Global competition and increasing customer demand are forcing many industrial machinery and components (IM&C) companies to change their business model. No longer is it enough to just sell products and services. To succeed in the IM&C industry today, you need to be a solution provider, and that requires a new business model — one that creates new streams of revenue by adding value to your product offerings.
Powering a Solution Provider Network
The Next-Generation Business Model
for the Industry
SAP White Paper SAP for Industrial Machinery & ComponentsContent
^ 4 Executive Summary
^ 5 Challenge Collides with Opportunity 5 Emerging Economies 6 Shrinking Product Profits 6 Rising Customer Demands
^ 8 Master the Future 8 Enabling a Solution Provider Network 8 Offer Turnkey Solutions 8 Use the Power of the Ecosystem 9 Optimize Value Chains 9 Use New Technologies to Innovate Processes
^10 Gain New Competencies 10 Develop the Mind-Set of a S olution Provider 10 Support Aftermarket Sales and Service 10 Get System Integration Expertise 10 Master Ecosystem Networks
^11 Road Map to a Solution Provider Network 11 A Combination of Business and Revenue Models to Follow 12 Pick Your Possibilities
^14 Harness the Power of a Solution Provider Network 14 Key Capabilities 14 Key Competencies
^15 Become a Best-Run IM&C C ompany 15 SAP Has the Building Blocks 15 Put the Power of the Ecosystem to Work for You 15 Learn MoreExecutive Summary
Transformation Through
a Solution Provider Network
Business challenges drive the evolution of the industrial machinery and components (IM&C) industry. Shaped by macroeconomic and market forces, today's challenges include increasing global competition, intellectual property protection, spare-parts piracy, declining profits in product sales, and ever-increasing customer expectations.
Bearing down on all sides of the busi- At the heart of SAP support for the This SAP white paper explores trans-ness, pressure from these challenges IM&C industry are a vision and a strategy, forming an IM&C company through is forcing IM&C company executives including an IM&C business model a solution provider network and to reconsider their business model. designed to help IM&C companies addresses the issues you will meet For you, it is no longer enough to sell succeed, today and tomorrow. The key along the way. Does the new model just products and spare parts. To to the new model is the creation of a fit with your business strategy and succeed in the IM&C industry today, solution provider network and the ability objectives? How do you enable a you need to be a solution provider, to deliver more value to your customers solution provider network? Is there and that requires a new business model - by leveraging the vast IM&C ecosystem. a business transformation road map one that creates new streams of revenue you can follow to get there? How by adding value to your product offerings. are other companies benefiting from tapping into the IM&C ecosystem with such a network?
4 SAP White Paper - Powering a Solution Provider NetworkChallenge Collides with Opportunity
New Thinking for Sustainable Growth
SAP's vision and strategy for industrial machinery and components (IM&C) Machinery Production 2006 World Economy 2040. China and Russia among the top 10 . China greater than United Statescompanies begin with a deep under- machinery countries . Brazil, Russia, India, and China standing of the pressures molding the greater than G6IM&C industry and the processes that Mechanical Engineering Production 2006 GDP* Forecast 2040drive it. SAP customers in the IM&C industry face three major challenges. U.S. ChinaThese start with emerging economies that are changing the competitive land- Germany U.S.scape rapidly (see Figure 1). Secondly, Japan Indiaprofits are shrinking despite an ener- China Japangetic world economy. Thirdly, customers are demanding greater value and com- Italy Mexicopetitive advantage. It is in this environ- France Russiament that the IM&C manufacturer must deliver profitable and sustainable South Korea Brazilgrowth. UK Germany
Emerging Economies Russia BritainCanada FranceThe first challenge is also an opportunity, 0% 100% 0% 100%as emerging economies are rapidly Source: Press release, German Engineering Source: "The New Titans," The Economist, changing the competitive landscape of Federation (VDMA), October 17, 2006. September 2006 *Market exchange ratesmachinery and components companies. Economists call this the "positive supply Increased competition demands greater differentiation shock" - rapid productivity gains in 1emerging economies are lifting the Figure 1: New Competition Requires New Thinking from IM&C Com... [download for more]
