Servitization Favors the Bold: Survey Reveals Major Gaps Among Production-oriented Companies

- Servitization adopters show service revenue 30% larger than peers and 5X more opportunity to accelerate annual top line growth above 5%

LONDON, May 14, 2020 /PRNewswire/ -- IFS, the global enterprise applications company, reveals the findings of the first edition of the IDC Servitization Barometer*, a data-based assessment of where companies around the globe find themselves in the servitization journey.

The barometer is fed by an IFS-sponsored survey carried out in July 2019, touching 420 companies active in the physical value chain world. Based on the survey results, IDC has developed a Servitization Maturity Framework that segments companies into four stages:

1. Splintered: Representing 14% of respondent companies, these organizations are characterized by siloed operations featuring disjointed, manual processes and fragmented business systems that offer little or no visibility on performance.
2. Side-Car: Representing 49% of companies, side-car organizations have standardized their back-office and front-office operations, but are lacking integration between the two.
3. Joined-Up: Representing 39% of respondent companies, joined-up organizations have integrated front- and back-office in both directions and leveraged advanced technologies such as IoT to feed the core systems with real-time data.
4. Borderless: Representing a mere 3% of the companies interviewed, borderless organizations are those whose processes start and end outside the organization and operations and technology enable different elements of the value chain to connect.

While only a very small portion of businesses have entered the fourth stage of servitization lending opportunity to those who move boldly and quickly, the IDC survey highlights the remarkable financial and operational proof-points achieved by Joined-Up organizations that make up more than third of companies globally and that are closing in on the Borderless state:

• Service revenues are on average one-third larger than their peers' as a proportion of total revenue
• 5X more likely to accelerate top-line growth above 5% annually
• Much greater likelihood of showing profitability improvements thanks to digital transformation initiatives

"The maturity framework outlined in this survey forms a roadmap for production-centric companies to benchmark their current situation and future aspirations," said Phil Carter, Chief Analyst IDC Europe. "With the current crisis hitting, organizations that bundled products with services or offered their capabilities in a consumption-mode are already enjoying competitive advantage. Manufacturers engaging in this transformation should demand applications that are natively connected across the full value chain, from the shop floor to customer support and service."

Marne Martin, President, IFS Service Management Business Unit, added, "This survey confirms the current state of play as we have observed it among our product-centric customers, many of whom are employing servitization strategies to monetize their expertise and capture larger parts of their respective value chains. The IDC Servitization Barometer also lays out the key hurdles facing many manufacturing organizations, including the lack of internal know-how and the perennial problem of running legacy, disjointed business systems."

Download a complimentary copy of the IDC Servitization Barometer on www.ifs.com here. 

*IDC White Paper, sponsored by IFS, IDC Servitization Barometer: Charting your way to new revenue streams, IDC #EUR145572819, October 2019.

CONTACT:

Lyndsey Rojas
IFS Director of Communications. 
Phone: 1-216-339-9144
press@ifs.com

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