About PSS

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:

·       Rolls Royce power by hour

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.