Can Automation Vendors Serve Two Masters? Products & Services

Summary

Bill Lydon, Editor

Over the last few years a number of automation vendors have announced various services including outsourced maintenance, system integration, manufacturing and business process consulting, and remote operations. I wonder if an automation vendor can continue to be effective as both a product company and services provider.

To clarify the difference, let’s start by defining what I mean by services and products. By providing services, automation vendors engage with customers to perform labor and knowledge intensive tasks that may include system design, engineering services, system integration, preventative maintenance, remote operations, and other services. By providing products, automation vendors sell something to the customers, system integrators and engineering firms that they will apply to accomplish automation tasks in manufacturing and process environments.

Service Dynamics

The primary objective of a service company should be to focus on the development a system solution that is uniquely suited to the idiosyncrasies of the client’s business without being tethered by particular product solution offerings. A big part of this is the ability to deploy technologies from appropriate sources using integration and engineering skills to achieve a superior result for the client. Service businesses need to have effective and refined project, personnel, and quality management systems. The growth and effectiveness of these businesses is directly related to adding and managing smart people and this is a unique business proficiency mastered by successful service organizations. Pure service businesses have an advantage of successfully maintaining alliances with a range of product vendors that cannot be logically achieved by product vendors who provide services. This separation positions a pure service business to use best of breed and get the most out of vendors. For comparison, consider you are a smartphone user and the only place to get apps was your phone hardware vendor.

Inherent Conflict

The dynamics of a service business and innovative product business are dramatically different. Established product companies tend to emphasize the practices and culture they know best when they move into services. The tendency is to find synergies based on their products that become the recommended solutions for customers. Additionally, it can be more difficult for a product company who provides services to be the champion for the customer when there is a problem with the product being implemented.

Ideal Product Company Focus

I believe that product companies should always be striving to eliminate implementation and operations labor with improved and innovative automation technology. There is an inherent conflict by having a company that provides services and products.

Innovation

I believe that companies who aspire to grow from services are in a sense making a statement that product innovation cannot be achieved to further automate. I think a major goal of product companies should be to use technology to compete with service providers. Consider the history of copiers where Xerox dominated the market and had a massive service organization. A group of Japanese companies changed this with copiers that could be installed and serviced by the user. In the automation industry, open network protocols have certainly enabled systems to be applied using best of breed sensors.

Is it possible?

Is it possible for an automation vendor to be effective at products and services? Maybe, but there have been a number of large computer companies that tried to offer services and products eventually becoming total service providers or went out of existence.

On balance, the use of a totally independent service provider may be in the best interest of the user.

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