Servitization is an effective way to assist post-pandemic recovery. Servitization, where customers pay for a service rather than buying equipment, is driven by customers using high-investment assets that need integration. The technology owner is responsible for equipment in many fields.
The first step in servitization is integrating legacy equipment, which can be tricky. Connectivity is key to integrating the servitization method. Therefore, the retention of customers is found in having a continuous stream of data. Retrofitting equipment is also paramount, and it is available with access to sensors that can help integrate the spare parts market.
An Emphasis On Service Instead of Expensive Equipment
Service is essential, especially in field service and mobile field solutions. Companies keep a competitive advantage by focusing on strategy through servitization rather than only the product. This growing shift has been expanding for the past ten years, but the COVID-19 pandemic has accelerated the growth of servitization. It’s crucial to foster customer relationships where the shift to servitization emphasizes service instead of costly equipment.
While recovering from the pandemic, many businesses saw the need for working with customers as integral to building healthy business ecosystems. Engaging in co-creation, companies sought to integrate service within the customer bond that was deepened during the pandemic. The other side to this new equation is that, as companies moved away from the break-fix status quo toward the power-by-hour model, it became clear that it could be detrimental to revenue.
Because servitization is so important in the field, Field Service News led a quantitative study of multiple industries (from aviation to gas, utilities, and power generation) to understand what was at stake industry-wide and future steps. However, the findings of this study show that the pandemic had far less to do with the increase in servitization than previously thought.
Systemic Efficiency Is Key
Servitization, by definition, is key to systemic efficiency post-pandemic. In addition, the pay-for-use model will help all move toward sustainable infrastructure and innovation.
According to the World Economic Forum:
“Letting market mechanisms, via servitization, promote efficiency as a good business opportunity is especially important as the world recovers from a global pandemic. Servitization can play a key role in helping cash-constrained businesses to regain momentum while reducing operating expenses and climate impact.”
Servitization bolsters already-existing assets, strengthening synergies and increasing efficiency and innovation.
Resources:
Servitization in a post-pandemic world…, Field Service News, FieldServiceNews.com.
What is servitization, and how can it help save the planet?, World Economic Forum, WEForum.org.