Why servitization journeys will speed up in 2021

We welcome our guest blogger Sarah Nicastro, Field Service Evangelist & Creator of Future of Field Service

One of the things I’m most excited to witness in 2021 is how I expect to see Servitization journeys gather speed. The concept of Servitization on paper—that product manufacturers compete on service offerings and outcomes rather than commoditized products—sounds simple, but in reality, we know it is a monumental shift in how a business thinks, sells, performs, and delivers. And monumental shifts take time.

However, the challenges of COVID have brought together several forces that I believe collectively will aid companies in making strides toward their Servitization visions. COVID has created greater customer intimacy—companies have learned more about not only what their customers want, but how they operate. This greater understanding inevitably leads to the discovery of additional opportunities to provide value. Many manufacturing companies I’ve spoken with have seen a heightened interest in service offerings, with customers wanting to maximize the lifespan of their current equipment to avoid capital expenditures. As such, they have become increasingly open to subscription models and premier service offerings, which paves the way for Servitization progress.

The leaders that I’m speaking with for Future of Field Service articles and podcasts believe deeply in the potential of advanced services and that belief is spreading across their businesses. Roel Rentmeesters, Director of Global Customer Service at Munters acknowledges the importance of a shift toward service. “We know we need to make ourselves ready to provide a different kind of service – to move away from break/fix work and move toward guaranteeing uptime to our customers,” he says “This is a significant shift for Munters, and we have begun taking steps to enable our success with Servitization.” In 2020, Munters put remote assistance technology in place for business continuity during the pandemic but with an eye on how the technology will ultimately enable more sophisticated service.

For some organizations, service helped maintain financials in 2020 with customers putting large expenditures on hold and, rather, looking to maximize life and use of existing assets. Customers in many industries are also experiencing their own evolutions which is forcing them to lean more on their providers for guidance and expertise. Both these scenarios open the door of greater service opportunity. “Our guidance and ability to help customers optimize their facilities is increasing in demand and so is the transition to guaranteed outcomes and more predictive service,” says Klaus Glatz, Chief Digital Officer of ANDRITZ. “Service is a huge focus area for ANDRITZ. Across all businesses, service generates the highest margins. If we can keep innovating to meet these expanding customer needs, it presents a lot of potential for our business.”

Acceptance of service as a key path toward differentiation is growing and will continue to mount in 2021. “Service has become an increasing strategic focus for Alfa Laval as we have a huge, installed base with which we need to continue to position ourselves as a trusted partner,” says Cedric Domont, Global Service Sales Director at Alfa Laval. “Service is a key enabler of differentiation and has a critical impact on customer experience. These are the major reasons that Alfa Laval’s focus on service has, and will, continue to increase.”

It’s no secret that, for many manufacturers, the focus on service represents a real shift in thinking, strategy, and company culture that surfaces a need to eliminate silos, manage change, and redefine roles. “There’s been a recognition within Panasonic that we need to adopt more of a service mindset,” explains Karl Lowe, Head of European Service at Panasonic Appliances Air-Conditioning Europe. “As we develop the maturity of our service organization, we have to examine the historical perception of service within the organization which is in more of the technical sense.”

I’m not saying that we’ll see the full potential of Servitization realized in 2021 as I believe that potential is far more vast than we’ve even touched upon, but I do think we’ll see a quicker pace of progress this year than we have in previous. As Mike Gosling, IT Service Platforms Manager at Cubic Transportation, which has successfully migrated to an outcomes-based service model, points out: We must stay focused on the process of weeding out legacy mindset. 2020 forced many organizations out of their legacy thinking, but if you find some still exists within your company, heed Gosling’s advice. “Take the time to get to the root of what they’re thinking and saying – overcome their concerns rather than dismissing them,” he says. “It takes bravery to overcome this legacy thinking, but you have to be brave and work through it or it will hold you back from your future.”