Microsoft recently released a report forecasting trends in manufacturing for the coming year. Their predictions around the continued growth in the adoption of IoT technologies and sensors (enabled by rapidly declining costs), increasingly prevalent demand for ‘as a service’ offerings and a growing interest from customers in the full environmental life cycle impacts of product manufacture all point towards significant opportunities for manufacturers to grow revenue streams through services in the coming year. Key highlights of the report include:
Growth in the use of ‘new’ technologies
Sensors, robots and other new technologies will, unsurprisingly, grow in popularity and continue to come down in price. Microsoft predicts that as manufacturers migrate certain data functions to the cloud, more companies will embrace a hybrid data center model. Global IoT spend is projected to reach $772 billion in 2018 and surpass $1 trillion in 2020.
Manufacturing goes greener
More than ever, consumers and governments are holding companies accountable for the environmental impact of their offerings, and evidence shows that they’re willing to pay for it. Manufacturers are optimising facilities and production, reducing waste and carrying out life cycle assessments of their products in response. Servitization offers a real opportunity to have an effect on the life cycle of the product and of materials its manufacture and maintenance.
The rise of XaaS
The demand for services in consumer markets continues to grow apace and to impact on expectations in B2B markets. On-demand services are thought to have grown nearly $57 billion in 2018. The sharing economy is projected to grow to 86.5 million U.S. users by 2021, up from 44.8 million in 2016. Consumers also expect increased personalisation, another trend which is crossing over into the B2B world. In the manufacturing world, predictions are that upwards of 40% of the top 100 US manufacturers will provide product as a service platforms by the end of 2018.
Manufacturers re-evaluate their value chain
Brand loyalty is more hard-won than ever and a customer’s brand sentiment comes from their entire experience across the purchase life cycle and lifespan of the product, so manufacturers must ensure excellence at every touch point.To help meet the needs of their customers’ customer, manufacturers must obtain visibility into their own supply chain, as well as have systems and processes in place for sharing this information with their business partners.
All signs point towards 2019 being a strong year for growth in terms of demand for services offerings both from consumers and business customers. There is no doubt that data will continue to be at the forefront of minds of anyone considering how to enable and offer a service, especially as the cost of the technologies to gather and analyse such data continues to drop. The important thing to remember is that data forms only part of the picture; customers in both B2C and B2B markets increasingly want more than just data- they want service providers to help them achieve outcomes and they expect a good experience throughout. Understanding customer needs, designing services to meet these needs, evaluating who to partner with to deliver the services, assessing how the organisation needs to change to support the delivery of services and integrating data as an enabler of services will continue to be the most holistic and fruitful way to approach servitization in the year to come.