IFS has released the first sets of results of its research into the role of technology in realizing business benefits and driving value as companies shift to a servitized business model. The research polled 2,000 senior decision-makers – VP and above –in France, Germany, Japan, Nordics, UK, USA and the UAE –across Manufacturing, Services, Telecoms, Energy& Resources, Construction & Engineering, and A&D industries.
43% of respondents stated that the momentum behind shifting their business model to a servitized one remained a clear priority for executives. The research also reveals a divide between the “Leaders” and “laggards” in completing the move,19%and 23% respectively. The primary cause for some organizations’ slow progress in building momentum in their organization is the need to clearly define the impact on their workforce, processes, and technology landscape.
Across industries, AI has become the essential technology for accelerating the servitization shift and value realization by improving operational efficiency (28%),capturing new customer segments or targeting new markets (28%),increasing customer satisfaction (27%),improving customer retention (26%), and securing higher profit margins (25%).
The urgency behind building AI capabilities is most prevalent in the Manufacturing and Services sectors (58%),followed by A&D (51%), Telecoms (50%), Construction and Engineering (48%), Energy, Utilities and Resources (48%).Driving innovation and continuously building differentiation within their respective markets continue to be seen as the foundation to increase revenue growth and profitability.
The importance of financial health and driving business resilience are high on the value agenda across the organization, with the CEO (54%) and CFO (49%) leading the charge. The dual leadership behind servitization points to a clear tie between the need to modernize via digital transformation and the expected financial benefits the board expects to gain from prioritizing customers at the heart of product and/or service design and delivery.
While the executive leadership team is clearly behind the evolution of the business, getting a complete and actionable understanding of the impact of the shift on people and processes (22%)is vital. The CHRO is particularly aware of the potential impact and cites digital technology as fundamental (50%) to managing the change and, specifically, using AI and automation to enhance workflows and processes.
Alex Rumble, SVP of Product Marketing, Analyst Relations and Competitive Intelligence at IFS, commented:“We often hear from customers that digital transformation is not about technology. This research very clearly points to tight alignment between the C suite when it comes to evolving the business and bringing the organization proactively along the journey. She added: Servitization is fundamentally about being customer-driven in the design, manufacturing, delivering and servicing of products and services. The topic has been around several decades, but the technology lacked”.
Rumble concluded: “It is the coming together of servitization and the explosion of digital technologies that has created a perfect storm for companies to harness the power of AI, automation and ML, for example, to re-engineer and streamline their businesses behind the customers’ needs AND deliver business value. That is exciting for IFS.”