Servitization: Is a Paradigm Shift in the Business Model and Service Enterprise Required?

Barnett, Neil; Parry, Glenn; Saad, Mohammed; Newnes, Linda; Goh, Yee Mey

doi:10.1002/jsc.1929

Cited by 70 publications

(75 citation statements)

References 38 publications

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“…Secondly, the study contributes to the emerging literature on IT servitization (Bustinza et al, 2015), by indicating how IT servitization makes it possible to use different competitive strategies flexibly, according to market competition and customers' preferences. Thirdly, the findings here add to earlier studies on software renting and pricing, revealing how servitization is moving revenue models from selling products towards rental contracts (Barnett et al, 2013). Finally, this study adds to previous economic literature and studies on software renting (which have mainly applied predetermined variables), and extends the focus to cover monopolistic market situations.…”

Section: Introductionsupporting

confidence: 60%

“…In a situation where servitization is moving revenue models from selling products towards rental contracts (Barnett et al, 2013), this study shows how software firms can apply mixed revenue models or hybrid pricing mechanisms on the basis of market competition. Finally, the findings expand from previous economic literature (Bucovetsky and Chilton, 1986;Bulow, 1982;Flath, 1980) and studies on software renting (Choudhary et al, 1998;Choudhary, 2007), which have tended to apply predetermined variables and to consider monopolistic market situations.…”

Section: Discussionmentioning

confidence: 99%

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Adjusting software revenue and pricing strategies in the era of cloud computing

Ojala

2016

Journal of Systems and Software

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Recent research has recognized cloud computing as a new paradigm of servitization in which software products are offered based on service contracts. Thus, instead of selling software licenses, software vendors can rent software as a service to customers. However, it is still unclear how software providers can use software renting as a competitive strategy in the software market. Based on 37 interviews with software professionals from five case firms, this paper focuses on the connection between competitive forces and the factors influencing the selection of a pricing model. The findings indicate that servitization of the software offering makes it possible to adjust revenue and pricing strategies relative to market competition. Depending on the competitive situation in the market, firms apply mixed revenue models, or else a hybrid pricing mechanism, to protect their business against rivalry and substitutes. The software renting model has several advantages which significantly help software vendors to expand their business opportunities. However, in some cases, powerful customers are able to limit the revenue and pricing options. The findings also indicate that software renting is related to cost leadership and differentiation strategies, whereas software licensing is linked to a focus strategy.

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Section: Introductionsupporting

confidence: 60%

Section: Discussionmentioning

confidence: 99%

Adjusting software revenue and pricing strategies in the era of cloud computing

Ojala

2016

Journal of Systems and Software

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“…Vandermerwe & Rada (1989) dubbed this business model servitization, while Barnett et al (2013) defined servitization as the process of seeking additional value through taking services propositions to the market. Recent figures indicate that, globally, more than a third of large manufacturing businesses offer services, while this rate increases to over 60% in western economies (Neely, 2008;Crozet & Milet, 2015).…”

Section: Servitization Literature: Extending Mainstream Researchmentioning

confidence: 99%

Territorial servitization: Exploring the virtuous circle connecting knowledge-intensive services and new manufacturing businesses

Lafuente

Vaillant

Vendrell‐Herrero

2017

International Journal of Production Economics

141

195

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The mainstream servitization literature mostly describes the success of manufacturing firms in integrating services for their corporate clients. However, the literature is relatively silent on how territories capitalize on the potential interconnectedness between manufacturing firms and the knowledge-intensive business service (KIBS) sector. The analysis of the outcomes that result from the mutually dependent associations between manufacturing businesses and KIBS firms, a process that we call Territorial Servitization, is of great relevance for academics and policy makers. This research hypothesizes that there is a positive symbiotic and bidirectional link between the growth in KIBS activity and employment generation by manufacturing sector startups. Furthermore, we scrutinize the mediating role over this relation of relevant industry characteristics, in our case the stock of manufacturing firms and the total number of freights transported. The empirical application considers a unique dataset created from multiple sources-the Global Entrepreneurship Monitor (GEM), the Spanish Institute of Statistics and Eurostat-for the 17 Spanish regions during the period 2006-2012. The results support the view that territorial servitization contributes to employment creation in manufacturing sectors. Territories with a vigorous manufacturing base benefit from a virtuous circle in which KIBS start-ups and newly formed manufacturers are connected through the economic activity of incumbent manufacturing firms. The study offers valuable insights for scholars and policy makers on how to implement specific policies-e.g., the development of digital infrastructures-that facilitate the interaction between manufacturing and KIBS businesses, thus fuelling territorial development.

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“…BM is a confirmed viewpoint and issue in the PSS context [40]. As the product is not adapted to the new BM, it shows the need to adopt a holistic strategic approach to service implementation [59]. Furthermore, according to some interviews, it is considered that existing contracting practices did not reflect the new service BM [59].…”

Section: Synthesis Of Pss Viewpointsmentioning

confidence: 99%

Conceptual Framework for Product Service Systems

Pirayesh

Doumeingts

Seregni

et al. 2018

Systems

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Abstract:To remain competitive in the current market, an enterprise must differentiate itself based on higher value propositions. For this purpose, since improving the product or service performance can reach some limits, one potential solution is to move towards new combinations of products and services. This evolution, called servitization, leads to the generation of Product Service Systems (PSS). Servitization requires not only a clear understanding of enterprise core business, but also a clear vision of the prevailing trends and challenges of PSS development from both the business and technological points of view. In addition, the evolution path should be aligned with the enterprise strategy. This paper first highlights the notion of symbiotic PSS where product systems and service systems, and their stakeholders, interoperate seamlessly based on a win-win approach. Then, it proposes a PSS Conceptual Framework (PSS-CF), which can be applied in the early stages of servitization to increase the understating of PSS dimensions and to facilitate the prioritization of the servitization investments. The framework dimensions were discussed in several iterations, from both the academic and industrial points of view, in the frame of a European research project. Moreover, the applicability of the framework was studied in four different industrial use-cases.

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Servitization: Is a Paradigm Shift in the Business Model and Service Enterprise Required?

Abstract: Servitization is the move by firms to gain value from service associated with their products, which requires a strategic rather than incremental change in the provider firm.

Cited by 70 publications

References 38 publications

Adjusting software revenue and pricing strategies in the era of cloud computing

Adjusting software revenue and pricing strategies in the era of cloud computing

Territorial servitization: Exploring the virtuous circle connecting knowledge-intensive services and new manufacturing businesses

Conceptual Framework for Product Service Systems

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