Professor Tim Baines’ name is synonymous with all things servitization and advanced services. Today, he is talking to Field Service News about Servitization Live, the business event solely dedicated to Servitization and advanced services, taking place 4-6 October.

Servitization: where, what, how? Internationally, the appetite for servitization is growing and the idea that services can be key to business growth is gaining ever more traction. Not only that, but a focus on delivering outcomes is increasingly seen as a valuable ambition for those business executives looking to make their company stand out from the crowd. And more and more are recognising that through such services, businesses can grow, become greener, more productive, make better use of digital and improve their resilience to economic disruption.

Yet with this growing enthusiasm come challenges and uncertainty.

Servitization Live is the event where we set the record straight! It is a business event exclusively exploring servitization and advanced services and this year, we will turn the spotlight on how servitization is turning the way we use and consume products and services on its head. Over three days, Servitization Live will showcase how the as-a-service trend affects us all on a daily basis, and how services business models present the solutions to some of the biggest challenges our planet has faced such as climate change, a growing and ageing population and health crises.

With themes that we can all relate to in our everyday lives, Servitization Live challenges you to imagine how the learning from our consumer lives can be taken into your own industries and how you can innovate the services-led business models of the future.

The keynote line up will feature experts in fields such as health, the built environment and food production, who will set the scene regarding the global challenges we face and how technology and services are beginning to address these issues in innovative ways. Speakers from manufacturers and technology businesses, will then showcase their services offerings, how they deliver additional value both to the customer and the manufacturer, and how they help to address some of the challenges facing the planet.

These speakers include Ben Wilson, Marketing and Offer Manager at Schneider Electric who will speak about how Schneider went from conceptualisation to launch and delivery of its Secure Power-as-a-Service offering in little over a year. Schneider’s offering supports the likes of hospitals and care homes to both minimise capital expenditure and energy costs, and focus on their core business of looking after people’s health and wellbeing- their strapline being ‘ Dedicate your time, expertise and capital to your core business – let us take care of the rest!’

Oliver Moffat, Segment Manager for Multi-Occupancy, Heat Networks & Heat-as-a-Service at the domestic boiler manufacturer Baxi Heating, will speak about how the company is exploring the technologies and services business models that will support a whole new way of heating our homes. They are working on ideas to enable a move away from buying gas-powered boilers and towards newer, cleaner technologies and, potentially, payment models for customers based around buying heat rather than a physical product.

Day three of the event will be dedicated to a celebration of regional SMEs and their innovation in services. We will showcase the very best of SMEs who have transformed their business models though servitization. You will hear how these business leaders changed their approach, capitalising on their expertise and getting closer to their customers, all through the adoption of services based strategies and ultimately resulting in increased revenue.

Following on from last year’s World Servitization Convention where over 360 attendees joined online to explore exhibits from the likes of Goodyear, Legrand and Omron and heard keynotes from Tetra Pak, Rolls-Royce and Thales, the event is hosted by the Advanced Services Group at Aston Business School who are at the forefront of thought leadership in this field. Servitization Live is delivered as part of our mission to educate and inform those business leaders shaping industrial practice.

Servitization Live will take place 4-6 October 2021 online. Centred on an exhibition of business models from mainstream manufacturers that are leading in way in servitization, the event features a packed programme of industrial keynotes, workshops and panel discussions from leading industry experts. Visit https://www.servitizationlive.com/ for more information and to register.

The three-day event is sponsored by IFS, Xait CPQ, DLL, and Servitly and supported by Field Service News.

 

Who is the Advanced Services Group at Aston Business School?

ASG is a centre of excellence in servitization research and practice at Aston Business School. We provide education, training, research and a community of likeminded practitioners around advanced services and servitization, helping global manufacturers and technology innovators to develop services-led strategies.
The Group is led by Professor Tim Baines, the world's leading scholar on servitization.
Tim is the author of over 200 publications on manufacturing strategy, including Made to Serve, the leading textbook on transforming a technology based business to compete through services.

 

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Further Reading:

• Read more articles by Professor Tim Baines on Field Service News @ www.fieldservicenews.com/tim-baines
• Learn more about The Advanced Services Group @ www.advancedservicesgroup.co.uk/
• Read more about Servitization and Advanced Services @ fieldservicenews.com/servitization-and-advanced-services
• Get in touch with The Advanced Services Group @ www.advancedservicesgroup.co.uk/contact

Professor Tim Baines, Director of the Advanced Services Group, Aston University and Dr. Ali Zia Bigdeli, Senior Lecturer in Industrial Services Innovation at Aston University argue manufacturing should embrace services as part of its post-COVID-19 strategy.

