Beyond the Product

How industrial goods providers improve their competitive advantage with servitization
Marc Ziegler | Sven Rossmann | Andreas Steer | Leon van Dijk | Ines Stoegerer
Feb 2021 | Strategy Paper | English

Beyond the Product

How industrial goods providers improve their competitive advantage with servitization

Increased global competition in the industrial goods sector is shifting revenue structures from the core product business to the software and service business. Digitalization is changing the way services are designed and delivered. In this strategy paper, Porsche Consulting analyzes this industry, which is traditionally focused on the development, production and installation of capital goods. How are successful companies managing their transformation toward a service-centric business model? The publication shows best practice examples and provides answers for concrete implementation with a focus on the industrial machinery, medical technology and special vehicles sectors, including agricultural, construction and mining machinery.

50%

do servitized companies outperform their peers in the long-term.

9 imperatives

guide from understanding the business value, to building the required operating model for a successful transformation into a service-centric company.

10 years

estimate servitization champions to drive service revenue up to a third of overall revenue with further ambition to double their service sales.

Management Summary
  • Servitization provides significant business value that drives total shareholder return (TSR). Servitization champions can achieve double the TSR of their industry peers
  • Digitalization fundamentally changes the way services are designed and delivered. The built-in scalability of advanced services or platform plays drives down costs and reshapes the economics of service business
  • When transitioning to as-a-service business models, the key challenge is about managing risk. While the opportunities are tempting, taking over value creation from customers requires careful identification, assessment and continuous management of risks
  • Bolder service transformations require a dedicated operating model as the DNA of an engineering-driven hardware company changes with increasing degree of servitization

Read the whole strategy paper now

Contact

Consulting that works

You want to get in touch with our experts? Reach out to us.

Pschemyslaw Pustelniak
Practice Lead Strategy & Organization

Insights

Trends & Solutions

Transformation Transportation

The human factor is key

Data-driven Strategic Workforce Management

How to ensure the future readiness of the workforce in an organization

The Decarbonization Puzzle

How to solve it and create business opportunities

Filter

Industries

Practices