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PurposeDigital servitization concerns how manufacturers utilize digital technologies to enhance their provision of services. Although digital servitization requires that manufacturers possess new capabilities, in contrast to strategic (or dynamic) capabilities, little is known about how they develop the required operational capabilities. The paper investigates the mechanisms for developing operational capabilities in digital servitization.Design/methodology/approachThis paper presents an exploratory study based on 15 large manufacturers operating in Europe engaged in digital servitization.FindingsThree operational capability development mechanisms are set out that manufacturers use to facilitate digital servitization: learning (developing capabilities in-house), building (bringing the requisite capabilities into the manufacturer), and acquiring (utilizing the capabilities of other actors). These mechanisms emphasize exploitation and exploration efforts within manufacturers and in collaborations with upstream and downstream partners. The findings demonstrate the need to combine these mechanisms for digital servitization according to combinations that match each manufacturer’s traditional servitization phase: (1) initial phase - building and acquiring, (2) middle phase - learning, building and acquiring, and (3) advanced phase - learning and building.Originality/valueThis study reveals three operational capability development mechanisms, highlighting the parallel use of these mechanisms for digital servitization. It provides a holistic understanding of operational capability development mechanisms used by manufacturers by combining three theoretical perspectives (organizational learning, absorptive capacity, and network perspectives). The paper demonstrates that digital servitization requires the significant application of building and acquiring mechanisms to develop the requisite operational capabilities.

PurposeSmart services have gained attention both among academics and practitioners, but manufacturing firms struggle in getting their new smart services extensively adopted by customers, employees and distributors. The purpose of this paper is to identify and analyse the requirements of different actors and the interconnectedness between their requirements in introducing smart services.Design/methodology/approachAn embedded single-case study was conducted with a manufacturing firm and its network, including its sales and service personnel, customers and external salespeople. Data were collected via 30 in-depth interviews.FindingsThe paper advances the multi-actor perspective by identifying the requirements of key actors for introducing smart services. These requirements were divided into eight categories: value of smart services, reliability of smart services, competence for smart services, data security and management, attitude towards services, reliance, knowledge of installed base of equipment and services and service reputation. The findings reveal the interconnectedness of different actors’ requirements for introducing new smart services and how discussion and relationships between actors affected their requirements.Practical implicationsThe findings represent a comprehensive template of requirements, as well as mapping the interconnectedness of actors’ requirements, serving as a practical guideline for managers.Originality/valueThis study characterises the introduction of smart services as a multi-dimensional, interconnected effort by manufacturing firms and their networks. It shows that service introduction cannot be viewed as manufacturer’s development task or customers’ adoption decision only. Propositions are offered on how multiple actors’ viewpoints can be combined to achieve success in introducing smart services.

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Purpose The purpose of this paper is to better understand the efficient use of remote monitoring systems (RMS) to create business value for industrial services in manufacturing firms. A business view to RMS is a key prerequisite for the successful application of the Internet of Things (IoT) in industrial services. Design/methodology/approach A qualitative multiple-case study was conducted in six engineering companies. The main source of data was semi-structured interviews with 16 managers. Findings The findings highlight the role of RMS in enabling manufacturing firms to collect data from customers to complement their limited knowledge about their customers. The study demonstrates the business value of using RMS in industrial services and the necessity of capturing the business value through advanced IT technologies. Research limitations/implications The qualitative research design and choice of six target companies limit the findings to business-to-business manufacturing firms. Further, the focus is on the manager’s viewpoint. The findings imply new business value through an efficient use of RMS to complement direct customer contact. Practical implications The study draws attention to the skilled use of advanced RMS and information and communication technology as a prerequisite for the successful application of the IoT in manufacturing firms that provide services for complex solutions and customers dispersed globally. Originality/value The research shows that using information collected through RMS is an important factor in creating business value in a manufacturing firm’s customer relationships. The study contributes by integrating RMS into the customer information collection process to increase the amount, validity and quality of data.

Research on the integration of different actors in project business has centered on the upstream value chain and a project-based firm's relationship with suppliers. The downstream delivery chain also includes an integration challenge as some project-based firms use distributors to sell and deliver systems. The purpose of this paper is to highlight the importance of integrating with distributors in the delivery of complex systems. A qualitative case study was conducted in one project-based firm. Different distributor capabilities were identified and grouped into business, relational, marketing, and delivery capabilities. Different integration mechanisms were mapped at business and project levels, and divided into control-, cooperation-, and development-oriented mechanisms. The findings show that distributor capabilities related to complex system delivery develop through repetitive collaboration across projects. The stable position of distributors in the downstream value chain facilitate the use of integration mechanisms at the business level and development-oriented integration approach at the project level. acceptedVersion