 

Change, a 1985 paper argued, can be characterised as a “punctuated equilibrium”: long periods of relative calm and small incremental alterations that are interrupted by brief, but radical, seismic shifts. COVID-19 means that we are now living through one of those revolutionary moments.

Advanced Services and Positive Business

But that also means that there is an opportunity to look at things in a new way. For the past 20 years, we’ve been conducting research and advising manufacturers to compete through services – activities aimed at solving customers’ problems – rather than simply just pushing boxes out of the factory.

And our reasons are simple: services are good for business, good for the economy and environment, and good for society. Now accounting for 80% of the UK’s economic output, services have grown by 30% over the past 20 years. By comparison, gross domestic product (GDP) generated from selling products has contracted – a trend that is being replicated in every developed economy across the world.

But it has been a slow and sometimes painful journey – “What is this thing called servitization,” we are asked. “And how do you spell it?!” Up until now, change in this field, like in so many others, has been evolutionary, somewhat incremental and exploratory. But then arrives a global pandemic that shatters the equilibrium and stimulates radical innovation.

These are challenging times, and it’s important not to make light of the struggles facing the global economy. Business activity is currently polarised around sector and geography. On the one hand are manufacturers who support the food and health sectors and have never been busier. On the other are those businesses linked to the aerospace, automotive, and oil and gas industries which are being forced to mothball facilities and lay off staff in their tens of thousands.

For some, the implications are so severe that they may not survive. Even those that are doing well are having to deal with a reduced workforce, social distancing in the workplace, and the economic fallout of customers being unable to pay their bills.

Disrupting the old norms

How appealing the old norms may now seem. Until just a few months ago, most executives within manufacturing organisations had a rather passive, established view of services. For us, it was frustrating, but comfortingly familiar.

We could work with these manufacturers to help them better understand the value of services, influence key decision-makers and then hopefully get a chance to support their innovation of new business models, technologies and organisational structures. But we often experienced an equilibrium – the harder we helped manufacturing executives to push for more services, the harder the system pushed back.

Now, however, that equilibrium is being disrupted.Take performance advisory services. These are services that allow manufacturers to use digital technologies to gain insight into how customers use their products, and then offer data and/or intelligence back to that customer on how to gain more value from those products.

"The end of this period of disruption will bring a new set of norms, and it’s beyond belief that we will return to the days of simply shifting boxes..."

An example of this type of service is Siemens’ monitoring of the condition of airport baggage carts. The company gathers acoustic and vibration data from rail-mounted luggage carts around the airport and uses this data to assess the likelihood of breakdowns before they happen.

Breakdowns cost time and money. So spotting potential breakdowns in advance saves airport operators the penalties that must be paid when luggage isn’t loaded onto flights on time, and improves the passenger experience through the punctual delivery of baggage.We have seen a wealth of technically excellent digital systems like this. Most, however, have so far failed to be commercially viable and manufacturers have been reluctant to invest in and push them to customers. But in the current climate, that may change.

As well as opening up a huge new market opportunity, these services could be far more profitable than simply selling the products themselves. Such services can also develop enviable intimacy with and loyalty from customers as the provider is able to address their customers’ demands and problems much more quickly and effectively.

And now times are changing, the economic potential of services is becoming more visible. Indeed, remote support and performance advisory services – helpdesks, remote support for breakdowns, digital installations – provide obvious solutions in an age of social distancing, remote working and lockdowns.

Customers either want remote advice on how to fix problems themselves, or they want the manufacturer to remotely fix and upgrade their equipment. It’s not all about technology, of course – customers still value speaking to a person, just not face to face. But manufacturers no longer need to gamble as much on selling these new systems; customers actively are seeking them. Both parties are starting to look at the bigger picture, and services are proving vitally important to both.

Accelerated change

For some time yet, change will be accelerated and hastened. The end of this period of disruption will bring a new set of norms, and it’s beyond belief that we will return to the days of simply shifting boxes. At the very least, business plans will need to include how to deal with disruption – whether it’s related to health, the economy or the environment.

The opportunities that this creates for services are potentially dramatic. Services are in the midst of radical change and, of course, we all look forward to returning to those long periods of relative calm. However, in so many ways, things will never be the same. Business models for manufacturers will have been disrupted, and there will be new and different conversations about the value of services. These business models have the potential to deliver huge value, and a level of resilience that we may never see again for production-based ways of competing.

