10 steps to servitization success

Sep 27 • Features, Management • 878 Views • No Comments on 10 steps to servitization success

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Every year, the team at Copperberg AB, producers of the forthcoming Aftermarket Business Platform gather the brightest service leaders from the largest manufacturing companies and from all corners of Europe to dissect the ongoing service transformation and share the key to a successful servitization journey.

It is a networking experience which has proven to be critical for defining new business models that can allow field service companies to respond to changing customer expectations, which are moving from ownership to outcome-based solutions.

One such service leader is Carl-Henrik Sjölund, Global Consultancy Service Director at SECO TOOLS, whom Copperberg recently interviewed for a new eBook in order to put together an eBook on Servitization that shares some practical steps towards a successful servitization journey.

Here, we take a look at some of that advice…

Want to know more? Register to access Copperberg’s Servitization eBook @ http://fs-ne.ws/CAjc30lXctz

10 steps to servitization success… 

Within the eBook Sjölund outlines what he sees as 10 key steps that field service companies should consider when approaching shifting to a servitized business model.

These are:

  1. Define the customer process where your product is in use
  2. Define the components in the close world around your product
  3. Define the challenges for efficient use, and cost of inefficient use
  4. If necessary, define your own core competence (know-how, not product)
  5. Match the customers’ challenges with the biggest cost of “inefficient use of components” with your best core competence to “fix it”
  6. Check customer interest of your new service by using real proof of concept. Could be fake landing pages for services where people can click for interest to buy, subscribe or just know more.
  7. If you find good interest for your new service, make a business case for profitability and start
  8. Build a service organization by parallel “selling and recruiting”
  9. Use Aftermarket Business Platform to communicate your strategy and you get many interested system suppliers that can help you to enable and control the business
  10. Enjoy the success!

Hindsight with 20/20 vision:

Reflecting back on his own journey, one of the core challenges in making a transition to a business strategy he had experienced was the difference between the traditional sales approach found in product-focused sales compared to the more nuanced approach required to sell complicated, yet highly profitable outcome-based service-centric contracts. As Sjölund commented:

“The journey was more or less OK except that we had too much trust in the existing product sales organization to sell the new services.”

“They just didn’t understand it, he added. “Instead we found a few of our own salespeople for service sales with different backgrounds to understand the complete customer journey (challenge) and communicate with the highest management level about this. It’s important to bring people from the product service organization along to learn and pick the best.

The major trends of Servitization:

The eBook also draws on the wider pool of senior Service Professionals that attend the Aftermarket Business Platform and as such outlines some of the key trends that are becoming prevalent amongst Manufacturers across Europe.

These include:

  • Manufacturing companies are faced with smaller and smaller batch sizes because of faster and faster development cycles.
  • This leads to challenges to estimate costs earlier, prepare for the unknown and have very fast set-up of machine. Added to that, the need to produce good parts directly when there are orders means there is no time for optimization.
  • Companies lack staff with the right skills and working methods for this.
  • Many suppliers are promising industry 4.0 ready-to-use solutions without success support and this leads to bad experiences.

The technology of Servitization: 

Of course, as we have discussed many times here at fieldservicenews.com technology is a major factor in enabling the growth of servitized business strategies and models.

However, for Sjölund, the sheer volume of innovative technology that is empowering field service organisations to push ever further the boundaries of service excellence, a path that logically leads towards servitization, can be something of a double-edged sword.

“Technology is part of the problem: what is good and what to do?” He asks. “We already tried out a lot of technology (AI, Robotics, 3D Printing, AR/VR) to know what is usable and what is not.”

“Most important change according to my experience so far is the use of big data mining to predict the future and access virtual good advices combined with virtual collaboration between users for “reality checks” and confirmation between professionals,” Sjölund continues.

“This needs, however, data generating systems (IoT) in the workshop and well managed virtual communities. This is today not yet spread and partly not even available.”

Want to know more? Register to access Copperberg’s Servitization eBook @ http://fs-ne.ws/CAjc30lXctz

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