Servitization in a Heavy Equipment Company: A business model perspective

Abstract

Background: Servitization is a transformation process consisting of the integration of products and services in the value offering of the firms in order to increase value added and improve the customer experience. This process implies a transition from Product-Centric to Product-Service Systems. In this regard, the servitization implies that firms modify their business model in order to match a Product-Service System Business Model. This research explores the concepts of the product-service system business model and the readiness of the firms for servitization. In addition, it also examines the challenges that result from this transition to product-service system business model. Purpose and Research question: The purpose of this research is to contribute to the servitization theory from a business model perspective and to understand the challenges for servitization by addressing the case study’s readiness and business model. The research question is: How could manufacturing firms improve their Business Model toward a Product-Service System Business Model? Literature review: The literature review was conducted to understand the existing theory of the field servitization and its drivers, benefits, and challenges. It also provides insight into the product-service system business model the readiness for servitization elements. Case study: The case study is a firm from the heavy equipment industry, the firm provides heavy machinery solution for mining and construction sectors. The results were gathered from several participants from different departments within the firm. Methodology: This is qualitative research, semi-structured interviews performed with a total of 7 company employees. The data from the interviews were analyzed in a thematic manner in transcribing the data, NVivo plus 12 for codifying and categorizing the themes to represent the findings of the study. Findings and conclusion: The study's findings assisted us in gaining an understanding of how a heavy equipment manufacturer provides services alongside its products by utilizing a Product-service system business model. The results show that the elements of the business model have a connection to the different levels of transformation and maturity a firm can be. The results also show that the firm is ready for servitization and to move towards a more service-oriented approach; nevertheless, there are challenges that the firm may face during the servitization process as well as challenges that the firm has overcome in the past.