COVID-19 Is Speeding Servitization Progress, But These 4 Barriers Will Hold You Back

By Sarah Nicastro, Field Service Evangelist, IFS

One of the topics that has come up in the majority of conversations I’ve had with service leaders battling the challenges of COVID-19 is how it has impacted the way in which they need to serve their customers. The biggest wants and needs of their customer base look far different than they did just four months ago, and this is forcing companies to be creative and innovative to adapt to new demands. Practically speaking, many customers are facing financial strain at worst and extreme fiscal caution at best, which is putting the breaks on large expenditures and long-term contracts. Companies that are reacting nimbly are embracing Servitization and outcomes-based service concepts and looking to move toward OpEx and subscription-based models that guarantee a level of service and ease investment concerns. For manufacturers, the shift to Servitization protects them from a potential loss or slowing of product revenue by taking advantage of the customers’ preference to extend the lifecycle of assets through service – and for service organizations, the move to outcomes provides peace of mind to customers while providing recurring revenue.

As such, our current global crisis is taking the journey to Servitization and delivering outcomes that most businesses we speak with are on and speeding it significantly. This journey is complex and multi-layered, which is why we’ve seen relatively slow progress – but as in other areas, COVID-19 will act as a major accelerator and will spur organizations forward in ways that may stretch them and bring about some growing pains but will ultimately make them stronger.