Transforming products into services – time to cross the rubicon

Paul Jennings urges manufacturers and lenders to ‘cross the Rubicon’ with new servitization book

Manufacturers, asset finance providers and fintech firms must rethink traditional business models and embrace service-led approaches if they want to remain competitive, according to Paul Jennings, whose new book explores the transformation of industrial products into ongoing services.

Speaking to Finance Connect following the launch of his book Transforming Products into Services – Time to Cross the Rubicon, Jennings said the shift towards servitization – including subscription models, pay-per-use arrangements and outcome-based contracts – is becoming increasingly important across the hard asset sector.

He argues that manufacturers have historically focused on selling equipment, often competing heavily on price. But the growing availability of data from connected assets and telematics now creates opportunities for businesses to build longer-term relationships with customers through advanced services.

“Telematics and IoT data are already used to monitor equipment performance and support preventative maintenance,” Jennings said. “But their real potential lies in enabling entirely new business models, such as outcome-based contracts and pay-per-use structures.”

However, Jennings believes the industry still faces significant structural barriers when implementing these models. In particular, he highlighted the complexity of building bespoke funding structures and IT systems to support more advanced service agreements.

“Firms often struggle to assemble bespoke funding and IT systems for these contracts,” he said. “I’d like to see more standardisation emerge, especially as securitisation gains traction in this market.”

The shift toward servitization also reflects broader changes in global trade, he added. According to Jennings, many manufacturers are finding it increasingly difficult to compete purely on price with lower-cost imports.

“The tectonic plates of world trade have changed,” he said, suggesting that developing service-led offerings can help manufacturers protect margins and defend market share.

Sustainability is another factor accelerating the move towards new business models. Jennings said the pressure to meet environmental targets, including Net Zero commitments, is increasingly influencing corporate strategy.

“Regardless of its controversies, the impact of Net Zero is closing in, driven by stakeholders like shareholders, investors, employees and customers,” he said. Data generated through connected equipment can help manufacturers and customers collaborate more effectively to improve efficiency and reduce emissions, he added.

The book also explores how the traditional asset finance sector may evolve as these new models develop. Jennings predicts that fintech companies and artificial intelligence will play an important role in supporting more sophisticated financing structures and recurring revenue models.

At the same time, he believes the industry’s infrastructure could change significantly as legal and accounting firms become more involved in structuring and supporting complex service-based agreements.

For manufacturers themselves, however, the biggest challenge may be cultural. Moving from a business built around selling products to one focused on delivering ongoing services requires transformation across multiple functions, from product design to procurement and production.

“Changing from just selling manufactured goods to advanced services is as challenging as transforming design, procurement and production,” Jennings said.

Professor Tim Baines, Executive Director of The Advanced Services Group at Aston University, praised the book saying: “The future of manufacturing lies not in what we make but in the value we create. In this wonderfully engaging book, Paul draws upon a lifetime of experiences to show how to transform to this way of thinking.”

Likewise, Edward Peck, CEO & Publisher, Finance Connect, remarked: “A really useful book from Paul Jennings that marries academic understanding of the opportunities and challenges for OEMs and finance organisations considering servitization with a life-time of practical experience and insight gained from running one of the UK’s largest and most successful manufacturer captives. If your business might want to cross the product-service Rubicon this is a must read!”

Jennings retired in 2022 after leading JCB Finance, one of the UK’s largest manufacturer captive finance providers. He now serves as a visiting professor at Aston University Business School and chairs the Economic and Social Research Council advisory group at the university’s Advanced Services Group.

Transforming Products into Services – Time to Cross the Rubicon is available through major retailers including Amazon.