper is like re-inventing the wheel. Rather, a combination of standards and practical experience from other industries (such as telecommunications) can be a good starting point. As the basis for change management in relation to IT implementation, a specification of requirements is needed that can maintain a complex connection between business processes and IT systems “Functions and features” is not sufficient in this case; rather, process and information structures are needed with relationships that can most easily be represented in a modeling tool.

We have done this before

Ferrologic helps global manufacturing companies with strategy and implementation of a data-driven, agile product development process for connected products and digital services.