Successful productization of data- and AI infused digital service is not a game for the weak

The truth for many machine industries is, that to successfully productize a digital service and infuse it into machines, you need to jump out of the comfort zone. So, what is needed to achieve success?  

In machine industry every company is facing a challenge that the markets expect well productized digital and AI services that merge with the machines and fleet management. It’s not enough anymore to just make a machinery that works, but the digital services’ sole purpose is to make machines safer, easier and more efficient to operate. Unfortunately, turning AI and digital service concepts into a profitable business may not align with traditional machine business models. This highlights the need for new strategies that are specifically designed to accommodate the aspects of developing digital services. 

Bold choices: Focusing resources on digital service development 

All companies are eager to find the fastest path to success, preferably combining significant achievements with minimal risk. However, this aspiration can lead to a premature upscaling of the digital business and spreading resources too thinly across many areas. This is a common trap that can be avoided.  

For business leaders it is crucial to acknowledge the reality that even the best AI and digital tools cannot solve every problem that the customers have. Success demands bold decisions, focusing on selected areas with the highest potential. Moving away from traditional methodologies, adopting a lean approach inspired by software development practices is key. This strategy involves experimenting and refining to ensure that the solutions are of the highest quality for users. After achieving success in these strategic areas, businesses can then consider scaling up. This approach typically starts with the machine types that have the most digital capabilities, such as comprehensive sensors and real-time connection to the cloud, and with clients who are willing to engage in service pilot projects.  

Nothing good comes easy – but there usually are best practices   

Digital service productization includes a lot of unknown grounds and development based on both successful and unsuccessful experiments. The good news is this is also the cost-effective approach. Next, you can learn the steps over common challenges.  

Figure out what customers want

Figuring out what customers really want starts with a simple step: asking them. But it's not just about chatting with customers. It's equally important to listen to the people on your team who talk to customers every day, like salespeople and technical support. They are on the front lines, hearing firsthand about the challenges and needs. A variety of methods can be used to get the maximum information from these stakeholder interviews and to validate the assumptions made in the digital service planning. This approach keeps things real and makes sure we're not just making things for the sake of it but creating solutions that the customers value. 

Start with the hardest part and validate it first

When developing digital services, distinguishing between value creators and value enablers early on is crucial. Value creators, often the novel and riskiest parts of your service, such as AI models and new service concepts, should be the first focus. By identifying these core features, you can prioritize their development and validation first. This approach allows you to test the most critical aspects through a minimum viable product (MVP), making sure that those work before committing full resources to the service development. This could be done in cooperation with a small number of tech-savvy pilot customers, who want your service and are willing to contribute to the development.  

Many times, the most difficult part is getting the honest and comprehensive feedback from the service pilot users. This phase often benefits from design methods and facilitated interviews to gather insights about the service performance and business value. If the service contains AI solutions, those must be tested with real data from the machines. Using synthetic data is a guaranteed way to fail when productizing an AI solution. 

Once these value creators are validated and refined based on feedback, you can then proceed to develop the rest, including value enablers. Value enablers are the low-risk foundations, such as cloud data platforms and applications/portals for delivering the service, that usually are based on well-known technologies and are used to enhance scalability, efficiency, and user experience.  

Build, measure, learn: Iterating towards excellence 

After prioritizing core innovations and validating value creators, the next step in digital service development is to use a cycle of building, measuring and learning. Set measurable goals and use customer feedback and data analytics to gain insights. Learn from both successes and failures and build the next iteration of your service by applying all knowledge that has been gained so far. This principle should apply to all parts of the service concept, not only the AI features that always require monitoring and updates. This phase is best done with a small number of pilot customers who are not afraid of changing features.  

This iterative process ensures that your digital service evolves in alignment with customer needs, and you will find opportunities that may have been unknown when planning the service productization.  

Scaling your success: Optimizing and expanding the service 

After validating your value creators and refining your product through iterative cycles of feedback and improvement, the next step is scaling your digital service. It will focus on topics like optimizing your digital infrastructure for increased demand, implementing advanced data analytics, and enhancing customer experience. In this phase the service is made available to new markets and adapted to different customer segments and machine types. Internally the development continues in an iterative way to ensure that your digital service remains competitive and continues to meet evolving customer needs. 

So, there you have it – digital service development with the lean approach is like having a roadmap in the world of tech. Start with real conversations, focus on the game-changers, tweak as you go based on what users say, and then grow your success from there. It is about keeping your ears open while keeping eyes on the target, all while dodging the pitfalls. Let’s roll up our sleeves and make it happen! 

TL;DR  

To reach profitable investments in digital service development for heavy machinery, you need to begin with your business- and productization strategy. Once you identify the actual business problem, adopt an innovative culture of lean development and involve the right people in the process, there’s a good chance of success.