Cisco, SAN JOSE, California - November 16, 2015: Eighty-six percent of manufacturers view the transition from product-centric to service-oriented revenue models as a core part of their growth strategies. However, only 29 percent believe that services will grow faster than the product aspect of their business.
A new Cisco study of 625 senior manufacturing decision makers across 13 countries highlighted this disconnect between the size of the service opportunity and how much is being captured - or what Cisco calls the Service Dilemma.
Good Products Are No Longer Enough
Today, simply making a good product is insufficient; what happens after the product is sold is becoming increasingly important. Industrial machine builders that successfully leverage services, for example, are using them to drive disruptive new business models. This enables them to charge for business outcomes - such as plant uptime - just as they now charge for physical products sold as a capital investment. Companies that don't harness services for such recurring revenue will risk falling behind in this new dynamic marketplace.
Cisco's survey respondents recognize this threat. Seventy-nine percent believe that digital disruption will have a significant impact on their companies over the next three years. However, many manufacturers are either struggling with the transition to services or are not moving fast enough.
Accelerate the Digital Agenda to Drive Value
The solution to the service dilemma requires digital business transformation. Cisco defines this as an organizational change through new business models and the use of digital technologies to improve performance. It enables greater insight and increased agility.
Manufacturers cited digital technologies such as cloud (37 percent), Internet of Things (33 percent), and analytics (32 percent) as having the greatest impact on production over the next three years. This is notable in part because of what respondents did not emphasize: manufacturing technologies such as robotics, 3D printing, and so forth. It underscores the pivotal role of digitization for the industry's evolution, especially as connecting across an entire manufacturing ecosystem becomes critical.
According to Cisco's economic analysis, the payoff for an average $20 billion manufacturing firm that digitizes is a profit upside of 12.8 percent over the next three years, or 19 percent over 10 years.
A Two-Front War': Selling Products and Services Simultaneously
To capture that value, manufacturing executives need to move from short-term thinking towards long-term planning for the future. Their ability to gain significant value hinges on accelerating the transition to a services model. Economic research by Cisco Consulting Services reveals $383 billion in Digital Value at Stake coming from connected products, connected machines, and new service models alone. Manufacturers are currently leaving 76 percent of the overall industry Value at Stake on the table.
Venturing into this unfamiliar ecosystem can create daunting challenges. Based on the research, the number one concern is the complexity that results from selling products and services simultaneously (23 percent), along with achieving profitability in new lines of business (18 percent), and finding ways to monetize customer data (15 percent).
Where Service and Digital Journeys Converge, Value Is Found
Cisco's survey further explored one particularly mature manufacturing use case: Connected Machines. It found that 33 percent of industrial machine builders were already receiving telemetry from customers' plant environments, and another 56 percent were planning to do so. Only six percent of machine builders have no such plans. The machine-as-a-service model for connected plant-floor equipment is seen as highly positive for machine builders. Forty-eight percent consider themselves very interested' in such an arrangement, another 36 percent fairly interested,' while four percent indicated they are already experimenting with this new consumption approach.
Digital transformation must start with top-down leadership, with changes spanning people, process, and technology. With the right foundational capabilities in place, manufacturers will have greater business agility to leapfrog competitors, derive insights that will create organizational efficiencies and reduce silos, and build a new customer, partner, and organizational experience for the digital age.
Thought Leader Quotes
When you look at digitization, if we can fully leverage the benefits of digitization and IoT, all the way from core manufacturing out to that end-user experience, the opportunities are exponential because we can better use all of those services, all of that data.
-- TONY BOLTON: CIO, Global Telecommunications, General Motors
Leading manufacturers are laying the foundation for realizing value from the Internet of Things by bringing together information technology (IT) and operational technology (OT). Tighter integration between industrial assets and the rest of the enterprise can drive business value, strengthen competitive positions and prepare their operations for future productivity improvements.
-- JOE KANN: VP, Global Business Development, Rockwell Automation
One challenge is on the technology side, making sure that the right infrastructure is provided. The second challenge I would see is more on the organizational level, to make sure that you somehow help your organization move towards these new business models.
