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Value based Services: A choice for long-term strategic advantage, not short-term profitability: You must invest to reap the benefits (from healthcare to industry)

An older article, but still relevant

SERVICE IN INDUSTRY HUB

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Within the general servitization buzz the talk is a lot about transitions to outcome or performance based services (including on this blog, see for example our take in this briefing: Outcome / Performance Based Services and Contracting: A Briefing for Managers), where a supplier contracts with a customer for outcomes -not activities- and gets paid accordingly. OEMs often bundle products and services into solutions (product-service systems) to produce the outcome, Rolls Royce’s “power-by-the-hour” being the prime example. However pure play service providers can and do also sell “outcomes”, as when an energy services company contracts to provide ambient climate, defined by temperature and moisture while reducing energy consumption -rather than heat and cooling by the kWh, or when a maintenance provider makes an agreement on the basis of Overall Equipment Effectiveness (OEE) and a budget constraint for a plant -rather than selling “spares and repairs” or a preventive maintenance…

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