How integrating services with hardware helped Lenovo address its customers’ critical needs

Lenovo delivered its fastest growing Q4 ended March 31, 2021, in almost a decade and closed the fiscal year with the new milestone of passing $60 billion in revenue and double digit growth across all its core businesses. Its performance demonstrates its resilience and ability to grow amidst the pandemic, as it continues to transform in line with its 3S corporate strategy. In an interaction with BusinessLine , Shailendra Katyal, Managing Director, Lenovo India, said the company posted steady growth through the fiscal, delivering an exceptionally strong Q4 supported by its services-led transformation.

When did Lenovo begin its transformation from a pure play hardwarecompany to a hardware and services company?

Lenovo has been undergoing a services-led, intelligent transformation over the last few years. Let me rewind just a little to 2017, to the start of our services-led journey. Our business was booming, and we had become the world’s leading PC manufacturer, selling four devices every second. As we looked to the future, we observed that one of the key trends arising from the rapid advancement in technology was a shift in business models. We recognised that this provided an opportunity for us to meet our customer’s needs and create an area of long-term growth for the company. Today, that thinking has been laid out in Lenovo’s 3S strategy focused on Smart IoT, Smart Infrastructure and Smart Verticals. So, this focus on services was something that came very naturally, as technology became a frontrunner and driver in business transformation. More specifically, we are integrating solutions and services together with our hardware products, for an approach that lets us address our customers’ most critical needs. This has been paying off – we just announced at our latest earnings call that software and services revenue grew at almost 40 per cent YoY globally in FY 2021. In the Asia-Pacific, especially in India, which is a dynamic and adaptable market, we are leading the charge in services. In fact, we saw a 50 per cent growth in services portfolio bookings by customers in India during FY 2021 and are confident that this will only continue to increase in the coming quarters.

What prompted this transformation?

We noticed that companies were moving away from on-premise IT infrastructure towards cloud-based environments. With this transition, we found that our customers needed smarter technology solutions spanning IoT, infrastructure, and intelligent application functions and this is where we believed Lenovo could step in. It was the next step in our evolution as a company from a purely hardware to hardware and services. While this was something that we have been pursuing over the last few years, the pandemic has accelerated this shift globally, ramping up the need for digitalisation and intelligent resources. We are already in the era where solutions and services are a need, not just a ‘good-to-have’ when it comes to digital infrastructure for most businesses to survive and succeed.

What does your service portfolio post transformation offer and what key verticals are they targeted at?

Services-led transformation was articulated as a major corporate priority as we kicked off our new financial year in early 2020. Lenovo’s solutions and services portfolio is multi-faceted, encompassing and complementing all our diverse segments and groups. We look at this from three different levels – First, are our Attached Services & Software, which are sold with the device and cover everything needed to keep the product running across its lifecycle, think services such as extended support and access to Office 365. Second, Managed Services and Device-as-a-Service (DaaS), which involves customers outsourcing their infrastructure management to us. A great local example of this is our partnership with one of the top universities in India, Kalinga Institute of Industrial Technology, where we were able to deploy 5,500 ready-to-use-devices to students, and through a campus helpdesk, provide standardised support and maintenance as well as overall device management. By combining our hardware, software and service solutions, it not only helped the institution to lower costs and save time, but also allowed students to easily transition to home-based learning during the nation-wide lockdown. Finally, we have Complex Solutions that brings everything together on a strategic level with proprietary Lenovo Smart Solutions. Some of our key industry verticals include Education and Manufacturing, and we are also focused on Retail and with the pandemic, Healthcare, an area that we have continued to support.

How much did services-led transformation contribute to India’s revenue growth?

In India, Lenovo saw steady growth throughout the past fiscal year and delivered an exceptionally strong Q4. Total revenue for all Lenovo businesses, including Infrastructure Solutions Group, Solutions and Services Group, Intelligent Devices Group was $1.66 billion for the full year ended March 31, 2021, representing year-on-year growth of 14.5 per cent, and $399.5 million for Q4, representing year-on-year growth of 76.9 per cent.

Globally, the services portfolio revenue registered strong growth accounting for 8 per cent of the company’s total revenue in FY 2021. We saw strong demand across businesses in India over the past four quarters. As individuals, companies, and institutions address the demands of the ongoing pandemic, they are transforming their relationship with technology. With our comprehensive technology services, broad range of devices, and infrastructure solutions, Lenovo is supporting this transformation. We are expediting the adoption of hybrid work systems, the digitisation of core industries, and further educational opportunities.

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