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How Servitization Became Mainstream Two Decades After its Introduction


This article will discuss:

  • Why intermediate and advanced servitization is possible today compared to when it was introduced 20 years ago
  • The role that digital technology and digital transformation plays in making servitization possible
  • How servitization helps the environment and supports the manufacturing industry’s drive to meet emission regulations

The globalization drive of the new millennium characterized by the Millennium Development Goals of 2000- was an attempt to improve productivity across every sphere of the globe. Twenty-one years down the line, globalization is being viewed as having achieved mixed results as it increased global productivity but led to the relative decline of the manufacturing capacity of developed nations.

Access to low-cost employees and the opening of global logistics lines also meant manufacturers could easily outsource certain tasks and get the finished product in record time. Thus, the outsourcing of low-cost jobs such as the manufacturing of equipment spare parts continues to affect revenues across the manufacturing industry to date. To foster growth and improve revenue generation, multiple strategies are being explored, and the servitization of the machine or plant-floor equipment is one of them.


What is servitization?

Servitization, like most technical ideas, can be said to be an innovation discovered ahead of its time. Servitization refers to the additional services a business provides to support the optimal use of the products it is known for and sells. There are currently three levels of servitization and they include basic, intermediate, and advanced servitization. Here, the focus will be placed on intermediate and advanced servitization options and why they can be provided to customers today.

For example, an OEM producing heavy equipment can seek to provide additional services to assist end-users of its equipment. Services such as making spare parts and repair kits available to the user are termed basic servitization while providing technology solutions to monitor the equipment performance to optimize throughput is an intermediate servitization option.

Servitization of the machine is an advanced servitization process where manufacturing equipment is offered to end-users through pay-per-use subscription plans.

Servitization of the machine can be likened to equipment-as-a-service or machine-as-a-service initiatives. The general consensus is that the OEM offering servitization is saddled with maintenance and repair responsibilities. The OEM also owns the data produced while the equipment is used and decides how to apply the data. The end-user gains access to expensive equipment on a pay-as-you-use basis and utilizes optimized services based on the data collected from their use of the equipment.

The subscription fee is an added source of revenue for the OEM which makes servitization a captivating proposal for manufacturers. Insight into captured data and first-hand visualization of how equipment is used are invaluable resources for designing future versions of the equipment.

Why servitization of the machine is possible today compared to decades ago

Although legacy assets and the more modern equipment of the early 2000s had the capacity to capture data, this capacity was limited. The equipment could collect throughput data and machine-utilization data but could not capture more advanced information such as machine vibration frequency. At that time, the tenets of Industrie 4.0 had not been introduced, which meant the application of edge computing or leveraging of cloud computing was nonexistent.

The 2000s undoubtedly saw the development of innovative sensors and actuators, but in terms of implementing extensive data-collection networks, the lack of IIoT and smart device options meant that data collection was limited to individual items of equipment. It follows that the provision of servitization plans without the technology to capture a variety of data sets from the usage process and apply it to automate industrial processes meant that early adopters could not reap its full benefits.

Today, Industrie 4.0 has come into its own. A plethora of data-capturing and analytical tools now exist which ensures servitization serves as an avenue for revenue generation and the foundation for innovation. Digital-transformation technologies such as cloud computing ensure that large data sets produced from the daily use of multiple pieces of equipment can be stored and analyzed to gain insight of machine utilization.

IoT and edge devices now support the capture of granular data to execute multiple Industrie-4.0 business models such as deploying predictive maintenance strategies and implementing a data-driven approach to optimizing productivity. The ability to conduct data analysis at the edge is an integral aspect of delivering both intermediate and advanced servitization plans. The implementation of edge computing solutions helps OEMs offer condition monitoring and remote management features alongside the equipment offered to the public.

Condition monitoring, using IoT devices and sensors to track machine utilization is an intermediate servitization option as it supports the application of predictive maintenance. While remote monitoring is made possible through visualization technologies and plugging equipment to digital platforms.

Visualization technologies such as human-machine interfaces and web-based HMIs also serve as information conduits that provide a specific end-user with unique insight into their production process to help them optimize the utilization of outsourced equipment.

For example, benchmark analysis data tells the end-user the optimized capacity of a machine and shows the user how this optimized rate was achieved. The user can then recreate a similar production scenario to ensure they get the best out of the outsourced equipment.

Servitization and the environment

Servitization leads to clustered manufacturing in which a centralized organization can easily monitor the manufacturing process of tens of manufacturers using a central facility. According to research, servitization leads to improved energy-consumption rates which are beneficial to the environment.

Improved energy consumption within the manufacturing sector – known for its huge energy needs – is a big step toward reducing the amount of toxic fumes the industry releases into the environment. Reduced energy consumption will also help halt the rising temperatures and abnormal weather patterns experienced across the globe which have been linked to industrial activity.

With regard to reducing the manufacturing industry’s carbon footprint, the jury is still out on servitization’s role in protecting the earth.



Technology advancements that lead to improved data capturing and analytics play important roles in delivering servitization. As time has shown, servitization of the machine does not depend on the availability of equipment alone but also depends on the supporting technologies needed to deliver its benefits to both OEMs and end-users. 

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