-- DIRK SLAMA: Director, Business of Development, Bosch Software Innovations
We can give feedback to customers proactively: how to save energy in terms of the operations of their machines, how to make the machine last longer, how to reduce cycle time, so it gives us a whole new set of business opportunities that we
Most recent headlines
17/02/2025
TVBEurope talks to the team who brought a piece of broadcasting history back to life on BBC Wales last night
By Jenny Priestley
Published: February 14, 2025 ...
17/02/2025
Eligible studios will receive the relief directly from their local authorities, with no need to submit a claim
By Matthew Corrigan
Published: February 17, 20...
17/02/2025
As DEI initiatives come under pressure in the USA, supporters of Rise, which promotes diversity in the media and entertainment sector, discuss the continuing im...
17/02/2025
EIB Global loan will partially fund SES's continued O3b mPOWER medium earth orbit (MEO) fleet expansion enabling additional capacity worldwide. O3b mPOWER s...
15/02/2025
At Nielsen, Business Resource Groups (BRGs) play a critical role in nurturing a ...
15/02/2025
Innovation to empower creativity: Explore the latest in Lightroom
Rob Christensen February 15, 2025
0 Comments
Whether you want to remove distracting ...
15/02/2025
Wisycom, a worldwide leader in RF technology and provider of wireless solutions, announces a new distribution agreement with EQUAPHON. An Argentinian profession...
15/02/2025
DPA Microphones, the leading manufacturer of high-quality microphone solutions, is pleased to welcome Nicholas Nick Mariano and Vincent Vince Divine to the ...
15/02/2025
Tuxera, a leading provider of quality-assured file systems and networking solutions, will showcase how Tuxera Fusion SMB enables unprecedented performance for m...
15/02/2025
Bitmovin's latest Video Developer Report indicates an increasing role of AI, the slow adoption of next-generation codecs, and continuing challenges when it ...
15/02/2025
When Michelin Enterprises set out to promote its prestigious Hotel Guide in the new Sleepless in the Kitchen , campaign, veteran German/Slovenian gaffer Robert...
15/02/2025
Formula E, the world's first all-electric racing series, revolutionizing motorsport with cutting-edge technology and a commitment to sustainability has sele...
15/02/2025
Agile Content, a global leader in TV and video technology solutions, announces its rebranding to AgileTV.
The transition to AgileTV stems from a commitment to ...
15/02/2025
Hiltron Communications will promote the latest additions to its range of satellite communication products, systems and supporting services at GovSatCom 2025. Th...
15/02/2025
Following the success of the original Airglow Booklight, DoPchoice debuts a new addition to their inflatable line the Float. This lightweight, inflatable, round...
15/02/2025
LAS VEGAS Marshall Electronics has announced that it will debut its newest camera controller, the RCP Plus, at the 2025 NAB Show at Booth N2649 between April 5 ...
15/02/2025
ATLANTA Gray Media has named Blake Sebo as the next general manager of KTUU and KYES, Gray's NBC and CBS affiliates in Anchorage, Alaska....
15/02/2025
KOKKEDAL, Denmark DPA Microphones will feature its new CORE+ technology for distortion-free microphone sound at the 2025 NAB Show, April 5-9, in Las Vegas....
15/02/2025
SWANSEA, U.K. QuickLink will launch StudioPro-NDI and StudioPro-3, two new models of its QuickLine StudioPro video production platform, at the 2025 NAB Show, Ap...
15/02/2025
Live From 2025 NBA All-Star Game Weekend: After 25 Years, Turner Sports All-In F...
15/02/2025
NASCAR Driver Cam on Max Embraces Cloud-Based Workflow for 2025 Season Chris Brown of WBD Sports says Mobii will play key part in delivering signals from the tr...
14/02/2025
Last month, we officially launched the Spotify Partner Program, a powerful new m...
14/02/2025
From an island off the coast of Lutruwita to the global stage in France SBS & ...
14/02/2025
The future of electro-optical/infrared (EO/IR) land systems is evolving so that ...
14/02/2025
Here are 5 reasons why you should attend ISE 2025
Discover more about Calrec: Learn more about Calrec's legacy of innovation in broadcast audio solutions ...
