The main drivers for the moving to a product service system are
to satisfy customer’s needs, to enhance the firm’s performance and to achieve
competitive advantages. The journey towards services is supposed to create a
win-win situation between the service company and their customers. Therefore
servitization can be seen as a great opportunity, but there are also many
challenges and threats in this business model.
Neely (2011), Aston (2013) and Atos (2011) all show big gains
in increased revenues for the companies that succeed. According to Atos (2011)
the main drivers for introducing a product service system are:
- Customer expectations - confirmed
by over 80% of interviewees Customers become more and more demanding and
organizations get challenged to adjust to those high standards, thus
implement customer centricity.
- Financial incentives - confirmed
by over 80% of interviewees shrinking product-based profit margins are
spurring the need for service-based revenue growth. Revenues of services
are greater than new product sale especially in times of economic crisis.
- Gaining competitive
advantage - confirmed by about 50% of interviewees Customer service has
become a competitive trump card, services are difficult to imitate.
- Marketing opportunities -
a theoretic driver (recognized by less than 20% of interviewees) use
services for selling more products. By offering services, companies get
insight into their customer’s needs. This is not yet deployed widely.
If the infrastructure of the service is set up correctly it
is easy to scale up the service with new improved functionality. It is also
easy to scale up the number of customers due the same infrastructure can serve
several users. This is called multi tenancy and is used by the most mature
service companies.
For the customer, there could be several benefits getting a
service instead of only a product:
- Better cost structure:
variable cost instead of fixed cost.
- Reduced financial risk due
to that the customer do not take the cost of failing hardware.
- Lower operating costs due
to economy of scale, but also due to more efficient operations.
- Goal are aligned due to
that supplier and customer share a common goal. Both being dependent on
that the devices and services are working properly.
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