Transcript 0:00 [on-hold music] Talk to me. Information, news and entertainment on demand. WS Radio.com. 0:11 [upbeat music] Welcome to The Peggy Smedley Show, the voice of IoT in our connected world, with your host, Peggy Smedley. [upbeat music] Hello, listeners, and welcome back to The Peggy Sledley Show. 0:26 My next guest today is an experienced finance professional. She has a strong passion for learning and improving commercialized solutions in energy and transportation around the globe. 0:37 So please join me in welcoming Sara Lupien, contract and revenue manager at Caterpillar. Sara, welcome to the show. Hi, Peggy. Thanks for having me. Oh, it's my pleasure. 0:50 So, Sara, let's really talk about Caterpillar, 'cause if you think about it, Caterpillar really hasn't traditionally been known as, like, this subscription kind of company. 0:59 And with sensors and things really evolving, and we think about assets in the field, I think, you know, Caterpillar's really done a lot with what it's trying to do with Cat Connect, and I thought it would be really great for us to talk about it so our listeners really understand what you guys are trying to do these days. 1:16 Yeah. So we've been connecting equipment since the mid-'90s. Uh, we still sell big iron, heavy equipment, engines, gen sets. That's our core business. 1:26 But we can complement that by leveraging digital to help our customers be more successful and more proactive to maximize their utilization and uptime. 1:37 How we're creating value from data is under our Cat Connect offering that you mentioned. These are our subscription services. 1:45 Our solutions analyze information gathered from sensors attached to over five hundred thousand critical assets worldwide that offer customers tailored advice about how to improve performance, reduce risk, control costs, and manage people. 2:00 Customers can get everything they need in one place, whether they have a large fleet or a handful of assets. 2:05 They have the ability to read and analyze data from all their critical assets, whether it's marine vessels, gen sets, or gas compression stations. 2:14 And even if a customer has a mixed fleet with equipment from other manufacturers or other important assets on the job site, we provide a range of digital services from telematics to efficiency optimization analytics that's on the equipment itself to predictive technologies. 2:33 Well, when we're talking about that, that's interesting you're talking about, because I think when we talk about machine performance, we're trying to understand the data, you know, the dirt, all those oth-other things, but we're really, when you get down to it, you're really trying to manage and, and kinda understand when m-- a machine needs fine-tuning, right? 2:51 I mean, that's really the benefit of the digital services that you're talking about, right? Right. 2:58 Uh, using the data from these technology-equipped assets, our customers can get more information and insight into their equipment and operations than ever before. 3:09 Uh, these services offer insights tailored to the financial operations or safety goals of customers. The data is really just as important as the asset that's providing it. 3:22 Uh, our digital solutions offer more than just telematics, including remote monitoring or predicting equipment's health. These services, they help the customer manage and control variables that impact utilization. 3:35 For example, knowing when their equipment can be operated, how to optimize the performance of it, or even predict the performance and find out if there's some recommended interventions that are needed. 3:46 Especially in the energy and transportation industries, where the locations of these assets can be more widespread and challenging to manage, the ability to monitor those operations remotely becomes more critical to reliable production and profit. 4:02 And digital services are now really a customer expectation, but we need to teach them how to use the data or analyze the data with the help of an expert. 4:11 They're looking for us to tell them what they need to do with this technology. 4:16 And, and that's an interesting point that you just said, because I think when you, when you talk about energy and transportation and, and how dispersed informa-- you know, the m-the equipment is, because if you're teaching individuals, because, and, and I say this all the time on the show, data for data's sake doesn't mean anything if you don't know what you're looking at, because it's just reams and reams of data. 4:36 But if you don't know what's the right information, you can't react properly. So if you're ignoring really important data, it can be extremely harmful. So you're teaching them what's the right data to react to. 4:49 Instead of being reactive, you're being very proactive, right? I mean, that's what you're talking about then. Right. 4:55 And this data can help customers avoid one of the most costly aspects in energy and transportation applications, and that's unplanned downtime. 5:05 Uh, the cost of downtime for the average business, uh, is dependent, of course, on many variables. 5:10 Uh, the financial loss can vary depending on the industry, revenue earnings per day, the length of the outage, the number of people impacted, and the list goes on. 5:21 But the average businesses say that one hour of downtime costs a hundred thousand dollars. And that's right, I said a hundred thousand dollars for an hour. 5:30 Uh, the data coming off a customer's equipment helps them take action and stop failures before they occur, ultimately helping the customer be more profitable. 5:40 And another risk of ignoring the data is more a reflection of the competitive landscape and how our competitors are making money. 5:48 Uh, the industry is moving towards risk-sharing agreements, where companies are helping customers avoid downtime and extra costs. 5:55 One way this is achieved is through condition-based maintenance versus service interval maintenance. 