Becoming a Solution Provider – Challenges and Patterns of Success

Amid a transformative shift, numerous R&D organizations are evolving from conventional product manufacturers or technology providers into solution-oriented entities. The objective is clear: to provide customers with effective solutions to complex problems. Essential to this evolution is not only adaptability and the ability to manage an increasingly complex portfolio, but also a focus on customer-centricity and an unwavering commitment to innovation. Simply put, the approach to solution development is undergoing a significant change, reshaping the entire landscape of R&D organizations. In this article, we aim to explore the ideal path toward becoming a proficient solution provider.

Characteristics of a solution

Solutions—in our context—are defined by the interplay of four characteristics:
, Customer Centricity, Integrated Ecosystem, Diverse & Complete Bundle, and Servitized Business Model. For example, an automaker positions itself within the living environment of its end customers and integrates the vehicle and mobility infrastructure to enable travel from A to B or to service the vehicle. A solution provider thus reflects a trend: moving away from the mere sale of a product and toward the provision of (additional) services and integration services.

Evolution: Transitioning from Product Sales to Comprehensive Service and Integration Solutions

The reasons for choosing this path can vary. .

To become a solution provider, internal levers in particular must be utilized: In the short term, operations management processes should be addressed to increase customer loyalty and flexibility. In the medium term, customer management processes are coming into focus, as customer relationships are becoming increasingly important. And in the long term, innovation processes are crucial, as companies must successfully engage in co-development to create solutions that stand out from the competition.

In addition, your own product can be enhanced and upgraded in terms of quality by a trusted brand. Examples of this include the Harman sound system in Kia vehicles and BOSE in Porsche vehicles. You can also incorporate technology that you do not develop yourself. Take the BlackBerry operating system, for example, which TTTech has integrated into its automated driving safety platform “MotionWise.”

To become a solution provider, internal levers in particular must be utilized:

In the short term, operations management processes should be addressed in order to increase customer loyalty and flexibility.
In the medium term, customer management processes are coming into focus, as customer relationships are becoming increasingly important.
And in the long term, innovation processes are important, as companies must successfully carry out co-development in order to generate solutions that stand out from the competition.

It also requires a willingness to learn and grow:
How do companies remain attractive to future employees (human capital)? How do companies achieve organizational resilience, remain flexible, and learn quickly (organizational capital)? Or: How can knowledge be managed within the company (knowledge management)?

And from a financial perspective?
The goal is to increase shareholder value by improving the cost structure, making better use of assets, boosting sales, and increasing customer value.

Expansion of Skills

To effectively respond to the various drivers and levers propelling “solutization,” the organization must cultivate and enhance a range of essential skills.

Customer centricity, for example, requires new skills within the sales organization. Whereas this was previously demonstrated through products and features, it is now a matter of presenting the value of solutions and communicating this to customers. Conversely, a deep understanding of the customer must be gained and fed back into the organization. Solution providers therefore increasingly find themselves in the role of orchestrator, as partners are also involved in solution design and delivery.

The development of solutions begins with systems thinking and the corresponding system-of-systems engineering capabilities.
For example, in order to address different customer needs—while also enabling scalability—the architecture must be based on modularization. Solutions are therefore often only made possible by digital capabilities—ranging from data analysis to the secure, reliable operation of IT systems. .

Designing solutions also sometimes requires product components that have not been part of the portfolio to date, and M&A offers opportunities to expand the portfolio.
M&A offers opportunities to expand the portfolio. Some of these solutions incorporate new value creation models.
Some of these solutions offer new models for value creation, which means that R&D needs to rethink its approach and plan for the future.

Solution-oriented companies therefore need complementary expertise and active cross-functional collaboration.

Different solution grades

The transition from product provider to solution provider can be described along the two axes of service performance and integration:

An increasing level of service performance within a portfolio ultimately leads to pure servitization, in which performance-based results are sold. Typically, companies offer products in combination with customer services, the effectiveness of which can be enhanced by complementary digital products. This can be observed, for example, in the field of mobile machinery, where uptime and optimized maintenance processes are important.

On the other axis is the increasing degree of integration: from closed hardware/software systems—such as in plant engineering—to open ecosystems that are integrated via platforms. Mobility ecosystems, for example, are multi-modular and open. For instance, an electric car provider can start with a charging infrastructure as a closed system—and then open it up to enable new business opportunities.

Based on publicly available information, we have included some of the companies in which 3DSE was involved in this matrix, including the interesting fact that Günther Walcher of Skidata developed the first machine-printed ski ticket with a photo in 1977. In 1982, the first access readers were installed at a ski resort. Today, Skidata is a full-service solution provider and offers everything a parking garage needs—from license plate recognition to EV charging and billing.
For example, it is interesting to note that Günther Walcher of Skidata developed the first machine-printed ski ticket with a photo in 1977. In 1982, the first access readers were installed at a ski resort. Today, Skidata is a full-service solution provider and offers everything a parking garage needs—from license plate recognition to EV charging and billing.

Finally, let’s take a look at three specific examples—and the paths they took to becoming solution providers.

Ata German OEM was very vehicle-oriented: “We build a good vehicle and bring it to market.
” Here, it was necessary not only to consider the sale of the vehicle, but to focus on the entire customer journey—right up to the end of the product’s life. For example, a new feature or an update can still be sold to the third owner of a vehicle
Of course, this requires a business model and some technological changes, such as OTA updates, system architecture, software platform, etc.

In the Mobile Machinery division, we helped an OEM transform into a solution provider who initially delivered his product to the customer on a pallet: “Here is the best crane in the world. Do whatever you want with it.” Today, the basis of an order is to clarify what the end customer’s task is and then deliver everything needed to accomplish it. For example, a truck is also supplied with a mobile crane.

Last but not least, we worked with an agricultural OEM that now offers solutions ranging from tractors to complete production processes. These include both its own products and third-party products. To achieve this, a platform had to be developed capable of integrating an incredible number of products. As is almost always the case, this led to a reorganization.