Platforms in service: The next big thing?

With the help of digital platforms, industrial companies can tap into new revenue and business models by offering their customers services that complement the products they sell, such as maintenance, servicing or repairs.

The dust has now settled after the hype surrounding platforms. While the big top dogs such as Google, Amazon & Co. dominate the end customer market, the potential for the B2B market remains largely untapped. In Germany, management is still undecided. However, some pioneers are encouraging and show why moving forward is a better option than waiting.

"Made in Germany" has stood for high-quality craftsmanship and engineering services from Germany for decades. However, it does not stand for innovative business models and the platform economy is still a blank slate for many industrial companies. In a Bitkom survey at the beginning of 2018, 54% of respondents stated that they had not considered what "digital platform" means for their business model. However, more than half of all companies already use digital platforms to purchase or sell goods and products (see page 4).

B2B platforms are already being used in a wide range of areas: from IIoT applications to predictive maintenance, logistics platforms and virtual marketplaces. Regardless of the size of the company, industrial and plant engineering in particular can benefit from such business models in order to retain customers with value-added services, increase the efficiency of machines and systems and generate additional revenue.

This all sounds very promising, but only a few companies have ventured into this new area so far. Has German industry already been overtaken by international competition? Since the 1990s, various players have become global market leaders worth billions through the platform economy, such as Facebook, Alibaba, Amazon, Ebay and Spotify. If you look at the figures, the gap becomes clear: platforms have an annual market volume of just under 8 billion dollars. 67 percent of this is accounted for by US companies and a further 30 percent by Asian companies. European companies account for just 3 percent (see page 7).

Rethinking as the basis for progress

Established German industrial companies are now also competing with platform providers and must find a strategy to remain successful. Due to the harmonization of the product range, goods are becoming increasingly interchangeable (commoditization) and the high competitive pressure is leading to increasingly fluctuating sales. The lack of planning security and volatility of the new product business must be countered by regular, recurring sales. This is precisely where platform-based business models with tailored customer service offer great potential, as it is becoming increasingly difficult to achieve competitive advantages through products alone.

The business principle of the large platform operators is actually quite simple: only the combination of product and the corresponding customer service creates real competitive advantages. In this way, added value is created for customers, which strengthens customer loyalty and is difficult for competitors to copy.

The new role of customer service

Digital platforms can therefore be used to open up new revenue and business models, particularly for industrial companies, if they offer their customers services that complement the products they sell, such as maintenance, servicing or repairs. The digital platform is used for the targeted networking of important processes and guarantees speed and quality in the service processes. The highlight: data-driven technologies and intelligent systems support a wide range of scenarios in the background and create a new kind of customer experience.

Case study: Bosch HomeCom

Bosch HomeCom is a good example of customer orientation in action and the development of a dedicated platform that connects heating systems with smart homes and technical services. In the portal-based application, end customers can control their heating systems using a smartphone, tablet or PC. Integrated evaluations allow energy consumption to be analyzed and optimized according to individual requirements.

Bosch HomeCom also offers a "Pro" version for professional heating engineers, who can access the same evaluation data. Faults are clearly displayed to the service technician. Using predictive maintenance functions, he receives several suggestions for possible causes of faults and solutions to problems, including required spare parts, based on the analyzed data. Thanks to this information, they can make better remote diagnoses in less time, order the relevant spare parts directly from the system and minimize the time required to rectify faults.

Bosch is thus creating a digital platform based on a three-sided model: the customer receives a free service, while the heating engineer offers a better service with an optimal customer experience thanks to the additional information. Bosch itself can conduct in-depth analyses of failures, fault frequencies and causes, learn from feedback to improve fault diagnosis, support modern customer service as a manufacturer and also have upsell opportunities.

Increasing customer loyalty with platform-based business models

Why is the use of modern technologies particularly interesting for the industrial service business?

While sales in the pure product and systems business can fluctuate greatly, services as a regular source of revenue offer relative planning security, which can often generate high operating margins. If traditional services are now supplemented with digital business models, significant increases in efficiency and turnover can be achieved.

These services are difficult to copy from the competition, but require a very well-developed service organization, highly trained technicians and a high level of knowledge about the methods used.

And this is a sticking point where many German companies get stuck. How should industrial companies build up the internal IT knowledge for such digital platforms?

How do you create the technical foundations for digital platforms?

Comprehensive systems naturally require a corresponding foundation, which must be developed step by step. In addition to extensive knowledge of market conditions and customer needs, the consolidation of digitized data from a wide variety of data sources is essential for the development of a platform-based business model.

When selecting a suitable technical basis, these three criteria are the most important: data-based, intelligent and scalable.

• Data-based: The coherent analysis of data from different sources provides insights that can be used as a basis for designing new predictive models. A typical application scenario here is predictive maintenance in order to automatically forecast potential failures. Customer and behavioral data could also be analyzed in order to better understand needs and preferences. The greatest opportunity for data-based approaches is to better understand causes and identify appropriate, tailor-made solutions.

• Intelligent: The way in which the data is analyzed plays a similarly important role in this context. Ideally, it should be analyzed intelligently using AI processes. In this way, self-learning systems recognize patterns independently and continue to develop.

• Scalable: Scalability is one of the biggest advantages of digital platforms, as the lack of production capacity allows for a high degree of flexibility in the face of changing market conditions. A scalable solution ensures optimum profitability at all times on the basis of easily calculable and usage-dependent conditions.

In summary, the development of a platform-based business model depends on the company's vision and the underlying technology.

Companies must now have the courage to simply try out new strategies and start with as few regulations as possible. This is the only way to catch up with the current backlog of German industry in international comparison.

In any case, the technical basis is already there: Empolis Service Express. This is a suitable platform with which you too can tap into new business potential by creating real added value for your customers with innovative services. The cloud-based system offers completely new insights into interrelationships with AI-based analyses, is ready to go within a very short time and impresses with its open architecture for a wide range of application and integration options.