Medical Devices and Technology
We work with component and product manufacturers of diverse industries and geographies to grow and optimize their service business.
A Sector in Flux
As competition in manufacturing and engineering industries intensified, companies responded by developing increasingly global operations and supply chains and offshoring production. They implemented lean processes in the pursuit of lower costs and higher quality and enhanced their products and brand.
Faced with limits to growth for new industrial products and systems, managements began also to appreciate the importance of the installed base and the potential for revenue streams over the product lifetime. They recognized that actual product sales constitute only a fraction of the total revenue opportunity – the rest being services, from product support and spare parts to upgrades and productivity improvements. Estimates have shown that total service revenues associated with an industrial product over its lifetime amount to between 5 and 20 times the sales value of the product. After-sales services now constitute a strategic anchor for many industrial companies, aiming at a mix of maximizing customer loyalty and retention, generating additional revenues and profits from the installed base and defending against lower cost competitors.
Now new forces are driving ever more powerful shifts: Demand is fragmenting, both geographically and in terms of customer requirements — more options and customization, faster product cycles and more frequent upgrades, better and more after-sale service. At the same time, rapid digitization is radically transforming how manufacturers operate and interact with customers, while enabling entirely different kinds of products and services. Products, in fact, are no longer at the center of all things. They are increasingly defined by the outcomes they achieve and the data they generate. Data collected from products in the field become raw material for new services and customized solutions. To deliver outcomes, manufacturers must integrate more into their customers’ processes, inducing customers to place greater emphasis on the total customer experience. Therefore, making things is starting to matter less while knowing things more. In many cases successful companies will no longer be the ones that make the best products, but the ones that gather the best data and combine them to offer the best services, whether on their own or together with others.
Service Characteristics
The product service market is usually characterized by large installed bases, large numbers of customers and multiple channels to market.
Competition is intense with large numbers of market players. Customers usually have high in-house service competence and competition in aftermarket is also intense, including from customers, third party service providers (often low cost), and, increasingly, product competitors.
Product downtime is expensive for customers and its avoidance provides the competitive framework while operational superiority drives competitiveness. Component and product services are largely a matter of scale and logistics to drive high efficiencies and productivity while maximizing recurring revenues from the installed base is a critical success factor.
Given the flux what is the best way forward for manufacturers? Should they try to get into the digitization game as early as possible in spite of uncertainties, or should they wait until things become clearer? One significant risk of waiting is the claim to the data: Digitization of assets is vendor neutral. If third parties (customers, competitors, independent providers) seize the initiative and digitize product data without the original manufacturer, this might not only endanger the manufacturer’s influence on product utility and performance (potentially jeopardizing service revenue streams), but also increases the risk of product commoditization and limits the manufacturer’s differentiation and margin potential. So access to, even “ownership”, of data is something manufacturers can ill afford to lose. And often the best way of keeping that access is by building on data to design and sell services and solutions.
For manufacturers to take full advantage of new technology to strengthen market positions, often requires transformational strategic, cultural and organizational shifts and upgrading of capabilities: Sales & Marketing must focus on value co-creation and customer experience; R&D must incorporate service thinking; Offerings, delivery systems and supply chains must integrate through the Industrial Internet of Things (IIoT) and turn data into actions.
Nevertheless, surveys indicate that only a minority of manufacturers are planning radical changes to harness the potential of digitization and services or have introduced training in digital skills. But it is wrong to underestimate the speed of technology driven disruption. Companies risk being left behind as competitors from within and from outside their industry draw ever closer to their customers.
Insights and Success Stories
Service Transformation is Business Transformation – a conversation with Riccardo Necchi
Service Transformation is one of those terms every Service Director, VP, or Managing Director has used — usually without pausing to define it. Ask ten people what it means and you’ll get ten different answers: better spare parts availability, a new digital portal, a shift to outcome-based contracts, a reorganization of the field service network.
To cut through the noise, Nick Frank from Si2 sat down with Riccardo Necchi, a service leader who has spent over two decades driving Service Transformation inside some of the best-known names in industrial equipment manufacturing — SIDEL, SIPA, and Vandewiele. Across these companies Riccardo has moved from focused, technical roles into progressively broader mandates: from R&D and connectivity, to platform and portfolio design, to full P&L responsibility for Service across a multi-company group. Few people have seen the journey from as many angles as he has.
