A new buzzword was recently thrown my way at the annual PTC Live conference in Anaheim. I’ve never been a big fan of buzzwords nor the concepts that they represent, as they are often watered-down or tainted versions of truly original ideas that have been bastardized by Corporate America. But, I digress.
During the opening keynote, PTC President and CEO, Jim Heppelmann, used the term: servitization. Like any good buzzword, it sounds made cheesy and made up. Heppelmann admitted that the buzzword was not one that PTC had coined, but one they had certainly adopted. My distaste doesn’t lie in the fact that servitization is a buzzword (though, it isn’t the prettiest or easiest thing to roll off your tongue). The concept of servitization is what raised (or furrowed) my brow.
Heppelmann used the Rolls-Royce jet engine as an example of servitization. As we all know (or at least you can draw an easy assumption), jet engines are extremely expensive to purchase. Also, if not more so, they are expensive to maintain. These expensive engines slow down the manufacturing process of the planes and add a significant expense to the BOM, which is quickly passed to the commissioning customer. Rolls-Royce now leases the engines on the planes, providing maintenance and regular inspections.
The idea is that owning something as expensive as a jet engine is not only costly, but risky. An investment in an engine of such size and innovation needs to be kept up, and (just like most technology) will eventually wear out and/or find itself quickly outdated. Why own an expensive piece of equipment and take the risk of poorly maintaining it or having it outdate, when you can lease until the next best thing comes along?