Thinking Offensively: Service and Servitization As A Business Model

Apr 27 • Features, infographics, Management, resources • 5124 Views • No Comments on Thinking Offensively: Service and Servitization As A Business Model

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New infographic from ServiceMax shows how the benefits of going on the offence…

Over the past 50 years, manufacturers have focused on efficiently making good products in order to maximise their returns at the moment of sale. However, in a globally competitive market, many products are now commoditised and margins are getting squeezed, diminishing the leverage from such production-centric approaches.

That’s where a service-centric business model comes into its own. Servitization transforms companies from production to service provider, shifting them to delivering advanced services, such as selection, consumables, monitoring, repair, maintenance, disposal, as well as the opportunity to increase service revenues even further by supporting existing third party or competitive products. This creates an ongoing relationship with the customer that effectively locks out competitors.

As a business model, servitisation isn’t a new phenomenon – the origin of the term dates back to the 1960s. However, against the back drop of a global recession, product commoditisation, shrinking product margins, and major technology advances in end-to-end service delivery, servitization is providing companies with an effective hedge against market downturns, and higher barriers of entry for competitors.

As a result, service is shifting from the spotlight to the limelight, becoming a powerful offensive business strategy for top line growth and competitive advantage.

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