Machinery and automation: Driving value through service excellence

In the machinery business, companies face the challenge of adapting their service monetization models to meet diverse customer needs. Traditionally, machinery such as tractors were sold as a capital expenditure (CapEx), with customers purchasing equipment outright. However, as technology advances and business models shift, there's an increasing trend towards offering machinery as a fully serviced solution, with costs linked directly to outcomes like crop productivity. 

This concept, known as performance-based pricing, is nothing new. It was popularized by General Electric in the 1980’s-1990’s on equipment ranging from locomotives and wind turbines to medical devices and jet engines. In each case, customers were charged based on actual usage and performance of equipment rather than a flat purchase price. 

This shift necessitates a rethinking of value metrics and the implementation of sophisticated value calculators to accurately reflect the benefits of flexible…