The advent of value-based maintenance and how to reap the rewards

The servitization model continues to grow strongly in markets across the world and is one of the leading business trends driving growth in economies and for the companies pursuing it. The Global Everything as a Service (XaaS) Market Size was valued at $245.3bn in 2021 and is expected to reach $1225.07bn by 2030, growing at a CAGR of 23.4 percent during 2021-2030, according to a recent research study published by Spherical Insights & Consulting.

Servitization is too often looked at in isolation as an independent trend, but it represents the entirety of a customer journey and the design, manufacture, install, decommission or use of an asset or piece of equipment. It is also how IOT, AI, ESG and enhanced data science insights generate return on investment.

Servitization means that service is a product. It requires a business that understands how to manufacture or base value offerings that drive an after-market stream of revenue, and a customer base that utilizes something that may need installation, but requires operational support and perhaps also field service. Whether this is anchored off of solution categories called ERP, EAM, FSM or CRM, the drivers are the same – the business requires a customer that needs and values service and there also has to be an asset or “thing” that needs servicing. That’s why across service, infrastructure and asset-based businesses, from utilities to telecoms and from facilities management to logistics, the concepts of enterprise asset management (EAM) and servitization are inextricably linked – and organizations need to consider both in tandem to achieve optimum value from them.

Businesses can’t have servitization without fully understanding not just their customer but also the asset or machines they are working with, or without making sure they have access to data that tracks the asset’s performance.

In addition, to make servitization a success, every manufacturer, utility, industrial operator or logistics company needs accurate information about the asset concerned. That will enable these businesses to drive the best servitization models and outcomes that are not only valued by the customer but that the business can deliver on profitably.

Moving to a more strategic approach

To take the above interaction to the next level, organizations also need to apply intelligence to the approach. They need to understand both the “as-built” bill of materials and the “as-maintained” bill of materials, for example. They also need to become more proactive and predictive in understanding their historical data and doing simulations and business planning. This capability then allows them to move from simply reacting to a customer complaining about a lack of service and instead start thinking more proactively about condition-based and usage-based maintenance and, even more importantly, value-based maintenance.

Today, value-based maintenance is changing the whole enterprise asset management model across service-based industries. It is doing this not just by delivering value for customers alongside digitalization, but also by providing value to the business who can cut costs by removing the need for excessive truck rolls, or unnecessary engineer visits. That’s the essence of this new term value-based maintenance – an approach that delivers true business value to the provider and to the customer alike.

Why data is the key 

Being able to efficiently harvest and manage data is crucial to making a success of the value-based model approach. After all, if the business does not have good data on what it is going to service, or how it should price a service contract or value-based outcome, it is not going to be doing good business.

Equally, if the organization is sending people out into the field without accurate data or knowledge about what they are servicing, then it will not be good for business or talent retention – and it certainly will not be positive for the customer, or even the asset outcome itself. All these elements fit together and are fundamentally linked. To deliver true value-based maintenance, organizations need to address all of them in tandem.

Moving into the age of value-based maintenance

In some ways, the building blocks of value-based maintenance and the understanding of its importance have long been in place. The basics around service being the product; having construction, maintenance and service processes in place and the goal of having accurate data around what’s in the field or the factory are all well-known and have been for many years.

What’s changed is the sense of urgency around delivering this. In the past, due attention was not always paid to collecting and maintaining this kind of data. The attitude was that field engineers are inexpensive and easy to get hold of, and therefore almost interchangeable. People did not think it mattered if they sent one person out one day to do a maintenance job, another the next and a third the day after.

The price of not having accurate data and not digitalizing was seen as pretty low. Now, everywhere across the world – with the possible exception of India, Africa and Latin America – there are a combination of talent shortages and aging infrastructure.

As a result, there is greater pressure on businesses to start driving uptime and the servitization model. Coupled with this also, the value of truly fixing these pain points is so huge and impactful for businesses today, that it is not an option to not do it.

So, servitization matters – but at the same time EAM is essential for businesses to understand their assets and customers and to develop and deliver value-based maintenance solutions. Having a good information management strategy is key, too, as organizations also need to collect and manage accurate data about their assets in order to be successful.

The age of value-based maintenance has finally arrived – and businesses that want to be successful in this new era need to invest in EAM, collect and manage accurate data, and develop value-based maintenance solutions that truly meet the needs of their customers.