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Further Reading:

• Read more articles by Tim Baines @ https://www.fieldservicenews.com/tim+baines
• Read more articles by Ali Zia Bigdeli @ https://www.fieldservicenews.com/AliZiaBigdeli
• Find out more about the World Servitization Conference @ https://www.advancedservicesgroup.co.uk/wsc2020
• Read more articles about servitization @ https://www.fieldservicenews.com/servitization
• This article first appeared The Conversation.com here
• Follow the work of the Advanced Services Group @ www.advancedservicesgroup.co.uk/
• Follow the Advanced Services Group @ twitter.com/theasgroup

Aston University’s Professor Tim Baines reflects on how the impact of the coronavirus pandemic has meant that he has had to re-evaluate his predictions from 2019 as industries rapidly pivot and shift their priorities and why servitization has a role to play in that recovery.

People don’t like to admit their mistakes and professors are no different. Indeed, we like to believe that we give more attention to the science anfacts than others may do. But I was wrong. Late last year, I wrote a piece that predicted that the three priorities for manufacturing business in the 2020s would be about responding to the challenges of poor productivity and climate change, and grasping the opportunities of digital.

Servitization's role in Covid recovery

I think it’s now quite safe to say that although these will remain important, priorities will shift towards the recovery of the economy – in particular the recovery and rebuilding of industry large and small. I also think that we will start to pay more attention to embedding greater industrial resilience, in an attempt to insure against similar disruptions in the future. It’s early days, but how might we do this?

My earlier judgment seemed sound at the time. I based my prediction on what I saw, was told and read about. I rationalised that there were three principal forces driving change, and my logic went something like this:

The UK, among other western economies, has an historical problem with productivity, we work too many hours to generate the level of wealth we create and this adversely affects growth something that everybody is keen to address. The evidence of climate change is becoming more acute; it can be seen in the melting ice sheets in Greenland and raging bushfires of Australia.

Customers and consumers are becoming more sensitive to the environmental impact of consumption, and supply chains are being restructured. Meanwhile, digital innovation is all around - whether you see it as IOT, Industry 4.0 or simply a new App - and its adoption within industry is being widely advocated.

What my logic did not account for was the seismic shock of a pandemic. Business has changed in a way none of us could have foreseen; borders have closed, travel is banned, staff are in isolation, society is in lock-down, working from home is the new norm and the kids are off school! Business activity is polarising; some factories are being mothballed, while those that service the food and healthcare sectors, for example, are exceptionally busy. Indeed, governments are intervening in ways unimaginable since, in many countries, the Second World War. At this time, I know it’s difficult to look beyond the next few weeks, but it is important to look forwards, albeit with a little care and sensitivity.

 

"Resilience is key and business models based around services are more conducive to achieving this..."

 

Economic activity is essential and it must recover. Undoubtedly, there will be many government initiatives to kick-start the economy, but how do we rebuild the manufacturing industry to be more resilient to future shocks, whether these shocks are health-related, trade-related, or indeed from the adverse effects of climate change. Quite clearly, the same as before is not sufficient. We have a unique opportunity to move industry forward and adopt business models that are better-aligned with the new world we will enter.

The 1900s and early 2000s were dominated by production-consumption business models, exemplified by mass production, Henry Ford and the consumer society – make, sell, dump. Feeding a growing world population, ruthless in its consumption of resources, servicing hungry global markets and all too often insensitive to the impact on the environment. This was not sustainable, and now many sectors have ground to a halt.

While mass production of course is still alive across some sectors - food and medicine to name a few - in other sectors this lockdown has shown that we do not need cars, airports and shopping centres to the extent we used them. As such, there is a great opportunity for services, delivered remotely and consumed locally, which help to build the quality of our lives without the need for consumption. If industry can build new business models on this basis, we will also create a truly resilient economy.

So, I believe that resilience is key and business models based around services are more conducive to achieving this. But what could such services look like in practice? In my next blog, I will reflect on some of the businesses that are making great progress in this space.

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Further Reading:

• Read more articles by Tim Baines @ https://www.fieldservicenews.com/timbaines
• Read more on servitization @ https://www.fieldservicenews.com/servitization
• Read more about Covid-19 in service @ https://www.fieldservicenews.com/covid-19
• Read more about the Advanced Services Group @ https://www.advancedservicesgroup.co.uk
• Read more about the World Servitization Conference @ https://www.advancedservicesgroup.co.uk/wsc2020

Professor Tim Baines of Aston University, looks back across his personal 30 year journey with servitization whilst looking forward to an industry defining event in the servitization space taking place in Birmingham later this year…

My first article on servitization was published in the late 1990s. Of course, we didn’t call it servitization then, rather the article talked about something called Total Service Manufacture. I didn’t think of it as anything special, I was simply trying to understand different competitive strategies that manufacturers might adopt - at that time Western manufacturers were being bombarded with outsourcing and offshoring ‘no brainer’ advice. ‘Do services’ was my reaction!

