1、Blueprint for Service SuccessYour How-To Guide on Service TransformationIndustrial customers are less interested in buying a product than an outcome and increasingly find value in services and support.As a result,services have become a critical means for companies to differentiate themselves as well

2、 as stabilize cash flow,lower volatility and enhance resilience.For that reason,we investigated the best service management approaches that can be applied to successfully transform and grow your future service business.We surveyed 748 industrial service business executives from across 14 countries t

3、o understand the approaches they are taking.The research revealed that a stronger focus on service-driven business models is helping industrial companies better balance pre-and post-COVID-19 economic challenges.Those with a strong market position in digital-driven services flourished as customers so

4、ught more remote services.More than 60%of respondents said their service business accelerated during the pandemic,and they plan to augment services.This finding shows how services,particularly digital-driven ones,help industrial companies ride out economic cycles.Digitalization can also establish ne

5、w recurring service revenue streams and make services more attractive to maximize customer lock-in.The expectations of industrial companies customers are changing.Customers want to know the answer to questions like:How can I augment the life cycle of my existing assets?How can I make my assets more

6、flexible to address increasing requirements for speed and personalization?How can I get the product but only pay for the value of services I receive?2|Blueprint for Service Success:Your How-To Guide on Service TransformationFigure 1a:Total revenue distributionNew ServiceRevenueCoreServiceRevenue9%20

7、%29%ServiceRevenueProductRevenue71%New Service BusinessSee Figure 1b:Service portfolio QualityManagementSiteMaintenance Product as aService InventoryManagement Asset/ProcessOperationsAsset/ProcessOptimizationRecurring Revenue Business ModelsSubscriptionPay perAvailabilityPay perOutcomePay perUseFull

8、 Labor ContractFull CoverageContractCore Service BusinessRetrofit,Overhauland UpdateInstallation,Integrationand CommissioningUnplanned Maintenance Planned MaintenanceCustomer Care/Technical SupportTraining Spare PartsEnd of LifeOur research found that approximately 29%of industrial company revenue,o

9、n average,is currently generated by services.(See Figure 1a.)That figure is expected to grow significantly in the next few years.Growing core services while developing and scaling new ones,combined with recurring revenue,will be an even stronger lever for profitable growth and customer value in the

10、future.(See Figure 1b.)3|Blueprint for Service Success:Your How-To Guide on Service TransformationBuilding revenue streams from services4|Blueprint for Service Success:Your How-To Guide on Service TransformationWhat does the journey to grow new services look like?Here,we highlight the digital founda

11、tion Biesse Group,an industrial equipment manufacturer,developed to create new revenue streams.An Industrial Internet of Things(IIoT)solution delivered new customer capabilities and services for its machinery aftermarket business.By implementing connected asset management across its machinery,Biesse

12、 Group aimed to improve operational efficiency,reduce costs,and open new revenue streams,such as machine usage analysis and production process optimization.It also identified a range of services to help increase performance and productivity to satisfy customer appetite for new digital capabilities.B

13、iesse Group and Accenture designed an IIoT operating model,business case,solution,and roadmap using a platform with flexible architecture and preconfigured technologies.The solution included preventive maintenance alerts and machine management,manufacturing events analysis and remote software distri

14、bution,and a pay-per-use model allowing customers to tailor services.Thanks to these value-added services,Biesse Group created new revenue streams,improved customer service and loyalty,increased productivity,and minimized outages.Real-time customer data and alerts also helped reduce warranty and mai

15、ntenance costs.Performance and usage insights enhanced product development and the customer experience.Four Service CategoriesUsing financial data gathered in the survey,we analyzed the results along the following financial parameters:overall profitability,service business profitability,new service

16、revenue and annual recurring revenue from services.We chose these areas because they best indicate:The positive impact of services on the overall business especially in the form of higher margins The extent to which companies are already involved in the new service business Business resilience durin

17、g downturns The trend toward service-driven business models has been developing for years and is accelerating,with companies achieving varying degrees of success.To better derive industrial companies success attributes and understand the challenges they are facing,we grouped the survey sample into f

18、our service categories.Pivot to a powerful services business 5|Blueprint for Service Success:Your How-To Guide on Service TransformationFrom our findings,we identified four categories of service players according to different service management maturity levels:Champions,Masters,Strivers and Traditio

