A chance for new beginnings with servitisation

Image Credit: Shutterstock (Image credit: Image Credit: Shutterstock)

2019 can be the year of new beginnings; it’s a chance for businesses to strategise and harness new technologies to improve their services and operations, while expanding revenue streams. 

So, how can businesses do this – and why is servitisation important in enabling them to do this successfully? 

Maximising value 

In a world with an abundance of technology platforms to choose from, often the biggest challenge businesses come up against is understanding what system is most relevant to them. It can be hard to keep track and businesses risk falling into the trap of focusing on new products and how to bring them to market at speed, rather than on what is relevant to them.  

Instead, they need to recognise how to yield the biggest return-on-investment (ROI) and avoid being dazzled by the latest tech on offer. Only then does change become achievable.  

Enter the role and rise of ‘servitisation’.


As a term often used by manufacturers, servitisation refers to the delivery of a service regime in tandem with the original product.  

Let’s take smart home devices as an example. Today, developments in the white goods industry mean that the days of home owners reporting a fault with a device are soon to be gone. The device simply recognises its own faults and automatically orders a replacement – or books in an engineer to come and fix it. This not only makes life easier for the customer, but ensures the business offering this service develops a strong relationship with the customer based on rapid service.

Essentially, servitisation helps ensure that the business can offer everything needed to an individual. Think of it like this: if a business can develop a range of services and products that can be offered alongside pre-existing products already on sale, then it’s offering a value-add to its customer base – and gets a deeper revenue stream in return.   

This model ensures that a customer relationship does not end after a single purchase. It enables businesses to earn increased revenue on a longer-term basis by providing a wider range of services. Examples include the use of monitoring and diagnostics, predictive maintenance, pay-per-use models, and a host of other smart services.

Whilst servitisation is nothing new, it’s more relevant than ever before. With technology now holding the key to the heart of more and more businesses, it is essentially now one of the most important factors in helping businesses to remain competitive when it comes to a growing range of B2C and B2B services.  

Image Credit: Shutterstock

Image Credit: Shutterstock

The longer term benefits

There’s no denying that all business leaders want to secure long-tail revenues and form longer-term relationships with their customer base. Despite these benefits, however, servitisation has not been adopted or championed by everyone.  

This is because it is based on moving data. With 43% of businesses experiencing a cyber breach in 2018, it’s hardly surprising that trust in data quality and security is in decline. Yet, trust in data is a critical success factor when it comes to servitisation. Not only does it increase the number of touchpoints a business has with its customers, but also strengthens the relationship and expected ROI. Businesses need to ensure they have control over their data and its security before spreading themselves too thin and potentially opening themselves up to vulnerability – but that doesn’t mean they should throw the baby out with the bathwater and avoid adopting digital competencies altogether.

It's time to think boldly if we are to make a success out of servitisation. It’s about more than offering just a product. It’s about offering a product with services that ensure the business becomes invaluable to the individual. Be it an exceptional customer service, analytics or more than one delivery option – these seemingly small things can make all the difference. At a time in which our political and economic futures are looking increasingly uncertain, businesses must think outside the box to ensure they are ahead of the game, and more importantly, the competition. So – why wait? 

Klaus-Michael Vogelberg, CTO at Sage

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Klaus-Michael Vogelberg

Klaus-Michael Vogelberg is CTO at Sage. He has over 32 years of working experiences.