6:01 To take a simple example that many people can relate to is your car's oil change.Your car manufacturer recommends an oil change every few thousand miles, but how do you know that's the best time to change it or that it needed to be done at that time? 6:17 With condition-based maintenance, the service recommendation is based on facts and data about the health of your equipment, so you can tell when the optimal time is to have that service performed. 6:29 And of course, the benefits of condition-based maintenance increase with the complexity of the aspects that you're monitoring. 6:36 Add that up, as you just said, a hundred thousand, uh-uh, uh, for each time that you talked about that, and then think about condition based and the savings there. 6:44 Think about what type of equipment and how emerging technology is really saving and helps, uh, an organization really look to the future and really help themselves be more efficient. 6:56 And think about the training and the technology that you just described. It's really interesting because I think a lot of companies kind of try to understand what does data mean, 'cause we hear data all the time. 7:05 But sometimes I wonder, does it just seem to be a lot of gobblygook to [laughs] a lot of people who might be listening to this going, "Yeah, yeah, yeah, you're just telling me more about data. I hear it every day." 7:14 But d- what it... Does it mean something? You just described a hundred K. I think it means a lot. And it's, it says something there. 7:20 So when you, when you're trying to price these things and somebody listening to this, do they understand, is this on a case-by-c-case basis? 7:28 I mean, how does this typically work when you're trying to look at this and, and these services that someone says, "Okay, I got it. 7:35 I can lose a hundred thousand dollars, and, and that's costing me, but how does this relate to me if I'm listening to this?" Yeah. Our strategy focuses on the value to the customer. 7:46 Cost avoidance, like you just said, it's a hard, uh, complex sell, and you have to really help the customer understand what that means to them in terms of the value. 7:57 Uh, Cat Connect enables reducing this risk of unplanned downtime and builds on our reputation for delivering quality and excellent product support. It's almost like thinking about what's the value of knowledge. 8:09 It's difficult to determine because it's not a product, it's a service, and that's one that's focused on the outcome and the value delivered to the customers based on the tools that we provide rather than focusing on selling the subscriptions themselves. 8:25 Setting prices for data services involves talking in depth with customers about their own financial operations and safety goals and what they're trying to get out of it. It's really an ongoing process. 8:39 Each customer's willingness to pay for this type of service varies based on what that outcome is that they're trying to prevent or mitigate and trying to achieve and what they wanna monitor with the solution. 8:51 Have you seen a lot of... Now that you've looked at this and you're saying with Cat Connect, have you seen, and you talk about customers, customer relationships be s-successful now? 9:01 I mean, is, are you seeing customers embrace this and saying, "We're starting to see the success and experience this," and saying, "The subscription services is working. 9:11 We're seeing the optimal return on the investments we're making, and now we can see where we need to go with this and continue to grow with this"? Yeah. 9:21 They're, they're definitely starting to see the value, and this is something where we really benefit, um, having the support of our worldwide dealer network, because our dealers have long-standing relationships with their customers and work with them over the long haul. 9:35 Now, these subscription services add a digital aspect to the relationship, making it a continuous touch point. 9:43 There's lots of control systems out there that gather data, but the majority of that data, like you mentioned, is never used. 9:50 There's a shortage of people who know how to leverage that data to increase the value of an asset, and for us, this expertise comes from both Cat and dealers together as a team, where our dealers are key, as they know the customer's business. 10:04 We find that the most successful equipment owners do team up with experts who help them simplify and interpret the data. 10:11 Together, they use facts to find, predict, prevent, and fix problems so the uptime is maximized and the unplanned downtime is kept to an absolute minimum. 10:22 We strive to provide solutions that help Caterpillar customers succeed with the combination of technology and deep domain expertise, allowing us to be smarter, faster, anywhere. 10:33 Uh, no one comes between us and serving our customers' needs. 10:36 Whether their goal is to maximize production, reduce costs, or improve safety, our Cat Connect solution gives customers the options needed to build the successful, sustainable business they want. 10:49 And so it's, it's been exciting to hear you talk about that. So Sara, where... Thank you. We've really enjoyed this conversation today. 10:55 Where would you send our listeners to go to learn more about what you just described with Cat Connect and everything with Caterpillar? Um, they can go to the... Well, we have a Cat Connect website. 11:07 You can go to caterpillar.com and look for Cat Connect. Well, I appreciate everything you spent. Thank you so much, Sara. We appreciate all the time today. It was really a great discussion. Thank you. All right. 11:18 Thank you. All right, listeners. You know we're out of time, but we've got more to come. 11:23 And during-- we're gonna take a quick commercial break, but we want you to go up to our website at connectedworld.com, or you can go always to thepeggySmedleyShow.com, and you can check out all the past segments. 11:33 But stick around. If you wanna tweet at us, certainly tweet at me at Peggy_Smedley or ConnectedWMag. Stick around as always. 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