What is servitization (or rather digital servitization)?

Servitization, innovation e digitalization

Since the establishment of the company in 1999, we have always been involved in digitization projects and in general in the introduction of new technologies capable of strengthening the competitive positioning of our clients, enhancing human capital by simplifying and streamlining processes.

For us, the theme of servitization, or rather digital servitization, is the natural outcome of the team's expertise, both on strategic marketing, planning and finance, and on digitization to support the business.

To complete the service offerings, in a flanking logic from strategy to finance, in 2020, a strategic partnership agreement was entered into with the inventors of Paradigmix, a patent that offers a model for risk and performance management of industrial assets under digital asset servitization, which is designed with to manage the integrity, performance, competitiveness, and environmental sustainability of service contracts.

Aware of the importance of the matter for our industrial tissue, we are working on raising awareness about digital servitization and the importance of this new professional figure of the Servitization Manager at www.servitizationmanager.eu

Today, Strategia&Controllo includes 6 Innovation Managers and 4 Servitization Managers in its team. In particular, Alessandra Gruppi is the first CEPAS - Bureau Veritas certified Servitization Manager in Europe thanks to her collaboration as a business innovation expert in the Things+ project, led by Friuli Innovazione.

To discover the Things+ methodology CLICK HERE.

What is servitization (or rather digital servitization)?

“Servitization” is the strategy that offers customers value-added services so integrated into products that the concept of the product itself is lost. It may concern maintenance services, specific highly functional mode of payment for the customer’s needs (e.g., pay per use, pay per performance), technical training services, etc.

This kind of strategies aiming at the differentiation from competitors started as early as the 1970s when Bristol Siddely Engines, acquired by Rolls-Royce (aircraft and marine engines) launched a “pay-per-flying-hour contacts” business model instead of selling aircraft. Successively, during the 1990s, important examples follows, including IBM, moving from selling hardware to selling Information Technology service,s and Xerox, which instead of selling copiers offers a pay-per-use services (case pay-per-Copy).

Apparently, Sandra Vandermerwe and Juan Rada authored the word in their article “Servitization of Business: adding Value by adding Services” published by the European Management Journal in 1988.

Thus, today, the real innovation is the digitization and connectivity in servitization, which are leading us toward a real revolution in the economic paradigm.

Introducing the opportunities arising from 4.0 technologies, particularly related to smart products, we face an acceleration in the collection and processing of data related to product performances, customer usage patterns, individual expectations and needs, and, simultaneously, in offering product adaptation. AI, Big Data, predictive maintenance… just to name a few examples.

This is a strategic opportunity to foster the competitiveness of manufacturing companies that so can benefit from higher margins typical of service offerings and build competitive barriers on customers against players outside their market. Digital servitization (we like to call it servitization 4.0) can also foster aggregations with other players, both with specializations precisely in 4.0 technologies and in a circular and sharing economy logic.

What are the differences between Servitization Manager and Innovation Manager?

The figure of the Innovation Manager, contemplated in the 2019 Italian Budget Law, is deemed decisive to innovate the companies of the future.

Indeed, the Innovation Manager contributes to the technological acceleration of a company and guides its change toward an increase in competitiveness.

The Servitization Manger is familiar with 4.0 technologies and innovations and focuses all his attention on using these technologies to gather more information about the customer (empathy 4.0) and designing service products as close as possible to the real needs of the customer. He then plans strategies for launching such product-services into the market and follows through their implementation by intervening to support other stakeholders.

Servitization Managers are strategic figure especially for manufacturing companies, as they hold the knowledge and skills that usually lack in such companies, which are traditionally focused on the excellence of the product.

Thanks to the Servitization Manager, the company is supported in shifting from a “product-oriented” to a “customer-oriented” company, and this not only in the implementation of the new business model, but also in the adoption of the necessary technologies.