The value of Big Data in servitization

David Opresnik n,1, Marco Taisch

Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Piazza Leonardo Da Vinci 32, 20133 Milano, Italy

Received 31 December 2013

Accepted 28 December 2014
Available online 5 January 2015

1. Introduction necessary, but not sufficient, condition for the sustained success of
manufacturing enterprises in mature economies.
Service oriented strategies in manufacturing are much older The question is, thus, what is the next step strategic step after
than the most widely used terms like servitization servitization, i.e. how to derive more value from servitization and,
(Vandermerwe and Rada, 1988)and product–service system among others, to avoid the service paradox (Gebauer et al., 2005).
(Tukker, 2004). Manufactur-ing enterprises began to combine When trying to answer this question and to analyse the
goods with services as far back as the year 1850 (Schmenner, servitization practices of manufacturing enterprises, the data
2009). ‘Servitization’ is the most high-level term for service- perspective arises. Today’s servitization differs greatly from the one
oriented strategies, and will be thus used throughout this article. a century ago, mostly due to the technology that can support the
Servitization is omnipresent in manufacturing enterprises in creation and delivery of P–S. Many services are supported or
mature economies (Neely, 2007). It can be an extremely enabled by ICT solutions, e.g. by providing software in addition to
successful differentiation strategy for undergirding competitive the product, ICT technology to support the technological needs of a
advantage and for avoiding the commodity trap, which pressures car adapted for car sharing, or a TV set with a pay-per-view movie
from the economies with lower production costs. However, portal. Such technologies enable data about the use of the service
manufacturing enterprises in such countries are also servitizing, to be collected, as eBay is doing by selling blinded transaction data
where the level of penetration is proliferating sharply, e.g. in to interested third parties (Ferguson et al., 2005). In P–S, this
China from 1% of servitized enterprises in 2007 to 20% in 2011 potential is based among others on the ubiquitous concept of the
(Neely et al., 2008). This indicates that manufacturing Internet of Things (Kopetz, 2011), where the concept of smart
enterprises that start out with servitization will soon have the products plays a representative role (Kortuem et al., 2010;
onus to design a further strategic step after servitization or one Welbourne et al., 2009). Furthermore, ICT has been introduced, not
that is complementary. Thus product–services (P–S) could only in the delivery and execution phase of the P–S, but also in the
become a ideation and creation phase of P–S. Based on the concept of Service
Engineering (Bullinger et al., 2003; Sakao and Shimomura, 2007), it
enables all the relevant intangible and tangible assets (I/T assets) of
a manufacturing enterprise to be identified and virtualized. They
are represented as data with which new P–S are composed and
managed. Furthermore, since

