PSS
The figure
hereafter illustrates the change of focus when tangible products are sold as
services i.e. servitized or intangible services are productized. When
discussing about the total offering and productization related at some point
the discussion goes into services. Often additional services around the core
product. This is typically the starting point for servitization. But when we
talk about true Product Service Systems there is a difference. The fundamental
starting point is in customer requirements rather than in some technical
product or service. That has some major effects in company strategy and in
operational model and thus personnel. Probably the best-known example of PSS is:
It is
anyway difficult to separate Servitization and PSS. Actually there are
researchers who claim these two things are the same and the naming is the only
differentiator. The operation of the true PSS requires high technical skills
and understanding of the customer needs and requirements as well as knowing the
features of own offering in detail.
Figure 1 Change of focus
PSS benefits
Some
research say that there are companies starting to do PSS sales even before they
have properly defined all the facts they should know, including the pricing of
their PSS offering. They do it because there is so much value in the feedback
data enabled by the model. Example: If I would sell container moves instead of
container handling equipment, I would need to know or learn fast the customer
operation in much greater detail if selling only the equipment. Then I would
really gain deep understanding of customer processes and operations. At the
same time, I should understand my responsibility then. The customer business
would be on my shoulders. Thus, deeper co-operation with customer in all level
of organization is a must thing to do – again a great benefit. Once I had
started this, it is really difficult for customer to change the supplier. The
mindset inside the company should also change
from leadership of technology to leadership of use
It is such
a change that I should execute a critical evaluation and gap analysis of
available skills and resources. The change would become visible in marketing as
well. I should make sure the marketing focuses on relationships marketing and
the performance rather than the equipment. This is again paradigm change.
The bad news
When the
change is done in marketing talks – no more equipment, rather the performance
figures or equipment availability numbers etc. It is obvious that some part of
the personnel would not anymore have perfect fit or they should be replaced
with different set of skills and mindset. Company management structure may also
require somewhat different weighing than previously. That all said, the change
has wide effect to many parts in the company which means there must be many
people rowing the boat with equal pace. It is even more important than in
traditional equipment sales because now the operation of the product has straighter
forward effect to revenue.
This is also seen as the number of people in direct contact with
customers is likely to increase when moving into PSS model.
PSS and digitalization
Technology
enables things today that has been the dream of many operations managers in the
past. Thus, the business developers have great tools in their hands. Previously
it was often mentioned that if we only would have the data online enabling live
monitoring of a device or it would be great if there were a system enabling
easy and fast established communication with customers and suppliers.
Technology is there, now it is just about the people and creativity. In the
next blog, there will be some ideas related to PSS benefits and barriers to
enter.