Focus on Services

Reflecting on the past 20 years, it is interesting to see how this focus on services has grown. Take the term servitization; first it was a case of ‘what is this word’, then ‘how do you spell it’, moving to ‘we do it already’, and now ‘this could help, tell me more’. Each stage in our evolution of understanding servitization brought with it its own challenges, and bizarrely we are now perhaps in the most dangerous phase. 

Manufacturing businesses are recognising that servitization is a valuable phenomenon, and those that sell technologies and services to this industry are asking how they can get on the bandwagon. We now see re-branding and re-styling everywhere. Companies that used to sell technology and systems that enable efficient spare part delivery to field service engineers, are now promoting themselves as ‘partners on your servitization journey’. Yet in practice, nothing has changed in what they offer. It happened with Lean and it’s happening now with servitization. Pollution is all around us! 

So where do you look now for real thought leadership? Well, I am biased, but I’ve dedicated my working life to what I believe in, and that is the university system. You see, a fundamental role of a Business School is to educate business.

This education is based on research, evidence and logic, and a translation of the broad body of science into digestible and reliable chunks of knowledge. This is what we do at Aston for servitization and advanced services, and we have a duty to be custodians of these concepts. What we need to do right now, is to overcome the pollution and ensure that industry is set on a reliable and informed understanding of servitization.

 

"The World Servitization Convention has been designed to raise awareness and the adoption of servitization and advanced services..."

 

This is why we have created the World Servitization Convention. This convention will be different to every field service conference or trade show you might consider attending this year. Firstly, it is coupled with the Spring Servitization Conference – the established research conference for the international academic community. Secondly, it has a series of industry keynotes and panel sessions from true industry leaders in this space – Thales, Rolls-Royce, Baxi, Goodyear, Alstom, Legrand, Domino, Mazak, etc. And we have an equally impressive range of small businesses – KoolMill, AE Aerospace, UV Light, CHH ConeX. 

Thirdly, the is the exhibition where over 20 manufacturers are sharing (not selling!) what they do in this space: Heat-as-a-service, Health-as-a-service, Mobility-as-a-service. Not just talking about servitization, but demonstrating what this looks like in practice. Finally, the convention is covering a comprehensive range of topics: from service strategy to finance, and digital technologies to business model innovation. A true one-stop-shop.

The World Servitization Convention has been designed to raise awareness and the adoption of servitization and advanced services. It is targeted at the owners, executives and senior management of manufacturing, engineering and technology businesses. This is a not-for-profit event hosted by the Advanced Services Group (ASG) at the Aston Business School.

This event is funded in part by a carefully selected group of four partners; IFS, DLL, Blueprint AMS and Servitly. Just like our manufacturing exhibitors, these sponsors are genuine thought leaders in this space and have worked closely with the Aston team to ensure the event fulfils its objective.

So, all you need to know about servitization will be in one place in September.

The World Servitization Convention brings together the global community of leading servitization researchers and business executives to advance their servitization strategies, experience demonstrations of the technologies enabling advanced services and transform the future of manufacturing. This three day convention in Birmingham, UK really is intended to move you forwards on your servitization journey; delivering a true outcome rather than just selling you things!

 

To find out more about the event  and to register, please visit www.advancedservicesgroup.co.uk/wsc2020

Professor Tim Baines’ is synonymous with all things servitization and advanced services as well as a long-term contributor to Field Service News. His Advanced Services Group are launching the World Servitization Convention in 2020 an exciting new project Field Service News is proud to be working alongside. Here we speak to him exclusively to get the low down on what to expect...

Data Capture has evolved massively in a relatively short period of time, but if done correctly it can transform a business. A new whitepaper by the Advanced Services Group brings clarity to the hype around digital technologies and services and outlines what you really need to know about capturing data, and how to make money from it, Aston Universities’ Professor Tim Baines gives us an overview. 

Digital technologies, IoT and digitalisation have been big topics in the manufacturing sector. Combined with services, digital seems to be the answer for a multitude of manufacturing questions, if you take the hype at face value.

But for many manufacturers, digital actually raises more questions than it answers, with one particular question at the centre: how to capture the value of digitally-enabled services?

The Advanced Services Group at Aston Business School has recently released a whitepaper on performance advisory services, which aims to cut through the hype and provide clear information and insight into how manufacturers can make the most of digitally-enabled services.

Real business insight
In this whitepaper, we wanted to reflect real business insight and real business challenges. We invited senior executives from a range of manufacturing companies - from multinationals such as GE Power and Siemens to local SMEs – for a structured debate on digitally-enabled services.