n
Corresponding author. Tel.: þ39 02 2399 3998.
E-mail address: [email protected] (D. Opresnik).
1
Postal address: Via Lambruschini 4/b, 20156 Milano, Italy.
manufacturing enterprises do not own all the necessary expertise and 2.1. Servitization
ideas for designing and delivering a service, they collaborate with each
other and form a Manufacturing service Ecosystem (MSE) in order to In an extensive literature review, Beuren et al. (2013) conclude that,
obtain others' resources and to retain and develop their own resources given the growth in the number of publications on product–service
by combining them with those of others (Das and Teng, 2000). systems (PSS) in recent years, there has been increased interest in the
Evidently, servitization has been demonstrated to be a process with subject. Furthermore 20% of enterprises have already integrated some
new distributed sources of unstructured and structured data with a kinds of services (Santamaría et al., 2012). A wide terminology for
high level of variety, while ensuring relative veracity and needed service oriented strategies exists, such as servitization (Vandermerwe
velocity. Servitization can be thought of as a data intensive process. and Rada, 1988), servicizing (Rothenberg, 2007), PSS (Tukker and
With new virtualizations of assets, new P–S compositions and, espe- Tischner, 2006), functional sales (Markeset and Kumar, 2005) and even
cially, through P–S usage, the volume of full-service contracts (Stremersch et al., 2001), etc. However, the two
these data increases exponen- tially. Thus, the “5Vs” can have the most pervasive concepts are servitization (Vandermerwe and Rada,
characteristics of Big Data (Beulke, 2011). 1988) and PSS (Goedkoop et al., 1999; Tukker, 2004). The latter is
The purpose of this article is thus to help manufacturing enter-prises defined as a combination of products and services in a system that
that servitize within an MSE to manage and exploit Big Data related to provides functionality for consumers and reduces environmental impact,
servitization in order to increase the level of competitive advantage. As while servitization is defined as a market package or bundles of
this work is novel, the following hypothesis has first, to be investigated: customer-focussed combinations of goods, services, support, self-service
“The generation and exploitation strategies of Big Data related to and knowledge. As the two concepts overlap at some points, Baines et al.
servitization constitute the next basis for competitive advantage after a (2007) proposed a solution by making a synthesis of both terms. A P–
manufacturing enterprise has servitized its products within a S is defined as an integrated combination of products and services that
Manufacturing Service Ecosystem”. In order to scrutinize this deliver value in use. The servitization definition is refined by
hypothesis, a Big Data Strategy framework in servitization is con- encompassing the PSS approach. Hence, in this paper, the term
ceptualized that depicts Big Data generation and exploitation strate- servitization will also be used for service oriented strategies. Many other
gies integrated into the process of servitization within an MSE. This definitions also exist (Harmon et al., 2011; Mont, 2002; Sundin et al.,
article elucidates, from a Big Data perspective, how a manufacturing 2009; Wong et al., 2011), but servitization is conceptually the widest one.
enterprise that is servitizing within an MSE can use the four Big Data According to the framework from Thoben et al. (2001) servitization has
stratums (Volume, Velocity, Variety and Veracity) in order to create a more than four main levels of servitization, going from pure product to
link with the fifth stratum, Value. Albeit the “buzz” around Big Data, providing pure functionality that can be detached from the product itself.
only a few IT executives have reported that their organizations were Servitization is applied, not only to the final product of the manufacturer,
succeeding at generating significant business value from their data but also to specific parts of the supply chain that are used to provide the
(Beath et al., 2012). Accordingly, this article will enable managers of final product (Opresnik et al., 2013b).
manufacturing enterprise that are servitizing products to unveil the fifth By achieving better price discrimination, helping to save costs, and
“V”, Value, represented as an additional layer of added-value hidden in preserving the power to deter a potential entrant (Sheikhzadeh and
servitization. Elahi, 2013), servitization is used as a foundation for a compe-titive
The argument goes as follows. The main concepts are introduced in manufacturing strategy (Olivia and Kallenberg, 2003; Slack, 2005).
the first section. It starts with servitization and its related sub-concepts Hilti International provides such an example, when one of its
MSE, Service Engineering and Informatization. The next main concept is competitors came onto the market with a product with similar
Big Data. Conceptual simulation of the Big Data Strategy framework in specifications, but at a lower price (Johnson et al., 2008). Hilti
servitization is treated in the second section, where its relevance is International reacted by servitizing its product; the drilling machine
scrutinized. In order to evaluate the impact of the newly designed Big was no more the object of the sale, but its functionality, with a “pay per
Data Strategy framework in servitization, it is benchmarked against hole” model. Taking into account the trends, it can be deduced that
existing relevant frameworks in the fields of Big Data and of servitization will be used even more by manufacturing enter-prises to
servitization. In the same section it is explained how the fifth “V” Value create additional and more secure revenue streams, since global
is created through the application of a Big Data Strategy in servitization. competition is increasing while margins are lowering. How-ever,
