In this new series of excerpts from a recent white paper published by IFS and Noventum, now available at Field Service News, we analyze how to productise services and set the climate for the service transformation...
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With ever increasing internal and external market pressures, manufacturers have been searching for ways to diversify their revenue streams. Within product-oriented businesses, there has been a drive to offer a greater diversity of aftermarket services, we refer to this shift as servitization.
Both those organizations looking to servitize their business, as well as businesses who previously include service contracts or warranty offers, are diversifying the established business models inherent in these approaches. Most notably, organizations are employing contracts based on asset or product outcomes, uptime, and output rather than focusing on a break-fix approach and maintenance contracts.
These dramatic shifts in both the go-to-market and service delivery approach runs the risk of increasing organizational complexity, creating redundant systems, and unforeseen personnel risks. In an environment where margins are tight, servitization will be a strategic differentiator and a path to growth BUT manufacturers must ensure they carefully manage the transformation journey to ensure they deliver value and not give away service for free.
Recent research from IDC investigated the factors which are preventing manufacturing companies from progressing on their Servitization Journey. Lack of internal know-how, organizational resistance and lack of technology systems were found to be the most common inhibiters.
What is limiting your companys ability to deliver more technology-enabled services as part of your overall business?
What Is Limiting Your Companys Ability to Deliver More Technology-Enabled Services As Part of Your Overall Business?
All these challenges need to be addressed when companies embark on Servitization. This report will explore the organizational, cultural, and technological challenges and look at methods that businesses have employed to ease in the shift towards Servitization.
HOW TO PRODUCTIZE SERVICES? THE SERVICE TRANSFORMATION JOURNEY
To answer this question, we have investigated what steps manufacturers that have a successful service business undertook and how these steps have helped to overcome these challenges.
Aside from these steps, we also identified a particular sequence in undertaking these steps to overcome these challenges. Based on these insights, we developed the ‘Service Transformation Journey’:
As the above illustrates, there are several steps to undertake which emphasizes that a Service Transformation is not something you can do in a day. But what is each step, and why is it essential?
SET THE CLIMATE FOR SERVICE TRANSFORMATION
The first block contains the steps related to ‘Set the climate for Service Transformation’. It is essential to start with this block to deal with most of the identified barriers. Undertaking these steps will also ensure you get funding for the full journey; get help to set the right priorities; ensure that you develop services for which there is a customer demand; and be able to deal with organizational resistance from start to finish.
In the table below we have outlined the first steps that are necessary to set the climate for Service Transformation:
In the next feature of this series of excerpts coming next week, we will discuss how to deal with organisational resistance, develop internal skills and capabilities and how to use technology solutions to support effective service delivery.
Look out for the next feature in this series coming next week where we discuss how to deal with organisational resistance.
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