The discussion and its outcomes formed the basis of the research for the whitepaper and helped crystallise the three areas that are most important to manufacturers:

1. Performance intelligence and data as a service offering; 
2. How to capture value from these services;
3. How to approach the design process to achieve success. 

What are performance advisory services?
The process by which a manufacturer transforms it business model to focus on the provision of services, not just the product, is called servitization. Generally, we distinguish three types of services. Base services, such as warranties and spare parts, are standard for many manufacturers and focus on the provision of the product. Intermediate services, such as maintenance, repair and remanufacturing, focus on the condition of the product. Advanced services take a step further and focus on the capability that the product enables.

In this framework, performance advisory services are situated in between intermediate and advanced services. Typically, these are services that utilise digital technologies to monitor and capture data on the product whilst in use by the customer. These insights can include data on performance, condition, operating time and location – valuable intelligence that is offered back to the customer, in order to improve asset management and increase productivity.

Why are they attractive to manufacturers?
Performance advisory services are attractive to manufacturers because they allow the creation and capture of value from digital technologies that are likely in use already. Take the example of a photocopier - with the addition of sensors that monitor paper and toner stocks, it can send alerts when stocks are getting low. This kind of data is valuable to the customer, as it will help improve inventory management and avoid service  disruptions or downtime, but it is also valuable to the manufacturer in helping them understand how the product is used, providing data that they can use to re-design products or to develop and offer new services.

Making money from performance advisory services.
Performance advisory services offer the manufacturer the potential to capture value either directly or indirectly and there is a strong business case for either. Whilst charging a fee directly for data or a service provided is compelling, the potential indirect value for the manufacturer should not be underestimated, as it can yield not only greater control and further sales, but also new and innovative offers, as well as improved efficiencies.

"Performance advisory services are situated in between intermediate and advanced services..."

In the photocopier scenario, the data generated could be sold to the customer as a service subscription, thus earning money directly.
Alternatively, the manufacturer could use the data generated for maintenance programmes or pre-emptive toner and paper sales, thus earning money indirectly.  In reality, however, direct and indirect value capture are likely to go hand in hand. A prime example of this is equipment manufacturer JCB, whose machines are fitted with technology to alert the customer if the equipment leaves a predefined geographical area.

For the customer, knowing the exact location of the equipment is valuable – as it may have been stolen. But it also greatly improves efficiency for the manufacturer when field technicians are sent out for maintenance work and do not lose time locating the vehicle.

Performance advisory services - just one step on the journey to servitization
Performance advisory services present a compelling business case for manufacturers looking to innovate services through digital technologies, in order to improve growth and business resilience.

With the immediate opportunity to capture value, these digitally-enabled services are a first step for many manufacturers towards more service-led strategies and servitization.

But that is what they are – just one step on the journey to servitization. Manufacturers looking to compete through services should not stop with performance advisory services.

In the environment of a more and more outcome based economy, it is imperative to understand the potential of taking a step further to advanced  services and to recognise performance advisory services as a step toward this.

The full whitepaper Performance Advisory Services: A pathway to creating value through digital technologies and servitization by The Advanced Services Group at Aston Business School is available for purchase online here. 

Insights from a recent study by the Advanced Services Group at Aston Business School can help you understand if you’re on the right path to advanced services. Professor Tim Baines explains...

Is Servitization a burning topic for your organisation - join Professor Baines and the Advanced Services Group for the Spring Servitization Conference, Copenhagen, Denmark, 14 - 16 May 2018 more info @ https://www.advancedservicesgroup.co.uk/ssc2018

Researchers and pioneering manufacturers have been singing the praises of servitization and its benefits to business – and it seems industry is starting to listen.

Increasing numbers of manufacturing and technology companies are trying to implement services-led strategies. How to go about doing this in practice, however, still presents a challenge to many. The leaders of today’s industry see the success of Rolls-Royce and Xerox in this area, yet they often struggle to work out how to achieve the same for their own businesses.

Within the Advanced Services Group at Aston Business School we’ve been working with manufacturers around the world using the latest research to support them in finding their path to compete through advanced services.

Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.While most manufacturers already offer ‘base services’ focusing on product provision such as warranty and spare parts, others take a further step by providing ‘intermediate services’ focused on the product condition such as maintenance, repair, overhaul and remanufacturing,. ‘Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.

Real-life examples include Rolls-Royce’s Total-Care offer on gas turbines for their airline customers based on a ‘fixed dollar per flying hour’; Xerox delivering ‘pay-per-click’ scanning, copying and printing of documents; and Alstom Train-Life Services supporting Virgin by assuring the availability, reliability and performance of their Pendolino trains on the UK West Coast Mainline. Advanced services such as these are a core concept in servitization.

