Customer needs are rarely met with an offering of products alone. Integrating software and services that complement your products or the use thereof into a seamless solution can create additional value. We call this shift a Solution Transformation.
We see a structural decline in return on assets, growing topple rates and shortening product life cycles. Solution driven companies are outperforming against this trend, causing companies to move from product selling to solution selling:
Declining return on assets Since 1965, we notice a structural declining trend in return on assets – showing a company's ability to generate income from their assets – primarily impacting asset-heavy companies
Growing topple rate In parallel, we see an increase in the topple rate – a measure of how rapidly companies lose their leadership positions – as competition exposed low performers and ate away at returns
Shortening product lifecycle Product life cycles – the time period between the introduction and discontinuation of a product – have become significantly shorter with product use changing over the past decades
Increasing value of intangible assets Intangible assets now account for most assets held by S&P 500 companies, where the 5 largest companies by market cap are solution driven instead of product driven in the previous decades
Solution based business models with dynamic monetization and recurring usage-based or outcome-based revenue models are already becoming a reality in an increasing number of industries. As Deloitte we are uniquely positioned to guide you on the journey from products to solutions through our understanding and experience with key trends and catalysts underpinning different market dynamics:
Commoditized markets: Blurring Boundaries Barriers to assets, resources, funding & markets are eroding, which not only drives commoditization of products and allows disruptive competitors to challenge the status quo, but also unlocks adjacent value spaces for incumbent players.
Capital intensive markets: Hyper connectivity Increased access to data and technological enablers further open the door to new business models, enabling monetization options that link price with value and allowing tighter integration with strategic innovation partnerships.
Regulated markets: Concentration and Fragmentation Businesses tend to concentrate towards platforms or fragment in their respective niches, collaboration becomes increasingly relevant in light of sustainability regulations pushing the need to track products across their value chain and lifecycle.
Solution transformation is rooted in understanding what it takes to solve a customer’s problem and then seamlessly bringing together exactly what is needed, unlocking the ability to assemble value from any of your assets, capabilities or IP to bring holistic solutions to your customers at the intersection of products, software and services. Similarly, we connect the best from our established Strategy, Business Operations, Technology and Analytics practices to tackle the diverse challenges of a solution transformation in an integrated approach, allowing us to support across a wide array of capabilities:
Strategy
Support in collecting value insights, identifying value spaces and designing value propositions that outline where to play and how to win
Solution
Support in the design of a holistic solution that meets customer needs by integrating product development with service design and software development
Technology
Support solution providers to design, build/adapt, integrate, operate and monitor/measure different hardware and software ecosystems to leverage and monetize data
Offering Support the development of bundled products, software and services from front-end (CPQ, pricing) to back-end (rate-cards, usage management, monitoring)
Sales Support salesforce in the transition from transactional sales of products to relationship-based sales of solutions, with a focus on customer success and software entitlement
Finance Support with shift from upfront or periodic payments to continuously recurring or outcome based revenue streams, including financing options for cashflow changes
Accounting Support with shifting ownership from customer to provider, which impacts accounting treatments and changing responsibility over assets in their lifetime