19、nalists.(See Figure 2a.)While Champions and Masters excel,Strivers and Traditionalists have not kept up for different reasons.(See Figure 2b.)EBIT earnings before interest and tax SEBIT services earnings before interest and taxARR annual recurring revenue(out of total service revenue)NSR new service

20、 revenue(out of total service revenue)41%37%Champions25%17%Traditionalists44%32%Masters36%34%Strivers60%25%38%13%EBIT34%22%23%17%SEBITARRNSRFigure 2b:Service categories at a glanceFigure 2a:Four categories of service players12%Masters32%Strivers39%Traditionalists7%Champions6|Blueprint for Service Su

21、ccess:Your How-To Guide on Service TransformationFigure 2c:Geography and industry (Total sample=748)36%Masters21%Masters19%Masters21%Masters25%Masters13%Masters25%Masters23%Strivers24%Strivers28%Strivers33%Strivers34%Strivers38%Strivers25%Strivers18%Champions12%Champions7%Champions6%Champions6%Champ

22、ions4%Champions7%ChampionsNorth AmericaCentral EuropeGrowth MarketsMed TechHeavy EquipmentAutomotive SupplierIndustrial Equipment23%Traditionalists43%Traditionalists46%Traditionalists40%Traditionalists35%Traditionalists45%Traditionalists43%Traditionalists7|Blueprint for Service Success:Your How-To G

23、uide on Service TransformationBecause many companies,however,lack the required experience and capabilities to implement them successfully in the short term,they also risk diluting margins.Thats why the most successful industrial companies identified in our research are careful to pivot in a way that

24、 balances core and new offerings.PivotingapproachesIndustrial companies stand at a pivot point in developing their services business.Our research confirms that new services,offered through recurring revenue business models,can represent a significant share of profit and stable business growth.8|Blue

25、print for Service Success:Your How-To Guide on Service TransformationFigure 3:Offering focus by service category All survey respondents offer these services with varying levels of success.CustomerSupportRetrofit andOverhaulTrainingSpare PartsUnplannedMaintenanceEnd of LifePlannedMaintenanceChampions

26、MastersStriversTraditionalistsInstallation andCommissioningQuality ManagementProduct as a ServiceAsset OptimizationAsset OperationsInventoryManagementSite MaintenanceChampionsMastersStriversTraditionalistsOfferedNot offeredCore Service OfferingsNew Service Offerings9|Blueprint for Service Success:Yo

27、ur How-To Guide on Service TransformationEach service category below illustrates different pivoting approaches,with varying success.(See Figure 4.)ChampionsWithin the Masters category,a few Champion companies outshine their peers with the highest service profitability and portion of new service reve

28、nue out of total service revenue.Champions have configured new services so they are more efficient than those offered by Masters.Champions have achieved product as a service,where pricing is based on pay-per-use or pay-per-outcome.They also offer robust core services.MastersAs the name suggests,this

29、 category has mastered the pivot.Masters grow core services while developing and scaling new ones to achieve stable,robust service profitability.Of all categories,Masters have the highest proportion of annual recurring revenue out of total service revenue,making services a driver for business stabil

30、ity.StriversCompanies in this group understand they need to pivot but rush into new services,often without a clear strategy or goal.While ambitious,their relentless striving has been at the expense of core services.They may have invested in the wrong areas or in too many fields at the same time.Alth

31、ough they have achieved a very high share of new service revenue,overall services profitability suffers from a lack of focus.TraditionalistsCompared to the other categories,Traditionalists focus more on improving core business capabilities,which they manage profitably and seek to grow.As a result,th

32、ey have the smallest share of new service revenue out of total service revenue.This may serve them well now but is not sustainable for future success.They do not see an urgent need to transform the core while scaling a new service business.They may struggle to build new services and execute a broade

33、r service transformation.In some cases,they have failed to pivot at all.Figure 4:Pivoting approachesChampions and MastersStriversTraditionalistsBusiness ValueTimePivotTransform the CoreCore businessNewBusinessScalethe NewGrowthe coreBusiness ValueTimePivotCore businessNewBusinessScalethe NewGrowthe

34、coreTransform the CoreBusiness ValueTimePivotCore businessNewBusinessScalethe NewGrowthe coreTransform the Core10|Blueprint for Service Success:Your How-To Guide on Service TransformationOur research indicates that the majority of survey respondents struggle with two areas,regardless of how well the

35、y currently perform financially:Few service capabilitiesCompanies are concerned about their ability to build service sales and delivery skills/resources,as well as digital and analytics capabilities.Collaboration confusionAlthough ecosystem partnering around services has been an industry hot topic f

