#DigitalTransformation

How Machine Builders Can Transcend the Service Dilemma

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To better understand the role of digitization in the manufacturing industry, Cisco Consulting Services

undertook a global survey of 625 senior IT decision makers in 13 countries.

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In a climate of digital disruption and global market pressures, many manufacturers want to differentiate

with new service-oriented revenue models.

86% say the transition from product-centric to service-oriented revenue models is a core part of their growth

strategies.

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A focus on service has many potential benefits:• New and significant revenue streams• Increased customer engagement and delight • Greater efficiency and cost savings• Critical value-added offerings• Disruptive new business models• Ability to charge for business outcomes

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However, the transition to service revenue models is not taking place fast enough. There a disconnect between

the size of the opportunity and how much is being captured.

Only 29% of respondents indicated that services would grow faster than products in their firm.

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Complexity and a lack of digital capabilities are holding firms back, giving rise to a Service Dilemma.

Drive to improve profitability

New services increase

complexity

Invest in new services

Complexity creates profitability

challenges

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3

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We need to be able to not only manufacture a product, but we also need to be able to set up the IT solution. We need to combine manufacturing and IT and we also need to transform the model from a pure manufacturing model towards an operator model.

Dirk Slama, Director, Business Development, Bosch Software Innovations

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Connected Machines can bring services and digital technologies together. For industrial equipment makers, digitization enables the creation of

new applications on the plant floor.

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The top inhibitor to transitioning to a service model is the difficulty of managing a “two-front war”—products and services simultaneously. Respondents cited

managing existing and new business simultaneously as their biggest challenge.

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Beginning the journey from product-centric model to Digital Transformation will create the most value.

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Want to learn more? Download the whitepaper.

The Digital Manufacturer: Resolving the Service Dilemma