By Tom Paquin
This is part of an ongoing series on the state and standards of service management software in 2020. Here are the previous articles in the series:
- What is Service Management Software?
- The Key Capabilities of Service Management Software
- The Attributes of Best-in-Class Service Delivery Software
- The Operational Capabilities of Service
- The Building Blocks of Customer Experience Excellence
- Implementing New Service Software
- The Politics and Potential of Changing Service Software Providers
So here’s the deal—we talk about servitization constantly on this site. To the point that we have a whole section devoted to our servitization stories and recommendations. For those of us in the world of service, servitization is simply entrenched knowledge. And its name does, to a point, allude to its definition. Nevertheless, the word isn’t even in my word processor’s dictionary.
There are a variety of reasons why one might not have encountered the word “servitization” before. One is the obvious—they’re new to service. Another, less obvious and arguably more prevalent, is that they’ve been raised on a different service orthodoxy. Perhaps they’ve referred to the concept as service transformation, or everything-as-a-service (the phrase I used much more frequently as an analyst). For those reasons, I wanted to take a minute and add to the record a formal definition of servitization. So…
What is servitization?
In short: Servitization is the act of restructuring traditionally product-oriented businesses towards service-oriented functions, including subscriptions, repair and maintenance contracts, and outcomes-oriented guarantees.
So within that, there’s obviously a lot of nuance, and a wide variety of topics that are worth breaking down. The primary consideration, and most important is to note that servitization is not merely the act of creating a warranty program. Servitization requires a forward-looking consideration of customer interactions, not reverting to the trappings of tradition.
Moreover, the delta between manufacturers, and, say, telecoms in adopting servitization is vast. Your business structure will naturally change—sometimes dramatically—how this definition is interpreted in practice. The good news is that we’re here to help you make the most out of servitization!
If you’re looking to see how businesses are employing servitization in practice, here are a few places that you can get started: