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Servicization: The Business Model in a Competitive Environment

At a time when competition is increasingly strong and international, it has become more essential than ever for companies to reinvent themselves to stand out from customers. Servicization is thus an opportunity for companies to generate new sources of revenue by offering services added to the initial product.

In 2013, servicization was considered as one of the eleven new economic logics that would change the world. By rethinking their strategy beyond the traditional model towards a service-oriented model, servicization is transforming manufacturers into service companies in a more global way, leading to a transition to a more value-creating and job-creating economy.

Although this concept is not new, it is gaining more and more importance, both in the B2B and B2C sectors, with the progress of companies towards Industry 4.0. The increasing deployment of new technologies opens up new possibilities, especially with the Internet of Things, Machine Learning and data analysis. These technologies together increase the possibilities of servicization with the sensors installed on the equipment, valuable information on the state of the installed asset. It is up to the manufacturer to exploit this possibility as best as it is.

Internet of Things (IoT) strengthens the value chain of industrial enterprises

In the manufacturing industry, products with sensors or intelligent functions can send a signal to indicate when or if a repair is needed. For OEMs, this allows them to offer their customers, more than the ownership of the asset, continuous access to the equipment by sending as soon as possible a new part or a technician to ensure the repair.

This is also the case in the oil & gas industry. Indeed, IoT and data analysis are key enablers, including for services. A recent IFS study on the benefits of servicization for oil and gas companies shows that they are seeking to add innovative services to their offerings to reduce their carbon dioxide emissions by 10 to 15 percent and lower maintenance costs by 25 to 30 percent: every 5 years offshore platforms must be decommissioned for thorough maintenance checks. Propose a predictive maintenance based on the IoT to know in real time the state of the asset and act in consequence allows the operator to limit these downtime.

These two examples show how much servicization can bring benefits to both the industrialist and his client: improving the life cycle of assets, limiting equipment downtime, customer loyalty, improving customer satisfaction productivity and growth generation for both companies. And this is true in all industrial sectors.

Data analysis and Machine Learning, bridges between connected equipment and the company’s information system

To support its servicization strategy, the industrialist must rely on back-office technology to collect the information collected, analyze and transform.

Data collection and analysis consists of centralizing them in a single tool that can be used to generate useful activity reports for the company to perform, for example, maintenance and, more generally, to take the best practices and make better decisions.

However this is not enough for a real agile strategy. With Machine Learning’s algorithms, this data is processed directly and becomes exploitable for all the business lines of the company concerned.

These will bring all their power potential provided that they are directly available in the information system of the company so that trades can work on it in full transparency. Thus, for example, the technician will receive directly from the information system an alert on a malfunction occurred or that may occur and intervene in consequence. This goes even further than predictive and proactive maintenance since, for the same example, the schedule of technicians’ tours, inventory management and production are also affected.

The servicization, in this context of Industry 4.0, of connected and analytical technologies, is a revolution for the company. More than a digital transformation, it upsets the organizational model and strengthens the proactivity and agility of all its businesses. This is a win-win contract for both the company and its client, allowing both entities to be the best performers and have a real competitive advantage.

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