“Servitization, or Advanced Services, is the final element in a three-tiered perspective of offering services. The first layer of service is basic service, whereby a company offers goods and spare parts on a transactional level. The second level of service is intermediate service, where product repairs, maintenance, overhauls, help desks, training, and condition monitoring are offered within a service contract agreement. The final layer is advanced services. In some cases, this may be a fully outcome-based service model; in others, it might be more akin to a customer success model. The degrees of servitization vary both on the situation and customer and service provider maturity. However, what is present in all servitized business models is a move away from transactional or contract-based sales towards true partnership. In the manufacturing sector, CAPEX asset costs are often replaced by long-term subscription costs. Within advanced services models, SLA adherence is replaced with guarantees of uptime, and perhaps most critically, there is a transfer of risk from the customer to the service provider, which is compensated by more profitable and longer term agreements.” FSN Research 2022

1. Servitization is a
spectrum not a journey

2. Who am I and why I’m
worth listening to…
• Editor-in-Chief and Founder of Field
Service News
• I’vebeen talking about Servitization for
best part of a decade
• I gave the keynote presentationat the
World ServitizationConference last year
• I wrote the book (well the forward at
least)
• Work widely quoted including in HBR,
Guardian, Wired, Business Insider and
BBC and many more

3. Bridging the gap between
academia and industry…
• Servitization comes from academic
theory, but it is put into practice by
industry
• Consultants – talk like academics,
sell to industry
• Me – talk to both academia and
industry to uncover best-practices
and share

4. What is servitization
“Servitization, or Advanced Services, is the final element in a three-tiered perspective of
offering services. The first layer of service is basic service, whereby a company offers goods
and spare parts on a transactional level.
The second level of service is intermediate service, where product repairs, maintenance,
overhauls, help desks, training, and condition monitoring are offered within a service
contract agreement.
The final layer is advanced services. In some cases, this may be a fully outcome-based
service model; in others, it might be more akin to a customer success model. The degrees of
servitization vary both on the situation and customer and service provider maturity.
However, what is present in all servitized business models is a move away from transactional
or contract-based sales towards true partnership. In the manufacturing sector, CAPEX asset
costs are often replaced by long-term subscription costs.
Within advanced services models, SLA adherence is replaced with guarantees of uptime,
and perhaps most critically, there is a transfer of risk from the customer to the service
provider, which is compensated by more profitable and longer term agreements.”
FSN Research 2022

5. “People don’t want to buy a
quarter-inch drill, they want a
quarter-inch hole.”
Theodore Levitt, Economist, Havard Business School

7. Risk

8. Percentage of companies with some
form of servitized element within their
service portfolio:
• 2022: 68%
• 2021: 64%
• 2020: 58%
FSN Research 2022

9. Drivers
Primary drivers for introducing
servitization in 2022:
• Customer Pull: 36%
• Competitor:12%
• Drive service revenue: 24%
• Drive product revenue:16%
• Strategic disruption:12%
FSN Research 2022

10. The road to servitization
(and why that phrase is
annoys me…)

12. Outside in
• Different customers different needs

13. “All great change in business has
come from outside the firm, not
from inside.”
Peter F. Drucker

14. • Do it for me
• Do it with me
• Give me what I
need to do it myself

15. Perception:
• Less than six months:
22%
• Between six months
and a year: 38%
• One to two years: 29%
• More than two years:
11%
Reality:
• Less than six months:
11%
• Between six months
and a year: 22%
• One to two years: 48%
• More than two years:
19%
FSN Research 2022

16. Approaching servitization
“Learn from the mistakes of others. You
can’t live long enough to make them all
yourself.”
Matthew Syed

17. A selection of related interviews on FSN PRO
Jason Smith, EMEA Head of Service, 3D Systems
Professor Dr. Shaun West, Luzern University
Des Evans, Former CEO, MAN Trucks
Dave Gordon, Senior VP Service, Rolls Royce
Professor Tim Bains, Aston University
Dr Christian Kowolkowski, Linkoping University
Dr Chris Raddats, University of Liverpool
Peter Alexander, former President of Sulzer's Rotating Equipment Services division
John Cullen, CMO, Metso
Felix Keiderling, Service Director, ABB Marine
John Pritchard, President MAC Solutions
Johan Granath, COO & Deputy CEO, Polygon
Alex Bill, Head of Service UK, Alstom
Harman Lanser, Head of MRO Service, Air France-KLM

18. www.fieldservicenews.com/the-essential-resource-for-field-service-managers/
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