Introduction
We see many new companies entering into servitization struggling with onboarding and committing their ecosystem to their As-A-Service offer.
The value of servitization relies on wholly committed and purposeful long term relationships with partners. Without this the As-A-Service offering can only be partial, it will never reach its full potential.The background to how this occurs is relatively easy to understand; with so much focus placed into the internal adoption processes of As-A-Service, one of the most commonly seen pitfalls in companies is the loss of effort and strategy in how to apply this externally, to partners.
With the right advisors however, companies can (and should) develop their As-A-Service offer into a model that encompasses their partners to a level that self propels the offer.
But how can you achieve this?
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1) The SLA you commit to the end customer must be shared with your partners
One of the main drivers to move to As-A-Service is client ownership; and client ownership comes with service responsibilities. With an As-A-service contract, you commit to numerous SLAs due to your client's expectation of you as being ultimately responsible for the entire solution. Due to the involvement of multiple suppliers in providing the solution, you must be sure that the commitments you make in front of your customers are correctly mirrored in the contract you signed with your suppliers. It is vital to check that the SLAs of all your suppliers align to the sales terms.
2) Your partners engage your brand when they interact with your end customers and as such they must provide them with a flawless experience
Now that you have signed the As-A-Service contracts, you are the single management point of contact for your customer. Immediately, and in the long term, you will be contacted regarding any issues, queries or concerns the customer faces. Obviously, you will need the support of your partners to solve part-of or most-of your customer’s requests. Every partner-client interaction will be made under your responsibility; so choose your partners wisely as they will be a representation of both you and your company in front of your customer.
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3) Your partners need to have a share of the margin generated by the offer
The transition to As-A-Service requires enhanced commitment and responsibility. Hand in hand with this comes the increased performance risk of ensuring that monthly services are efficiently and effectively carried out. The possible concern of non-payment is a one-time issue in the transactional business model approach versus the ongoing challenge of As-A-Service models.
The counterpart of this additional risk (which can be easily managed by an adequate contract) is the increased margin that it brings to your company. When this risk is shared with your partners/suppliers, it is key that the reward of the increased margins is also shared.
Conclusion
Implementing a servitization business model requires a changed mindset, not only in terms of client relationships, and internal behaviour adaptation, but also a committed and targeted approach to partnerships. Overall, servitization drives a more holistic approach in comparison to the manufacture-centric focus of traditional linear business models.
The As-A-Service business model not only provides the opportunity for your partners, but is fundamentally developed around the involvement and elevation of an entire ecosystem to satisfy the growing customer requirement for more extensive and client-centric services.
An ecosystem committed to servitization means more satisfied clients and therefore increased margin to share.
Black Winch, was founded by three market Experts boasting over 25 years industry experience. Black Winch can help you to design, implement, or improve a successful, scalable and circular, in-house, As-A-Service business, to bring value to your end-users, stakeholders and, of course, your partners!
