Grundfos is a well-established company with a 180-year heritage and some active assets in the field over 30 years old still requiring maintenance, at this year’s Spring Servitization Conference they outlined why they see advanced services at the heart of their future…
Grundfos is an organisation with a long, proud and traditional history, yet at this year’s Spring Servitization Conference in Copenhagen, it was their vision of a brave new world, a world in which advanced services sit at the heart of their offering that was the focus of their presentation.
Thomas Rosenkilde Anderson, Group Vice President for Services at Grundfos A/S outlined the thinking behind the Danish Pump Manufacturers shift towards a servitized business alongside his colleague Marianne Kjeldgaard Knudsen, Senior Director, Head of Digital Commercial Offerings at Grundfos A/S.
“Service has already been embedded into the way we serve our customers,” Anderson begins as we sit down after his presentation and he gives me the opportunity to dig a little deeper into the conversation.
When we took the strategic decision from an executive level that now is the time to create a service business unit,
“We actually held workshops across all countries across the globe in less than three months. We would be sitting together with the local country manager and their leadership teams and asking ‘how do you approach services here’, ‘who is doing service here?’”
“Then name by name, we went through the personnel undertaking any service work and identified those that were doing 50% of their role in a service capacity as someone who should become part of the service business unit. If they did less than 50% then they should stay where they are – and we did this all around the globe.”
“This was the first time that we really knew exactly how many service people we actually had. This was critical as when I first started I wanted to know what was our service business – how many people did we have and what was our profit margin, but we didn’t have easy access to those questions.”
It is interesting to note that at this point the service business was operated as a cost centre and it was Anderson’s drive to move the service operations to becoming a profit centre that demanded that such lack of visibility be overcome. However, moving to a profit centre was just part of the reasoning behind undertaking such a significant task as bringing transparency across the service operations globally for Grundfos.
However, one thing that Anderson stressed very clearly in his presentation was that such a significant shift in focus within an organisation is not possible overnight. It is a long iterative process – in his presentation, Anderson outlined Grundfos’ own roadmap which stretches across ten years.
Yet, when Anderson first arrived having transitioned from the high-tech sector, this was not necessarily the case.
We were selling basic service contracts in 15 different ways across 60 different locations across the globe, so there were a lot of basics such as tools and processes that we needed to fix first
“However, I realised that here the starting point was a bit more unstable, we were selling basic service contracts in 15 different ways across 60 different locations across the globe, so there were a lot of basics such as tools and processes that we needed to fix first. If we had tried to do everything at once and bring very advanced services to the market in one go there would have been chaos”
“In short, we needed to build a solid foundation before we could move forwards further and that takes time,” he adds.
The next phase of this development Anderson explains is to build financial transparency.
“We need to get a firm understanding and have total transparency on what is the cost of service, what revenue are we currently making from services? Then we can have a firm grasp of how service is impacting on our bottom line,” Anderson continued.
“Once this is all in place then we can start the big task of really fully developing our service portfolio and of course building out our tools, processes and customer support and getting that standardised across the globe.
“Then, of course, there is the consideration around the people part of this equation. Service businesses are people businesses. We need to make sure we take care of our people and that we attract the best people – so a lot of our investments are going into leadership positions.”
“We are looking at leadership development, financial training for those that will have commercial responsibilities and technical training for those who are focussed in that part of the sphere.”
What is clear is that whilst the end goal of a servitized business promises great opportunities the road to that goal is long and complex.
However, Anderson and his colleagues have a very thorough and well-defined roadmap to guide them on their way – something that it is essential for any company looking to follow in their path develop for themselves before they start the journey themselves.
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