Product Digitalization from the Perspective of an Established Manufacturing Firm

Abstract: This thesis set out to investigate what motivates an established manufacturing firm to add smart and connectivity features into its products and what considerations are made when doing so. Such a firm was used as a case study object, a firm that is considering digitalization in one of its product areas but has not yet finalized the strategy on how to move forward. The qualitative study was made using semi-structured interviews which included mostly respondents from this organization, but also respondents representing the customers as small company entrepreneurs.  A literature study was conducted to better define the subject of product digitalization. Previous research on smart and connected products as well as related business and market theories were identified as relevant, as well as literature on digital transformation. Based on the literature study, a theoretical framework was formulated in the form of an iterative model on product digitalization, where the business and market mechanics are included. A qualitative case study was then conducted in the form of semi-structured interviews, with topics considered relevant based on the literature study. The empirical data shows many similarities compared to the current literature on the topic. The literature study has identified these aspects as relevant to be considered by an established manufacturing firm and compared them with the case study firm: ·       Digital vision – with clear intent and outcome for both the business and the customer ·       Customer intimacy – services related to smart and connected products will increase the intimacy to the end customer ·       Business model – product sales business model will be transformed by servitization ·       Technology content – smart and connected products need integration of new technologies, such as hardware, software and data management ·       Capabilities – necessary capabilities and the ability to integrate and coordinate these ·       Competitive strategy – using digital technology to gain competitive advantage.  ·       Technology acceptance –what technologies are accepted by the customers and why The case study shows that the firm have identified several key areas affected by product digitalization. Many of these aspects are considered when making strategic decisions, and the members of the organization are including most of them when building scenarios. One area of concern is the ability to integrate and coordinate all necessary functions, both for technology and services. Another is the switch in mindset going from a predictable product business model to a innovate digital one. Offering services will bring them into more direct contact with the customers, and possibly change the role of the dealership network.