BizCamp Event – September 19th Dublin

For those of you near Dublin on the 19th of September, the BizCamp conference is taking place at the Guinness Storehouse. This free to attend event is a great place to meet with an expected 400 entrepreneurs to share ideas, experience and knowledge in a broad range of business areas. I will be giving a presentation on how Software-as-a-Service (SaaS)  is changing the structure of the software (and broader IT) industry and the various implications this has for businesses (a process known as servitization).

Hope to see you there.

Steve

Servitization Momentum Is Increasing

We attended a very good event at Cranfield University last week (details in earlier blog post). The faculty, staff, guest speakers and audience members were great and the quality of discussion was excellent. Cranfield are taking a leading position in this field and it shows in the expertise of the team there and the Product Service Systems (PSS) programmes underway. Cambridge are also doing some important work in this area and a presentation from one of the guest speakers, Guangjie Ren, a PhD graduate from their Institute of Manufacturing was particularly insightful.

One important take away from the session is that the study and application of servitization is accelerating. Another is that its been a long time coming and is more complex than was originally anticipated. Governments are increasing funding in this area, research institutions are expanding their programmes and businesses are becoming much more aware and active.

The net effect of both increased inputs (funding and research) and increased outputs (organisational and marketplace change) is that more companies are doing more in the whole area of service innovation, at a faster pace, than ever before.

There are various potential reasons why this acceleration is occurring now. One is the general accumulation of research and experience since the term servitization was first coined in 1988 – time and scale may have reached a tipping point. Another more likely explanation for the timing  is that the economic background and the commoditizing impact of global competition has focused attention on ways to differentiate and innovate through services.

Servitizer profiled in the Sunday Business Post

We were delighted and flattered to be profiled in this weeks Sunday Business Post, the leading business newspaper in Ireland. Servitization (or service innovation) is an important trend that companies are beginning to embrace to differentiate themselves and create more value for their customers and we at Servitizer are proud to be in the vanguard of this development.

We are working with a number organisations here in Ireland and internationaly to help develop their services capability and the increasing awareness of this area of business is more relavent in todays economic climate than ever before.

Transformations to Servitized Organisational Forms Industry Day

Cranfield University, one of the worlds leading academic authorities on servitization and service science, is hosting an event called Transformations to Servitized Organisational Forms Industry Day on June 17th. There is increasing momentum behind the trend of servitization and service innovation and events such as these provide important insight and discussion between those involved in this transition.

Servitizer will be attending this event and look forward to learning from and contributing to other leaders in this field. We will post a blog entry afterwards summarising any interesting findings.

Steve

CEIA May Business Briefing

The Cork Electronics Industry Association is holding its May Business Briefing in the Maryborough Hotel in Douglas, Cork on the 19th of May at 18:30. These events are always well attended and highly regarded and this month’s guest speaker is  Servitizer’s John Flynn.

John will be presenting a topic called “The Role of Services in Evolving towards a Solution-based Strategy“, describing servitization, services innovation and services transformation.

For further information on the CEIA, visit their site at http://ceia.ie. If you are attending then John will look forward to meeting you there.

Servitizing A Services Business

In the classic scenario, servitization is a process of transforming a product business into a products+services one. But the process of servitization is centered on people and organization (both internally and externally) and a similar, but different, approach can be used to take an existing services business forward too. Servitization is also a continuum – both in terms of how companies implement it (its an iterative process) and also in how the concept and diciplne of servitization itself has evolved and will continue to evolve over time. The methodologies, techniques and processes used to servitize a business are refined based on experience and technological developments.

One of the most high profile servitization initiatives undertaken was that of IBM in the 1990s. Theirs was (and still is) a story familiar to many other product companies – shrinking margins on a product business facing increasing commoditisation and competition. They embarked on a wide ranging programme of servitization that completely transformed the company and its fortunes. Today, services account for 60% of IBMs revenues (and even more of its profit margin) and its Global Services organisation is a global leader in the field of IT services. So it is particularly interesting to note how in recent years it has had to re-structure itself again – this time in that same services business.

As the recent FT article recounts, by 2004 IBM was facing increasing commercial pressures due to commoditisation and competition of its services portfolio. This was largely driven by the growth of off-shore outsourcing from the BRIC countries (even though IBM had massively increased its footprint in these regions too). The solution for IBM was to review and rethink its services business – servitize its services business. Its a process we undertake with our customers too, many of whom are pure service companies. It involves a complete audit of the existing service portfolio, revenues, customers and markets. In IBMs case, this led to strategic exiting of lower value services where commoditisation and globalisation had the greatest impact and an increasing focus on services where their specific advantages in both knowledge and location gave them an edge (and higher margins). They also implemented a programme of service standardisation to reduce their costs of service delivery and greatly increased the use of technology tools throughout the entire process. Many of the servitization lessons IBM applied to its services business were learned earlier through the servitization of its hardware business.

It is often much easier to understand and implement servitization in a product company. Services companies can be somewhat blind to their own needs and opportunities in this area. In an increasingly competitive, globalised, service-centric world, it’s important that they don’t lose sight of them. IBM posted improved earnings results in the 4th quarter and have a more positive outlook for 2009 than many of their rivals.

Steve

Blog Blastoff

We have been talking about launching our blog here at Servitizer for some time now but for various reasons it has been postponed, until now. One of the reasons we have hesitated is that from my own personal experience I know that while it quite easy to create a blog its much easier to then neglect or even abandon it (like a gym membership). So to ensure this doesn’t happen, we have implemented medieval-like punative measures for team members who do not post and contribute to it. Lets see how it goes.

Anyway, on a more useful note here is what we will actually talk about – servitization and related topics such as solution innovation, business transformation and customer behavior modeling. The basic concepts are well documented elsewhere (including on our site here) but in summary the term servitization describes the process of adding value to a product and a product organisation through the development and integration of services. We also broaden the classic definition somewhat by applying the term to services and service organisations too. This may sound counter intuitive but it reflects the nature of todays service industry which in many cases has created ‘products’ out of services and so can also benefit greatly from a structured programme of servitization.

Until the next time…