IIoT / Smart Manufacturing

How the IIoT will shake up how your plant buys what it buys

Rent, buy, subscribe? Equipment becomes a vehicle as vendors sell uptime, output.

Remote connectivity and analytics enabled through the industrial IoT (IIoT) offer equipment dealerships and rental companies an opportunity to grow revenues through new maintenance services. Equipment used in the construction, mining, agriculture, industrial, and transportation industries has grown increasingly complex and often incorporates mechatronics, electronics, IT, and software. This makes it challenging for general-purpose technicians in the maintenance staff to debug and isolate equipment problems.

In response, original equipment manufacturers (OEMs) are offering IIoT-enabled remote monitoring and analy-tics services on a subscription basis that identify an issue before it harms the equipment or cascades into a major incident. An OEM’s dealership or rental company provides this predictive maintenance service to its local end-user customers along with well-trained field service technicians to make repairs. This benefits all parties by providing increased revenues for the equipment dealer or rental company while improving customer satisfaction and retention by helping equipment users avoid costly unplanned equipment downtime.

Unique needs of equipment dealerships

Successful equipment dealerships typically listen carefully to their customers’ business needs to improve customer satisfaction and retention and identify new sources of revenue. As these dealerships add products and services, their business has become increasingly diverse. Now, the IIoT provides two new opportunities for business growth: product-as-a-service (PaaS) and predictive maintenance (PdM) offerings.

Both PaaS and PdM drive significant expansion in dealer-provided maintenance services:

  • PaaS transforms the customer relationship from one that focuses on the initial delivery of equipment into a results-oriented continuous service offering. With PaaS, users are charged based on equipment output. One example would be charging for the volume of compressed air generated rather than charging an up-front fee for the compressor. Because revenue is generated only when the equipment is operating, the distributor or renter has a high incentive to manage and deliver maintenance that ensures high equipment uptime.

  • PdM as part of a service model involves using the IIoT and analytics to monitor equipment’s health, for which the distributor or renter charges a subscription fee. When the analytics trigger an alert, the distributor initiates a repair prior to failure. The distributor assumes penalties if the service-level agreement (SLA) is not achieved. Again, the distributor manages and delivers maintenance to ensure high uptime of the equipment.

These new business models dramatically increase the need for excellence in the dealership’s or the rental company’s information management and business processes for each piece of equipment and its maintenance.

A unique and critical need of dealerships and rental companies pertains to the interwoven business processes for delivering both depot and field services. The table above provides a basis for describing the complex set of maintenance-related business processes for a dealership. These processes demand a hybrid combination of maintenance management that involves assets on site in the depot and field service management for repairs at customers’ locations.

For field-service repairs, the dealership/rental company must:

  • Send a technician with the right skills, parts, documentation, and tools at the agreed time for service at the customer’s location
  • Enable the technician to upsell by expanding the scope of the initial work order as the need or opportunity arises

For depot refurbishments and upgrades, the company must:

  • Refurbish used equipment, subsystems, and parts from trade-ins, rental returns, and other sources to function as new with a warranty
  • Maintain or upgrade a client’s equipment or parts and return them to the respective owner

In both cases, the organization must:

  • Bill the customer correctly based on the client’s specific service agreement and actual services delivered
  • Track the history, costs, and related asset information for assessing future repairs and evaluating end of life

During these activities, the dealership/rental company tracks ownership for each specific customer and its inventory. Site-specific industry requirements, local customs, and individual interests are nuances that must be layered onto the basic business processes.

Equipment lifecycle and profitability assessment

Dealers and rental companies need an enterprise solution for managing the lifecycle of thousands of assets with consistent workflow, business processes, governance, and data quality.

The number of machines serviced by a dealership or rental company can range into the tens of thousands, with a variety of customer relationships and associated SLAs. These companies need a means to assess the economics for each machine to determine when maintenance costs grow to the point that the machine should be refurbished or replaced. The entire equipment lifecycle encompasses initial forecasting and sale of the equipment through to shipment, renting, servicing, overhaul, and final disposal. Each asset has its unique history of activity, revenue generated, and costs incurred that determines optimal times for refurbishment or replacement.

Managing this lifecycle for thousands of assets goes well beyond the capabilities of ad hoc entries by multiple people into a jumble of Excel spreadsheets. Enterprise-level applications can provide an effective solution for managing workflow, business processes, and governance. An equipment profitability assessment will capture the financial transactions for the equipment and its subsystems. A budget model will allow application users to understand the income and costs for each item and the associated SLA for uptime. This can trigger the need for a major maintenance activity, such as an engine rebuild, an overall refurbishment, or an upgrade.

When costs and income start to negatively impact profitability and the asset is no longer economically viable, software is needed to alert users and those monitoring the equipment to this. For a customer’s machine, this involves comparing cost vs. replacement. For the dealer’s rental equipment, this involves comparing revenue and cost. Now, with IIoT-enabled remote monitoring and analytics, the dealer can have real-time information that provides a better understanding of expected costs, supporting a clear, fact-based evaluation.

The IIoT also provides access to operating data that can help extend asset longevity. Alerts can provide awareness of mistakes made by inexperienced operators, triggering appropriate training to help avoid additional equipment damage or safety issues. Also, the dealer will know when use exceeds that specified in the rental agreement.

Because the dealership or rental company is usually named among the many parties involved in product liability lawsuits, the documentation generated by the application can be held indefinitely and accessed easily should it ever be needed to support a successful defense.

In addition, as maintenance becomes a larger portion of an equipment dealership’s or rental company’s revenue, it becomes increasingly important to deliver those services efficiently and competitively with acceptable margin. Mobile devices and software provide technicians with access to the instructions, drawings, and other information needed to improve the MTTR and first-time fix rate FTFR – two key metrics for repair effectiveness and customer satisfaction.

Mobility helps provide:

  • Improved mean time to repair (MTTR) and first-time fix rate (FTFR)
  • Accurate arrival time
  • Opportunities for upselling and increased revenue
  • Data quality needed for a trusted management system

With a mobile device and network access, technicians can access maps and directions to help them navigate and accurate determine arrival times, another key customer need.

When a technician is at the customer’s site, sometimes he or she finds that the job has a broader scope than anticipated or additional pieces of equipment need repair. A mobile device provides the opportunity to modify the original work order or add new orders to cover the additional maintenance. The technician can upsell and increase revenue while with the customer.

The mobile device allows for processing of work orders while the technicians do their work. This avoids common problems associated with paper work orders, such as data-entry errors and a lack of timely information in the associated management systems. Mobile devices and software help improve technician compliance and data quality, making the field-service management software a trusted tool for planning, scheduling, and billing.

With mobility, the technician closes the work order before leaving the job site, allowing revenue recognition and invoicing immediately upon work completion. This business process automation reduces the elapsed time to issue an invoice, improving cash flow.


The introduction of new technologies often provides a reason for companies to review their business processes and identify potential performance improvements. The time is ripe for dealers, rental companies, and their OEM suppliers to assess the viability of their business management software in this changing business environment. Based on ARC research and analysis, we recommend the following actions:

  • Dealerships and rental companies should consider adopting the IIoT to profitably grow their business with remote asset health monitoring and maintenances services. Research indicates that real-time monitoring and proactive maintenance usually adds three to five years of useful life to rental machines. Also, those still employing reactive, break/fix maintenance will be at an increasing competitive disadvantage compared with those that offer PdM services to achieve near-zero unplanned downtime. These disadvantages are strongest at sites where unplanned downtime affects revenue.
  • Heavy equipment users should review their maintenance strategy and consider employing predictive maintenance services provided by OEMs, rental businesses, or dealership with the goal of reducing maintenance costs and unplanned downtime.
  • Equipment OEMs should evaluate IIoT-enabled connectivity and analytics to differentiate their equipment in today’s increasingly competitive industrial marketplace.