Introducing servitization as a means to increase profitability for an irrigation company and its customers

Abstract

Servitization is a business model innovation that allows a manufacturing company to sell its customers the outcome of their product, rather than the product itself. One of the best examples of servitization is the Rolls Royce business model by which Rolls Royce sells the output of their aeroplane engines as "power-by-the-hour", instead of selling the engines as a product to aeroplane builders such as Boeing. In this model, the customer buys the power that the engine delivers, while Rolls Royce provides all the service, expertise and technology to ensure the engine continues to deliver the power. This model ensures that there is a closer alignment in the interests of the customer and the interests of the manufacturing company.