Product servitization is a business trend that can bring value not only to OEMs and service providers, but also to end users.

According to the 2024 Gartner^® Emerging Tech Impact Radar: Edge Artificial Intelligence “The mass is very high because it will enable providers to sell new services and will impact virtually every industry. Product servitization enables capital assets offered by OEMs or OEM partners to be extended as outcomes, priced as recurring operating charges. When products are servitized, the user acquires asset-based services (outputs), scoped within the desired results relating to performance, availability and output quality.”

Offering value-added services in addition to the product is at the heart of the competitive strategy of many companies in different market sectors, where also innovative business models based on the provision of services rather than the sale of products are becoming more widespread (see streaming services and pay-per-use agreements for home appliances).

This approach, which is now widely accepted, will also have a significant impact on the manufacturing sector in the near future. So, in order to stay competitive in the market, both OEMs and service providers need to incorporate additional services into products. (es. remote monitoring, remote control, predictive maintenance, ecc.).

‍But what are the main barriers to rapid adoption of this trend?

COMMERCIAL BARRIERS: Immature product servitization business models and concerns about negatively impacting OEM and service provider revenues, stemming from a lack of digital expertise, investment, and adaptability, are currently constraining the expansion of product servitization initiatives. 

As reported by Gartner: “Product servitization faces key commercial inhibitors, such as:

• Immature product servitization business models and fears of cannibalizing existing revenue of OEMs and service providers offering traditional, reactive services in support of products
• Manufacturers’ reluctance to open access to partners and competitors that seek to manage heterogeneous environments 
• Lack of digital skills, investments and digital dexterity by the legacy IT and OT providers

CULTURAL BARRIERS: Both the strategies employed by OEMs and service providers to mitigate risks, as well as their hesitation to grant access to partners and competitors looking to manage diverse environments, pose significant barriers to the adoption of product servitization.

TECHNICAL BARRIERS: Despite the widespread deployment of IoT platforms, there are still technical challenges that need to be addressed. These challenges include device management, security and the integration and management of asset data with enterprise business planning and logistics applications.

According to Gartner “The future success of product servitization lies in the use of IoT, edge computing, AI and software applications to improve product performance and facilitate remote intervention and control when needed”.

As a software vendor, we embraced the idea of an application that enables OEMs and service companies to provide and monetize their “connected services” offering and helping products’ users to get the highest outcome. Technology and software applications are in fact catalysts that accelerate the path and reduce the time to market for launching a new connected service offering. 

If you don't want to miss out on significant opportunities, you have to act now, by considering technologies and software such as Servitly, that Gartner recognized as a Sample Vendor in the 2024 Report.

For this reason, here you can find 5 suggestions to overcome product servitization barriers, leveraging on Servitly and our academy.

‍1. Start small. Grow step by step.

Your connected services journey can reach key value drivers from the first step. We have mapped here the typical elements that make up a connected services offering. 

So our suggestion is to:

1. identify the final destination
2. define the route to take
3. divide the journey into steps
4. start from the very first step

As described in this map, you can start to offer base digital service to strengthen relationships with your customers and offer a better customer experience with your products (with positive and immediate impact on your revenue).‍

2. Plan & Track‍

Deploying your Connected Services offering requires planning and tracking. We suggest a number of dimensions worth considering. To have an overview of your overall progress you can list these dimensions on a single page and for each track the progress status, like the example you can find in our here.

3. Leverage on Best Practices‍

Be guided by servitization best practices, rather than figuring out what you could do by yourself and risk trials and errors. Servitly, supported by Academy, ensures the perfect balance between built-in features and configurable layers for many Connected Service Use Cases, so you can be supported in the configuration of your solution and avoid trials & errors.‍

4. Focus on the value you can create for your customers‍

For your connected services offering to be successful, you must create value for your customers. This means extracting value from the raw data received from your connected products and distributing that value to all stakeholders in your product-service system, considering their specific needs. Servitly provides powerful processing and monitoring engines to turn your data not only into valuable information, but also into actions and business process triggers. In addition, Servitly is a configurable and white-label solution that enables you to create your unique connected services offering and define different user interfaces to enhance customer relationships with your brand.‍

5. Choose your approach to implement the software enabling your connected services offering considering all the aspects‍

As you embark on your servitization journey, choosing the software that will enable your connected services offering is one of the most critical decisions you will face and you will likely face the “make or buy” dilemma. Our suggestion in this case is to discover here more on the characteristics an effective DPS must have and then consider all the distinctive features of Servitly.

Servitly includes a Console with a No-Code approach that let you be in full control of the system and configure every aspects of your DPS, rather than building and maintaining tons of lines of code by yourself or an external partner. In addition, Servitly ensure natively compliance with the EU Data Act and include already all the software modules, patterns, interfaces and integrations you need. So you can save time and costs in developing and evolving your offering and focus only on what really matters: your competitive differentiators.

And if you already started your custom-made DPS, don't worry. Servitly is a modular system, you can add only the parts that are missing from your actual solution.

Do you still have doubts about the value Servitly can generate for you?

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^{Gartner, Emerging Tech Impact Radar: Edge Artificial Intelligence, By Danielle Casey, Eric Goodness, ET.Al., 18 January 2024.}

^{GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.} 

^{Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.}

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