He describes the key takeaways:
1. Create Value: through the ‘Art of Strategic Choice’ and focus on return.
Build Sponsorship and alignment for the long haul.
3. Execute with Discipline: to turn ideas into business realities.
he concludes: “Don’t get hung up on the label. When you’re handed the task of “service transformation,” the real task is transforming the business — and Service just happens to be where you’re standing when you start.”
Making “Trusted Advisor” Real
For years, “Trusted Advisor” has been the go-to phrase whenever service leaders describe the relationship they want with customers. It’s used in sales kick-offs, service strategy decks, and job descriptions for everyone from field engineers to key account managers. The trouble is that the more a phrase gets used, the less it tends to mean. Ask ten people in your business what a trusted advisor actually does differently, day to day, and you’ll likely get ten different answers — usually some version of “being really good at customer service.”
That ambiguity is a problem, because for suppliers of industrial equipment, components and solutions, the trusted advisor relationship isn’t a nice-to-have. It’s the difference between being treated as a replaceable vendor and being the partner customers call before they’ve even finished defining the problem. So it’s worth being precise. We define a trusted advisor as:
A service professional whose relationship with a client goes beyond basic transactional expertise. They act as a long-term confidant, providing holistic guidance to help customers make critical, informed decisions — operational or strategic. The goal, through that relationship, is to add more value to both parties through collaboration.
Two words matter most in that definition: “both parties.” This isn’t altruism, and it isn’t really about being liked. Done properly, it’s a commercial discipline that benefits the customer’s operation and your order book at the same time. This article explores how that plays out in practice — and what it actually takes to build it into an organisation rather than just hope for it.
Service Transformation is Business Transformation – a conversation with Riccardo Necchi
Service Transformation is one of those terms every Service Director, VP, or Managing Director has used — usually without pausing to define it. Ask ten people what it means and you’ll get ten different answers: better spare parts availability, a new digital portal, a shift to outcome-based contracts, a reorganization of the field service network.
To cut through the noise, Nick Frank from Si2 sat down with Riccardo Necchi, a service leader who has spent over two decades driving Service Transformation inside some of the best-known names in industrial equipment manufacturing — SIDEL, SIPA, and Vandewiele. Across these companies Riccardo has moved from focused, technical roles into progressively broader mandates: from R&D and connectivity, to platform and portfolio design, to full P&L responsibility for Service across a multi-company group. Few people have seen the journey from as many angles as he has.
He describes the key takeaways:
1. Create Value: through the ‘Art of Strategic Choice’ and focus on return.
Build Sponsorship and alignment for the long haul.
3. Execute with Discipline: to turn ideas into business realities.
he concludes: “Don’t get hung up on the label. When you’re handed the task of “service transformation,” the real task is transforming the business — and Service just happens to be where you’re standing when you start.”
Making “Trusted Advisor” Real
For years, “Trusted Advisor” has been the go-to phrase whenever service leaders describe the relationship they want with customers. It’s used in sales kick-offs, service strategy decks, and job descriptions for everyone from field engineers to key account managers. The trouble is that the more a phrase gets used, the less it tends to mean. Ask ten people in your business what a trusted advisor actually does differently, day to day, and you’ll likely get ten different answers — usually some version of “being really good at customer service.”
That ambiguity is a problem, because for suppliers of industrial equipment, components and solutions, the trusted advisor relationship isn’t a nice-to-have. It’s the difference between being treated as a replaceable vendor and being the partner customers call before they’ve even finished defining the problem. So it’s worth being precise. We define a trusted advisor as:
A service professional whose relationship with a client goes beyond basic transactional expertise. They act as a long-term confidant, providing holistic guidance to help customers make critical, informed decisions — operational or strategic. The goal, through that relationship, is to add more value to both parties through collaboration.
Two words matter most in that definition: “both parties.” This isn’t altruism, and it isn’t really about being liked. Done properly, it’s a commercial discipline that benefits the customer’s operation and your order book at the same time. This article explores how that plays out in practice — and what it actually takes to build it into an organisation rather than just hope for it.
