How Covid-19 accelerates
growth in services for
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Recently, Noventum, Microsoft and HSO published a research report on ‘Drivers for Growth in Service‘. The main objective of this research has been to identify the opportunities how manufacturing companies can grow their business towards a services-led business. This research has been conducted just before the covid-19 outbreak and lockdown.
Martin Gilday, senior research consultant at Noventum, explains how covid-19 has made the outcomes of this research even more valid and how he expects a stronger acceleration of the development of new, services-driven business models in the manufacturing industry.
Martin: “In our research, we identified several drivers for business growth in services and how manufacturing companies can prosper in a services-led world. What we have seen is that the social and economic restrictions during the covid-19 lockdown period have led to a huge strain, economically and financially, on a lot of businesses. Coming out of this crisis, it will become even more important to have a growth strategy in place and companies will need to look for new ways to establish profitable and sustainable growth.
Trends accelerated by covid-19
Of course, making the transition from a product-led company to a services & solution-driven company is not easy, especially if you have always been successful in your product business. However, after covid-19 we see a few megatrends arise, that pave the way for a transformation:
- Working remotely and digitally has suddenly become extremely relevant. Companies that were struggling to adopt these new ways of working have to make this transition very quickly.
- Cash flow has always been vital, but in times of a crisis it is even more important, for manufacturing companies and their customers.
- Supply chain models will change, moving for example to more local sourcing.
On top of the customer expectations we describe in our research, these trends will serve as an extra accelerator. What we see is that services deliver long term growth. Plus, services prove to be a more profitable and a predictable source of revenue than products only. Overall, services deliver a stronger business and a better customer experience.
Urgency to transform after covid-19
In the research we conducted we found that although there are many opportunities for growth in services, this transition can be tough. Especially since it involves a change in culture too. Customer experience and service must be top of mind in all teams and departments. From R&D to Sales and Marketing. Also the IT infrastructure has to be aligned with the service models, which is often not yet the case. What we expect is that manufacturing companies, during and after covid-19 will have an even stronger motivation and urgency to transform themselves.