The last section depicts the impact of the Big Data Strategy framework despite the fact that P–S can be very promising, there are also many
on the competitiveness of manufacturing enter-prises, first through an challenges. The three most important ones for this article can be listed
evolutionary perspective and secondly through a theoretical lense of (Martinez et al., 2010): (a) the delivery of integrated offering (e.g.
the Resource Based View (RBV) (Peteraf, 1993; Wernerfelt, 1984) and expectation gap between the P–S provider and consumer, multi
dynamic capabilities (Prahalad and Hamel, 1990). The article ends offers touch points with the customer); (b) the need for the acquisition of
a short discussion and paths for future research. new capabilities that enable the organisation to compete in new
service spaces, since there is a lack of tools and techniques for use for
assessing the internal capabilities of organisations to design and
deliver P–S offerings; (c) the need for much stronger cooperation with
partners within the manufacturer’s supply network of the P–S. In
2. Concepts order to contribute to solving those challenges, the concept of service
engineering and its related ICT tools is introduced.
The concepts upon which the conceptual simulation of the Big
Data Strategy framework in Servitization for manufacturing enter- 2.2. Service engineering within a manufacturing service ecosystem
prises is based are presented. The synergies of the following concepts
and their related ICT tools and procedures are utilized—(a) the Many enterprises do not have the processes and corporate
service oriented strategy servitization, (b) the specific service engi- structure to enable P–S to be developed efficiently and launched
neering ICT tools and procedures facilitating servitization within an onto the market, thus a structured approach called service engineer-
MSE (virtualization procedure of assets and their management in ing is used, based on which models, methods and tools for the
terms of deletion, addition, sharing and composition within an MSE) composition of new innovative P–S are developed (Bullinger et al.,
and (c) the process of informatization. The advancement in the field 2003). This article takes into account the advantage of the power of
of these concepts is briefly depicted. this discipline, and introduces formal semantics in order to transform
all the key real world assets of a manufacturing enterprise into their represent a new revenue stream for manufacturing enterprises. Thus,
virtual representations, i.e. data. Those can be managed operationally, informatization starts by collecting and storing data during a P–S usage.
i.e. added, deleted, shared and composed, by the enterprise that is part One possibility is to do this through the smart-products.
of the MSE. Two main types of assets exist – Tangible Assets (TA)(e.g. Second, the data are analysed using business intelligence techniques,
machines) and Intangible Assets (IA) – that are defined as key drivers where the newly generated information serves as an input for a new
whose essence is an idea or knowledge and whose nature can be innovative P–S or to incrementally innovate the existing one. Alter-
defined and recorded. In order to operationalize the management of I/ natively, those information, or simply raw data, can be resold to other
T assets, a dedicated virtualization procedure (Hirsch and Opresnik, entities; for instance to marketing agencies in need of longitudinally
2013) has been developed. It is framed within software processes that accurate behavioural data, that are extremely hard to obtain, or to other
facilitate the population of the data warehouse and are commonly manufacturing enterprises with complementary products, or to
known as “Extract-Transform-Load” processes (Vassiliadis and independent service providers wanting to design a new service. However,
Simitsis, 2009). Starting from real-world in-/tangible assets like the data exploitation phase would be much more efficient if organized
human skills or physical resources, the virtualization method pro- within an ecosystem of partners interested in data exploitation—the
vides a systematic approach to transfer these assets into a data base information ecosystem. Thus, the transactions could be closely managed,
and has five main steps—identification of key assets, population of the ensuring privacy policies and enhancing trust.
P–S ontologies, definition of rules, deployment, and maintenance
(Hirsch and Opresnik, 2013). The outcome of this process is data about 2.4. Big Data
the assets of the manufacturing enterprises that are collabor-ating in
the process of servitization. The term Big Data refers typically to the following types of data
(Dijcks, 2013): (a) traditional enterprise data, (b) machine-generated /
2.3. The manufacturing service ecosystem and data sensor data (e.g. weblogs, smart meters, manufacturing sensors,
equipment logs), (c) social data. Given the mass of data generated
Servitized supply chains are different from their production count- through those channels, information overload is going to be the biggest
erparts and need to be more responsive, relying on real-time inform- problem for coming generations, as also the biggest oppor-tunity
ation (Johnson and Mena, 2008). Furthermore, a tighter collaboration related to data for enterprises (Renee, 2013), as it is opening new
between partners is essential in delivering P–S (Martinez et al., 2010). exploiting opportunities. Every day Google alone processes about 24
The importance of relationships between enterprises for increasing petabytes (or 24,000 terabytes) of data (Davenport et al., 2012), a single
competitive advantage has been emphasized (Dyer and Singh, 1998) jet engine can generate 10TB of data in 30 min, while Smart meters and
and collaboration between enterprises shown to be one of the key heavy industrial equipment like oil refineries and drilling rigs generate
elements of enterprise competence development (McEvily et al., 2003). similar volumes of data (Dijcks, 2013). The increased volume and
From the strategic management perspective such a phenom-enon velocity of data in production settings means that organizations will
could be termed, according to its function, as a “strategic factor need to develop continuous processes for gathering, analysing and
market” (Barney, 1986), defined as a market where the resources interpreting data (Davenport et al., 2012). “Smart Products” are also
necessary to implement a strategy are acquired. Such dynamic gaining importance, especially with the rise of the Internet of Things,
networking, as well as collaborative engineering for innovation, can be e.g. for performing predictive main-tenance of a refrigerator (Cassina et
facilitated by Future Internet (FI) architectures as well as by information al., 2007). As there is also an explosion of different types of data, of
and communication technologies (ICT). Consequently, since we are unstructured data and sources (Beath et al., 2012), volume is not the
dealing solely with manufacturing enterprises that are collaborating in only major characteristic of Big Data. Thus, there are five Big Data
order to provide as efficiently as possible an innovative P–S on the characteristics (Beulke, 2011):(a) volume—e.g. from machine generated
market, the term Manufacturing Service Ecosystem (MSE) is used to data; (b) velocity, increas-ing due to frequency and speed of
depict an organized collaboration in the process of servitization. Within transactions; (c) variety—increase of structured and unstructured data
such MSE, the partners’ key assets are virtualized. Each MSE partner has number of data sources;
access to this repository. From an employee perspective, when one is (d) verification—tackling the issue of data quality and security levels;
inserting data about assets such as compe-tence and skills, it could work (e) value—enquiring into how value is being extracted from existing
similarly to LinkedIn, where the users insert their professional data. Consequently, from the perspective of a manufacturing enter-
Curriculum Vitae from distributed locations. However, those asset are prise, after having increased its data Volume, Variety and Velocity,
structured on a dedicated MSE ontology, ena-bling prices and other while struggling with Verification, the question that is posed is how a
market conditions to be added, thus providing information relevant for manufacturing enterprise can exploit those data, so that added value
the MSE partners. By adopting such a structured approach to P–S, the can be created. According to Zhu and Madnick (2009), there are two
enterprise already gains a competitive advantage, as the value of ways an enterprise can increase the value of its data: first sell
resources and their related skills and competences is greater than the the “private” data (currently not publicly accessible) or, secondly, to
sum of their assets, due to the complementary effect (Amit and become a data re-user. These strategies are very well known in the
Schoemaker, 1993). Furthermore, by using such dedicated ICT tools and software industry. One such case is the online auction site eBay,
procedures, a manufacturing enterprise can acquire external which uses data in at least two manners; first as data reuse, with
competences and skills, which among other things decreases the force the data about the behaviour of millions of its customers it drives
of the path dependent enterprise development (Quélin, 1997), enabling analytics at every level of the organization (Boucher Ferguson, 2013).
more freedom in innovation. Once the P–S is composed from different Second it has already begun selling blinded transaction data to
assets owned by multiple MSE partners, it can be managed from an interested third parties (Ferguson et al., 2005), thus exploiting them,
assets perspective. not only for internal use, but also as a new “product” generating an
Although the P–S represents the nucleus of the value of servitiza- additional revenue stream, which is data sell. This case indicates not
tion, it is not only factor. During servitization another layer of added- only the strategy of data reuse, but also of “data re-purposing”, which
value arises, the information layer that is nascent due to a process can be part of both previously depicted strategies and simply indicates
called informatization (Opresnik et al., 2013a). By showing that the possibility to reuse data differently.
servitization is a data intensive process and by offering procedures In conclusion, a manufacturing enterprise, in order to stay
to exploit them, such data, that are collected from consumers during competitive, must servitize in collaboration with others within an
the P–S usage and then exploited on an ecosystem level, could MSE. The ICT tools and procedures that support service engineering
generate numerous additional volumes of data with a high level of of a manufacturing enterprise that has servitized its product within.
variety and velocity. Due to the software and hardware that support Consequently, the Big Data exploitation strategies are independent
the provision of a P–S (e.g. remote maintenance), there is another variables, while the level of competitive advantage is the dependent one.
source of data available—the P–S during its usage. Consequently, a The results can be generalized for a manufacturing enterprise in mature
manufacturing enterprise in mature markets, which is falling into the economies that have servitized their products successfully within an
commodity trap, has new opportunities to increase its long term MSE. In the following section, the data flow simulation during such
competitive advantage, by exploiting the Big Data that have become servitization is depicted and concrete opportunities for Big Data
available due to servitization within an MSE. The methodological dedicated exploitation strategies of manufacturing enter-prises in such
background of the article is demonstrated in the next section. an environment pinpointed.

3. Methodology 4. Conceptual simulation of the Big Data Strategy framework

in servitization
Conceptual simulation is used to design the Big Data Strategy
framework in servitization and to simulate the related opportunities. The data related to servitization are first analyzed to determine
The term is also called “what if” reasoning. It is used in situations of whether they can be treated as Big Data. The first two steps from the
informational ambiguity and may be used to help scientists resolve research design are applied, which means to conceptualize the
that uncertainty, especially when attempting to develop a general, or framework and then to apply the Big Data generation and exploita-tion
high-level, understanding of a system (Trickett and Trafton, 2007). strategies.
The latter is the case in this article of trying to develop a Big Data The servitization related data may appeared to be, prima facie, in
System within a certain level of information ambiguity. Furthermore, small amount, well structured and, possibly, quite static. However,
Brown and Fehige (2011) proposed a three-step process of first, when considering the servitization and informatization processes in
visualizing a situation, secondly, applying a certain operation on it, parallel, this is not necessarily the case. The first of the “5Vs” (Beulke,
and thirdly, observing so to omit or admit causal relations. This 2011) is Volume, which can be augmented in two ways. The first is in
framework serves as the research design of this article: the process of virtualization, in which the data used by service
engineering tools from partnering manufacturing enterprises are
 Visualization of the situation—a process of servitization of a loaded into the MSE database. The second way is by the automatic
manufacturing enterprise within an MSE. generation and collection of data from smart products during P–S
 Performing an operation on the situation. Big Data generation usage. For instance the data generated by a car (e.g. speed, location, tyre
and exploitation strategies are applied on servitization of a pressure), when it is driven, are sent to the manufacturer for further
manufacturing enterprise within an MSE. The two main opera- exploitation. The second “V” is Velocity, where the number of
tions can be applied: one being data reuse (in regards to transactions and their frequencies are increasing, especially when
composition of the new P–S and/or analysis of data), while ideating, composing and testing new P–S; the data must be updated
the second is resell of the data generated during P–S usage. and easily accessible to all partners involved so that they can perform
 Observation of causal relations—the effects of the operations the required service engineering operations. The velocity of avail-
from the previous step are analysed in regard to the level of ability of different kinds of data from multiple users constitutes one
competitive advantage, using RBV and dynamic capabilities. essential advantage of knowledge sharing within an ecosystem of
manufacturing enterprises. The third “V” is Variety, which is escalat-ing
The concept of the Servitization Big Data System is being designed due to the extremely large number of different types of data,
in the first two steps. It is based on System thinking theory in order to particularly in the form of unstructured data that are being trans-
recognize and analyse the relation between the components and formed and, due to the increasing number of data sources as servit-
the effect on the whole system (Pan et al., 2013). More precisely, by ization is performed among multiple partners with numerous
adopting the General System Theory, the system model becomes an employees, which creates a certain level of complexity. Furthermore,
important means of controlling and instigating the transfer of this “V” is important for knowing how to create synergies or new
principles from one field to another, and it will no longer be necessary knowledge using data generated through the usage of multiple P–S.
to duplicate discovery of the same principles in different fields The variety of data can increase considerably. For example a partaker
isolated from each other (Von Bertalanffy, 1950). Thus, the system of could obtain access to data generated from a washing machine, car and
the Big Data Strategy framework in servitization simulates the mobile phone. The fourth “V”, Verification, can represent a challenge
interrelations between the integrated concepts from a data flow in service engineering and servitization, as it is hard to control and
perspective, depicting two main points; first how the data are ensure the required level of data quality in all aspects. It is handled by
generated and secondly how they are exploited. However, in order to integrating different access rights and enhancing trust between
evaluate the findings, the results of the proposed framework have partners. The four Vs represent a challenge to manufactur-ing
been integrated and benchmarked against established ones in both enterprises, and also boosts costs, so that management of such data
fields—Big Data and servitization. Furthermore, in the third step, in requires sound business objectives in order to be able to create the last
order to increase the validity of the conceptual simulation onto “V”, Value, with which this article deals most. Thus, positioning the
competitiveness, the results are analysed through an evolutionary generation of Big Data in the business context of servitization enables
perspective and also using the RBV and dynamic capabilities per- the Big Data in question to be exploited in such way that they create
spectives. The former was chosen, since servitization in the con- Value. The first four “Vs” represent a more or less technical challenge,
ceptual model is based on Service engineering, which uses assets as a while the present article focuses on the last “V”, which is a challenge in
basis, like RBV that uses resources. The latter one was chosen because combining a pervasive business strategy in manufacturing with cutting
market needs are dynamic and not static, as advocated by the RBV edge ICT approaches.
(Eisenhardt and Martin, 2000) and consequently the firm needs to The second part of this section deals with visualization of the context,
possess distinctive capabilities to make better use of its resources which is also the first step in the research design. The model
(Penrose, 1959), which are the dynamic capabilities. conceptualization follows a process perspective. The boundaries are
Thus, in this article we investigate whether the Big Data generation defined by the business strategy of servitization within an MSE, using
and exploitation strategies really undergird the competitive advantage collaborative service engineering approaches to support and spur the
process in question. The process of collaborative servitization is detached from their consumers and can very quickly sense changes in
divided into four main steps. The first consists of setting-up the MSE the latters’ behaviour. However, the data serving as input into the P–S
before starting with the actual composition of P–S. It is necessary to innovation process constitute only one possibility in exploiting the Big
access the data of the partners cooperating in servitization, thus to Data previously generated. The second possibility is to sell the
identify the data relating to the most relevant assets in each manuf- generated and collected data on the market to other business entities
acturing enterprise and to load them. After establishing the necessary (e.g. marketing agencies, manufacturers and service providers).
collaborative and data related infrastructure, the second step consists Until now, the Big Data Strategy has been presented from the
of the ideation of a new P–S based on the previously virtualized data perspective of the business strategy of servitization. However, the same
about the partners’ assets; following that, the testing and approval of a strategy can also be depicted from the Big Data perspective. In the
certain composition is performed and, finally, the P–S deployed on the framework, two main steps are present—first, Big Data genera-tion and,
market. As each partner should have the right to ideate and deploy secondly, Big Data exploitation. These two frames help determine in
P–S, the previously virtualized data must be shareable across the which part of the servitization the data are being generated and
entire MSE. In an environment where multiple business partners are whether they are exploited. It can be seen that the virtualization and
required to deliver a solution, such an organization, based on a service the management of individual assets merely generate data, while
engineering approach can, besides increasing the innovative potential informatization is also valuable for data exploi-tation. Thus, the step of
also minimize transaction costs and reaction time. The composition of Big Data generation encompasses the first three steps in servitization
the P–S contains, not only data such as a classical “bill of material” of described previously: (a) setting-up an MSE, (b) P–S ideation and
the P–S, but other crucial business information like price and avail- prototyping and (c) P–S usage. These three servitization steps
ability. These composed data also enable their partial or full reuse by constitute two sources of data: the first comes from the virtualization of
other partners in some later servitization scenarios. Furthermore, as the assets of the manufacturing enterprises collaborating in
those assets can have price labels and can be dynamically adjusted, it servitization; the second arises from the extraction of data from the P–
could theoretically allow managers to trade them within their MSE, S during its usage. The four main servitization steps are depicted in Fig.
encapsulating the logic of “buy low, sell high”, inclining to creation of a 1, using vertical grey dashed lanes, while more detailed tasks in
parallel assets market. In the third servitization step the P–S is on the servitization are represented by horizontal lanes. While the Big Data
market and in use by consumers. In this step the process of generation and exploitation strategies are represented in red and blue.
informatization is introduced into servitization. Data are collected To analyse further all the processes from the Big Data perspective,
from the usage of each P–S on the market and collected by the data exploitation strategies are utilized (Zhu and Madnick, 2009):
manufacturer. This step constitutes the second source of data in this (a) sell the “private” (i. e. not publicly accessible) data, (b) to become a
process, in addition to data virtualization about the assets of the data reuser. The relationships between the servitization and the Big
collaborative enterprises in servitization. In the fourth servitization Data exploitation strategies are shown in Table 1. It shows which
step, the P–S in question is being improved, relying on continuous steps contribute to which part of the strategy in order to generate Big
innovation. This step sees the beginning of the Big Data exploitation Data and to create value from them. Data reuse can be a very
strategy, in which the data are first analysed and then used to innovate powerful concept, as already Tim Berners-Lee, inventor of the Web,
existing P–S and ideate new ones. This way manufacturers are not

