Service business of machinery and plant manufacturers in the DACH region grows
Companies are differently prepared for the internationalization of their service organization. Digitization is proving to be the basis for global success.
In recent years, customer service has become an increasingly important element of the product life cycle and thus a critical globalization competence. In particular, the large machinery and plant manufacturers from Germany, Austria and Switzerland want to further expand their customer service business internationally in the future: Over the next five years, they plan to grow their service branches outside their home regions by 15 percent. South America (+37 percent) and East Asia (+31 percent) will benefit particularly strongly, followed by the Middle East (+28 percent) and North America (+24 percent). This is the result of a recent study by the management and technology consultancy BearingPoint in cooperation with the trade magazine LOGISTIK HEUTE. Experts from 61 companies from the mechanical and plant engineering sector in the DACH region were surveyed. The focus was on the status quo and development prospects in the international business with customer service.
Maturity and internationalization level of service organizations
The analysis shows that many companies still have significant potential for improvement in their service organization: In just under half of them, the share of sales generated by customer service is still less than 20 percent. Three quarters of the companies therefore want to use internationalization as an opportunity, systematically expand their profitable service business and expand into new markets. However, there are some significant differences in terms of service strategies. The categories of service product management, service marketing, standardized processes, resource management, spare parts management and the degree of coverage by digitization or IT solutions) formed the basis for assessing the service maturity of the individual companies. It is striking here that companies often fall short of their own expectations: On average, the relevance of the categories is assessed as being much higher than their own maturity level demonstrates. The combination of globalization and maturity level then results in the classification of companies into "champions" (25 percent of the companies surveyed), "potentials" (22.5 percent), "beginners" (22.5 percent) and "underachievers" (30 percent).
"Although the service business does not yet account for a significant share of sales at most companies in the German-speaking plant and mechanical engineering sector, the dynamics of globalization are increasingly spreading to the service sector after production, purchasing and sales. We expect a strong increase in international service branches and activities in the coming years and consequently a consistent expansion of this business area. In terms of digitization, many companies still have a lot of catching up to do. The digitization of service in particular is increasingly becoming a minimum requirement for competitiveness in the market. If companies do not catch up here, they will not be able to survive in the long term," comments Donald Wachs, Partner at BearingPoint.
Digital service concepts as success factors
According to the study, many machine and plant manufacturers have identified their service weaknesses and are planning to increase their level of maturity through targeted improvement measures. In the context of digitization, the introduction of digital service concepts is the main way to score points. These include, for example, digital inspection, digital customer portals, networked products (IoT), remote monitoring and predictive maintenance. In the course of the many initiatives, digitization is finally advancing to become the industry standard. If the restructuring of the service organization to expand internationalization succeeds as planned, for the majority of companies (77 percent) the contribution of the service business to total sales will be over 20 percent in the future. In some cases, up to 40 percent will be earned with services.
Frank Duscheck, Partner at BearingPoint, concludes: "The GEXSO study makes clear that the companies surveyed are very differently prepared for internationalization and also deal with it strategically in different ways. This is reflected, among other things, in the fact that the number of service and sales force employees varies greatly compared to the total number of employees. However, this will change quickly, as 93 percent of the companies surveyed plan to develop a global service strategy, standardize processes and promote global knowledge exchange in the future. This means that the difference between so-called 'high- and low-performers' will narrow significantly over the next five years."
Source: www.bearingpoint.com