At a glance
Servitization generally describes the concept that a company offers its customers service-oriented services around its products. This can include everything from consulting and planning before the purchase, individualization and installation of the product, to maintenance and servicing. Servitization can also mean that the product becomes part of the service, for example, when hardware is offered for leasing. The concept can even go so far that the customer himself no longer comes into contact with the product, but only benefits from the results. This is then referred to as Product-as-a-Service.
Product-as-a-Service is thus the highest level of servitization: The manufacturer no longer sells his product, but what the product can do for the customer at the end of the day. This includes the results that the product itself achieves, but also the complete service around the provision of the promised performance, e.g. a constant quality of performance or the maintenance of the equipment.
The role of IoT for Servitization
The Internet of Things and smart products can support manufacturers in designing their range of services. This is because smart devices from IoT continuously provide data on how they are used, i.e. what tasks they perform, how busy they are, etc. From this information, manufacturers can draw conclusions on how to tailor their service offerings even better to the needs of their customers. This enables them to continuously improve the quality of service and product.
Benefits of merging product and service
The concept of treating products as a service offers numerous advantages for customers as well as for manufacturers and suppliers.
From the viewpoint of the customer
One of the biggest advantages on the customer's side is the cost savings associated with the concept. Because instead of purchasing hardware at full price, the required equipment and resources can be rented or leased. This also creates flexibility, as the necessary equipment and services can be used exactly when they are actually needed. There is also no need to provide expensive storage space. Fixed costs for storage space thus become variable costs for a temporarily booked service. Furthermore, the financial risk (e.g. due to faulty or defective devices) is no longer borne by the customer, but mainly or even completely by the provider.
From the perspective of the supplier
A well-rounded concept of products and associated services gives the supplier the opportunity to retain customers for longer. If only products and a sporadic service are on offer, customers rarely have the need to enter into a long-term partnership (e.g. in the form of service contracts).
In general, it can also be assumed that the concept saves resources in many cases, e.g. if the provision and maintenance of equipment is carried out directly by the manufacturer. This is because in these cases it is not necessary to transport the goods themselves, as well as consumables and spare parts, to various locations at the customer's site, because the products remain centrally with the manufacturer.