5 Steps To Successful Servitization

Servitization is one logical step in the transformative journey of how companies work with customers and generate revenue. In the not-too-distant past, a manufacturing company likely focused on the sale of its products -- say, an industrial-strength drill -- as a standalone offering. Service contracts represented a cost to the company. When products failed, it was considered too expensive for a product-focused company to service its own equipment. Companies allowed third-party vendors to provide the service contracts; while the companies generated revenue solely from the products themselves.

The landscape has shifted, however, and now servitization -- the process of generating revenue from services instead of products -- is opening the door to better customer outcomes, decreased operational costs, and even new innovations.

Take the example of SandvikCoromant, a manufacturer of cutting tools and services for the metal-cutting industry. It sought to take its service-side business to the next level, so the company developed a solution that connects to the Azure IoT cloud to collect data in real-time and get data out of the machining process such as temperature, load, and vibration.

Rolls-Royce wanted to improve aircraft performance, safety, and maintenance for their jet engines. It used an intelligent cloud and machine learning (in the form of Cortana) for three key outcomes: more efficient flight and maintenance plans, targeted and actionable fuel efficiency insights, and quickly generated reports and dashboards that tell compelling stories and deliver high-quality insights.