Hi there,
Last week was an exciting week!
I made my first trip to the Nürnberg Messe for SPS. Dozens of conversations later I'm feeling more energized than ever about working for IXON and building CONNECT.
🔥🔥🔥
One thing I noticed during my conversations:
People often mix up two terms in the machine building industry: ‘servitization’ and ‘after-sales services’.
In this edition, I'll try shedding some light on how these concepts are connected (no pun intended), yet different. Let’s start by looking at servitization.
What is servitization? 🤔
Servitization means changing the way you sell machines. Instead of just selling them once, you charge customers based on how much the machine is used or even on the value it provides. Some also refer to this as Machine as a Service (MaaS).
One of the early examples of large scale adoption of servitization was Software as a Service (SaaS), pioneered by Salesforce in the early 2000s. This innovation changed the way software was sold and set the standard for how most of us consume software today.
Making that shift requires a fundamental change in pricing, potentially causing disruptions and uncertainties in revenue streams and margins. For most machine builders it also requires significant upfront investments in technology.
That’s why the machine building industry hasn’t made this shift. We don’t expect the sector to do so any time soon. At least not on a large scale.
The confusion between servitization and after-sales services 🤯
After-sales services, on the other hand, refer to the support you provide to customers after they've purchased your machine. While after-sales services can be a component of servitization, they are not synonymous.
The confusion arises because both require a shift in mindset — from selling products to providing ongoing value throughout the machine’s lifecycle. Traditional after-sales services are mostly reactive, addressing customer needs as they arise.
Both also require investments in similar technologies such as machine connectivity, data analytics, and remote monitoring. These technologies enable you to stay connected to your customers and develop a more service-centric approach.
Going digital with after-sales services 🤓
Going digital with after-sales services before diving into servitization has big advantages for machine builders. Here's why focusing on digitization in after-sales is a smart move:
- Without the headache of big pricing model changes, more focus goes to the customer experience and enhancing machine efficiency and reliability.
- It provides immediate benefits in terms of customer satisfaction, operational efficiency, and potentially also internal cost savings.
- It empowers the service department to address the increasing knowledge gap among operators and on-site maintenance teams at scale.
- It allows machine builders to move from reactive to proactive after-sales services by leveraging remote connectivity, real-time & historical data, and analytics.
Additionally, it creates a solid groundwork for a successful transition to a servitization business model somewhere in the future.
Start small, learn fast 💡
Making the decision to invest in digitizing your after-sales services can feel like a risky bet. That’s why we work hard to eliminate the need for big upfront investments and lengthy software development projects. Check out ixon.cloud if you want to learn more.
So, I hope that debate is settled 😉
See you in two weeks with another edition where I’ll talk more about the potential benefits of digitizing your after-sales services and look at some real-life examples.
Thanks for reading this. I hope you have a great day!
- Steven