The Pains of Servitization -Finding the customers’ pains of a servitization business model in the modular data center industry

Abstract

Increasingly more traditional manufacturing companies are adapting to the trend of bundling services around their core products and even going further towards defining their products and their surrounding services as a single service. This step of going from selling products to selling services is generally called servitization. Looking closer at consumer behavior it is evident that consumption is moving from patterns being characterized by purchasing tangible goods to intangible services. Swedish Modules, a supplier of modular data centers, are looking into changing their business model from a traditional one to a servitized one. When changing a business model in an industry with strong traditions it is vital to establish a clear understanding of the customers. This process involves understanding the customer’s benefits, but also its challenges with the new business model. Hence, in order for the case company, Swedish Modules, to create a servitized business model that is taking the customer’s potential challenges into consideration and offers relievers for these pains this study is focusing on identifying these challenges and pains. To create this understanding, we have conducted interviews with actors along the value chain with a focus on the potential customers of their future servitized offering. These identified pains and challenges are anchored in theory and later compared with what the respondents present. The findings show that the lion share of the identified pains are connected to the change from a traditional way of purchasing data center towards buying it as a service. Here pains such as ownership, control, uncertainty of value and trust are identified both in literature and among the respondents. Furthermore, it becomes apparent that it is vital that the contract is thoroughly designed in order to mitigate many of the identified pains but also to enhance the gains with a servitized offering. Also, many of the identified pains can be derived from either economic- or socio-psychological factors that affects the customer.