By 2020, onboard service revenue will outpace product-related revenue by a factor of two, according to IDC Manufacturing Insights.

The rise of the Internet of Things (IoT) has brought with it increased focus on “connected products.” As manufacturers work to retrofit existing products with connectivity and build it into new products, they are faced with the question of how these connected products will transform the after-sales services they provide, and possibly even their business models. To help IT and non IT leaders in manufacturing justify investment in connected products for after-sales service transformation, International Data Corporation (IDC), today unveiled a new report, “IDC Planscape: Transformation Service through Connected Products,” (Document#256993).

According to the new report, leading manufacturers have seen the potential that aftersales service revenue holds, with some collecting up to 50 percent of their profits from aftersales sources. This trend will continue, as IDC Manufacturing Insights estimates that by 2020, onboard service revenue will outpace product-related revenue by a factor of two. Service through connected products is a cornerstone of growing revenues for many manufacturers in the coming years.

The new IDC Planscape offers practical guidance to non IT and IT leaders at manufacturers understand the critical role of connected products in after sales services and answers the following key questions:

§ Why do connected products offer service organizations a transformative
opportunity to shift revenue growth toward after-sales processes while
meeting increasing customer expectations for exceptional service?

§ What is connected service and what are the key use cases for after-sales
service transformation?

§ Who are the key stakeholders that should be involved in connected service
initiatives? What are their roles and responsibilities for promoting successful
service-based projects?

§ How can IT and non-IT manufacturing leaders help accelerate investment in
service through connected products for their organization?

“Providing value-added services through connected products is going to be a primary source of revenue growth for manufacturing companies across many industries in the years to come,” says Heather Ashton, research manager for IDC Manufacturing Insights. “This IDC PlanScape helps IT and non-IT manufacturing leaders understand the role of connected products in after-sales service transformation and identify the key stakeholders and their part in accelerating investment in this growth area.”

IDC Manufacturing Insights recently published an IDC TechScape: Worldwide Manufacturing Connected Products Technologies, 2015 (Doc #255573) to provide IT buyers within manufacturing companies with an industry snapshot as to where specific technologies lie today relative to current industry best practices. The 18 technologies highlighted in this report reflect the current state of connected products in manufacturing, and will continue to evolve along the adoption continuum as IoT becomes a more mature technology.

Connected Service has also been identified as one of the “killer apps” of connected products, as stated in the IDC FutureScape: Worldwide Manufacturing 2015 Predictions — Changing the Industry with Technology (IDC #253305, December 2014). As a result, IDC Manufacturing Insights asserts manufacturers will increasingly turn to transforming their existing service offerings with connected capabilities to satisfy revenue goals and meet customer expectations.

Ashton concludes, “We expect to see a considerable rise in connected service offerings in the coming years, moving from remote monitoring to predictive and eventually prescriptive services that keep products up and running with minimal interruption. And, across every industry sector within manufacturing, there will be leaders who create disruptive product-service-systems that re-define how products and services are delivered and monetized.”

About IDC PlanScapes
IDC PlanScapes help to assure business value is recognized from technology by developing a technology initiative that is aligned with business goals, scoped to succeed, and properly resourced. By helping technology leaders make the case for a technology initiative, recognize unique resource requirements, and identify risk factors, IDC PlanScapes mitigate the greatest risks associated with technology initiatives.

About IDC Manufacturing Insights
IDC Manufacturing Insights assists manufacturing businesses and IT leaders, as well as the suppliers who serve them in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing asset intensive, brand oriented, technology oriented, and engineering oriented manufacturing industries. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of (IDG, the world’s leading technology, media, research, and events company. For more information, please visit (www.idc-mi.com, email info@idc-mi.com, or call 508-988-7900. Visit the IDC Manufacturing Insights Community at http://idc-community.com/manufacturing.