Servitisation, is the move away from selling products to selling a solution, which encompasses a product and a service. This has transformed the nature of the relationship between customer and supplier, and drawn new lines between product and service. In this blog, we will look at the servitisation model for both the supplier and the customer and explain how you can make a success of servitisation at your organisation.
What is servitisation?
Let’s use an example of a commercial Multi-Functional Device (MFD) to illustrate what servitisation involves. With servitisation, the customer wouldn’t buy the MFD, but would instead move to a consumption-based model. This would be based on the value they get from the product – for instance, they might pay for the number of pages they print or scans undertaken
Everything else is the responsibility of the supplier: the support, the maintenance, the repair, even the toner. The supplier now owns the product throughout the lifecycle. It becomes their responsibility to keep it up and running efficiently for longer and continuously adding value for the customer. The supplier is only making money if the customer keeps using the printer.
The value for the customer is clear. All the customer wants to do is print large volumes of documents for a reasonable price. They don’t want to be worried about maintaining the printer – and servitisation makes this possible.
Servitisation can be applied across all industries, sectors, and businesses. Aero engine manufacturers are now selling the number of hours flown, rather than the engines themselves. Large factories and large office block buildings don’t pay for light bulbs anymore, instead, they pay for the number of hours that the lights are on. The growth of the internet of things (IoT) has made this possible.
The role of IoT
With IoT sensors installed in products, suppliers can monitor everything remotely and use the data generated to offer a better service. If the MFD monitoring indicates a growing service risk, the supplier knows to send out a field service technician immediately. Consumable consumption can automatically trigger recording to ensure maximum up time of the device. Depending on the sophistication of the IoT – if the printer breaks, it could even be fixed before the issue causes any operational downtime.
The servitisation scenario in action
Benefits for the supplier (1): insight and opportunity
With a servitisation model and the data generated through sensors (IoT), the supplier gains:
- Full control over the use of the product for the entire product lifecycle
- Better insight into its performance
You can use this data in many ways. Firstly, with a true view of your product’s condition and performance, you can maximise its operating efficiency. If the data is telling you that your product is starting to fail, you can fix it before it breaks down. You can send out field service technicians as and when they are needed, with the necessary information, tools, and parts to complete the job.
Secondly, you can use that data to maximise your product potential and shape future investment. Managing data from sensors across your business portfolio identifies which features of your products are being used and which are not. These can also highlight recurring problems with a particular product, which can be used to trigger root cause analysis (RCA) to help you improve product reliability and uptime.
Benefits for the supplier (2): increased customer satisfaction and competitiveness
Servitisation puts you in a better position to add value to your customer. This can help your organisation:
- Become more competitive
- Meet increasing customer demand and expectations
- Increase customer satisfaction, retention, and loyalty
As sensor technology, IoT and infrastructure continues to become the norm, more and more manufacturers are offering servitisation to their customers. If your competitors are offering something that your customers value, and you’re not, then you risk losing those customers.
In simple terms, if there are two manufacturers and one offers a consumption model and the other expects the customer to take on a large capital cost upfront, the customer will probably choose the consumption, purely for cash flow reasons.
How to make servitisation work for you
The key element to making servitisation a success lies in the technology systems that underpin its performance. You need a system that provides end-to-end service delivery, including:
- Delivering the initial product
- Connecting to IoT sensors
- Storing and visualising the data
- Resolving any issues through field services maintenance delivery
Managing IoT is an essential ingredient. For instance, if you can’t measure the amount of toner in a printer, you can’t deliver servitisation for that product. So, for many organisations, the road to servitisation begins with working out the answers to the following questions:
- What kind of IoT sensors do you need?
- What kind of data do you want the sensors to show?
- How do you best use the sensor data to maximise uptime?
You then also need to focus on implementing end-to-end systems and solutions that can help you commercialise all of this product data. That is key to making a success of servitisation.
As servitisation becomes more widespread, it is important for organisations to adopt it as an opportunity to improve their product offering and increase customer satisfaction. What’s more, the alternative could mean losing customers to the competition.
Find out how to make a success of servitisation at your organisation by getting in touch with us today at Hitachi Solutions.