Don’t find customers for your products, find products for your customers —Seth Godin. This quote fits aptly into the history of servitization, where the term was first coined in the 1980s and can be traced back to the 1960s when Rolls-Royce created its “power-by-the-hour” concept, which sold fully maintained aero engine use by the hour rather than by the unit.
Simply explained, servitization is the concept of not just selling your products but also having additional services around your products or renting your products based on running hours. So, how does a concept that is already 60 years old become the talk of the town? Because, in this age of intelligent enterprise and digital transformation, it all comes down to effective asset management. With affordable technological capabilities now having caught up with the theoretical concepts, are you being bold in reexamining your business model?
As I penned my thoughts, I asked my good friends and fellow experts (Mike Curl, Martin Driscoll, Amitabh Dubey, Aditya Kamalapurkar) to help me integrate all the experiences based on a project we did for a big railway company in Europe (contracts dictate everything is anonymized, including the architecture, etc.), so I’ll do my best to give the most succinct yet comprehensive description I can.
Depending on the type of servitization model, the benefit you’ve expecting from servitization, the maturity level to overcome the barriers to servitization, your roadmap, impact on applications, business processes, and platforms all vary. It’s not something I can cover in one blog post nor is it the intent of this particular one. Instead, I’ll focus on some things you need for servitization to work once you determine that it is relevant to your industry and organization:
- Your assets have sensors, right?
- The sensor captures data, but how do they send it? Understand your network (5G plays a significant role but this is a separate topic).
- Storing data and analyzing it brings the machine learning, artificial intelligence, and data lakes aspects.
- Now that we know what is happing with the assets, actions need to be taken. We need a transactional system to be able to do this.
Building such an architecture is not easy. Capgemini envisages a best-of-breed architecture that we have tested and run.
From a service provider standpoint, I begin discussions with clients by saying, “To deliver an outcome effectively, you need to let me understand what you really care about.” This architecture has the components you need to run servitization in your organization. As you can see, we leverage a multi-cloud, multi-vendor architecture to make sure you have the best components. Best of breed doesn’t mean expensive. Instead, we focus on the price and value of running this IT solution so it doesn’t kill your “power by the hour” business model.
Capgemini’s Renewable Enterprise allows you to align your transformation with your real business priorities irrespective of your landscape. I hope this helps you in your thought process. Let’s talk. Contact me directly to find out whether servitizaton and/or delivering an intelligent enterprise with SAP and Microsoft is in your cards.