Waves of digitization, innovative technology, and an astounding rate of change are transforming aerospace and defense (A&D). As organizations strive to keep pace and take advantage of new concepts, one trend gaining attention is servitization – instead of selling products, the manufacturer or contractor provides service-based offerings billed to customers based on usage. Rather than a defense contractor selling hardware, the contractor sells availability and bills only for the hours when the hardware is operating and available for deployment. Often called
Sensors embedded in the machinery monitor and collect data concerning physical conditions, such as temperature or vibration. Cloud-based systems store and analyze data, looking for anomalies or early warning signs of a potential part failure. The system uncovers issues early, so the manufacturer can be proactive about maintenance and confident that the equipment will be available when needed. Without IoT technology, servitization would be a high-stakes gamble.
As more servitization business models are deployed, four common stumbling points are coming into focus.
Who assumes the risk?
Consider, as an example, a battle tank-supplying contractor. Rather than selling the tank, it now offers tank availability. Assembling such a complex vehicle requires many components. Many factors influence its availability, some beyond the control of the contractor offering the service. If the tank requires extensive maintenance because of a faulty component, how
Aging equipment risk
Tracking parts and components of new machinery to monitor performance and impact on availability is realistic. But, what about older equipment that has been in the field for extended periods? Some defense assets, such as the C-130 cargo plane and Bradley fighting vehicle, have been so durable they have surpassed life expectancies.
Can the same kind of servitization offer be extended for those assets which are already high-risk because of their length of service? Are the individual parts logged for the asset, including service history? An overhaul may need to catalog the components and add sensors so that IoT technology can monitor performance. Often, contractors avoid these questions by deciding that servitization contracts only apply to new or recently overhauled products.
Who owns the data?
As in any IoT application, the servitization business model opens the conversation about who owns the data being collected. The contractor needs the data to ensure the asset is serviced and maintained and for billing, but what other data rights does the contractor keep? Can the data about predictive trends and performance insights be aggregated and used to create benchmark reports, service guidelines, or white papers with advice about asset investments – products that could be sold to third parties? Or, does the customer paying for the rights to the asset own the generated data and for how long? These issues should be discussed early in
Since the servitization model relies on sharing, transmitting, and storing data by a third-party cloud provider, the possibility of a cyber breach requires the scrutiny and expertise of skilled professionals. Is it possible to protect the assets, system, and devices being used? Safeguards and backups can provide the confidence needed. In many cases, cloud security, when managed by providers with advanced systems, are more secure than the average on-premises solution.
When planning a servitization offering, it is important
As A&D companies seek ways to differentiate themselves from the competition and create lasting customer relationships, servitization is gaining more attention. It offers advantages for the contractor and customer, allowing the customer to pay only for time and services consumed. Early adopters have encountered some stumbling blocks, but these issues should not prevent moving forward with implementing a servitization business model. The solution is often in the data and use of business intelligence tools. Knowing how to deploy the technology may be the biggest challenge, but experts are available. So, get started. Those who wait or opt to sit on the sidelines observing, run the risk of becoming obsolete to customers.