The future for fast-growing advanced manufacturing and technology companies is in services

In Pinsent Masons' exclusive survey of 100 of Europe’s fastest-growing AMT companies, we reveal that services will soon trump products for growth potential

Since the industrial revolution manufacturers have focused almost exclusively on building and producing goods, either for use in other businesses' products or directly for end markets. But that is beginning to change.

For a growing number of advanced manufacturing and technology (AMT) businesses, evolving the value proposition now means more than simply developing newer, better products, but repositioning themselves as service providers. This represents a complete overhaul of established business models.

“Servitisation” is based on all-round and continuing service, rather than a one-off transaction. It means, for example, an aerospace engineering firm guaranteeing its customers an agreed number of flight hours or a maximum outage level over the course of the year, rather than simply selling an engine; or automotive manufacturers offering a subscription service, which would allow the company to tag on additional services and provide a more complete service to customers via AI.

Research for our new Pacesetters (AMT) report shows that a substantial majority (61%) of the fastest-growing AMT businesses anticipate earning at least 40% of their revenues from services within the next three years, up from just 17% who do so today – with only 5% who were pursuing servitisation three years ago.

This will be made possible by the growing use of analytics to predict customer behaviour and product use. “Business will have the access and data to understand their customer like never before,” says Pinsent Masons' Clare Murray. “This is hugely valuable to developing products, services and marketing strategies.”

The era of servitisation has begun.