In previous posts on the Modern Equipment Manufacturer, I introduced the concept of HVAC as a Service – or HVACaaS for short – and described why I feel both equipment manufacturers and equipment owners would benefit from embracing it.
The argument for embracing HVACaaS is rather simple for both parties – offering services can open the door to new revenue streams for equipment manufacturers, while taking the burden of optimally operating and managing equipment off of the shoulders of equipment owners. This is especially important today as the industrial and commercial equipment marketplace gets more competitive and as customers increasingly demand more efficiency and ease-of-use from their devices.
And while offering HVACaaS may make sense for equipment manufacturers, the process of adding services to their portfolio could seem daunting. Afterall, this is a whole new offering that requires a new set of skills and personnel to execute on. But embracing HVACaaS doesn’t need to be difficult or confusing.
Let’s look at three steps that organizations can take to make HVACaaS a reality, then we can address some of the larger organizational changes that they may need to make if their movement towards HVACaaS is going to be successful.
Step one: acquire device data
For HVACaaS initiatives to be successful, it’s essential that equipment manufacturers have access to the data being generated by their installed devices. If devices are going to be monitored and managed remotely, their data can’t be confined to their current physical location, it needs to be set free so that it can be aggregated and analyzed from anywhere.
This is still a large step for many manufacturers. Today, many equipment manufacturers are shipping products that generate data and connect to their customers’ BMS platforms, but they’re failing to aggregate that data for their own use. A simple solution involves embracing cloud gateways that are capable of cloud-enabling devices – effectively enabling devices to push their operating data into a device cloud.
By cloud-enabling devices, the equipment manufacturer opens the door to aggregating and analyzing their data.
This allows them to begin monitoring their devices in any location, in real-time. This also allows their customers – the device owners – to begin monitoring their devices remotely. Even more exciting, by pushing their device data into a device cloud, they’re opening the door to remotely managing these devices. Which brings us to step two…
Step two: use that data to improve service and support
Now that the device data has been set free from its current physical location and made accessible from the cloud, equipment manufacturers can start to do things with it. We suggest using it to improve service and support.
When a device goes down, it leaves customers in a lurch. Devices such as elevators may not bring a company to its knees if they fail, but other devices could be debilitating if they stop functioning. If a problem can be identified and diagnosed before the device dies, it can save customers a significant amount of lost revenue and productivity. But this is only possible if manufacturers are monitoring their devices remotely for red flags and problem signs.
The process of servicing and repairing devices can also be improved by monitoring and analyzing device data in the cloud. If a device fails and a customer calls, the manufacturer can analyze the device data remotely in an attempt to diagnose the issue from afar. This enables them to dispatch a technician that is better prepared to make the requisite repairs.
With more information about the problem in hand, manufacturers can ensure they roll a truck with a technician capable of repairing the problem and with all necessary replacement parts. This ensures that the problem is fixed quickly and efficiently and saves the manufacturer from paying for redundant truck rolls.
After following the first two steps, manufacturers can then begin thinking about generating revenue from these services.
Step three: generate revenue
By this step, equipment manufacturers are aggregating their data in the cloud, monitoring their devices in the cloud and using device data to improve service calls and maintenance. They’re also most likely changing settings and managing their devices in the cloud. At this point, it’s time to monetize these services.
As I discussed previously, device owners can benefit significantly by having the organization that knows the most about their equipment – the manufacturer – monitoring, managing and optimizing their devices. And chances are, they’re willing to pay for that. Especially if the services pay for themselves over time. In fact, the cost savings from the manufacturer making devices operate in a more energy efficient manner – alone – could pay for these services.
Step three involves taking the processes and services established in steps one and two, and simply starting to charge customers for access to them. This may seem simple, but it will be a change and – like any organizational change – will need to be managed.
The changes on the horizon
Change is hard. Organizational change is really hard. And embracing HVACaaS is certainly going to require a change for equipment manufacturers.
To make HVACaaS a reality, new skills will be needed within the organization. Data scientists and people that can analyze device data for actionable insights will need to be brought on board. These skills will be essential to making the most of the device data that is being generated and aggregated in the cloud.
The sales team will also need to be trained on how to evolve from selling a product – with a definitive, tangible list of features – to selling services. In many cases, this will be the first time that consumers and customers are ever approached with the HVACaaS concept, and many will find the intangible nature of “remote device management” difficult to grasp. Sales people will need to be trained to highlight the potential cost savings and productivity benefits to overcome inevitable sales objections.
That being said, the potential benefits for manufacturers certainly outweigh the changes that they’ll have to make. HVACaaS can revolutionize a company’s business and introduce new revenue streams at a time when the marketplace is becoming increasingly crowded, equipment is becoming increasingly commoditized and margins are growing thin. By following the three steps and being open to some change, manufacturers can truly differentiate themselves and open the door to incredible revenue growth in the future.
For further thoughts on the value of HVACaas and cloud-enabling devices, click HERE to download a complimentary copy of the ABI Research report, “Equipment Manufacturers Turn Cloud Connectivity into Competitive Advantage.