Some of the world’s leading companies IBM, General Electric, Rolls-Royce, Ericsson, and EDS among them — now compete by providing integrated solutions rather than making stand-alone products or selling services.1
Suppliers of products as diverse as information technology systems, trains, aircraft engines and telecom systems have achieved success with this approach by providing innovative combinations of technology, products and services as high-value unified responses to their business customers’ needs.2 For example, Rolls-Royce plc competes by providing airlines with “Power By The Hour” — selling the jet engines along with the services to maintain, repair and upgrade them over many years. And providers of services such as IT, telecom network management and technical consultancy now compete by offering solutions that incorporate products from a few select manufacturers. Electronic Data Systems Corp., the global IT service provider, has built the capabilities to manage and integrate different suppliers’ technologies and products as part of its business outsourcing solutions.
The shift has been underway since the early 1990s. Looking just at the manufacturing side, a growing number of manufacturers have begun providing services to finance, operate, maintain and upgrade an installed base of products — their own and, increasingly, those of other manufacturers. Services are attractive because they provide continuous revenue streams, have higher profit margins and require fewer assets than manufacturing. By... To read the complete article, login or sign-up using the form below.
Get a premium subscription today to read this and all MIT Sloan Managmeent Review articles.
More Info.
Buy this article. Purchase one or more copies of this article as a PDF.
Subscribe today to read the most recent articles and the current issue of MIT Sloan Management Review.
Upgrade to premium
Current Subscribers: Do you subscribe to MIT Sloan Management Review? Register for online access.
- Register for free access to recent articles and the current issue of MIT Sloan Management Review.
- Subscribe and read articles from the past three years online.
- Premium subscription—access to the entire archive of articles.