With their potential to radically disrupt and alter the face of manufacturing, understanding the process of introducing them is vital to businesses and the economy.

At the Advanced Services Group, this is the focus of our work.

In a recent study, we examined two key questions about the path to servitization:

1. What stages do manufacturing companies go through to achieve competitive advantage through advanced services?
2. What factors and forces affect their progression through those stages?

We conducted interviews with 14 multinational manufacturing companies, all on a trajectory to compete through advanced services, representing a range of industries – from aerospace, defence and road transport through to air filtration and precision motion control systems.

The four stages of transformation

We found that manufacturing companies go through four stages in their transformation to compete through advanced services: exploration, engagement, expansion and exploitation. As manufacturers become conscious of the concept of servitization and suspect that advanced services may be relevant to their organisation, they will start out in a stage of Exploration, where they are doing their research to find out more about the concept and how it could benefit their business.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.Once a constructive outcome is achieved, the attention moves to Expansion, where advanced services are innovated and implemented with increased scale and speed. When the value of these is demonstrated, attention will switch from individual projects, to initiatives focused on the reliable and efficient delivery of a portfolio of services across the organisation. In doing this, manufacturers are focusing on Exploitation of advanced services.

In each of these stages you can expect multiple iterations and interactions until there is sufficient evidence and consent to move to the following stage.

Progression through the four stages – or in some cases falling back – is influenced by five forces.

Five forces affecting transformation

1. Customer Pull

Customers’ appetite for services has a significant influence on progression.

Several companies described their decision to offer more advanced services, together with usage-based revenue models (i.e. pay-for-flight-hours or pay-for-passengers-moved) as a direct reaction to customer demand.

2. Technology Push

Other manufacturers start servitization having become aware of the technology that could record how their products are being used and transmit this data back. The data makes it possible to develop advanced services contracts based around payment for outputs achieved rather than asset ownership.

The majority of the companies we studied said they had been influenced by this ‘technology push’; IoT and industry 4.0, which are hot topics in industry at the moment, were often mentioned. Fewer companies mentioned the ‘customer pull’ factor, and yet customers’ growing appetite for ‘experiences’ over ownership is arguably just as significant.

In the UK for example, the appetite for services has grown 2.4% per year for the past 20 years according to the Office for National Statistics, significantly outstripping that for selling products – a trend that is being replicated in every developed economy across the world.

3. Value network position

The position of the organisation within the wider value network can affect business transformation.

As an example, working through distributors can restrict access to customers and inhibit the changes needed to deliver services. In several cases, manufacturers chose to acquire their distributors.

One manufacturer was stalled by the access to remote sensing technologies, wrestling for some time over acquiring a technology vendor, to give them access and control over information. Positioning in the value network that delivers dependable access to both customers and suppliers has a significant influence.

4. Readiness to change

Internal organisational factors influence readiness to change and can affect progression. Having reliable and well-performing products, for example, is a prerequisite to compete through services. It also leads to an interest in advanced services in cases where, increasingly, product reliability and performance are no longer differentiators.

Organisational commitment is also important. In some cases, where the support of the management board was in place from the outset, companies progressed quickly through the exploration and engagement stages. Without this, progress can be much slower.

5. Competitor threat

The actions of competitors significantly affect organisational commitment. In one case, organisational commitment to advanced services came about when a principal competitor acquired a network of service providers.

This caused anxiety amongst the leadership of the company and led to significant investment in its own advanced services programme.

Are you on the right path?

The findings of our study suggest that transformation towards servitization is neither a clear-cut, linear processnor an easy one. In each of the four stages, key milestones have to be achieved before a company can move to the next stage.

The five influencing forces work internally and externally, affecting progress in each stage. These five forces may be so strong that the manufacturer moves rapidly through all four stages. In other instances, they may be so weak that the manufacturer fails to progress entirely.

Next month we will be running the seventh annual Spring Servitization Conference, this time in partnership with Copenhagen Business School, where we will examine research into the detail of these stages and influencing forces.

The Conference is the go-to place for researchers from around the world to present and discuss their latest work, and topics this year will include: changing the mindset of the organisation in order to compete through services; pricing advanced services; how to use data as an enabler for servitization; how SMEs, in particular, can create value through servitization; internal and external enablers and inhibitors.

To book your place, visit https://www.advancedservicesgroup.co.uk/ssc2018. 

Field Service News will be reporting from the conference and interviewing some of the industrial speakers; look out for updates in future issues.

Can’t join us at the conference?

