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Former Member

by Georg Kube, Vice President, Industrial Machinery and Components, SAP

Original blog on SAP.COM

Do your customers want products or solutions? It’s not a trick question.  Rather, it’s a question about the approach you’re taking to help your customers.

solution provider network

The drill manufacturer Hilti, for example, has gone beyond offering drills and bits, its traditional products. With an eye toward customer centricity, Hilti has a program to offer its customers a guaranteed number of holes to be drilled. Kaeser Compressors has moved beyond simply selling compressors to selling solutions based on the volume of compressed air that a customer requires.

Both Hilti and Kaeser have focused on customer-relevant outcomes and created a solution around those outcomes. The products each manufacturer produces play an integral role in that outcome, but the outcome also depends on elements neither manufacturer produces itself. To guarantee a specific number of holes or a specific volume of compressed air may require maintenance and professional services, service-level agreements, even monitoring and measuring systems that can ensure solution delivery at the specified level.

So how can a manufacturer do this? That’s where a solution provider network comes in. Think of it as the glue that binds an OEM’s products into an offering that meets the customer’s broader business need.

Evolving the solution and the network

For every manufacturer, this focus on solutions creates possibilities for a stronger relationship with customers. You stand to increase your revenues and profits, even as you increase customer satisfaction and loyalty.

How can you convert your products into customer-centric solutions? You need to answer two questions: To what end do your customers use your products? And, what besides your products is critical to achieving those ends?

The answer to this latter question helps you identify the elements that will constitute your solution provider network. Your customers may need replenishment solutions, quality-of-service agreements, monitoring and measurement services (to support the QoS agreements), or something else entirely.

Once you know the elements the solution requires, you need to develop a network of solution partners that can help you ensure the solution you’re going to offer. Clearly, this approach represents opportunities for your prospective partners, so your task is to determine which partners can provide the services your customer needs with a level of quality and reliability that’s consistent with the solution you’re offering.

Binding the network

If the solution provider network is the glue that binds an OEM’s products into a solution, data is the glue that binds the solution provider network. If you think about the solutions Hilti and Kaeser offer, it’s clear these services rely on a steady stream of data from the field. If Hilti is guaranteeing a certain number of holes, it needs to know how many holes a customer has drilled. It needs to know the status of its products in the field and, if a drill or a bit needs to be replaced, it needs to let its solution partners or replenishment teams know the customer needs new components immediately.

Data binds your solution’s elements. It enables quality of solution monitoring and proactive responsiveness. And it’s not only data from your own systems and products. Delivery of your solution may also depend on data from your customers’ systems.

If you’re an OEM delivering a solution that enables customers to manufacture a certain number of perfectly printed circuit boards each week, then you need data from your customers’ QA systems telling you how many boards passed the QA tests. You need systems and an infrastructure that can capture what might be a huge volume of data, analyze and understand it in real time, and perhaps even take action automatically in any number of dimensions. That might include sending a bill, remotely restarting a solution, alerting your sales and marketing teams of upcoming contract renewal dates, or detected patterns that might signify that a customer is a candidate for another solution you can offer.

Depending on the data you require to ensure your solution—and it will vary with every solution offered—this could lead to very sensitive negotiations between you and the customer interested in your solution. Once you’ve come to an agreement, though, the benefits of a customer-centric solution provider network—to both your customer and your enterprise—could be hugely significant.

Want to discuss solution provider networks further? Don’t miss the SAP Manufacturing Industry Forum 2014, April 15 – 16 in Itasca, Ill. Join SAP customers, partners, and experts from around the world to network and learn about industry trends. Register now!