The formula is straight-forward: markets match customer needs with businesses that provide options intended to satisfy them. Products have historically been the solution. The customer gives the business money. In exchange, the business transfers product ownership to the customer and the customer puts the product in use to complete a task, perform a job or achieve an outcome.
There is an increased demand for solutions that perform a job or deliver an outcome.
Things are changing! There is an increased demand for solutions that perform a job or deliver an outcome. This demand is pushing industries to convert from a product-base to a service-base. While some industries (think software) are close to 100% converted, many still wonder if their industry will change. It’s not a matter of if, but when!
Industry by industry, the shift to as-a-service is happening. This is not a phenomenon exclusive to the software sector or something that only matters in the B2C world. In this rendition of “Recent Examples of Servitization” we cover glimpses of servitization in Construction, Publishing and Mining.
Construction
Construction companies are beginning to realize the lucrative maintenance deals in the aftermarket
Our first example of servitization is in construction. The legacy structure of large building projects follows a pattern: one entity assumes the financial risk and responsibility for site evaluation and construction; when complete, another entity steps in to manage the property. Today, construction companies are beginning to realize the lucrative maintenance deals in the aftermarket following design and build and, as a result, they are more willing to budge on the price of construction in exchange for long term maintenance contracts.
For more insight into servitization trends in construction, read the article “Asset Lifecycle Servitization: The new business revenue model for the construction sector” from Engineering News Record (ENR).
Publishing
It aims to provide a textbook-as-a-service model as an alternative
Up next is a fairly straight-forward example from an industry that continues to see disruption from online and digital technologies. You know the story… first it was Amazon with a new way to sell books, then it was online books.
Now, the story continues with a play by a big name in publishing. Pearson, the publishing and education giant, recently launched a textbook subscription service called Pearson+. It aims to provide a textbook-as-a-service model as an alternative to buying or renting expensive textbooks for a year or semester’s worth of use.
For more insight into the shift to textbooks as-a-service, read the article “Pearson Adds Digital Textbook Subscription Service, Pearson Plus” from Subscription Insider.
Mining
New outcome-oriented approaches will re-shape the landscape of the mining industry
What? Mining! How is there possibly a servitization story in mining? Well, it’s possible. It’s coming soon. And it’s huge. Industry heavy weights such as ABB are leading the charge and predicting significant innovations and trends in the years to come.
Top of the list for servitization opportunities in mining are: 1) sustainability services, such as decarbonisation; 2) new optimization and efficiency services leveraging remote connectivity and predictive analytics; and 3) device as a service, managed services, and unit operations as a service to provide critical functions and outcomes such as ventilation on demand and electrification.
While there is still plenty to figure out in this space, one thing is certain: these new outcome-oriented approaches will re-shape the landscape of the mining industry as we know it and what it means to be an equipment or service provider in the space.
For more insight into the forces of servitization shaping the mining sector, read the article “Five mining trends to watch beyond 2021” from ABB Conversations.
This shift to services is not contained to only the industries above. The move to as-a-service is happening everywhere. Act now to be a leader in your industry, generate growth, and capture options for increased market share, wallet share and recurring revenue.
