Is there a correlation between Servitization and Digital Transformation?

Kris Oldland, Editor-in-Chief, Field Service News reflects on the alignment of digital transformation and servitization – the two key trends driving innovation and evolution in our industry… 

There have been two key trends that have been consistently present within our industry for a number of years. Both have been at the heart of discussions in boardrooms and on conference stages alike. Implementation of both has been accelerated by the pandemic. These two trends are of course Digital Transformation and Servitization – but just how closely related are they? 

For Sarah Nicastro, Vice President of Customer Advocacy, IFS the two are very closely aligned. 

“We believe that Servitization and Digital Transformation are inextricably linked, in that the progression of digital is a major factor in the increased demands customers have that are prompting companies to Servitize as well as in the fact that it’s impossible to Servitize without digital capabilities,” Nicastro explains. 

“To seize the potential of advanced services, companies must view Digital Transformation as key to success. Digital is required to gain insights into the performance of assets in a way that allows a proactive and predictive response, to optimize the utilization of both its workforce and inventory in the manner necessary for guaranteeing outcomes, and to ensure the customer experience is seamless and informed.

“Data is also proving to be an integral part of an advanced services value proposition in the form of providing customers unique insights gleaned from digital tools in use. As such, companies should seek a modern digital platform that provides a range of capabilities to eliminate the failure points common in a disjointed environment and to protect the integrity of the customer experience.  ” she adds.

This is a comment that is echoed by Iwi Lin, Marketing Manager, Durabook. 

“Digital transformation is already happening within the business-to-business sector, meaning organizations across every industry need to embrace this digital change,” he comments. 

“Servitization can only be a consistent and reliable revenue source if your business performance remains equally efficient and dependable…” – Iwi Lin, Durabook. 

“The adoption of emerging technology is where true industry revolution occurs, determining who will rise to the top and who will fail over time. Companies that implement technology to streamline processes, optimize budgets and improve overall workforce performance are predicted to outlast their competition.

“However, servitization can only be a consistent and reliable revenue source if your business performance remains equally efficient and dependable, which is where rugged devices come into play. These computers are fast becoming the focal point of these technologies as they enable organizations to realize even greater operational capabilities,” 

Indeed, our world both inside and beyond field service is evolving rapidly in terms of technology and as we add the further pressures of a servitized business model into what is an already complex mix of many moving parts that constitute field service then the importance of being able to leverage, but also importantly trust the technologies we deploy throughout digital transformation is critical. 

As Lin adds “With technological evolutions in IoT, 5G, Augmented Reality (AR), machine learning and AI, companies investing in new technologies will be able to predict and prevent operational failure. Computer manufacturers that provide rugged devices can help organizations understand how to operate these devices in the field to enable their digital transformation programs and ensure new technologies are used for their maximum benefit.  

“With uninterrupted servitization a crucial factor for business success, the latest equipment is designed with optimum efficiency in mind. Rugged devices are the only models that can withstand the frequently harsh conditions many field computers must endure.

“The latest devices also contain sensors that feed operational data back to the manufacturer on the product’s condition, reducing maintenance issues and downtime. Should a problem arise, the manufacturer or service provider will be automatically notified by the faulty part so it can be quickly fixed. While they may require a greater initial outlay, they are far more cost-effective in the long term because of this lower need for maintenance costs.” 

“Servitization at its core means providing outcomes rather than products or even services – it’s a company-wide transformation in the identity of the business and the customer value proposition.” – Sarah Nicastro, IFS

Coming from an industry where reliability in the field is a critical component of the success of their products, Lin’s point raises an important distinction between servitization and digital transformation. While they are invariably two facets of the same conversation, the latter is the enabler, while the former represents the true paradigm shift. 

As Nicastro explains, “Servitization at its core means providing outcomes rather than products or even services – it’s a company-wide transformation in the identity of the business and the customer value proposition, not a simple addition to the service portfolio.

“However, in many cases this transition occurs over time in a phased manner to ease the impact on culture and operations and to help manage change.”

Of course, while technological innovation or advances in service design thinking are important, these all become something of a moot point if they are not aligned with what our customers actually need and want. This is a critical part of the discussion which cannot be overlooked. 

“Without customers, nothing happens,” states Ricky Sevta, CRO, simPRO bluntly.

“Customers we’ve talked with agree. They also know it’s a tricky balance, tailoring your services to the unique needs of your customer while also providing high-quality service to every customer. You also have to do it better and faster than your competitors, and still turn a profit.  

“In our experience working with all types of trades businesses, we believe technology like job management software, can help you do it all.  

“Job management software helps you better manage all the moving parts in your business, and gives you insights (data) into how well you’re truly performing in each area of your business. More importantly, it shows the relationship between these areas. 

“You can then pinpoint how your performance, in these areas, good or bad, ultimately impacts the customer experience,” Sevta adds. 

“Your customers make everything happen. Why make them wait?’ – Ricky Sevta, simPRO

“For example, how does proper stock management impact customer service? Say your field staff arrive at a job only to realize that they don’t have what they need. Now they’re wasting the customer’s time and their time. This can lead to an irritated customer and a job that takes much longer than it needs to. 

“Your engineers are set up for success, and empowered to provide good customer service when they know that they have the right materials for every job, and can check stock from anywhere at any time, but so is the rest of the team. With field management software, your admin team can check inventory while talking to a customer rather than having to take their number down, manually check the stock and then call them back.”  

“Your customers make everything happen. Why make them wait? Job management software, especially cloud-based software, gives staff all of the relevant information they need to deliver the best customer service no matter whether they’re remote or on-site,” Sevta concludes.

Indeed, there is a broad mix of tools available for field service companies of all shapes and sizes, across all sectors in today’s market. Digital transformation is all around us and will continue to evolve at pace. As to will the servitization movement, with service portfolios becoming more advanced and sophisticated as we embrace such tools. 

However, as Sevta rightly states, keeping the customer centre to all we do is the one true key to success.

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