Purpose Resource allocation is challenged by dynamic environments where changes are frequent. The purpose of this paper is to identify resource allocation challenges and practices in service units that perform both project and non-project activities in dynamic environments. Its goal is to show that top-down mechanisms of project resource allocation need to be replaced by or supplemented with mechanisms that are more flexible. Design/methodology/approach A qualitative comparative case study was conducted in two service units of two project-based firms. The main source of data consisted of semi-structured interviews with 17 service managers and staff members. Findings This study shows that resource allocation is not necessarily a top-down process at all, and the practices are context-dependent. Two more flexible approaches are revealed – hybrid resource allocation and bottom-up resource allocation – as examples of managing resource allocation in service units that engage in projects under uncertain conditions. The results of the analysis highlight prioritisation and adapting to change and delay as the main issues that managers face in allocating resources to different types of projects and service activities in dynamic environments. Research limitations/implications The two target companies chosen for the qualitative research design limit the analysis to project-based firms in a business-to-business context. Further, the viewpoint of the service unit is central to the study. Studying project resource allocation in different organisational contexts and uncovering the perspectives of product development and delivery units would offer promising directions for future research. Practical implications The study reveals that in dynamic project settings such as service organisations, top-down mechanisms of resource allocation need to be accompanied by other, more flexible approaches to ensure the sufficient resourcing of projects and related services in dynamic environments. Companies need to establish practices for resource allocation changes that are caused by re-prioritising tasks and accommodating changes and delays in their project and service activities. Originality/value Compared to a top-down perspective taken in previous research, the study proposes a more flexible approach for resource allocation in constantly changing environments with different project and service activities. Previous studies have focussed on resource competition between projects, placing project managers in the central role for resource allocation. By contrast, this study discusses hybrid and bottom-up resource allocation, both of which involve broader personnel engagement in resource allocation tasks, drawing on the experience of all employees.

Manufacturing firms in various industries are expanding their business reach to industrial services, while simultaneously using modern information and communication technologies to digitalize and transform their businesses. This book is intended to guide students into understanding the key enablers for industrial service business and the requirements for managing industrial service business. The focus is on the enablers and management of service systems in industrial firms, including customer information, resources, service offerings, service delivery systems, organizing, and management control. The viewpoint is that of the organization involved in industrial service business and collaborating with customers and other organizations. The book discusses issues that manufacturing firms and other industrial service providers need to consider when involving industrial services as a source of business. The book is suitable for familiarizing with industrial service systems also more generally, particularly among experts and managers in manufacturing firms that consider servitization in their business.

Many project-based firms have become solution providers that offer a combination of products and services as life-cycle solutions, i.e., solutions that offer value to customers over time. Firms involved in solution business need to acknowledge customers’ needs and integrate different components to deliver higher value to customers. However, integrating services into solution offerings is not straightforward and imposes different challenges and changes to project-based firms. Such integration is not limited to system integration that involves suppliers in the upstream value chain during the project execution phase. The downstream value chain, where project-based firms face customers also features an integration challenge. Integrating services successfully in the solution offering requires that project-based firms consider the downstream integration needs of distributors as well as internal business units that are involved in solution sales and delivery. This research aims to increase understanding of the operational implications of integrating services with solution offerings and the related internal and external integration practices. Previous research has considered systems integration at the strategic, organisational and project levels, and particularly from the perspective of supply and the upstream value chain. While it acknowledges the need for changes in the organisation of project-based firms’ transition towards solution business, practices in the downstream value chain are not sufficiently known as of yet. The downstream value chain is where customer value is defined with the customers and delivered to them. The internal and external actors in the downstream value chain are the most neglected actors of project-based firms. Project-based firms need strong practices for integrating different actors and services to solution offerings, ultimately to succeed in delivering lifecycle solutions. Four qualitative case studies were conducted herein with respect to project-based firms in the engineering and technology industries focusing on different aspects of integrating services to solution offerings. The findings show that integrating services with solution offerings challenge solution sales and delivery and creates several integration requirement in sales and service work. Project-based firm needs to organise the sales and service work to respond to challenges resulting from the x increased service orientation. The identification of challenges at the practice level enhances the current understanding of the experiences of individuals in internal business units in integrating services. Various integration practices were mapped, in use among different actors in the downstream value chain, including the interface of project operations and services, sales and services, and project-based firm and distributors. As actors in the downstream value chain have a stable position within the permanent organisations and service delivery lasts quite a long time after project delivery, integration at the business level is critical for improving interpersonal and organisational relationships and facilitating integration practices at the project level. This research contributes to the solution business and supply chain integration literatures. It illuminates what it takes to integrate non-core actors in the downstream value chain of project-based firms at the practice level. Moreover, this study suggests specifying the challenges that emerged through integration of offerings and proposes suitable integration practices to overcome various integration challenges. As well, the research contributes to supply chain integration knowledge by describing the importance of integrating with distributors as intermediaries between project-based firms and customers. Overall, this research made six propositions regarding selection of organisational integration practices based on type of challenges to overcome, solution life cycle, type of interfaces, the experience level of actors, and uncertainty in the environment. For managers, this research provides insights into the challenges at the sales-service, project operation-service, and project-based firm-distributor interfaces. Different organisational integration practices are posited to facilitate integration across internal and external actors, thereby integrating services with solution offerings successfully.