Should Industrial OEMs “Buy or Build” an Installed Base Management solution? Part 1 of 3

Should Industrial OEMs “Buy or Build” an Installed Base Management solution? Part 1 of 3

In this 3 part series, we examine the ‘Build vs. Buy’ decision that Industrial OEMs face when implementing an Installed Base solution. The approach outlined in this blog series is generic enough to be applied to other solution implementations or tool purchase decisions.

The ‘Build vs. Buy’ decision for Installed Base Data Management can best be compared to someone hitting a fitness routine. I choose this analogy because, just like our bodies, we happen to know a lot about our businesses. Like our body, we are fairly comfortable making decisions for both our bodies & our businesses due to this familiarity.

Now, let’s take this analogy further with two people –

  1. someone who’s never been to the gym before and,
  2. someone who has had prior experience working out.

The person who has never been to the gym before will flounder & see slow progress. There will be new-fangled machines to deal with, a schedule that is too erratic & slow to see any real progress or too fast to cause burn out. There will be a ton of trial-and-error along the way as their body will start to react in new, strange ways. With no guidance and “hack it till you make it” attitude, the fitness endeavor will eventually come to a halt – with a promise to get back someday or sometimes sadly sworn off for good.

The person who has had some prior experience is in no great situation either. They’ve spent countless days, money, resources & focus learning as well as unlearning the right way to get in shape. They typically have scars to show – I am one of them, having endured everything from a major shoulder injury to a knee that acts up every single morning as a reminder of an unfortunate accident from 2016. The money spent on working out is nowhere close to the money spent on fixing the issues that popped up later.

So what does physical fitness adventures have to do with the “build-vs-buy” decision?

The answer is simple – you need a mentor, a helping hand, a guide, a trainer, a motivator, and a friend all rolled into one.

Without someone to help you navigate the strengths & weaknesses of your own system, you are bound to slow down, be injured, or even quit altogether.

The same goes for implementing any solution, including an installed-based management solution. Sure, you can do it all by yourself because you know your own data inside out; however, what will end up happening is you will start from scratch, build workflows and needs on the fly, potentially reach resource constraints, and what is built may not be good enough for everyone or serve all for a long time.

We have seen this play out with industrial OEMs for multiple years. Every so often, we come across an industrial OEM team that decides to build a solution internally. They go around gathering the users, policymakers, decision-makers, and of course, the IT team required to build the solution. Having spent months getting the requirement right and a few more quarters building the solution from the ground, they circle back like clockwork. At that stage, the industrial OEM project is in a half drowning state – with both money & time spent for deliverables that are subpar.  Other times, we have come across what is known as “legacy tools”, which are nothing but an in-house installed base management solution that their team tried to implement as recently as a year ago. Sometimes, these tools are a natural product of an acquisition years ago. The common complaint across all these solutions is that they are simply not good enough for aftermarket sales & service teams to use.

So is buying an installed base management solution the only option?…

Let’s rephrase the question – is buying a software solution the only option? Do we buy a Microsoft Excel™ or build one? Do we buy an ERP/CRM system or build one from scratch? Do we buy a Service Field software, or do we build one?

The answer lies in understanding which COTS (commercial off-the-shelf software) are available in the market. If there are mature tools which have been tested for years, if not decades, across a large number of organizations and users.

If such a solution exists with credible success stories, it’s a no brainer to go ahead and buy rather than implement one.

If Industrial OEMs are implementing Installed Base Management Solutions in this day & age, they are way out of their depths & are investing in a short-term project that will be termed ‘legacy tool’ in the matter of a year.

Now, are there any exceptions to the above? Absolutely yes, there are. In our experience, an OEM with revenues less than $10 MM has an installed base size that can be managed diligently using spreadsheets. Most sales & aftermarket folks in such organizations know their customers well enough to be able to predict their needs before they happen. Beyond $10 MM revenues, Industrial OEMs, would need to start evaluating their data hygiene and creating more complex predictive needs so they can cover 65-80% of their installed base. In the next part, we share the typical challenges Industrial OEMs face when implementing their own Installed Base Management solutions. Stay tuned.

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