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The rise of the Internet of Things (IoT) has brought with it increased focus on “connected products”. As manufacturers work to retrofit existing products with connectivity and build it into new products, they are faced with the question of how these connected products will transform the after-sales services they provide, and possibly even their business models.

To help IT and non IT leaders in manufacturing justify investment in connected products for after-sales service transformation, International Data Corporation (IDC) has launched a new report, IDC Planscape: Transformation Service through Connected Products.

According to the report, leading manufacturers have seen the potential that aftersales service revenue holds, with some collecting up to 50% of their profits from aftersales sources. This trend will continue, as IDC Manufacturing Insights estimates that by 2020, on-board service revenue will outpace product-related revenue by a factor of two.

Service through connected products is a cornerstone of growing revenues for many manufacturers in the coming years.

“Providing value-added services through connected products is going to be a primary source of revenue growth for manufacturing companies across many industries in the years to come,” says Heather Ashton, research manager for IDC Manufacturing Insights.

IDC Manufacturing Insights recently published an IDC TechScape: Worldwide Manufacturing Connected Product Technologies, 2015 to provide IT buyers within manufacturing companies with an industry snapshot as to where specific technologies lie today relative to current industry best practices. The 18 technologies highlighted in this report reflect the current state of connected products in manufacturing, and will continue to evolve along the adoption continuum as IoT becomes a more mature technology.

Connected Service has also been identified as one of the “killer apps” of connected products, as stated in the IDC FutureScape: Worldwide Manufacturing 2015 Predictions — Changing the Industry with Technology.  As a result, IDC Manufacturing Insights asserts manufacturers will increasingly turn to transforming their existing service offerings with connected capabilities to satisfy revenue goals and meet customer expectations.

Ashton concludes: “We expect to see a considerable rise in connected service offerings in the coming years, moving from remote monitoring to predictive and eventually prescriptive services that keep products up and running with minimal interruption. And, across every industry sector within manufacturing, there will be leaders who create disruptive product-service-systems that re-define how products and services are delivered and monetised.”