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April 5, 2021 | 5 Mins Read

Insights Gleaned in The Trenches of Servitization

April 5, 2021 | 5 Mins Read

Insights Gleaned in The Trenches of Servitization


By Sarah Nicastro, Creator, Future of Field Service

I’m hopeful by now you’ve seen the special report we published recently, The Service Centricity Playbook: 7 Phases of Morphing from Product Provider to Trusted Advisor (if not, please check it out!). The report looks at the common steps along the journey that companies take when servitizing their businesses. But we all know that the real value comes in when you can spend time with people that have done the work and are willing to share the good, the bad, and the ugly of what it took to achieve success. The team from Noventum and I hosted a discussion with Wolfgang Kuenkler, VP – Head of Global Retail & Delivery Services at Diebold Nixdorf and Roel Rentmeesters, Director of Global Customer Service at Munters to hear their tales of living the “playbook” in real life. Here are some of the insights they shared.

Servitization Isn’t Service Transformation, It’s Business Transformation

One of the biggest misperceptions around this journey is that it is a service journey but, in reality, it is a journey for the entire organization – and success only comes when the entire business gets on board. “It was a quite a difficult journey to start with, because it's a mindset and it’s a highly cross-functional journey as well,” says Roel. “This is not just a service journey. R&D spot trends on what is coming up. Product management, who has a relationship with customers as well, bring in what they feel as demands. And so together, this is where you develop this service strategy and vision, and how to bring it to life. And on top, what's so exciting is the fact that it doesn't stop.”

The deeper and richer your history as a product-centric business, the more challenging this shift can be for the business. “If you are coming into the beginning as a pure, product-based company, service is something which over time will change your organization,” says Wolfgang. “You cannot compare product sales to services sales; it is totally different. Everybody in the company must understand that service is not for free. Service is really a big business and it could be very profitable for the company. This is the first step to solution sales. Diebold Nixdorf was really product-driven until 2008 when the economic crisis hit, and the product sales went down dramatically. Our stability came from our long-term contracts. We have long term contracts, three years, five years, so we had that permanent income. This helped to change the mindset of the account management, executive management, and everyone involved. From this point on, service was very important for us on the same level as product – it is 50 percent of our business.”

Standardization is Key to Servitization Success

Wolfgang and Roel agreed on the importance of global standardization. “Diebold Nixdorf has a global service organization of about 16,000 people. Our main customers are global customers from the oil industry, from fishing industries or sales of furniture and, of course, global banks,” explains Wolfgang. “What they're expecting is that an engineer in Indonesia and Malaysia and Brazil is working in the same way as an engineer in U.K. or in the Netherlands or in Denmark. Standardization is key to achieving this. So, what we are doing is being standard in our services, our contracts, our sales processes, our service delivery, our support, our logistics, everything. It is possible, from my point of view, that people are acting in all the countries in the same way, because this is what customers expect from us.”

At Munters, where the journey is earlier in process, standardization is being worked toward by a dedicated team. “I am a strong believer that central services can take away a lot of the burden of the countries and inconsistencies in the way we operate,” says Roel. “We involve them in creating the standards based on best practices that they might have on one side and best practices that come from other companies that are working in a standard way. We have a central services management team that looks into the infrastructure, the product development and the processes, and the business systems we want to use to serve as an incubator and facilitator for the countries that are actually executing the business. We can dedicate resources specifically on the initiatives and steps we are taking, the work to implement them for the countries to benefit from.”

Regardless of what stage of the journey, continual optimization is the name of the game. “We have a continual improvement manager that specifically looks into the end-to-end processes, to make sure that everything flows where it needs to flow,” explains Roel. “If you use companies like IFS with an ERP system, they often base that on a standard process, embedded in there as a framework that you can use. It’s not just customer value that you will be able to create by implementing standard processes; it is your internal way of operating that will change as well. You will become more efficient and that means that you need to adapt your processes to what you implement. If you implement a remote management center that will change your processes, then the way you sell things and the way you train the people that need to sell that to customers also need to change. It’s a continuous journey of learning and refining.”

Streamlined Technology Enables Streamlined Service

Finally, it’s important to realize that the level of cohesiveness you need to achieve for Servitization success is impossible to come by without modernized, streamlined technology. “For IT, we are the service experts and we define the processes. It helps us to optimize our processes,” says Wolfgang. “Our goal is to have only a limited number of tools, because each tool increases the number of complexity costs. To master data services without master data will not work. For IT infrastructure and service, you need a vision. In the same way its important to have a service vision, so also is a vision for IT. There are too many tools on the market at the moment and you must be clear on your requirements to find the right fit.”

You may want to consider having a dedicated resource that is responsible for tying this together. “We have a VP of Digital and that person is really targeting how the company needs to do digitalize and what it needs to do to support the business. We did an inventory on the needs that we saw from a business perspective and are creating a roadmap based on that,” explains Roel. “New technology is key, and alignment between IT and the business is a must.”