PTC LiveWorx - Schneider Electric feels the power of becoming services-centric
- Ten years into its relationship with ServiceMax, the energy automation and management specialist has been able to significantly grow its knowledge of its customers and their needs.
Earlier this month, a new CEO took the helm at energy automation and management company Schneider Electric. Peter Herweck has much to prove. His predecessor, Jean-Pascal Tricoire, spent 17 years in the role and much of the past decade steering the €34 billion company through a significant shift in focus to become less reliant on equipment sales alone and more focused on post-sales service and support revenues.
Internet of Things (IoT) technologies, of course, are a big part of this picture and, today, pretty much all new equipment from Schneider Electric comes with built-in sensors that allows products to report on their status, performance and condition.
Herweck will continue this work, and by 2025, Schneider Electric aims to double its revenue from services, as well as increase its associated services and support headcount by 60%.
Many of the company’s new services relate directly to sustainability. Increasingly, Schneider Electric, which manufactures equipment such as circuit breakers and uninterruptible power supplies, likes to position itself not so much as a company that helps customers manage energy, but as one that helps them save energy.
EcoCare is a good case in point. This membership service provides Schneider Electric customers with proactive monitoring of their equipment, for increased performance, resilience and safety, along with field services, remote technical support, spare parts delivery and so on. In this way, Schneider Electric is building a promising recurring revenue stream.
Other Schneider Electric services include EcoConsult, which carries out audits of equipment already installed on customer sites and performs health checks in order to provide recommendations on modernisation and replacement strategies; and EcoFit, Schneider’s approach to circularity and reparability, which aims to extend the working life of older equipment, with a focus on reconditioning and recycling.
At the heart of this services-centric transformation is software from ServiceMax, the service management specialist bought by industrial software company PTC last year. Schneider Electric’s VP for services digital experience Jean-Pierre Samilo cites the importance of this relationship:
Ten years ago, there was not a big focus on service at Schneider Electric and we were much more of a manufacturing-oriented company. In fact, we would even say back then that our products were so good that there was no need to service them! So it was a big change in ambition to start growing our services business, and a big cultural shift for us as a company.
But today we know that services make us more resilient as a company, because we get recurring revenue, but more importantly, it makes us more intimate with our customers, because we now accompany them closely on the post-sales experience and throughout the lifecycle of our products. Today, ServiceMax provides us with a service management platform that supports our field services, including scheduling and dispatch functions, but we’ve also approached this from an end-to-end standpoint, rather than deploy ServiceMax as a standalone platform only for service.”
What he means by that, he says, is that Schneider Electric started by mapping out the end-to-end value chain for services, integrating the sales and marketing functions for opportunity management and quotations at one end, for example, right through to the supply chain and finance functions for spare parts delivery and invoicing at the other. That has involved fully integrating ServiceMax with various ERP systems around the company, mainly SAP, but also Oracle and Microsoft Dynamics, as well as more niche and homegrown systems that have come to Schneider Electric through acquisition.
A longstanding relationship
Schneider Electric’s relationship with ServiceMax is a longstanding one, having weathered the software provider’s ownership by General Electric (which competes directly in some specific areas with Schneider Electric) and subsequently by private equity firm Silver Lake.
PTC’s stewardship of ServiceMax could bring new opportunities for end-to-end integration at Schneider Electric, since it is also a user of Windchill, PTC’s Product Lifecycle Management (PLM) software. This provides companies with a single point of reference for all the components and parts that make up their products. The potential benefit in getting more of that data in front of field service engineers and remote technicians is clear.
On top of that, says Samilo, there is the whole design-for-serviceability aspect to this. PLM is typically closely integrated with Computer-Aided Design (CAD) software used to design products at the very start of their lifecycle. So there is a strong argument for using new integrations between ServiceMax and Windchill to create products that take into account the services that could be built around them from the very start:
It’s probably too early to say, but we could be making sure the design of a product, using Windchill, takes into account service requirements. For example, how easy is it to diagnose an issue with a product? How easy is it to repair? Can we incorporate circularity from the start, so that products are manufactured and repaired using sustainable, replaceable parts?
In effect, what Samilo is describing here is stretching the ‘digital thread’ of data - a favourite term among PTC executives - so that it connects every stage of a product’s lifecycle, both before and after its sale, from design and manufacture to maintenance and repair.
But in a sense, it is in fact more of a loop because, as Samilo describes it, information about maintenance and repairs carried out once a piece of equipment is installed at a customer site could in future be used to inform how new iterations versions of that product are designed. As he puts it:
We have come a long way in ten years. We have grown our customer knowledge significantly. But we can go further still, I believe, on this journey of being a trusted partner to our customers at every stage of the product lifecycle - and this is indeed our plan.