Service Lifecycle Management (SLM) is a business initiative focused on servicing a company's products, and the customers that bought them, after the product has been sold. Simply put, SLM focuses on making more money from the product after the initial sale. But it is more than that; it is also a way to become a strategic part of the customer's business after the sale is completed.
General Electric (NYSE:GE) is an excellent example of a company that has focused on aftermarket opportunities, going so far as to call themselves a "services" company as opposed to a "products" company. General Electric is widely reported to have significantly increased both their total revenue and their profitability by focusing on services opportunities in addition to developing world-class products. While General Electric may not have called their strategy "Service Lifecycle Management", they have certainly proven the value of serving the product aftermarket. SLM is an initiative that impacts the product lifecycle, which has some asking whether it is a part of Product Lifecycle Management (PLM). The broad definition of Product Lifecycle Management (PLM) describes it as a business initiative that addresses the full lifecycle of a product, from initial concept through retirement, in order to gain maximum value out of the product. The value being offered from most of the current PLM solutions, however, is gained primarily through improvements in the development and introduction of new products and product enhancements and centralized management of product data. While there are tremendous benefits available from improvements to the new product development (NPD) processes and product data management (PDM), there are important, additional benefits that lie throughout the product lifecycle. SLM is a complementary, yet separate, initiative aimed at the benefits that lie beyond the product sale, in the product aftermarket.
Many industry analysts include SLM as a part of Customer Relationship Management (CRM), although implementation of an SLM strategy does not require a broader CRM solution. There is some logic to this, because SLM shares many of the same goals of CRM, including increased customer revenue and improved customer satisfaction. Regardless of where SLM is categorized, there is growing interest in SLM because of the tangible benefits available from increasing revenue opportunities, decreasing internal service costs, and improving customer satisfaction.
Many manufacturers and distributors are beginning to recognize that there are significant revenue and customer satisfaction opportunities available after their product has been sold, in the "aftermarket". The aftermarket has been a lower priority for many, particularly for manufacturers, who have historically viewed themselves purely as product companies. This sole focus on developing and selling products as their key to success ignores the fact that the cost of maintaining some products can easily be 4 to 5 times the cost of purchasing the product - or more. This additional revenue has often been left to third party companies.
The value of the aftermarket is highly dependent on the type of product and the industry. In industries that sell capital equipment such as medical devices, telecommunications, instrumentation, IT hardware and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies this is a strategic move to grow the top line, while others are looking to replace revenue from slower product sales in the current economic conditions
General Electric (NYSE:GE) is an excellent example of a company that has focused on aftermarket opportunities, going so far as to call themselves a "services" company as opposed to a "products" company. General Electric is widely reported to have significantly increased both their total revenue and their profitability by focusing on services opportunities in addition to developing world-class products. While General Electric may not have called their strategy "Service Lifecycle Management", they have certainly proven the value of serving the product aftermarket. SLM is an initiative that impacts the product lifecycle, which has some asking whether it is a part of Product Lifecycle Management (PLM). The broad definition of Product Lifecycle Management (PLM) describes it as a business initiative that addresses the full lifecycle of a product, from initial concept through retirement, in order to gain maximum value out of the product. The value being offered from most of the current PLM solutions, however, is gained primarily through improvements in the development and introduction of new products and product enhancements and centralized management of product data. While there are tremendous benefits available from improvements to the new product development (NPD) processes and product data management (PDM), there are important, additional benefits that lie throughout the product lifecycle. SLM is a complementary, yet separate, initiative aimed at the benefits that lie beyond the product sale, in the product aftermarket.
Many industry analysts include SLM as a part of Customer Relationship Management (CRM), although implementation of an SLM strategy does not require a broader CRM solution. There is some logic to this, because SLM shares many of the same goals of CRM, including increased customer revenue and improved customer satisfaction. Regardless of where SLM is categorized, there is growing interest in SLM because of the tangible benefits available from increasing revenue opportunities, decreasing internal service costs, and improving customer satisfaction.
Many manufacturers and distributors are beginning to recognize that there are significant revenue and customer satisfaction opportunities available after their product has been sold, in the "aftermarket". The aftermarket has been a lower priority for many, particularly for manufacturers, who have historically viewed themselves purely as product companies. This sole focus on developing and selling products as their key to success ignores the fact that the cost of maintaining some products can easily be 4 to 5 times the cost of purchasing the product - or more. This additional revenue has often been left to third party companies.
The value of the aftermarket is highly dependent on the type of product and the industry. In industries that sell capital equipment such as medical devices, telecommunications, instrumentation, IT hardware and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies this is a strategic move to grow the top line, while others are looking to replace revenue from slower product sales in the current economic conditions
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