What is Driving the Move to Outcome-Based Business Models

Sep 25 • Features, Future of FIeld Service • 548 Views • No Comments on What is Driving the Move to Outcome-Based Business Models

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ServiceMax, a GE Digital company, has recently commissioned independent market research specialist Vanson Bourne to explore the trends around this topic and have recently published an executive summary on the findings of this research which is available to fieldservicenews.com subscribers.
Here we look at an extract from the white paper based on those findings that focus on the shift towards outcome-based business and service strategies. If you want to read the full white paper you and are a field service professional use the link below to subscribe and you will get a copy of the full white paper sent over to you instantly.

If you are field service professional you may qualify for a free complimentary industry subscription and by clicking the link here you can access the white paper

Note: Please do take the time to our T&Cs (available in plain English at fieldservicenews.com/subscribe) and note that this content is sponsored by ServiceMax a GE Digital Product)

The idea of outcome-based business models has not completely taken off as yet, and this is reflected by what respondents’ report is happening in their organisations.

On average, respondents estimate that 19% of their organisation’s business model is outcome-based, compared to 38% of the model that would be classified as product-based and 26% that is service-based.

However, there is potential for an outcome-based approach to be a big hit and it is unlikely to be too long before large multi-national corporations realise that product and service-based models are not as relevant as they once were.

It seems as though this realisation has already started to some extent; of respondents whose organisation does not currently operate a 100% outcome-based business model, more than nine in ten (95%) report that they are currently working towards moving some or all of their products and/or services in this direction or are planning to in the future.

Surveyed organisations from the oil and gas sector appear as though they are looking to get a head start on their competition with 64% of them reporting that their organisation is already working towards implementing a more outcome-based business model.

In recent times, organisations have found themselves in a race to the bottom, constantly undercutting their competitors on price, but often at the expense of product or service quality, simultaneously cutting their own profit margins.

This is not sustainable as a business model, not only due to reducing profits but also reducing customer satisfaction levels. Outcome-based business models provide an opportunity to differentiate from the competition and raise standards across all industries.

Enhanced Performance and More Competitive

The shift towards this type of business model is therefore somewhat unsurprising, and surveyed decision makers display overwhelmingly positive attitudes towards this approach.

The vast majority (89%) believe that the move to more outcome-based business models will enhance the way their industry operates, and only slightly fewer (82%) agree that this model will make their company more competitive than ever before.

Not only do organisations from the oil and gas sector appear to be making an early leap towards outcome-based business models, but surveyed IT and field service decision makers from organisations in this sector are almost completely convinced on the possible impacts of such a change.

More than nine in ten (94%) respondents from the oil and gas sector believe that this switch will enhance the way that their industry operates, including 71% who believe it will lead to significant enhancements.

Decision makers in oil and gas seem to be tired of the shortcomings of product and service-based business models and are ready to embrace the positive changes that outcome-based models will inevitably have.

Everything has a shelf-life, and it is evident that old school approaches to business have run their course – it is time for a change, and oil and gas are hoping to lead the way.

In business, those who can be first to the punch will often be very successful, but with a transition such as this, organisations must ensure that their plan is rigorous and well thought out.

Implementing a fully functional outcome-based model will not necessarily be a straightforward process and could be fraught with difficulties along the way, but it is certainly a step worth taking to improve customer satisfaction levels, the bottom line and the way industries operate as a whole.

Want to know more? Subscribe to fieldservicenews.com on the link below and we’ll send a copy of the full white paper to you instantly.

If you are field service professional you may qualify for a free complimentary industry subscription and by clicking the link here you can access the white paper

Note: Please do take the time to our T&Cs (available in plain English at fieldservicenews.com/subscribe) and note that this content is sponsored by ServiceMax a GE Digital Product)

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