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Service transformation as a development perspective for post-lockdown
by Mauro Bellini, Director of Industry4business.it
What servitization is, why it increases the resilience of companies and how it can represent a solution for business continuity and to activate new business models. Interview by Mauro Bellini, Director of Industry4Business to Nicola Saccani, associate professor at the University of Brescia10 Jun 2020
Looking at the post-emergency Covid-19 prospects today means trying to understand what the new normal will be like. It seems clear to many that among the many changes underway there is one that concerns the relationship between consumers and products or between companies and production systems. There is a growing attention towards service transformation projects o servitization. For consumers and businesses, the issue of owning a product or system seems less important than the use value of the service that the system or product can make available. We wanted to see what are the prospects that servitization opens in the construction of a neighbor New Normal with Nicola Saccani, associate professor at the University of Brescia.
Let's start by explaining exactly what is meant by service transformation or servitization
By servitization or service transformation we mean the transition from the sale of a product to the sale of a service or rather a solution to a specific customer need. This causes companies to completely change their offer integrated into the product or service.
Think of the Rolls Royce case that for aircraft engines has gone from selling in a transactional perspective to selling the hours of good flight operation of its aircraft by linking the purchase of the aircraft to a payment that is based on the availability of the aircraft. good and that brings with it not only the physical asset, but a series of maintenance activities, remote monitoring, replacement of spare parts that are carried out by the supplier.
Another typical example is that of sharing, for example in the automotive world, or pay per page typically used in digital printing systems, photocopiers and printers, where the user does not pay for the printer, but a certain amount per page printed and behind. at this cost there is toner, maintenance and so on.
There is a shift in logic from a product-centric approach to a customer-centric approach. Design, production or distribution excellence certainly counts, but there is also the need and competence linked to understanding customer needs, to setting up systems to deliver services to customers effectively and efficiently. This lends itself to activities related to the development of the digital component of the service.
What advantages have companies that have adopted servitization models had in dealing with the lockdown?
They benefit from the fact that the sale of the service associated with the product is more resilient in the moment of crisis. Customers continue to need maintenance services, spare parts, advanced services. We saw in our survey that parts sales grew immediately after the lockdown.
And because traditional services have in any case suffered the same problems of potential integration of production logistics activities, advanced services based on digital, data, remote support, have grown in volume and level of interest. As well as resilient alternative business models to the sale of goods by product companies, i.e. models such as rental, or pay per use with satisfactory sales volumes and expectations.
What role can servitization play in the development prospects of the post-emergency phase?
Servitization can play a very important role in this post-emergency phase. It can make it possible to save the revenues and margins of companies, which see the demand for the purchase of goods drop significantly. If the installed fleet is kept alive and not replaced, it will require more maintenance interventions such as physical services or upgrades or remote control on which companies will not see demand drop, but will see growth. Furthermore, long-term maintenance contracts or new business models (rental, pay per use) precisely for the duration spread over time, will allow for less disruption from the point of view of revenues and therefore a role in saving the income statements. .
On the other hand, it will see a strong push towards digital, it will be an actor and protagonist of digitization, because also to overcome the problems related to the provision of physical services given the restrictions, digital is a fundamental lever ...
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