Servitization has been around for years but has recently really started to get traction. The reasons are clear. For example, in many manufacturing companies, the profitability of services is estimated at 2-5 times higher than products, and analysts say that 75% of the companies expect that servitization will dominate their business in the future. However, only 30% of the companies have an active servitization strategy (*).
In this blog, we look at the threshold to full servitization from a billing perspective.
Frank Marks of Praetimus describes four steps in his servitization maturity model, and three transformations from one step to another.
Many companies are on their journey to achieve benefits from integrated services. They are adding services to complement products and expanding opportunities with totally new business scenarios.
Adding life cycle services that enhance product performance is a logical move forward. This step already requires renewal of business processes and new pricing and billing capabilities considering the needed flexibility and scalability with the business model.
In the Praetimus’ maturity model, the third transformation step is the hardest part of the journey. Price-setting is often considered to be difficult and volatility in income is expected during the business model transformation. Moving from a fixed business model for uncertain future revenues is not an easy decision, and often lack of insight into future cash flows makes it hard to take this hurdle.
High-quality data and tools for simulating the different scenarios are needed to support the business transformation. This is why platform support starting from level 2 is important: it is a foundation not only for current business but also for future business capabilities. The ability to automatically set a price for each business scenario and service event is a key to both revenues but also profitability.
In our experience, a monetization platform such as Good Sign can create valuable operational insights to empower the transformation. By leveraging your existing contract and operational data, we can build predictive monetization scenarios. Our agile billing platform helps our clients to document detailed billing events over the life cycle of clients to come up with the right pricing and monetization strategies.
If you feel your servitization strategy will outgrow your current billing solution, or if you are just curious to learn how Good Sign does things differently, feel free to take us to the test! We will gladly take on your challenge and prove to you it can be done, and that the new world lies beyond just subscriptions.
Marc Wullings : Nov 17, 2021 9:45:00 AM
The Accelerated Pace Of IoT Adaption As a central part of Industry 4.0, digitalization has been supercharged with the usage of IoT. Studies show that...
Petri Takala : Jun 15, 2021 8:45:00 AM
Billing Needs Flexibility, Bridging ERP And CRM We recently had a great conversation with Igor Stenmark, the billing expert at MGI Research, and...
Petri Takala : Apr 4, 2023 8:30:00 AM
Managed Service Providers need a scalable, reliable, transparent, and flexible pricing and billing solution due to the complexity of their customer...
