New services

What is the challenge?

Companies want to meet customer needs as well as possible. In doing so, the possibilities have often already been exhausted during product development. In the context of data-based value creation, the successful design of the service business is therefore an essential prerequisite for growth and competitive differentiation. In the manufacturing industry, for example, investments in digital technologies and data analyses are mainly monetized via services, so that 40 to 50 percent of sales can be generated with them in the future. The challenge, however, is to exploit new service and innovation potential with the help and on the basis of the increasing abundance of data.

What data can help?

• Customer data
• Market data
• Product data
• Machine and production data

How can companies use their data?

Data can be used to offer new services and combine them with existing products to create a customized solution. Digital elements and applications (e.g. smart glasses, augmented and virtual reality) can be created around the offering. With the availability of data, new revenue models can also be created with recurring revenue and often increased flexibility for customers (product as a service, individualized and regularly optimized subscriptions). In the industrial sector, data collection in production via machine sensors provides valuable insight into the efficiency of the customer’s processes. These insights also give rise to new services.

Where is this use of data already being applied?

The machine manufacturer Voith has developed the “On Efficiency – SmartAssist” assistance system. This is designed to help make fleet operation of buses more efficient by optimizing driving behavior. For this purpose, data on the position of the accelerator pedal, the intervals between gear changes and general vehicle data are recorded and analyzed. Bus drivers receive the results and advice on how they can drive more sustainably.

The software company Microsoft offers customers a new usage concept with “Office 365” and transforms the software product into a software service (product as a service). Customers pay on a subscription basis and automatically receive optimizing updates and access to additional applications.

Agricultural equipment manufacturer John Deere offers its customers a service to reduce operating costs that can be purchased as an add-on module to agricultural machinery. Field cultivation is controlled via GPS tracking (to a centimeter interval) in such a way that double cultivation is largely avoided and the sowing or application of fertilizers and protective agents is optimized.

The online fashion retailer YOOX offers customers the opportunity to try on products virtually. With the “Yoox Mirror Reloaded” app, customers can create a personalized 3D avatar and use it to (virtually) try on new outfits.

How does this use of data contribute to value creation?

By using digital services, current value chains can be optimized, for example along customer processes or in manufacturing. However, it is also possible to create a new value chain with an additional service and thus expand the core business with a new business area.

Sources: Voith (2019), Microsoft (2020), John Deere (2019), YOOX (2019)