Equipment providers – do you need to reinvent yourself?

Who is John Deere?

Even if you were not born in a village (like me), I presume you have heard about John Deere. Until several years ago, John Deere was a pure farm and industrial equipment manufacturer.

And then, John Deere created, a platform that connects data from John Deere equipment and other sources, analyzes it and provides farmers with guidelines that help them become the most profitable and sustainable growers. Why did John Deere changed its focus from making its products bigger, faster, and stronger to building a platform of services that optimizes farming operations? Should your company consider a similar transformation?

From Product to Services – The John Deere case study

John Deere identified their customers business pain – inefficient operation resulting in low yield due to the numerous factors that farmers had no way to optimize. John Deere realized that a solution that utilizes sensor data from various farms and machine learning algorithms can have a tremendous value for each farmer as well as provide grow opportunities for John Deere . And John Deere was in a great position to provide this solution. revolutionized farming and helped John Deere customer boost their productivity and profitability. Moving to outcome base solutions through, services drove John Deere equipment sales, improved customers loyalty, gained control over the data, made it difficult for Agritech companies to disrupt its market and ultimately secured its market leading position.

Why is it relevant for you?

The world is changing rapidly. Technology revolutionizes products and business processes. For equipment providers, connected devices offer proliferating opportunities that go beyond the traditional product boundaries, disrupt markets, and change value chains.

Besides traditional competitors, companies are at risk of facing  competition from new players that introduce new, significant value and may become the most important link in the new value chain, on the account of the companies who used to lead the market. This happened in multiple cases where the most known example in the mobile devices market where device manufactures like Nokia and Samsung saw their hardware margins decreasing when software platforms gain marketplace control.

Furthermore, customer expectations are changing. In the digital age, a great product is not enough. You need smart, connected products that provide your customers with everything they need to achieve the outcome they are looking for.

Servitization – from Product to Services

The solution is servitization – expanding your offering from a pure product to services based on your product. The path to servitization includes several stages – connecting and managing devices, analytics, adding self service capabilities and customer communication channels and building a service platform around your product.

The good news is that you do not need to wait until the end of the path to enjoy the benefits. As you can see in the image below that shows the value companies gain as they progress towards servitization, companies who follow this path gain significant value at each stage.

Today, many manufacturers are already on the path to servitization. Some are focused on operation and maintenance, but others already realize the business potential and offer new services and value to their customers. Where is your company in the above maturity model?

Whether your company is just starting walking in the servitization path or is already in an advanced stage, we urge you to identify the new opportunities the digital age enable, and realize them before your competition will to grow your market and secure your leadership.

StarVision helps companies in the path to servitization – become data-driven, improve operation and maintenance, and provide more value to their customers using the benefits of the connected world.