Production Management

Western European manufacturers’ difficulties in earning revenue from industrial services in Pacific Asia have been linked to cultural values. Yet, ways of creating and capturing value from smart services in the region remain unexplored. Against this backdrop, this research seeks to (1) uncover how cultural values influence smart service revenue models, and (2) derive revenue model configurations enabling value capture. To do so, the authors study six Western European manufacturers commercializing smart services in Pacific Asia. The results indicate that indirect and freemium revenue models may achieve fit with the cultural values identified.

Manufacturing companies enhance increasingly their hardware products with services. The deployment of digital technologies intensifies the fusion of products and related services towards hybrid offerings consisting of smart products and smart services. If manufacturing companies can control all relevant performance measures of such hybrid offerings in use, they are at the edge to further transform their business.
At this stage, bundles of products and services merge into a single service offering. With such a service, customers may use the product while the supplier ensures the product’s functionality. This kind of offering is called Product-as-a-Service. Manifold industry-specific applications of this concept have emerged, such as Lightning-as-a-Service or Windpower-as-a-Service. In a broader sense, these offerings are subsumed under Everything-as-a-Service (XaaS). However, only few manufacturing companies offer XaaS, let alone the number of companies that are economically successful in this endeavor.
In contrast, software vendors show the successful transformation from selling on-premise solutions to offering Software-as-a-Service (SaaS). In order to do so, software companies had to restructure their offering. Far more than just adopting a new business model, switching to SaaS was a strategic move for software firms that entailed fundamental organizational changes. As software vendors demonstrate how profitable SaaS is, the underlying transformation path could be a didactic play for manufacturing companies.
Importantly, a comprehensive framework to transform a manufacturing firm towards XaaS is missing. In order to fill this lacuna, we propose a holistic management model. The four layers strategy, business model, operating model and enablers represent the main levers for turning the transformation towards XaaS into action.

With digital technologies, smart services become a cornerstone of industrial product-service systems. Services are increasingly delivered by digital means and thereby become difficult to grasp for customers. For manufacturing companies, this is an opportunity to leverage value-based marketing and sales (VBMS). Despite this approach appearing promising in the age of digital technologies, no research combined so far the perspectives of VBMS, servitization and digital technologies. This paper fills this gap through a systematic literature review. We find that a limited number of authors and papers discuss this topic, but using a plethora of different terms. We consolidate the extant terminology in an overarching framework for VBMS. Furthermore, we identify four pillars of digital technologies that influence VBMS of industrial services. Finally, we suggest that in the age of digital technologies, the effectiveness of VBMS is contingent on relational rather than technological factors.