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I am Gustavo Milan, and with my colleague Bill deWitt we are part of the global industrial manufacturing team focusing on customer experience and solution configuration.  In this second blog of our series on industry cloud solutions for industrial manufacturers, we are excited to share our thoughts on what is driving the need for personalization, what the implications for industrial manufacturers are and how SAP's Industry Cloud solutions can help.  If you missed the first blog on the case for industry cloud for industrial manufacturers read it here

Each Customer Is Unique

In the current environment, it’s not enough for industrial manufacturers to simply deliver great products anymore. Today, customers expect great experiences and exceptional service to go along with those products. We have found that industrial manufacturers want to offer configurable solutions that meet individual customer needs and deliver those close to standard cost. They want to offer solutions that comprise of physical equipment bundled with added value services, that typically include service contracts, subscription contracts, installation services, consumable products and digital services and subscriptions.

We’ve found that successful industrial manufacturers are actively listening to their customers, identifying each specific customer need, and then configuring and creating personalized solutions that address that need. From a business model perspective that means evolving from selling products, to bundling services and products into solutions and finally transitioning to outcomes-based offerings.

Competitive threats are also driving this transformation – commonization at the product level means that selling products is no longer an advantage. Services, subscription, solution, and outcome- based selling models will enable both revenue and margin growth and become a competitive differentiator for industrial manufacturers.

Some of this is not new - industrial manufacturing companies have been offering engineer to order and configure to order for a long time. However, today, as more customers are expecting even more personalized solutions at near standard cost, we see that there are implications across the entire value chain - industrial manufacturers need to have greater flexibility, automation, and intelligence throughout their business processes.  More importantly, there’s a need of effective and automated collaboration between sales, engineering, manufacturing, and aftermarket sales divisions.

One Single Model and Source of Truth

As industrial manufacturing companies consider how to deliver complex configurable solutions, they need to look closely into integration and collaboration throughout their value chain. From R&D, through supply chain and manufacturing and all the way to sales & service, it is critical that all the value chain of the company have visibility into the product lifecycle.  This means that the configuration ordered by the end-customer is transferred seamlessly to manufacturing, installation and services teams, especially as industrial manufacturers are starting to digitally engage with customers and partners directly through e-commerce platforms and digital channels.  We think that automatically connecting processes is a key component to successfully sell outcomes and personalize solutions. For this to take place, there needs to have a single source of truth of product modeling that can be used in all different front end and back-end processes, so that there is consistency of product data across the value chain.  Through our conversations with our customers, it is clear that inconsistent data across the organization will impact the customer experience, and ultimately revenue and margins, and that is why industrial manufacturers are accelerating digitization of most critical business processes.

And improving integration alone is not sufficient - collaboration between sales, engineering, and manufacturing becomes even more important - so sales reps can have accurate information when interacting with customers and have the ability to validate configurations, manufacturability, provide estimates, assess risk, analyze profit margins and plan accurate lead times in order to deliver on the promise.

Shift into the future

Therefore, it is important to have both an application architecture where you can run your core business processes in an effective manner and extend processes quickly and at scale with modular innovations (micro-services). SAP’s Industry Cloud is an innovation space, where modular industry cloud solutions have been developed by SAP and our partners, to help industrial manufacturers deliver new solutions and business models. These modular solutions use the same business services, data and process models so they can be easily integrated with SAP’s intelligent suite and business network.  And as native cloud solutions, they are seamless to implement and use and the integration makes it easy to scale and merge into existing processes.

SAP Intelligent Enterprise [Source:]

Digitalization of processes will be essential in order to personalize solutions and sell outcomes cost-effectively going forward. Embedding technology such as artificial intelligence (AI) or robotic process automation will help manage these complex processes across different systems, organizations, and supply chains effectively, while growing revenue and increasing margins.

So, we think that for industrial manufacturers producing quality products is still critical but now it is just one piece of the puzzle. They need to provide real outcomes, which are a combination of good experiences and exceptional service that accompany quality products –personalized to each customer needs. What are your thoughts regarding this topic?

In future blog posts we will provide more information on the SAP's Industry Cloud solutions that support the solution selling. If you have any questions about SAP's Industry Cloud, please submit it here.