Expanding industrial services successfully : applying industry 4.0 and the industrial internet of things (IIOT)

Many industrial companies have built their business success on supplying excellent systems/products/parts to other businesses (B2B). Over years, these companies have accumulated a wealth of information about their customers and these customers’ production processes and needs. From a service perspective, most industrial companies limit their service portfolio to providing classical services on their products (maintenance, repair, overhaul and predictive maintenance). The know-how and information about the customer needs and production processes related to the supplied products are often given away for free in order to secure an order for their products. At the same time, the European industrial (manufacturing) sector is increasingly facing tough competition from Asian manufacturers, which are advancing rapidly in both quality and features, offered at very competitive prices. Simultaneously, the concepts of Industry 4.0 and the Internet of Things (IOT) emerging, which enable suppliers and customers to link together in completely new ways. For the first time, industrial suppliers have the possibility to turn big data flows into useful information and profitable business models. Many industrial companies will therefore be facing the triple challenge of fending off traditional types of competitors, facing new data analytics based service providers and being confronted with the conundrum of merging/morphing an industrial mind-set with the agility of the digital natives, - to preserve both sales and profitability. The new and disruptive technologies will for some companies be a threat leading to their demise, or be an enabler to merge the best, of what Europe has to offer: quality, know-how, service, distribution, market access in order to build new and profitable business models – moving deeper into services. IIOT will provide an unprecedented volume of data, which can be turned into useful information, as will Industry 4.0 open up for new disruptive production models. The industrial companies who fully embrace the „digitalisation“ of their factories will naturally first be looking for ways to make better use of the wealth of data, accumulated during production, selling and logistical processes to improve existing business processes, before moving into new business areas. Industrial B-t-B companies may also turn this information from customers and uses of their industrial products into new and valuable services, while benefitting from “intelligent” manufacturing systems and supply chains. In addition, the application of analytics and AI (Artificial Intelligence) offer the potential to develop new (and profitable) services to the B-t-B-t-C market, strengthening or defending a market position (”Intel Inside” strategy). Thus, industrial companies will need to decide, if services serve the purpose of only customer retention, i.e. defence of existing market and value position, or also market expansion, i.e. the capture of new and hitherto untapped/unknown services. To develop and successfully implement any new business models, the companies will therefore need to take a fresh look at their strategy, the financial implications, the market risks (of “business as usual”) and what the organisational consequences could be. For many industrial (manufacturing) companies the concept of expanding services beyond their core products (machinery, equipment) is not hampered by technologies, or onsite availability, but rather by traditional (vertical) organisational structures, including the traditional service organisations, - and mind-set. Benchmarking against the above-mentioned industrial services companies will provide best practices, financial indicators and organisational issues. In short, this thesis will merge the issues of Industrial companies providing more services (new business opportunities) with The application of “IIoT” and “Industry 4.0”, in order to secure a new solid and growing business model. Answering the research question, the thesis will discuss and provide recommendations regarding: - New business models (services) - Strategic implications (applying IIoT and Industry 4.0) - Analytics, AI and security issues - Financial implications (P&L and Balance Sheet) - Organisational issues (training/hiring/organising/leading/measuring