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VNSG round-table; Companies are struggling with their servitization roadmap

A. Summary

The VNSG (Dutch SAP user group) servitization round-table was held on 6-june at SAP in Den Bosch, with participation from; Shell, Philips, Miele, Lamb Weston/Meijer, Strukton, ASML and SAP. This blog gives an impression of the discussions between the participants.

Servitization enables companies to extend their value propositions with services towards their customers by utilizing the information extracted from industry 4.0 (IoT) data and the (SAP) intelligent enterprise.

The round-table was based on the 8 phases of the servitization road-map (as described in the previous blog (https://www.linkedin.com/pulse/impact-servitization-sap-enterprise-architecture-frank-luyckx/) and has the following outcomes;

A1.      Servitization MVP’s & maturity of the company

The servitization maturity of many companies is low, which means that companies must extend their capabilities to efficiently sell and support the servitization MVP’s. The servitization MVP (Minimal Viable Product) are mostly in the POC phase.

A2.      Business & operating model

Based on trial and error, the Product / Marktsegment Combinations (PMC) are explored and scaled up when feasible. The 4 value streams (sales, production, logistics and services) are limited efficiently integrated to support the scale-up of the servitization MVP’s.

A3.      CX & ERP solution architecture

The solution architecture and the service organizations are limited ready to efficiently monitor, analyze the MVP’s and efficiently collect the revenues. The asset information is limited integrated into a digital twin.

 A4.      ITSM & enterprise architecture

The (ITSM) organizations could be more efficiently managing the infrastructural equipment issues across multiple (customer) platforms. The servitization portfolio manager and enterprise architect should integrate the different interrelated projects into a servitization roadmap.

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B. Discussions from the Servitization roundtable;

Finding round table participants which are actively involved in a servitization transformation is not easy because many companies are busy with IoT and (predictive) industry 4.0 projects but have problems to translate these capabilities into a MVP (with services) for which customers want to pay and have a positive long term ROI case.

The awareness that servitization is important for the long-term profitability of the company seems to have a higher priority for the countries on the Asian continent. Every company has their own reasons to start the servitization journey, examples of these reasons are;

1.      Commoditization (Amazon offers lower prices; product competencies is differentiator)

2.      Circularity            (Government regulates that products are scrapped sustainable)

3.      Brand recognition   (Differentiate the brand and core competencies from competitors)

4.      Energy management (Audit trail for environmental and energy regulations)

5.      Predictive maintenance (Build long term relationship by IoT maintenance services)

6.      Pay for use               (Attractive pricing options for quotations and additional services)

7.      Partnerships        (Customized configurations to increase customer loyalty)

8.      Logistical management       (Optimize logistical supply chain on just in time principles)

9.      Customer intimacy    (Extend data on product & service usage to align product design)

10.  Revenue optimization (Increase sustainable share of wallet by up and cross selling)

B1. Define the servitization MVP’s & improve the maturity of the company

Servitization starts with building a trusted relationship with a loyal customer and slowly extending the service offerings towards a MVP with mutual investments of the customer based on trust and shared added value. The success of the MVP’s depends on many unpredictable factors (e.g. personal habits) and an agile creative mindset (e.g. measurement points) is important.

The organization must be flexible to support additional logistical services (e.g. washing powder, coffee), additional partnerships (distribution centers, data scientist, Iot services), disciplined asset configuration management. The MVP’s should be supported by web communities (e.g. MieleLaundryClub.com) to exchange experiences and ideas. The customer information for each market segment should be shared between the partners to fully understand the needs of the end-customers. Only when the value proposition is clear and tested, the up-scale and mass marketing can start.

B2. Define the required business & operating model

Relevant (non-core) complementary companies should be bought or have exclusive cooperation contracts with, to complete the integrated service offerings and share profitability (e.g. washing powder, electric power plants). The agile value propositions must be supported by an agile marketing and sales approach which should be focused on the fulfilling the ultimate goals of the customers (e.g. 2-years longer personal life, real-time customer intelligence).

The value propositions are supported by long term extensive customer contracts in which the number of replacements and upgrades are also agreed. Business responsibilities will shift because of the changed focus on services, business units must be willing to share customer control and management teams should share knowledge and collaborate to optimize (new) service propositions. The partnerships eco systems should be based on long term relationships in which multiple services are integrated in multiple value propositions supported by an integrated (SAP) solution architecture.

B3. CX & ERP solution architecture

The investments in the required (SAP) solution architecture are risky and must be aligned with the customer solution architecture standards. SAP service management should facilitate the cooperation with the services partners in the cloud. The cloud integration and API platforms must facilitate all required interfaces.

The asset data should stay visible in the cloud to maintain the asset control (e.g. Miele@Mobile). The asset data should be enriched with information from partners and customers. The AI analysis requires material knowledge which is seen as the market USP & differentiator to utilize the company’s core competencies.

B4. ITSM & enterprise architecture

The CMDB of ITSM platform should be extended with IT assets (like IoT devices) so the issues can be managed by the IT services organization. The IoT data collection and device managements services can be outsourced.

The servitization portfolio manager should integrate the multi-disciplinary value streams to optimize the profitability of the value propositions and facilitate collaboration. The product manager, the portfolio manager and enterprise architect should collaborate intensively to analyze the impact of new products and services on the enterprise architecture.

C.Consolidation of the round-table inputs;

The participants were asked to give their input for the 8 phases of the servitization roadmap, the following gives an overview of the consolidated results;

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The servitization round-table was a success and will be held next year again. So we are looking for 10 companies who are willing to participate and share their servitization concerns. Every company should be preferably represented by a product manager and a solution architect. The enrollment is done via the VNSG site and I hope to see you next year in May 2020 !!!

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