Customer-centric business model for remote monitoring services

Abstract

Development of industrial internet has made it possible for industrial manufacturers to remotely monitor and collect data from their installed base and serve their customers with new and innovative services such as condition-based maintenance. Despite some previous research, there is still uncertainty on the most important customer needs for a remote monitoring service and through what kind of business model should the services be offered. Offering services with inadequate knowledge of the customers’ needs has led to ineffective offering and value propositions slowing the spread of these services. Through a single case study of an industrial manufacturer, this thesis aims to discover what the most important customer needs and business model fundamentals of remote monitoring services are to create understanding for further service growth. The empirical part of this research was conducted as a qualitative case study. The primary data were collected with semi-structured interviews and the secondary data consisted of documents originally from a recent internal development project of the case company. The sources for collected material were both internal interviewees and respondents from customer companies operating in process industries. The results indicate that the two main customer needs for remote monitoring services in industrial maintenance are increasing the asset output and reducing maintenance costs. Other important needs were found to be getting access to the service provider’s expertise, adding predictability to maintenance and achieving safety improvements. It was also found that different needs are closely linked with each other. A new business model framework for remote monitoring services was proposed. The developed framework was used to structure elements for a successful remote monitoring service business model. Implementing the business model will require new capabilities in understanding customers’ businesses, new sales capabilities and technological capabilities in order to develop valuable insights from collected data. The results confirm earlier findings of value propositions and value proving as crucial parts of business models in remote monitoring services. Collaboration between customers and the service provider was found to be a potential way to create value in remote monitoring services. However, experiences of value co-creation in deeper level are still behind the examples from literature. Remote monitoring services and collaborative value creation were found to be compatible with outcome-oriented earning logics and there was interest towards it on both customer’s and supplier’s side. To gain more understanding on outcome-oriented earning logics, further research of defining and sharing the achieved benefits, especially in complex multi-actor environments, is proposed.