14/02/2025
World Radio Day: On the same wavelength
By Graham Murray, International Sales Manager at Calrec
To mark World Radio Day, Calrec's International Sales Ma...
14/02/2025
DALLAS and TYSONS, Va. Tegna has concluded a broadcast rights agreement that makes Tegna's KFAA in Dallas the exclusive local television partner of the Dall...
14/02/2025
Amazon's Prime Video has released a new app for Apple TV that the streamer said delivers an improved streaming experiences with faster scrolling, improved s...
14/02/2025
CLEVELAND Telos Alliance announced a software update for its Axia Quasar XR and SR line of audio-over-IP (AoIP) mixing consoles and will show the offering at th...
14/02/2025
Puget Systems Returns to HPA Tech Retreat 2025 with New Analysis Tools for Puge...
14/02/2025
Glass Animals: Tour of Earth Uses Blackmagic Live Production Workflow
Brie Clayton February 14, 2025
0 Comments
80six deploys Blackmagic URSA Broadcas...
14/02/2025
A dispute between Paramount and Youtube TV that would have pulled CBS stations and Paramount's cable channels from the streaming service has been temporaril...
14/02/2025
Colourist Deidre (Dee) McClelland details how she helped shape the distinct look and feel of whimsical Oscar-nominated stop-motion film, Memoir of a Snail
By C...
14/02/2025
BitFire said it intends to introduce forward-looking services that simplify the launch of live production workflows, and enhance real-time collaboration
By Jen...
14/02/2025
The claim by the liquidators is the latest twist in the ongoing saga of the companys collapse at the end of 2021
By Matthew Corrigan
Published: February 14, ...
14/02/2025
A carriage dispute between YouTube TV and Paramount could come to a head today (Feb. 13), with the virtual pay TV provider threatening to pull all of the progra...
14/02/2025
ENGLEWOOD CLIFFS, N.J. LG Electronics USA has opened a new in-house, state-of-the-art virtual production studio at its 360,000-square-foot North American headqu...
14/02/2025
NEW YORK In a bid to help local broadcasters find new ways of monetizing their content, the Coalition for Innovative Media Measurement (CIMM) and TVB have relea...
14/02/2025
WASHINGTON Three Democratic U.S. Senators have sent a stern letter blasting FCC Chair Brendan Carr for the weaponization of the agency for attacking broadcast...
14/02/2025
Years after launching the streaming service Apple TV+ in November of 2019, Apple has finally released a version of its steaming app for Android devices....
14/02/2025
FOOTHILL RANCH, Calif. Red Digital Cinema will make its V-RAPTOR [X] and KOMODO-X camera systems available with Nikon's premier Z Mount, providing filmmaker...
14/02/2025
DAYTONA, Fla. The Fox Sports production of this year's Daytona 500 will see the addition of a few new tech elements and the continued unfolding of the broad...
14/02/2025
Watch Bryson Battles Blind Audition on The Voice Get a Four-Chair Turn Michael Bubl said the Boston Conservatory at Berklee musical theater senior might have...
14/02/2025
2025 Daytona 500: FOX Sports Looks To Ride Super Bowl LIX Momentum Into NASCAR S...
14/02/2025
14 Feb 2025
VEON's Kyivstar and the Come Back Alive Foundation Raise USD 2....
14/02/2025
Max Renews THE PITT, Starring Noah Wyle, For A Second Season
Max
Warner Bros. Television Group
The Pitt
New Episodes Of The Medical Drama From John...
14/02/2025
This year, Technicolor proudly celebrates 110 years of shaping the magic of cinema pioneering color, visual effects, and innovation that bring unforgettable l...
14/02/2025
NBA All-Star: More Games, More Teams, More Music, More Sound From the Court Turner Sports' team will deploy familiar tech to capture all the audio By Dan D...
14/02/2025
LIV Golf Continues To Innovate With Drones, Data-Driven Graphics, and All-Access...
Cisco, SAN JOSE, California - November 16, 2015: Eighty-six percent of manufacturers view the transition from product-centric to service-oriented revenue models as a core part of their growth strategies. However, only 29 percent believe that services will grow faster than the product aspect of their business.
