Supporting servitization via the Internet of Things: the ES provider viewpoint : A case study of the multinational ES provider IFS and its customers

Abstract: Servitization is a popular term referring to the innovation of an organization’s capabilities and processes to better create mutual value through a shift from selling products to selling Product-Service Systems. It is generally regarded as an innovative business model with great potential for smoother revenue streams, higher profit margins and longer, more closely-knit customer relationships. It is seldom easy to reengineer the business model of an entire organization and the servitization concept does not come without risks and uncertainties. One of the biggest changes when servitizing is the ownership of products; it is no longer necessarily the customer who owns the product, but the producer. This entails new uncertainties surrounding the use and care of the product, leaving the provider with a risk because of a lack of information about how the product is being used. The technology Internet of Things (IoT) can potentially solve this problem by enabling a constant remote data flow from the products in use back to the provider. IFS, the company at which the research of this study took place, develops and supplies enterprise systems (ES) such as enterprise resource planning systems (ERP) and can be described as forward-thinking and innovative. The ERP is a central point for any manufacturing firm, governing data and enabling an organization to automate and integrate a comprehensive part of their business processes, and to produce and access information in real time. In order to build functionality which can be referred to as the “best practice”, and to make a profit doing it, ES providers, such as IFS, need to stay in touch with the market and develop attractive applications in line with the general demand. One way to do this is to collaboratively develop functionality together with customers. In recent years, IFS has developed the product IFS IoT Business Connector in such a collaborative way with a number of pioneer customers. The product enables the collection and analysis of IoT data as well as seamless integration into IFS’ other products. This has opened up possibilities to utilize IoT functionality to support a more efficient provision of services, but the continued successful development of the Business Connector in this direction entails several more collaborative ventures into many different industries. To assist in this, we have concretized how IoT can be used to support a servitization process, as well as how the market has realized and adopted this. This has rendered a conceptual model for judging the suitability of a company, based on the readiness to utilize IoT and servitization respectively. We have then presented which types of customers an ES provider should aim to collaborate with for joint development of functionality in the enterprise system, to enable IoT solutions which can support servitization. This is followed by a presentation of a short market review, and the visualization of the market in the model. From this we draw conclusions about the fit and usefulness of the model, and the market maturity in general. Finally, we present a number of suggestions on how ES providers can work to develop such support in a more efficient manner.