1. Changing an entire business culture
Every well-established organization has a dominant business culture, and change is hard to imagine. Change can be quite challenging when it involves new technologies and processes. And the transition from a product-centric mindset to a value-centric mindset is massive and requires support from all levels within the organization. Most importantly, it needs to come from top-level management and engage with employees to think about the business in new ways.
To succeed in servitization, an organization must establish a robust business architecture to support them in moving from a product focus to a service focus. This means giving the right time and priority to map out a vision and roadmap for servitization. This vision and roadmap need to be preached and practised by everyone in the organization.
A method to approach this challenge includes organizing design thinking workshops and creative problem-solving exercises, to both understand IT systems as well as the problems, needs and expectations of customers from different perspectives.
2. Requires new business capabilities
Integrating a servitization strategy requires a different skill set. Thinking in terms of services and solutions starts with thinking about your customer’s needs and goals, and not only about the engineering and functionality of industrial machines. Learn more about how IoT and predictive maintenance helps battle the tech talent shortage
A successful servitization strategy in manufacturing starts by defining the business case and redefining the design of processes to make sure they meet customers’ needs and goals.
OEMs and plant owners need to attract new people with the needed skills to operate the new systems and technologies. Some of the skills needed to implement a servitization strategy include knowledge of algorithmic/statistical/programming skills, predictive modelling, data engineering, and data science among others.
The market is growing rapidly and the pool of people that have the right skill set is growing as well. On the other hand, organizations don’t have to have the knowledge in-house, you can also get external support. Talk to our experts to see how you can get started with implementing a servitization strategy.
3. Sticking to the silo trap
Well-established manufacturers which want to digitalize towards servitization have established silos (design, R&D, engineering, production, marketing, etc.) that often operate independently. To make servitization work, an organization needs to come together and synergize to make servitization initiatives work.
To approach this challenge, organizations can create a cross-functional team to evaluate existing information on the customer’s experience and define new strategies to approach them.
4. Customer resistance
Especially in the beginning when integrating a servitization strategy your organization might experience customer resistance. In the beginning, customers are hesitant and often do not see the value of service-embedded products. This is why it’s important to educate your customers about what are the new services, how they work, how to use them and the value it brings to the customer.