You can still develop the skills, knowledge and action plans to implement servitization and advanced services at our Skills for Servitization workshop on 22 May 2018. Find out more at https://www.advancedservicesgroup.co.uk/skills-for-servitization In the meantime if you want to assess where your company stands today in terms of adopting a services strategy and where you’re aiming to get to- and compare your thoughts with colleagues to test your alignment- our quick survey Unlock Your Insight will give you a personalised set of feedback in under five minutes. Visit https://www.unlockyourinsight.co.uk/

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As a leading figure spearheading the servitization movement Professor Tim Baines of the Aston Centre for Servitization Research and Practice has seen manufacturers begin to focus far more heavily on service as a revenue stream in recent years...

Over the past few years servitization has become a topic of hot debate.

Several years ago, when I talked to businesses about my work on servitization, managers would look at me blankly and ask what it was all about.

Often they would get hung up on the spelling, or simply say ‘what’s new here? We offer services anyway’.

The concepts of advanced services, IOT and Industry 4.0 were largely unheard of, and the term servitization was often dismissed as ‘a bit too academic’.

Now the world has changed, and servitization has become more mainstream. I’ve always taken the view that servitization is simply ‘manufacturers growing their revenues and profits through services’ and that ultimately we are looking at a paradigm shift in our ideas about manufacturing.

Relax this definition a little and you will see that servitization is all around us; it might be Goodyear implementing proactive services in commercial trucking, GE following through on their digital industrialisation strategy in power generation, BMW offering a new MINI on a Personal Finance Plan with a package of services, or Brompton Bikes being offered to hire by the hour in the high street.

Servitization is happening in many guises, and technological innovations are helping to bring about rapid change.

Industry 4.0 is popular today, while just yesterday it was IOT and before that Big Data. Innovative use of technology is attractive, and understandably so for people within manufacturing who come from a technology background.

 

However I think there is also an element of fear; we’ve all witnessed the rise of IT giants, whether it’s UBER, Apple, Facebook or EBay- many businesses are anxious about the next innovation from Silicon Valley and what it might mean for them and I have heard IT vendors countless times pushing businesses to invest in IT and develop ‘the killer app’.

A word of warning here: remember that service is not an app or a new technology. Take a step back before you invest and think: How can you really make money through technology? What outcomes will it help you deliver to customers?

So my conversations about servitization have moved from ‘what is it?’ to ‘how do you do it?’ My team at Aston Business School and I have now worked with over 100 manufacturers helping them to discover and implement servitization.

There are four fundamental stages through which every company must go; Exploration, Traction, Acceleration and Exploitation.

Today, most want help with the first stage, and to those business leaders who want to get started with servitization we suggest three steps:

Step 1: Think clinically, and understand servitization as an innovation: 

The recent popularity of servitization has inspired some business leaders, consultants and vendors, to re-brand their older offerings and muddy the water in the process.

This can significantly undermine your chances of success.

Go to established sources such as the Aston Business School Servitization website (short url - fs-ne.ws/FOwP304KRAq) to tap into the wealth of critical and rigorous knowledge that exists in this field.

Understand that servitization embraces business model innovation, organisational change, and new technology adoption. That services exist in various forms, and represent differing values to both the customer and provider.

Also understand the limits of our knowledge, for instance large scale surveys will help to give you a sense for how the world is changing, but don’t expect any to tell you exactly how the revenue and profits will change for your own business.

Step 2: Allow yourself to imagine an advanced service proposition but only a little:

Imagine what types of services you might offer, but don’t get too drawn into the people, processes and technologies you might need to deliver these, in the same way that a design engineer will conceptualise the form and function of a car, rather than be constrained by design of the production line.

Keep it simple, don’t yet begin to think that these ideas will ultimately transpire into ‘the’ customer value proposition, just try to give your ideas a sense of realism.

Step 3: Explore, benchmark and validate your ideas:

Identify a business in your wider value chain that has moved forward with services- this might be a distributor, competitor, or one of your own suppliers that is asking to do more for your business.

Alternatively you may need to look to an analogous market sector which has some similarities to your own. In each case visit both the service providers and customers, and try to get a sense of how each collaborated to form a proposition, and how they have behaved to make services a success.

 

Compare your own thoughts on services against these, and use this insights to inform your own ideas, and so test whether your own thoughts are indeed realistic.

The outcome of these three steps is simply a better understanding of servitization and what it could mean for your business. They are elementary but they will improve realism and confidence.

After this, the hard work really begins, as you will need to develop new relationships with customers, innovate you customer value propositions, form new value chain relationships, adapt your business model and much more- and even these are still only part of the exploration phase.

 

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The world of manufacturing is getting ready for one of the most significant changes since the industrial revolution. Servitization is coming and amongst those leading the charge is Professor Tim Baines of Aston University. We're pleased to welcome him to the list of field service news columnists and here in this first article he gives us an introduction to this complex yet fascinating and important topic... 

