What we used to know as machine-to-machine communications – for monitoring expensive equipment – delivered radical changes across a number of industries. Complex capital equipment became available for hire, with full service support from the original manufacturer under the (rather awkwardly named) concept of ‘servitization’.
Ten years ago, Rolls-Royce was already earning more than half its revenues from services – long-term real-time monitoring, support and maintenance contracts for engines, delivered under its ‘Power-by-the-Hour’ initiative. Similarly, Alstom’s trains on Virgin’s West Coast line are delivered under a full-service contract where the focus is not simply on the supply of equipment in good working order but on the far wider issue of minimising ‘lost customer hours’ – the customer in this context being the passengers using the service.
- Measurement – how equipment is used and how well it is doing a task
- Control – how equipment operates and who can do what with it
- Communications – with equipment users and those supporting them
However, added together, these features delivered a total shift in the market that changed forever the expectations, behaviours and relationships of manufacturers, providers and customers.
The irresistible rise of smartphones has led to plenty of unexpected consequences, not least the wide availability of high-quality sensors that are small in almost every way – price and power as well as size. These low-cost and low-power electronics combine with ubiquitous communications to ensure that what we now call the Internet of Things is seeding this same disruptive wave of innovation across all sectors of industry and society.
Energy meters, thermostats, inhalers, heart-rate monitors, running shoes, watches and even cars are no longer simply products to be bought, used and replaced. They are entry points for services which not only increase the value of the products they service but also have the potential to outgrow them, in both time and capability.
This is a challenge for many organisations. Until recently, companies that sold products with strong brands through distribution models that scaled globally were kept at least one step away from their customers. These same organisations now also need to deliver services that interact directly – and in real time – everywhere, at any time, with customers whose expectations are forever increasing.
That’s why Cambridge Consultants has launched a digital services initiative. We have a long track record of developing devices – typically highly novel and technically advanced devices that meet tight regulatory requirements. Often, these devices presage a radical breakthrough in a particular market, be that satellite phone services or compliant drug delivery. And now we are stepping up to the challenge of understanding and delivering the services that go with these products – and guiding and supporting the operational change demanded of the businesses that need to offer them.
The Internet of Things lays down a challenge to companies in every industry. What comes first – the device or the service?
Read more from Tim and his colleagues in Interface magazine.