Service Integration in the Downstream Value Chain of Project-based Firms

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.