Competitive and fit for the future with digital services

ditional products have now been replaced as the number one driver of revenue. Today's customers expect innovative product add-on services that promise additional value as well as smart digital services. Convenience and a pleasant customer experience are musts applying to both the business and the consumer sector. The importance of add-on services is perfectly illustrated with the example of the car: While sales reps used to sell “just” the car, modern electric cars and modern combustion-engined vehicles attract customers with comprehensive additional services. Vehicle communication systems allow them to display and book charging stations and empty parking spaces and to unlock increased engine performance. Such “on-demand functions” make it possible to individually upgrade one’s vehicle with additional features after the purchase. Real-time data also plays an increasingly important role in digital services. For instance, they allow for intelligent route planning or “last-mile services”, i.e. effortlessly switching to public transport in urban environments based on live data. These examples make it clear that digital product add-on services offer enormous business potential and mark the next step in the digital transformation.

Real added value for customers
Product life cycles are shorter than ever before. Customers expect smart products that offer maximum value as well as always up-to-date, relevant additional functions. This is why companies are forced to subject their products to ever faster innovation cycles. Often this can only be done using integrated software that makes cars, TVs or refrigerators “smart”. A positive side effect: The use of digital services creates loads of data that can be analysed to better understand customer needs and thus optimise and customise offers. The logical linking of data opens up new sales potential. The major digital pioneers and global market players such as Google, Amazon, Apple and Tesla have long been exploiting this potential and are constantly offering their customers new services – from smart route guidance (taking into account optimised charging options) for electric car drivers to a specific, personalized and location-independent shopping experience around the clock to Mobility as a Service.

​​​​​​​Focus on Convenience & Customer Experience
​​​​​​​For consumers, digital services allow for a plus in comfort and customer experience. After all, smart services can be used as needed, independent of place and time. Moreover, digital services allow for a high degree of customisation. Designed in a user-friendly manner, they provide customers with lots of value and contribute to positive customer experiences and customer loyalty. Also, they make it possible to give existing products new, innovative functions and services. Devices, machines and systems, for instance, can then receive “over the air” updates that offer customers useful services or additional features. Customers can adapt these offers to their own requirements and optimise the use of their products. This development can be observed clearly on the market: Providers are increasingly differentiated by the functions and services they provide to customers. In this context, companies face the challenge of understanding the needs of their own customers to offer them matching services of real value. The speed at which these changes are made also contributes to their success.

Based on digitalisation & linking
If one seeks to offer digital services (especially self-services), internal processes must be fully digitised and technical departments (development, production, logistics, sales, etc.) must be linked to offer customers the use of these services and to offer a positive customers experience. This implicitly contributes to increasing competitiveness and efficiency. In practise, a lack of connections between the technical departments and the necessary investments often present hurdles to the endeavour of fully digitising a company's process landscape. And lastly, launching digital services, providing them to customers with a high user experience and further developing them presents a challenge to many companies. This is where competent digitisation partners come in that can accompany companies during the conceptualisation, implementation and launch of digital services.

Increased quality and traceability
In industry, digitised products and services enable, for example, tracking and proof of quality in the various production steps and also in the application of the product. Automated, AI- and sensor-based quality controls in manufacturing are state of the art today, increase efficiency, product quality and save costs due to defective products. As a "by-product", data is generated during engineering and manufacturing as well as during use, which can be used to optimise processes and products. By linking software systems and data, digital twins are created as a virtual image of a real object or system. This way, entire processes, products or entire systems can be mapped and visualised in the digital world. In the automotive industry, digital twins have already been in use for some time and support the optimisation of logistics and manufacturing processes along the entire supply and production chain. The use of movement data or error messages from the vehicle helps to increase product quality and save costs. The data collected can not only be used and evaluated in the production process but also across the entire product life cycle. This saves costs and improves efficiency. Digital add-on services such as predictive maintenance also open up new revenue streams for companies. In practise, many companies struggle with transitioning and modernising their systems to record and evaluate data to develop digital services.

Data: The ultimate key
By offering digital services and their use by customers, companies obtain a lot of data and valuable insights. Analysing said data allows for the optimisation and automation of processes but also to derive product improvements. Data is a valuable source to better understand one’s own customers and the actual use of products and services. They also make it possible to offer matching additional services and generate new revenue streams on their basis. Not least, precisely tailored services boost customer satisfaction and their loyalty. In this context, data is protected by the EU's General Data Protection Regulation. Generally speaking, customers always need to consent to the use of their data to use the desired services – in a connected car for instance. The industry makes personal data anonymous so that personal information is not visible. In practice, the great need to catch up with digital services is a challenge for companies. Manufacturing companies in particular must adapt or expand their business models to meet the rising expectations of their customers.

Great business potential
In many industries, the trend is pointing towards offering customers a seamless digital experience. This ranges from information about their purchase to offering digital services or smart products and their use. Depending on where companies stand regarding the digitisation of their services and products, gaps must be closed to offer customers the best possible experience and to remain competitive. This requires end-to-end process digitisation, both during the creation of the product or service, across its life cycle and the customers’ journey. Data and digital twins allow to analyse and optimise digital services, associated processes and marketing. This way, companies can analyse user behaviour, improve and customise products and digital services and offer customers an optimal customer and user experience. Developments such as artificial intelligence that supports companies during process optimisation and data evaluation or customer service and sales chat bots show the direction. In the mid-term, companies that don't offer digital services will no longer reach their target audience, fail to meet their expectations and in the long-term, face declining competitiveness. Moreover, they lack important data on products, services, customers and processes. This hinders analyses and optimisations of their own range of services. Furthermore, companies miss out on the opportunity to open up additional revenue streams as well as cross-sales and other business potential. So there is a real need for action.
​​​​​
​​​​​​​Authors:
Thomas Brandstätter, Head of Custom Business Solutions at DCCS, develops individual software solutions with his team, turning business models, processes and services into software that significantly contributes to the competitiveness of his customers.

​​​​​​​DI Christian Krenn, Executive Advisor at DCCS, advises and accompanies customers during digital transformation and conceptualisation, design and implementation of innovative digital services and business models.