Manufacturers are investing in new business models

February 20, 2024

Manufacturers are investing in new business models despite economic uncertainty

An annual global research report released today, titled The Voice of Digital Leaders in Manufacturing 2024, interviewed global B2B digital leaders and decision-makers from large industrial manufacturers. Key findings include:
• The number of organizations relying on e-commerce for aftermarket services has more than doubled, from 7% last year to 15% this year.
• More than three out of four respondents (75%) cite e-commerce as the expected channel for revenue growth in 2024.
• Investment in customer portals has grown, with 66% saying they’re investing in them this year compared to 50% last year.
• 39% of this year’s survey respondents say they are prioritizing their data foundation and analytics – an essential component of customer portals and e-commerce shops.

“In today’s economic and industry landscape, where competition is fierce and servitization is growing, it’s no surprise that many manufacturers see a huge opportunity in growing business within their existing customer base by upselling and creating digital services in the aftermarket,” said Mascha Tamarinof, Global Vertical Lead, B2B at Valtech. “Our research finds that the combined digital revenue from selling new products and equipment is 16%. However, in the aftermarket, digital sales mount up to 26% of total sales. This motivates a shift in priorities, ushering in a new era for the industry where organizational change becomes a critical business focus for new business models and value-adding services to flourish.”

As more B2B manufacturing organizations voice an interest in the aftermarket, the survey surfaced improvements in digital maturity with 30% of respondents ranking themselves ahead of their competitors, compared to the 16% in last year’s survey.

“Faced with the challenge of confronting the complex IT landscape that still exists within many B2B manufacturing organizations today, it’s positive to see an upward trend in digital maturity as they begin to leapfrog the competition and benefit from the digital capabilities they invested in last year,” said Herbert Pesch, Managing Director, Valtech B2B. “To continue this trajectory, B2B manufacturers must maintain a customer-centric focus in their digital transformation efforts to drive innovation and the creation and optimization of their new services and customer experiences. At the same time, they need to scale and monetize their new digital services and business models, all while integrating them with existing legacy systems and siloed data architectures.”

While the report illustrates that digital leaders in manufacturing are increasingly aware of the potential business opportunities born from aftermarket channels, respondents highlighted several challenges in seizing these opportunities:
• 51% of respondents are concerned that rising costs of operations will pose a threat to their digital success in the new year.
• Concerns about new entrants in the market and disruptors of business models have increased by 23% compared to last year.
• The top reasons for slow or failing internal adoption are reluctance to change or embrace digital tools (49%), lack of cross-functional and departmental collaboration (46%), and lack of ownership of digital at the local level (46%)

Herbert added: “Like last year, the results this year reflect a common organizational culture struggle that can be addressed with change management, collaboration, and a more cohesive approach to digital ownership. Overcoming these challenges is essential for industrial manufacturers to unlock the full potential of digital commerce and customer portals in the aftermarket.”

Valtech’s annual survey of manufacturing leaders focuses on the current state of their digital transformation investments, progress, and focus. It aims to better understand the challenges of the industry, giving manufacturers a resource to share goals, business strategies, and challenges with industry peers as they navigate the year’s challenges. As manufacturers enter the next phase of their digital transformation, the results and recommendations will empower them to make more informed decisions as they bring their digital ambitions to life.

To download a complimentary copy of the report, visit: The Voice of Digital Leaders in Manufacturing 2024 report.