Smart Products Need Smart Services: How IoT Affects Industrial Equipment

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Jet_Engine_DataLast October, CEO of General Electric, Jeff Immelt, kicked off GE’s Minds+Machines conference with this statement:

"You went to bed last night as an industrial company. You will wake up in the morning as a software and analytics company."

So what would make the CEO of an industrial equipment giant say this? In addition to their wide range of product offerings, GE is quickly becoming a software and analytics company that is stretching the definition of what a product is and how they can improve their customer’s outcomes with that newly defined product. In the new age of IoT (Internet of Things), your industrial equipment organization can benefit by taking GE’s lead in developing smart services that support your products. 

The Data is Out There, Capture It!

A single GE jet engine collects 1 terabyte of data on a cross-Atlantic flight, and 1 gas turbine compressor blade monitoring potential of 500 gigabytes per day. In turn, that data collection gives them an opportunity to create new service offers.

GE is not alone in the data that they are collecting. It has been estimated that in the history of the world up until 2003, there have been 2.3 exabytes of data collected. Even more staggering, IDC and EMC estimate that by 2020 we will have collected over 40,000 exabytes. To put it into perspective, 1 exabyte is the equivalent to the entire Netflix catalogue streamed more than 3,000 times. That’s a lot of data!

What Are Companies Doing With This Electronic Data?

If you sell technical assets today, commoditization is draining your economic moat. Many of the tactics employed today to refill that moat revolve around effective data capture and using that data to improve customer outcomes. While beneficial, the capture and analysis of this data will force you to rethink many aspects of your business. In order to help you navigate this transformation, TSIA has developed a framework that we call the “Remote Services Continuum.”

The Remote Services Continuum

There is no doubt that smart, connected products are going to transform the industrial equipment marketplace, but before we get too far, let’s start with what a “smart, connected product” means:

A product is some type of electro-mechanical device.

This product becomes smart when some type of sensor technology is applied that enables a company to capture a digital representation of performance, status or usage.

Then these products are connected enabling companies to communicate with the product.

So, how are companies using smart, connected products today? The best way to describe it is to take a journey along the Remote Services Continuum, which can be divided into three main steps.


(Click image to enlarge.)

Step 1: Service Efficiency: Reduce service costs and improve responsiveness to service incidents

Implement the usage of smart, connected products that enable the capture and analysis of data, including:

  • Self-diagnostics.
  • Monitoring critical components to understand failure rates.
  • Key component performance, using data like temperature, vibration, fan/motor RPM, voltage, and drives.

Step 2: Process Optimization: Improve product utilization and enable value-added service.

Use data for remote resolve/self-healing /proactive services that predict faults and disruptions by comparing to normal operations and noting any anomalies. This also includes the ability to provide service regardless of location. Analytics are used to identify new features and value added services that help customers achieve and maintain a higher level of operation, moving from reactive SLA to proactively resolved tickets and incidents.

Step 3: Customer Outcomes: Integration of information, people, and processes to improve business results

Assist customers in reaching best in class operational performance, which is accomplished through the combination of multiple products embedded in systems, platforms, or ecosystems that are integrated with each other and 3rd party data to guarantee improved customer outcomes. This integration will enable suppliers to do work that was previously done by customers, partners, or not at all.

What Does This Mean for Industrial Equipment?

Be sure to check out our other blog posts in this industrial equipment series, where we go into more detail on each step of the Remote Services Continuum, share examples, and identify new capabilities required at each step. 

As you begin to consider how your company will respond to opportunities posed by services in the age of IoT, there are a few thoughts we would like to leave you with:

  • Growing capabilities of smart, connected products will deliver more business value than the traditional physical component.
  • Traditional products are commoditized with the system integrators in control.
  • Company offerings with the greatest impact on customer outcomes will be in best position to capture disproportionate value.
  • Customers will continue to insist on suppliers taking more responsibility and moving towards a Level 3 and Level 4 supplier model. Someone will fill the white space, whether its current competitors, new entrants, or you!

Service organizations must develop new organizational capabilities that will help lead their companies to success in the age of IoT, and the time to start developing those capabilities is now.

Read more posts in the “Intro to IoT” series:

About the Authors

vele-galovskiVele Galovski is vice president of field services research and advisory for TSIA. During his career as a services executive, he has provided thought leadership and driven breakthrough performance in high-profile assignments in a diverse set of companies, including Xerox, Eastman Kodak, Bank of America, NVR, and several cloud services startups. 

Throughout his nearly 30 years in industry, he has consistently driven double-digit top-line growth with a proven retain, gain, and grow strategy; and bottom-line profitability with a focused cost-down process. He may be reached at, or connect with Vele on Twitter @vgalovski.

Harald-Kopp_new Prof. Harald Kopp is TSIA's director of industrial services research, as well as a teacher in a MBA program for sales and service engineering at Furtwangen University, Germany. His focus is chiefly on services in industrial automation, equipment, instruments and technology companies. He has 20 years of experience in the areas of research, consulting and management in industrial services, supply chain management, and IT-Management in industrial equipment, automotive and enterprise IT industries. He may be reached at

 The State of Services for Industrial Equipment Manufacturers 2016
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Topics: mobility, field services, industrial equipment, internet of things (IoT), Intro to IoT, smart services


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