The world once seemed simple; manufacturers made things and services companies did things for us. Today, increasing numbers of manufacturers compete through a portfolio of integrated products and services.

This is a services-led competitive strategy, and the process through which it is achieved is commonly referred to as servitization. Celebrated exponents of such strategies include Rolls-Royce, Xerox and Alstom; all offer extended maintenance, repair and overhaul contracts where revenue generation is linked directly to asset availability, reliability and performance.

Servitization is much more than simply adding services to existing products within a few large multi-national companies. It’s about viewing the manufacturer as a service provider that sets out to improve the processes of its customers through a business model, rather than product-based, innovation. The manufacturer exploits its design and production competencies to deliver improvements in efficiency and effectiveness to the customer.

Manufacturers have traditionally focused their efforts on product innovation and cost reduction. Companies such as Porsche and Ferrari are celebrated for bringing new and exciting designs into the market, while companies such as Toyota are held in awe for their work with Lean production systems. These successes foster a perception that the only way for manufacturing to underpin competitiveness is through new materials and technologies, faster and more reliable automation, machining with more precision, waste reduction programmes, smoother flow of parts etc.

Competition through services

Services offer a third way to compete. This is not an ‘instead of’ or ‘easy option’ for companies that are struggling to succeed. Indeed, delivering advanced services can require technologies and practices that are every bit as demanding as those in production. Neither do they require the manufacturer to abandon its technology strengths; instead it can build on these to help to ensure long term and sustained benefits. Consequently, there is a growing realisation that such services hold high value potential.

Conventional manufacturers can struggle to appreciate the value of services, seeking such simple explanations of servitization that they fail to appreciate potential benefits. This is often the case with organisational rather than technological innovations. In the early 1980s it was difficult to imagine that ‘Just-in-time’ would endure, and yet today it’s hard to identify a single manufacturing company that has not been touched by Lean techniques in one way or another.

 

Servitization is a similar paradigm shift. The word ‘service’ can be used in different ways. It can refer to how well an action is performed – “that was good service” – or to an activity, like maintenance, spare parts provision and so on. Servitization relates to this second interpretation; activities that a manufacturer can perform to complement its products.

All manufacturers offer services to some extent, but some establish market differentiation through these, following services-led competitive strategies. Servitization is a term given to a transformation. It is about manufacturers increasingly offering services integrated with their products. Of these, some manufacturers choose to servitize by offering an extensive portfolio of relatively conventional services, while some move almost entirely into services, largely independent of their products, by providing offerings like general consulting. Others move to deliver advanced services.

Advanced services are core to servitization. Xerox’s ‘Managed Print Services’ is one example; rather than simply selling equipment, the company offers ‘document solutions’ to customers. For a typical customer, such as BA, Xerox provides project management, implementation of new technology, and management of third parties.

There are various types of advanced services, and a variety of terms is used across industry to describe these (e.g. availability contracting, performance contracting, managed services, solutions). However the outcome of these contracts is, invariably, a capability for a customer to perform a business function or process.

This is distinct from conventional services where the outcome is product ownership and maintenance of an asset’s condition. Particular contracting features are often coupled to advanced services.

There are four key features; the first three of which are relatively widespread: Pay-for-use revenue payment: pay-per click, pay-as-you-go, power-by-the-hour etc. are all terms used to refer to advanced services. For instance, in its contract with Xerox, Islington Borough Council receives a ‘click charge’ each time a document goes through a machine.

Long-term contracts: Contracts of fewer than two years are rare. The Heart of England NHS Foundation Trust has a ten year contract for its pathology laboratory facility, while in power generation, GDF Suez enters into contracts of 20 to 25 years. Risk management: The provider is responsible for ensuring asset availability, condition and performance. If an Alstom train is late, penalties of £600 per minute of delay are incurred if the fault is with the OEM. Commitment to on-going process improvement and cost saving: this features increasingly in advanced services contracts.

 

When these features are coupled with the principle of delivering a capability, contracts become sophisticated and demanding. Many existing contracts are relatively large, which is perhaps part of their appeal to OEMs. MAN Truck and Bus UK has 10,000 vehicles under contract, and expects this to grow by 50% over the next three to five years, to represent £200million of business. The Heart of England NHS Foundation Trust’s five-year contract in its pathology laboratory is valued at £20M per year.

Advanced services are however not only for large organisations. They can hold high-value for manufacturers big and small. They can help strengthen relationships, lock-out competitors, and grow revenues and profits and this is why servitization can be a sustainable business model for manufacturers of all sizes.

 

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Want to know more - why not attend the Servitization Spring Conference in May 18th - 19th Click here for more information

 

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