Money-making opportunities in manufacturing: Translating big data into ongoing revenue streams
Continuous connectivity—facilitated by the Internet of Things (IoT)—is the single greatest influencer in the manufacturing industry today. It is not only responsible for innovation in new market segments, products, and production methods but also for restructuring this vertical from one of simply creating goods (for single profits) to selling services for ongoing revenue streams.
Manufacturing’s metamorphosis is related to the constant generation of commerce-related big data in general. And, it may very well serve as a harbinger of the evolution of business itself in days to come.
“I would argue that it’s a completely different [business] model altogether,” noted Marcia Walker, SAS global manufacturing industry consultant and member of the MESA Americas board of directors. “It’s a service economy on top of the manufacturing economy.”
The emergent service economy yields tangible business value in five stratifications:
♦ Subscription services—The contemporary emphasis on service in manufacturing is akin to service-oriented architecture, in which numerous options are available as a service. The most novel pertain to offering services as subscriptions, similar to paradigms pioneered by Airbnb or Uber.
♦ Predictive services—These services primarily include predictive maintenance and forecasting for supply chain demand. According to Sierra Wireless senior director of product management Bryan O’Flaherty Wills, the former is predicated on IoT’s ability to transfigure customer relations “from one of selling a piece of equipment to a continuous relationship” which has contributed to a maintenance mid-market.
♦ Data as a service—Manufacturers can profit by selling user behavior data of customers to strategic partners in the marketplace.
♦ Advertising—The timely management of sensor data introduces opportunities for targeted advertising, particularly when paired with the influx of smartphones in the IoT’s consumer section. For example, Stibo Systems global head of IoT Robert Long described a use case in which based on the Wi-Fi and Bluetooth ID in your phone, vendors can track where a customer walks in a retail space, and then based on the person’s browsing and purchase history of other affiliates, market advertisements to that person.
♦ Product development—IoT’s unparalleled insight into which facets of a product customers use is influential for developing additional features and customer micro-segmentation.
This data is only available to manufacturers because of IoT. Deploying these options requires overcoming several knowledge management obstacles. “The data management challenges are huge,” Walker acknowledged. “And what I find interesting … is that most [firms] don’t know that that’s going to be a problem.”
The abundant use cases for manufacturing’s recurring revenue streams may serve as a compelling case study for other industries to follow.