36、or years,all service categories struggle to find the right collaboration model for legal agreements and data sharing.IT and cloud providers,often a go-to-market ally for digital-driven services,can potentially own key data and become a competitor.Pivoting pitfallsWhats causing industrial equipment c

37、ompanies the most difficulty as they attempt to pivot?Aboutof respondents said they lack strong service capabilities57%The COVID-19 stress testThanks to well-established digital-driven services,Champions,Masters and Strivers rode out the COVID-19 storm.For more than 40%of the Champions and Strivers,

38、as well as 33%of Masters,the global pandemic accelerated their service business.Traditionalists,however,didnt pass the COVID-19 stress test.One out of two observed a severe negative impact on the overall service business because they lacked digital services to fulfill the demand for remote services.

39、11|Blueprint for Service Success:Your How-To Guide on Service TransformationFigure 5.Pivoting challenges by service categoryIn addition to these top-of-mind issues,Strivers and Traditionalists are hindered by the following difficulties:Poor investment focusStrivers and Traditionalists struggle with

40、lack of service investment,most likely due to a lingering product-and engineering-driven company mindset.Where they have invested,certain patterns prevent them from making progress.Although Strivers have invested heavily in new services,they still require streamlined processes to eliminate redundanc

41、ies,increase service delivery flexibility,and create scalable,efficient operations for a solid core service foundation.Only through a robust IT foundation can they successfully grow the business.Traditionalists have a balanced investment focus across IT hardware and infrastructure,data availability,

42、analytics and digital capabilities to secure and develop their core service business.Yet,the IT has not attained the maturity level to support new services.Inadequate service management practicesStrivers and Traditionalists lack effective service management practices and related key performance indi

43、cators(KPIs)such as integrated product-services sales and customer insights.In some cases,companies never adapted product business practices to their services business.In addition,both categories struggle to balance short-term and long-term KPIs like return on investment(ROI)to allow new services th

44、e time to gain market traction.TraditionalistsStriversMastersChampions(%of respondents)Lack of software,tools,shared technical standards and interfaces Lack of software,tools,shared technical standards and interfaces Lack of data exchange and ownership agreementsProcesses and systemsLack of service

45、capabilities57%34%32%58%34%27%55%34%32%57%36%30%Lack of service capabilitiesLack of service capabilitiesInsufficient funding for growthService management practicesInsufficient funding for growthService management practicesLack of service capabilities12|Blueprint for Service Success:Your How-To Guide

46、 on Service TransformationFour focus areas for successful service transformationWhat does it take to successfully grow core services while pivoting to new ones?Based on our research findings,we concluded that a successful,value-oriented service transformation needs to consider four focus areas seen

47、in Champions and Masters.Integrated sales approach and ambitious targetsEffective,scalable delivery Sustainable,systematic digital services investmentProactive service ecosystem management 123413|Blueprint for Service Success:Your How-To Guide on Service TransformationApproximately 87%of all survey

48、respondents seamlessly align product and service units in an integrated sales approach.But there are many ways to achieve this.Champions and Masters distinguish themselves from Strivers and Traditionalists as follows:Cost transparencyWith full transparency into service delivery costs,Champions can p

49、ackage services and products to satisfy market demand and margins.For instance,they can determine whether it would be more profitable to provide a product for free and offer related servicesor sell a product outright.Product-service alignmentNot only do Champions have full transparency on potential

50、cannibalization effects between service and product businesses,they actively monitor them.As product as a service reduces the demand for product purchases,the two businesses stay aligned to monitor product sales shrinkage and track whether the new service business is growing as anticipated.Customer

51、intimacy along the entire lifecycleOnly Masters and Champions make the customer lifecycle the linchpin of a successful go-to-market service strategy.Champions also distinguish themselves with a 360-degree view of the customer to understand their business and needs.More than 50%of Champions use their

52、 field force to foster customer intimacy and identify cross-and upselling opportunities.The sales force is also incentivized and trained to sell complex bundles as well as products and services.Strategic service salesChampions and Masters regard clearly defined service sales targets,integrated into

53、the sales strategy,as the top prerequisite for a joined-up sales approach.Service sales targets act as the main component to proactively push customer-specific sales initiatives.Integrated sales approach and ambitious targets1Aboutof Champions said they have full transparency over service costs comp

