Servitization vs. Networkization: A Defining Distinction

As companies embrace Servitization, they are encountering an equally transformative concept: Networkization. While Servitization focuses on enhancing products by bundling goods and services, such as maintenance, upgrades, and usage-based pricing, Networkization is about the comprehensive management of these services and goods across a distributed network, reaching beyond the vendor's premises and directly into customers' homes and businesses, the “Customer Bridge”.

• Servitization

  • Definition: Transforms traditional product-based businesses into service-oriented models offering physical goods as ongoing services, where revenue streams are derived from usage, subscriptions, or service consumption rather than outright product sales.

  • Key Shift: The seller retains ownership of the goods while delivering value as a service over time.

  • Example: A car company provides vehicles through a subscription service where customers pay for access, usage, and bundled benefits such as insurance, maintenance, and roadside assistance. Rather than making a one-time sale, the manufacturer retains ownership and takes ongoing responsibility for ensuring the car is continuously available and fully supported to meet the customer's needs.

• Networkization

  • Definition: A collateral effect of Servitization, where the goods sold as services become part of a virtual network of service-oriented goods and services. These goods must communicate and interact to deliver the service's full value on a scale, ensuring traceability, consistent service reliability and performance across diverse customer locations.

  • Key Shift: Servitized goods become part of a system of assets, forming a virtual network that should be supported during the lifecycle of the service.

  • Example: In the car subscription model, vehicles are part of a mobility network. Each car shares real-time data, location, usage and maintenance needs to ensure service uptime and preserve Service Provider assets.

But how many companies adopting Servitization are genuinely equipped to sustain robust Customer Bridges, connecting themselves with the services and equipment operating at the edge of that Virtual Network?