Julie Fraser executive brief: Increasing value and profit through services

Manufacturers and distributors facing ever-increasing competition, pricing pressure, and growth imperatives are quickly waking up to the opportunity offered by expanding their service organization. Installation and service of industrial products can be quite profitable, with margins sometimes reaching over 40%, unheard of for most manufactured goods. The service opportunity is growing because customers see high value in reducing their operating and compliance risks.

Services automation is one of the “hottest” corners of the customer relationship management (CRM) marketplace. Both mainstream ERP vendors and a bevy of services-centric software vendors are starting to provide integrated business software that supports services. The companies adopting these systems to streamline all service-related processes are gaining a competitive advantage in the market. They can confidently make decisions that improve the value-add they deliver to their customers, while increasing their efficiency and improving the bottom line.

Creating broader service relationships with customers is a strategy that can simultaneously improve margins and enhance customer relationships. Services provide the opportunity for industrial companies to significantly deepen the level of customer intimacy and increase customer control. However, strong margins in the services world aren’t a “slam-dunk.” Growing service organizations face real challenges to their efficiency and profitability.

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