54、ared to 14%of Strivers48%14|Blueprint for Service Success:Your How-To Guide on Service TransformationDigital firstAlthough Traditionalists have invested in IT infrastructure,its not mature enough to act as a steppingstone to new services.Unlike Strivers and Traditionalists,Champions(40%)and Masters(

55、42%)prioritize investment in cloud-based IT systems,data storage and interfaces as a solid foundation for services growth.Systematic investment approachChampions take a strategic investment approach to develop profitable new services.They clearly define investment requirements for pilots and further

56、 development stages to finance innovation and take services to market.IT+skills+efficiency=growthChampions have a clear implementation plan to operate new digital business models.They build on their IT foundation,invest in training and upskilling service personnel,and relentlessly identify efficienc

57、y improvements.Strivers,however,miss this crucial point,resulting in poor profitability and low reinvestment in new services.Think long termTo help new services gain market traction,Masters and Champions set long-term targets,measured through return on service investment.They dont focus purely on pr

58、ofitability,which risks killing initially low-performing offerings that promise significant benefits over the long term,like asset optimization.Sustainable,systematic digital services investment2Of the Championsprioritize investment in cloud-based IT systems,data storage and interfaces as a solid fo

59、undation for services growth40%15|Blueprint for Service Success:Your How-To Guide on Service TransformationComparable offeringsChampions recognize the importance of standardizing customer service level agreements(SLAs)and contracts to make offering comparison simple and lay a foundation for efficien

60、t delivery.Standard contracts,for instance make customer care easier for the field force.Standardized delivery processesChampions prioritize having the right,standardized processes and systems in place.Strivers,on the other hand,have not fully standardized core and new service processes(see Figure 6

61、),resulting in poor profitability.Effective,scalable delivery3Figure 6:Core and new service delivery process standardization(%of respondents saying yes)Champions34%23%Strivers13%7%Traditionalists25%11%Masters30%20%Are all Core Service delivery processes standardized across your company?Are all New S

62、ervice delivery processes standardized across your company?Of the Championshave fully standardized SLAs compared to 18%of Strivers43%16|Blueprint for Service Success:Your How-To Guide on Service TransformationDigitization and automationChampions digitize and automate new services,especially product

63、as a service,using IoT,artificial intelligence and robotic process automation.The new services are increasingly operated in the cloud to bring smart connected products to life.(See Figure 7.)Knowledge management and continuous learningLike the other categories,Champions find this area difficult to m

64、anage but set themselves apart by tracking and updating service delivery knowledge and toolkits to improve field force effectiveness and efficiency.High customer participationChampions not only provide information for customers,they allow them to participate in delivery with self-service tools.For i

65、nstance,customers can optimize equipment configuration based on intelligent analytics dashboard suggestions.Effective,scalable delivery3Figure 7:Digitized and automated service delivery processesPriorityTraditionalistsStriversMastersChampions1.2.3.4.Product as a ServiceTrainingUnplanned MaintenanceU

66、nplanned MaintenanceTrainingUnplanned MaintenanceTrainingTrainingInstallation&IntegrationSpare PartsQuality ManagementAsset/Process/Site Operations(6)Product as a Service(8)Product as a ServiceQuality ManagementSite Maintenance(10)Product as a ServiceNew ServicesSite MaintenanceAsset/Process/Site Op

67、erations17|Blueprint for Service Success:Your How-To Guide on Service TransformationAlthough most companies across service categories found ecosystems challenging,Champions pull ahead of the pack by focusing on:Strategic managementWhile 75%of all respondents have dedicated ecosystem partner manageme

68、nt processes,Champions focus on finding the right combination of ecosystem partners.Once identified,Champions employ standardized processes to onboard partners.Collaboration with intentChampions continuously manage ecosystem relationships and search for new partners to offer fresh ideas and capabili

69、ties,enabling consistent service innovation.In addition,they ringfence key areas for knowledge and data-sharing to avoid clashes with IT and cloud providers.Proactive service ecosystem management4of all respondentshave dedicated ecosystempartner management processes75%18|Blueprint for Service Succes

70、s:Your How-To Guide on Service TransformationOur research of 748 services executives globally shows that successful industrial companies put rigorous structures,systems and processes in place to transform their service businesses.Champions and Masters exploit a strong market position in core service

71、s to fund long-term investments in new ones,without diluting margins.Their structured,balanced approach enables them to get services to market quickly and continuously improve them.Your how-to services guide19|Blueprint for Service Success:Your How-To Guide on Service TransformationFigure 8:Your piv

