Machine and Process Management

Servitization, Redefining the Concept of Ownership in the Digital Era

Software is eating the world, sharing economy is generating a wave of economic disruption, servitization is emerging as a new economic paradigm. It’s clear that these statements are no more just buzzwords but consist in a trend that is transforming more than ever industries, cities and our lifestyle.

If I think about my personal experience I realize that many activities that once would be associated to the term “ownership” are now executed in a service-like way. Thinking about short trip planning, 6 years ago I used to drive my own car even for short trips or for intra-city movements.

Today growing ride-sharing applications and peer-to-peer accommodation networks are linking their existence and success to the ‘sharing economy’, which redefines the concept of ownership. This system is providing more options as we ask the questions of where to stay and how to get there. That’s why when planning a short vacation, chances are that I share my route via blablacar (a ride-sharing platform that connects drivers and passengers to share the costs of transportation) and then arrange my accomodation via airbnb (a platform that allows homeowners to rent out spare lodging).

mobile app development Schneider ELectric

General figures explain the huge phenomena these digital services represent today: Since it was founded in San Francisco in August 2008, Airbnb has developed a truly global presence. These days, it counts over 2 million listings in 191 countries around the world. Apartments and rooms are available in at least 34,000 cities.

BlaBlaCar is valued €1.4 billion and operating in 20 countries (including Mexico, Russia, India and Brazil) with more than 20 million members.
The concept of a peer-to-peer market is not new. However, modern technology has granted everyone access to a global market. The raise of online payment systems, GPS, smartphones usage has transformed collaborative consumption into a feasible alternative for the average consumer. A sharing economy built on multiple uses of the same resources will allow us to live a more sustainable life. For example, share the trip with one or more passengers would cut congestion and pollution improving everyone’s quality of life and creating a positive impact for our society.

“The success of Uber, Airbnb and TaskRabbit isn’t a fad — it’s a new way of doing business,” PwC said

Thinking about entertainment, listening to music or watching a movie, 6 years ago this would mean buying mp3 downloads or renting a dvd from blockbuster. Today the scenario is completely different: if I want to listen to my favourite singers I would definitely go for Spotify, I pay a monthly fee for getting access to all the music I want whenever I want with an excellent quality level. Like the change from vinyl to cassette or CD to MP3, Spotify represents a big paradigm shift in the way we experience music. With just a few clicks, the music streaming app gives us access to millions songs at the cost of about 8€ a month, or for free with advertising enabled.

Same when it comes to watch a movie, instead of buying the access to the single movie, through a program like Netflix or Sky Go I get all the series and movies I want anytime, from any device. Basically, rather than purchasing a one-off license for a single piece of digital content, in this way, I subscribe on an ongoing basis to a license that gives me access to a far larger collection of media that I could ever, even in a lifetime, collect on my own.

Even my learning experience has recently changed. In order to get updated on the latest technologies and software programs last month I subscribed to the linkedin learning program.  I can get access to a huge variety of in-demand trainings kept from industry experts on topics like business, tech, soft skills, etc. all these by paying an annual fee instead of paying for every single course.

Moving to the industrial and enterprise area, connected services are a great asset for companies that can grow their business benefiting from connected devices and a dedicated service offer. A survey sponsored by Salesforce, highlights that more than 70% of manufacturing executives identified service, not new products, as a significant driver of future revenues. They view service as a critical piece of their future plans, with 90% stating that improving field service performance is a top priority for their organizations and 68% believe wearable devices (such as smartwatches and glasses) will play an important role in the future of service operations. Service transformation, enabled by connected technologies, is the key to diversifying manufacturing revenue streams while generating added value for customers.

salesforce

The “as a service” business model provides companies with unprecedented level of agility, flexibility and real business outcomes allowing them to run more efficiently, accessing on demand to different resources while paying only for the real time usage.

Cloud application services, or Software as a Service (SaaS) use the web to deliver applications that are managed by an external vendor and whose interface is accessed on the clients’ side.

Instead of companies installing software in their own servers, software providers host the software at theirs and charge them according to the time they spend using it, or a monthly fee. So it’s easy for enterprises to streamline maintenance and service support because everything can be managed by the vendor: applications, data, middle-ware, OSes, virtualization, servers, storage and networking.

Servitization is growing at high rate and Everything-as-a-Service is disrupting several industries from technology and applications, to goods and healthcare. I expect in the future a prioritization of the values related to experience and performance over the ones related to ownership, since servitization, among others, will benefit us of a more sustainable and ethic life-style.


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