As IoT becomes increasingly pervasive, a new and alternative services sector is evolving, called servitization – also known as outcome-based services, writes Joe Kenny, the senior director for Global Customer Transformation at field service management specialist, ServiceMax.
By integrating services with products, you can create bundles that are of greater value than products alone. As manufacturers move from being purely product providers to becoming service providers as well, it adds value to their products and generates additional revenue. In other words, service-based outcomes take you out of competing on price alone.
According to Ashton Business School, servitization delivers a 5-10% jump in annual services revenue, profits two to three times greater than those on product sales alone, cost reductions for customers as high as 30%, as well as the opportunity to increase service revenues even further by supporting existing third party or competitive products. This creates an ongoing relationship with the customer that effectively locks out competitors.
Machines are already able to self-diagnose themselves, and report back when they need servicing or require action to be taken to avoid breaking down. This is a game changer for any company with a service department, as well as the wider field service management industry. But shifting business models requires thought and planning. So let’s look at some of the key considerations on the business transformation journey to servitization.
First, validate your business model. Chances are you’ll be making potentially more money but in different ways which will require a rethink. Machines, products and consumers are now all able to communicate with each other in real time, which opens up a myriad of possibilities for monetising revenue in different ways.
Think through the customer experience, and look to add value or provide value in the ecosystem either upstream, downstream or both. By building a better customer experience that’s of value or creating more viability of an asset’s use, you’ll not only be able to unlock new value for your customer, but also potentially profit from it. Be careful not to create vulnerabilities or unnecessary technical baggage to a customer transaction or service. Opt for simple logical value. In my view, simple, reliable and consistent wins over cool every time so don’t over complicate things.
Second, look at security around how the data is collected, protected using encryption, stored and communicated. A good reference is The IoT Security Foundation, which is vendor neutral, non-profit and full of expert resources for knowledge sharing, best practice and advice.
Third, take a look at who owns the data captured and the consolidated trends. We now have laws that cover control data captured, data protection, ownership and the protection of personal information. Talk to your legal department and review these aspects, and include them in your end user agreements – clearly state what data is collected and how relates to protection and usage rules.
Fourth, ensure you understand the technology you are using. Have you designed for quality of reporting, and for failure, scalability, reliability? How will you know the sensors are reporting back with valid measurements? It’s really important to test, test and test again – everything from sensor locations, fixings, power supply, communication methods and circuit redundancy.
Fifth, check Industry 4.0 for ideas. In other words, check for standards and emerging templates or blueprints. You can be creative but it’s worth doing your research to get plenty of advice. Always build trial or proof of concept on small scale then methodically learn what business outcomes you can drive or improve – but keep a holistic focus on improving value. And consider how are you going to install, maintain, upgrade, retrofit, or decommission your solution, and once deployed, make sure you recalibrate your expectations on a continual basis.
There are a few obstacles to overcome, but the reality is we have been monitoring sensors in machines for years. As an industry, we already know what good, reliable data looks like and most companies are familiar with the thresholds of proper testing and validation.
The convergence of IoT and servitization is transforming business models in the service arena, opening new possibilities for proactive maintenance, prescriptive management and recall management. Your only decision is how to transform your business to take advantage of them.
May 19, 2016
Posted by: George Malim
The Internet of Things (IoT) has continued to snowball over the past couple of years, and it’s the buzzword that continues to dominate the tech world. It was alarming just how big a focus it was at Mobile World Congress this year, writes Robin Kent, the director of European operations at Adax. (more…)
April 21, 2016
Posted by: George Malim
Adoption of the Internet of Things is proceeding quickly and although most people don’t yet have a smart refrigerator or toaster in their home, smart has taken off in certain market segments, writes Christian Fredrikson, the chief executive of F-Secure. TVs, fitness tracking devices, home monitoring systems and personal wearable devices are all hot products for connectivity, and it’s only a matter of time before other segments follow. Gartner tells us that by 2020, 25 billion devices will be connected. (more…)
March 1, 2016
Posted by: George Malim
Phill Pexton’s research covers the broad topic of machine-to-machine (M2M) communications and the Internet of Things (IoT). Specifically, his current remit allows him to delve deeper into IoT security, service enablement platforms and the industrial internet, with a focus on the monetisation and new business opportunities as well as underlying technologies.
Prior areas of research have included network infrastructure, data centers and unified communications. Phill holds an MSc in International Economics and Public Policy from Cardiff University and a BSc in Accounting and Finance.
November 24, 2015
Posted by: George Malim
The World Advanced Manufacturing & Future Mobility Exhibition (WAM Morocco) has secured over 60 speakers from 20+ countries delivering 45+ hours of strategic content across three days, positioning the event as the region’s most influential platform for industrial transformation.
January 20, 2026
Posted by: Marion Webber
Eagle Electronics has announced the acquisition of Wireless Mobility and rebrands as Eagle Wireless. The combined company will be the defining Western module vendor serving both the automotive and IoT markets at scale with equally strong US and international presences.
December 18, 2025
Posted by: Marion Webber
The LoRa Alliance, the global association of companies backing the open LoRaWAN standard for internet of things (IoT) low-power wide-area networks (LPWANs), has announced that its members have surpassed 125 million global deployments of LoRaWAN end devices. This marks a significant step, underscoring the rapid and sustained adoption of the leading LPWAN standard. With a 25% compound annual growth rate (CAGR) across its ecosystem, LoRaWAN has proven its maturity and scalability as it enters this exponential growth phase. Additionally, the Alliance noted that when factoring in the largest networks with multi-million-device deployments, some vendors are achieving CAGRs as high as 50%.
December 11, 2025
Posted by: Marion Webber
NLT Telecom, a Brazilian operator specialising in IoT, floLIVE, a provider of global connectivity and network services, and TNS, a specialist in providing connectivity solutions and infrastructure as a service, has announced a partnership to promote the use of eSIMs with the new GSMA standard, SGP.32, in the Latin American IoT market. The solution, developed to meet the specific demands of the Internet of Things (IoT), aims to simplify device connectivity on a large scale, reducing logistical and operational costs for companies across various sectors. According to the companies, the Latin American market, due to its size and diversity of operations, demands reliable solutions from suppliers with global experience, enabling the integration and scalability of connectivity solutions with ease and cost-effectiveness.
November 20, 2025
Posted by: Marion Webber
Evergy, one of the largest investor-owned utilities in the Midwest United States serving 1.7 million customers across Kansas and Missouri, has selected Kigen, a global contributor in eSIM and iSIM technology, to strengthen grid resiliency. By adopting Kigen’s secure eSIM OS and eIM solution, Evergy is unifying private LTE and public networks into an automated connectivity layer — creating a foundation for more reliable operations in the face of severe weather, growing energy demand, and the complexity of distributed energy resources (DERs).
November 4, 2025
Posted by: Marion Webber
The TALQ Consortium, which developed the Smart City Protocol, a global interface standard for smart city applications, continues to grow its membership base and announces every few weeks new officially TALQ-certified products. The TALQ-certified products include Central Management Software (CMS) and Outdoor Device Networks (ODN; Gateways) for various smart city applications, currently from 47 different vendors globally. By certifying their products according to the Smart City Protocol, manufacturers enable interoperability with a wide range of systems from other vendors. For cities and municipalities, the growing number of certified solutions offers not only greater flexibility and freedom of choice, but also the ability to avoid vendor lock-in when investing in smart city applications—such as Smart Street Lighting, Waste Management, Parking Solutions, Environmental Sensing or Traffic Control.
October 30, 2025
Posted by: Marion Webber