72、ot roadmap How do they do it?Weve mapped their approach to help you build new services and exploit the resulting profit pools.The focus areas and pivot structure can serve as your“service blueprint”to become a Champion in your industry.Within each phase along the pivot structuregrow the core,transfo

73、rm the core and scale the new businessare activities mapping to each focus area,some of which are done in parallel.(See Figure 8.)Focus areasGrow the COREScale the NEWTransform the COREIntegrated sales approach and ambitious targets1Proactiveserviceecosystemmanagement 4Effective,scalabledelivery 3Su

74、stainable,systematic digital services investment2Set service sales targetsfor the sales organization Commercialize products and services based on customer lifetime valueEnsure full service cost transparencyStandardizecore service processesDigitize and automatecore service processesDigitize and autom

75、atenew service processesEnsure offering performance comparability(e.g.,SLAs)Enable field service technicians for cross-&upsellingBuild solid digital foundationMonitor cannibalization effects between product and service businessLeverage existing knowledgefor continuous improvementIncrease customer pa

76、rticipationin service deliveryFacilitate and leverage customer 360 viewChannel new service offerings systematically from ideation to go-to-marketBuild required new capabilities whileimproving operational efficiencySet long-term service business targets(e.g.,ROI)Set up and proactively manage service

77、ecosystemStandardize new service processes20|Blueprint for Service Success:Your How-To Guide on Service TransformationNow is the time to act.The research confirms our industry vision where services increasingly constitute an even greater proportion of overall revenue to drive competitiveness and pro

78、fitability.How do we believe industrial equipment companies can achieve this vision?Following the pivot roadmap could help companies transform services and reap the benefits from this changing landscape.Accenture believes that services will contribute up to 60%or as much as two-thirds of overall rev

79、enue for industrial companies in the next five to 10 years.The exact figure will vary depending on industry and company maturity,as well as how successfully a company travels along the roadmap and implements the entire pivot.Industrial companies that havent yet mastered their services business need

80、to transform now or risk falling behind.Those that can keep up with or even outpace the current Champions by transforming their business have the potential to deliver what services customers want while significantly improving profitability and resilience in an uncertain business climate.Change is he

81、reIndustrial Equipment companies need to adapt their services strategies now or risk falling behind.21|Blueprint for Service Success:Your How-To Guide on Service Transformation16%HeavyEquipment15%Med Tech23%Automotive Supplier46%Industrial EquipmentIndustries(N=748)Revenue(N=748)41%USD 15B28%USD 520

82、B10%Above USD 20B21%USD 500M1B47%Central Europe40%Growth MarketFrom June to September 2020,Accenture conducted a comprehensive and representative online survey with 748 industrial executives in senior positions in the service business.The companies were based in 14 countries and operate in four indu

83、striesindustrial and electrical equipment,heavy equipment,automotive suppliers,and medical equipment.The companies were split into four revenue groups starting with a revenue threshold of at least$500 million annual revenues.About the research22|Blueprint for Service Success:Your How-To Guide on Ser

84、vice Transformation13%USACopyright 2020 Accenture.All rights reserved.About AccentureAccenture is a leading global professional services company,providing a broad range of services in strategy and consulting,interactive,technology and operations,with digital capabilities across all of these services

85、.We combine unmatched experience and specialized capabilities across more than 40 industriespowered by the worlds largest network of Advanced Technology and Intelligent Operations centers.With 513,000 people serving clients in more than 120 countries,Accenture brings continuous innovation to help cl

86、ients improve their performance and create lasting value across their enterprises.Visit us at AuthorsMAXENCE TILLIETTEManaging D DR.JIVA DIMITROVA-MICHAPrincipal Directorjiva.dimitrova-URBAN HOFSTRMPrincipal DMATTHIAS WAHRENDORFF Senior Thought Leadership PrincipalAccenture ResearchGlobal IIoT and I

87、ndustrial Research LCLARA WEISSENBERGERManagement COLIVER MARTIManagement CDisclaimerThis document is intended for general informational purposes only and does not take into account the readers specific circumstances,and may not reflect the most current developments.Accenture disclaims,to the fulles

88、t extent permitted by applicable law,any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information.Accenture does not provide legal,regulatory,audit,or tax advice.Readers are responsible for obtaining such

89、 advice from their own legal counsel or other licensed professionals.This document may contain descriptive references to trademarks that may be owned by others.The use of such trademarks is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.