Digital Debate: Risk Mitigation for the Industrial Subscription Economy | Recap
By Isaac Brown
Last week, I had the pleasure of hosting a virtual panel-style debate with my friends John Riggs (SVP, Applied Technology Solutions at Munich Re / HSB) and Guneet Bedi (Chief Revenue Officer & SVP, Global Sales at relayr) – see the recording here.
Over 150 global executives joined the virtual event from companies like Atlas Copco, Bosch, CNH, Daimler, Emerson, Evonik, Ford, Georgia-Pacific, Gulfstream, Jabil, Magna, Schneider, Siemens, Suez, Tetra Pak, Thales, Transocean, Volvo, ZF, and many more.
The discussion kicked off with the big picture question: How do digital transformation and business model innovation create risk? In our previous session on the Industrial Subscription Economy, we discussed equipment manufacturers bringing connected machines to market with value-added digital services for their customers, and transitioning into equipment subscription models – but the challenge is how to assess and mitigate the risks of investing in digital transformation and business model innovation.
To understand business model transformation across industrial equipment and services, we debated the following points:
Is the net opportunity worth the risk for transitioning to as-a-service models?
Who owns the risk for XaaS – manufacturers, servicers, operators, or financers?
What strategies can be used to mitigate risk to enable first-mover advantages?
How are companies embracing change and cultural shift during transformation?
John helped us understand the big picture with the following framework he and the Munich Re / HSB group have developed for assessing risk in digital transformation:
Technology & Cybersecurity Risk – digital transformation inherently involves technical enablement via the use of new hardware and software systems, which create new points of failure and new attack surfaces.
Strategic Risk – this includes a range of things like market trends, the competitive landscape, and crafting the right value prop. Above all, it’s essential to assess customer needs and what customers will pay for, which is changing day-to-day during the current global climate.
Financial Risk – transformation always involves some form of financial investment, so it’s especially important to identify the right partners to invest in and maintain some liquidity.
We wrapped with Guneet outlining a detailed example of a business model transformation with one of relayr’s customers, Coborn, a diamond tooling machine OEM. Coborn leveraged relayr’s technology in combination with Munich Re / HSB insurance to transition to an as-a-service model with guaranteed machine reliability.
And in case you missed it, check out there recording!
We’ll be hosting a series of virtual events focused on the evolution of the Industrial Tech landscape – hope you can join us!
Digital transformation inherently involves technical enablement via the use of new hardware and software systems, which create new points of failure and new attack surfaces.