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Exploring the Implementation of Servitization: Strategies, Structure, and Technology
The concept of servitization, the shift from selling products to delivering services and solutions, has gained significant attention in recent years. As companies explore new avenues to enhance customer value and differentiate themselves in the market, servitization emerges as a promising strategy. In this blog post, we will delve into the implementation of servitization, exploring the approaches taken by organizations, the considerations of internal structure changes, and the role of technology in enabling servitized offerings.
Strategic Approaches to Servitization
When it comes to developing a servitized solution, companies employ various approaches. According to research, nearly a fifth of companies (17%) devise their solutions internally, utilizing their existing team. However, the most common approach is seeking guidance from external third-party consultants, as reported by over two-fifths (41%) of companies. Some companies (9%) choose to develop their strategy internally after hiring key staff with servitization experience. Additionally, a significant portion (33%) of companies work in partnership with their customers to devise their servitization strategy. The trend of co-creation between service providers and customers has been highlighted as a hallmark of successful servitization case studies.
Targeting Specific Clientele
Organizations that have already developed a servitized offering often perceive it as suitable for a select group of clients (67%), while others aim to transition all clients to their servitized offering (33%). Similarly, among companies currently developing their servitization strategy, the majority (64%) also consider their servitized offering as something complementary to their traditional service offerings. This highlights the idea that servitization can cater to specific client needs while maintaining a broader service portfolio.
Structural Changes and Sales Approach
The transition to a servitized business may or may not require significant changes to the existing structure of an organization. While some service operations may not need a complete restructure, certain aspects may undergo redevelopment, such as changing how spare parts are accessed. Among organizations that have established a servitized element, the response was divided, with half (48%) stating no changes were made to their service organization, while the other half (52%) reported making structural changes. However, among organizations currently developing their servitization offering, a majority (67%) expressed intentions to make changes to their service operations.
Servitization also has implications for the sales department, as the sales approach for service offerings differs from traditional product sales. A significant percentage of organizations (72%) with established servitization elements confirmed changing their sales approach. However, among those currently developing their sales approach, a slightly lower proportion (61%) anticipated making changes. This variance could be attributed to organizations already embracing modern service-sales approaches or underestimating the complexity of selling servitized offerings.
Empowering Servitization with Technology
Technology plays a crucial role in enabling and delivering servitized solutions. All organizations that have introduced servitization (100%) acknowledged the importance of technology, with a third of them considering it critical to the successful implementation of servitization. Similar sentiments were expressed by the group currently developing their servitization offering, where all respondents emphasized the importance of technology, with nearly three-quarters considering it critical.
Key technologies identified as important for servitization include IoT (Internet of Things), data analytics/big data, field service management systems, artificial intelligence, and customer relationship management systems. Notably, those in the development phase placed slightly less emphasis on these technologies compared to those who had already implemented servitization. This aspect will be explored further in subsequent qualitative interviews to understand the underlying factors.
The strategic considerations of implementing servitization
The implementation of servitization involves strategic considerations, collaboration with customers, potential structural changes, and leveraging technology. Companies approach servitization development through internal teams, third-party consultants, hiring experienced staff, or partnering with customers. While some organizations focus on specific clientele, others envision servitized offerings alongside their traditional services. Structural changes may be necessary for successful servitization, impacting service operations and sales approaches. Technology is considered crucial, if not critical, in enabling and delivering servitized solutions. Understanding these implementation aspects can guide organizations as they embark on the servitization journey, unlocking new avenues for growth and customer value.
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