The relationship between products and services is evolving. Particularly in technology driven industries, services are becoming as fundamental to products as hardware and software. The term servitization is used to describe this trend (it is also referred to as the service economy and product-service systems). This transition is neither radical or new (the term servitization was coined in 1988 by Vandermerwe and Rada) but it can be positively disruptive within a business and within a market.

Today the term can also be extended beyond product organisations. The service industry has grown enormously over the past 20 years and have in many cases tried to productize services into portfolios that are themselves strong candidates for servitization.

The fundemental principle of servitization is to understand how your customer (or their customer) will use your product or service and increase the value of your proposition by providing additional services that will compliment its use, function, deployment or application. This is easier said than done and requires increased insight into your customer base, their pain points and business ambitions.

The results of servitization can include increased revenue and margins, a customer relationship that develops from supplier to strategic partner and product/service improvements built upon better understanding of customer needs and requirements. Through servitization, products and services become more sophisticated solutions.

There are many examples of companies and industries that have been transformed in this way. IBM evolved from a near failing hardware business to a very successful solutions company by embracing servitization. Rolls-Royce today sells aircraft engines not just as discrete components but as complete solutions that are sold to their customers based on aviation miles with all operation and maintenance functions included.

However, servitization does not only dramatically change what a business offers to their customers. It dramatically changes how the business itself operates and unless this internal servitization process is designed and implemented correctly the results can be counter productive and damaging to the business and its customer base.

Servitizer brings a wealth of experience to companies that are embarking upon or looking to further develop their business through servitization. Our people, methodologies and tools will help you servitize your business and deliver positive growth.