The world of high technology encompasses a large and varied collection of companies. So much of what people use daily has a significant technological component. It is easy to think of the obvious, like computers and smartphones, but there are millions of other devices that use circuit boards, electrical power, and some sort of intelligence to get the job done.
Although the high-tech tools used in homes and businesses can appear quite leading-edge, it does not necessarily follow that manufacturers are always equally on top of their game. Manufacturing is a process, and it is often difficult to retool a shop, whether on the factory floor or in the executive suite, to embrace current trends and techniques.
But things are changing, and it is vital for tech companies to take note. The world is moving into the outcome-based economy. Instead of just selling a product, tech companies—including software, semiconductors, and consumer electronics—are getting into the solution business.
Example: The MRI
A straightforward example of this is the MRI scanner. As a critical part of medical diagnostics for a variety of illnesses, magnetic resonance imaging (MRI) scanners are in high demand at any hospital or specialty clinic. They are expensive, both to buy and maintain. In earlier decades, it was typical for manufacturers of medical devices to sell products to hospitals but leave the support and operations to the customer or a third party. Business was about sales, and monetization focused primarily on repeat transactions.
The outcome-based economy no longer focuses solely on machines. It focuses on results, like patient safety and comfort, accuracy of diagnoses, the financial well-being of clinics, and the ongoing health of the machines themselves.
Machines play pivotal roles, but for manufacturers, significant opportunities exist to expand beyond just product, expanding into services and solutions. For MRI manufacturers, this might include:
- Remote diagnosis, assessment, and repair of MRI components, through Internet of Things protocols (machines communicate their status and needs directly to manufacturers)
- Supplying installation, maintenance, and physical upgrade services using in-house teams instead of third parties
- Providing supplies – films, lenses, even cleaning agents
- Providing trained and certified MRI operators and technologists – hospitals worldwide suffer from shortages in quantity and quality of available technicians
- Providing access to diagnostic specialists and health-related big data
- Offering better cloud-based storage of imagery
- Offering insurance and protection against damage, power-loss, viruses, hacks, and ransomware, in conjunction with or in addition to a hospital’s existing arrangements
Services can now be bundled and provided by manufacturers on a subscription basis—a monthly retainer or fee that guarantees uptime, availability, security, and up-to-date upgrades. This could be considered MRI-as-a-service. The outcome is an improved experience for patient and practitioner, which yields further business opportunities and financial reward for all involved. It is a win-win for vendors, the hospitals, and patients.
For manufacturers in any area of high technologies, the outcome based economy is about:
- Bundling products and services
- Getting away from one-time transactions
- Going into subscription-based transactions with a recurring revenue relationship.
This is all about monetizing the entire ecosystem, meaning everything about the business.
Building the marketplace
A technology company that owns its marketplace can bring in all its channel partners and value-add partners to create a bigger value pie for everybody. The company becomes the “place” to sell those additional products and services. Those services, like cloud-based storage of MRI imagery, complement the basic high-tech product or solution (the MRI scanner), and ensure that the residual business stays inside the lines.
Customers and B2B buyers no longer need to click away from the company’s own web property. That business stays within the marketplace and does not get lost or poached.
This is significant, since data shows that as soon as customers are sent offsite, for example, to learn about a service they might want to receive (like better cloud-based storage of MRI imagery), half those people drop away from the manufacturer’s site, and most do not return.
Any company that works in the high-tech sector must take immediate steps to look around and observe the ecosystem that surrounds them. When their product is sold, who uses it? Where do customers go for other items that work with their purchases? Where do they buy upgrades or replacements? How are repairs or proactive maintenance delivered? What other non-traditional services or products do users buy that relate to the product somehow? What else is happening in the world that might affect how the product is used?
These are the types of questions that will help define the scope of the new marketplace.
As the world evolves towards an outcome-based economy, SAP can help high-tech companies launch their own direct marketplaces, helping them retain direct customer relationships while monetizing everything that touches the business.
Ready to grab a bigger piece of the value pie? Learn more here.