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0. Servitization for OEMs: Introduction

Opdateret: 29. mar. 2023

Servitization is a business strategy that involves providing services instead of traditional product offerings. This approach can provide several benefits for both customers, original equipment manufacturers (OEMs) and/or Value-Adding Resellers (VARs), including enhanced revenue streams, greater customer loyalty, and improved sustainability.

In this series of blog posts, we will introduce the concept of equipment-based servitization, explore the different business models available to OEMs, and explain why understanding these models is important. Understanding the different types of servitization models is important for OEMs as they consider how to expand their business offerings. Each model has its own unique benefits and challenges, and OEMs must carefully consider which model will be most effective for their particular products and customer base.

Furthermore, there is often confusion around the terminology used to describe equipment-based servitization business models, as demonstrated by Prof. Dr.-Ing. Matthias Schlipf & Prof. h.c. Dr. Uwe Seebacher (MBA) in their 2021 Equipment-as-a-Service market study (link). We hope this series will provide some clarification on this matter.

Description of the models:

There are several types of servitization business models, each with its own unique approach and benefits. In the upcoming blog posts, we will dive deeper into each of these models from a generalist perspective. It's important to note that each model may look different in its successful form in each industry, for each customer, and OEM.

The models we will cover include:

  1. Subscription-/renting-based models: In this model, customers pay a regular fee for access to the product or service for a defined period of time.

  2. Usage-based models (pay-per-use): In this model, customers pay based on their actual usage of the product or service.

  3. Outcome-based models: In this model, customers are charged based on the outcomes achieved with the product or service.

  4. Value-based models: In this model, customers pay based on the value created by the product or service, typically through cost savings or revenue generation.

  5. Shared services: In this model, customers share access to a product or service, typically through a platform or network.

  6. Asset-light services: In this model, companies provide services to customers without owning the physical assets required to deliver those services.

How we will cover these models:

In the upcoming blog posts, we will provide a comprehensive overview of each servitization model, including:

  • Description of the model: We will explain what the model is and how it works.

  • Successful use-cases: We will - try to - provide examples of companies that have successfully implemented the model and the benefits they have experienced.

  • Benefits: We will explore the benefits that each model provides for both OEMs and their customers.

  • As a sustainability-enabler: We will explain how each model can promote sustainability and reduce environmental impact.

  • Data utilisation: We will discuss how data can be used to optimise each model and drive its operationalisation.

  • Finance need: We will cover the level, and type, of financing required for each model and the key factors that impact financing needs.

In the conclusion of this blog post series, we will briefly touch hybrid models and partial servitization, outline the challenges of the covered models, and round off the series.

Happy reading!

The first post on Subscription-Based Models is ready today here.


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