Fig. 1. Big Data Strategy within the context of servitization. (For the colored version of this figure, the reader is referred to the online version of this article.)

Table 1
Relations between servitization and Big Data Strategy.

Big Data Strategies Virtualization Org. and sharing Informatization

Collection Analysis Sell Data and/or info as input for new P–S

1. Generation x x x x
2. Exploitation Reuse x x x x
Resell x
said in an interview published in Technology Review in 2004, “the Data Strategy framework generates new opportunities for manufac-
exciting thing is serendipitous reuse of data: one person puts up data turing enterprises. Namely, the value of servitization does not solely
there for one thing, and another person uses it another way” (Zhu and reside in the P–S itself and in the relationships with customers, but also
Madnick, 2009). The same goes for the assets and their comp-osition in the data that are generated during this process. Hence the Big Data
within an MSE, where one manufacturing enterprises pub-lishes its exploitation strategy increase substantially the added-value generated
assets and another one uses them to compose a completely new P–S. from servitization and increase also the number of revenue streams,
Data reuse is thus also present during the composition of, possibly, making servitization an even more profitable and reliable strategy for
multiple P–S; hence, the data is reused. Furthermore the data that are manufacturers.
being collected during P–S usage can be used a new input when A second Big Data framework for benchmarking the Big Data
designing or improving a P–S or simply resold to others. Both Strategy framework is based on servitization and is called the Big
possibilities enable data reuse. Thus, in the introduced frame-work, Data Analysis Pipeline (Zheng et al., 2013), describing the perspec-
data can be reused for different purposes (i.e. innovation and ideation of tive of analysis of Big Data with five main steps: (a) acquisition,(b)
a P–S or resell) by the same organization providing them or by extraction and cleaning, (c) integration and representation,(d)
other organizations, which is means that those data are first sold to analysis and/or modelling and (e) interpretation. The frame-work
them and then used. Data resell can also be possible by selling them per se do group the steps from a value perspective as our
directly, which is being done extensively by the software industry. framework or the one from Miller and Mork (2013). Nonetheless,
Table 1 depicts the relationships between the tasks in servitization with the sub-steps of the framework are then quite similar. Our frame-
the Big Data strategies. work would include their first two steps into the data generation
phase, while the last three would be in the Big Data exploitation
phase. This framework, does not however stipulate multiple users
5. Big Data Strategy framework positioning of the data generated from the Big Data analysis.
A third Big Data framework deals with its application for cons-
The previous section depicted the main conceptual model of this umers, proposing to show how a mathematical topology and Markov
article. With the aim to position the framework in question in the chain theory along with co-occurrence analysis can be applied in
fields of Big Data and servitization, some of the most representative obtaining useful information to the analysis of various kinds of data in
frameworks have been chosen to be benchmark against our consumer world (Thi Thi Zin et al., 2013). It is a framework constituted
proposed framework or to scrutinize it through their perspectives. of three main blocks: data organization layer, analysis and modelling
We first address five Big Data frameworks, in three cases we layer and predictive and inference layer. This framework describes
perform a direct benchmark, while in the other two cases we from a technological perspective the data flow, while our framework
integrate our Big Data Strategy into their framework with the positions the Big Data flow within a managerial perspec-tive, similar to
objective to obtain a new perspective. In the second subsection, we the Value Chain of Big Data. Therefore, the value of this framework
then position the proposed Big Data Generation and Exploita-tion resides in providing extremely concrete and advanced methodologies
strategies within the process of servitization. The objective is to and tools to extract value, while the value of our Big Data framework
position the proposed Big Data Strategy framework into the relies in providing different modes to generate data from multiple
literature of servitization as also to emphasis the impact of the Big sources, while also providing opportunities to exploit those data.
Data Strategy onto the process of servitization, moreover on the A forth Big Data framework proposes a Big Data architecture and
added-value created for the manufacturer. framework aiming to captures all the stages of a Big Data application
(Tekiner and Keane, 2013) consisting of three stages: (a) acquisition
5.1. Positioning servitization in Big Data theory and filtering of data, (b) data analysis and modelling, (c) data orga-
nization and interpretation, while providing seven layers constituting
Miller and Mork (2013) proposed a Big Data framework called the the Big Data architecture. This framework also focusses on the
Value Chain for Big Data based on Porter’s value chain, which is application of Big Data and adds another level of details being the Big
process based. Among others, the proposed framework aims to manage Data architecture. While our Big Data Strategy framework relates the
data from their generation to the exploitation point where are present value chain of Big Data with a pervasive business strategy in
the consumers of information. It also presumes data collection from manufacturing.
various stakeholders and establishing a portfolio-management As for the fifth and also the last presented Big Data framework in
approach to maximize the value of the data. Their value chain has three this article, proposes to classify each data set into so called “5Ws” data
main steps: data discovery (i.e. collect and annotate, prepare and dimensions. Those stand for “what” the data is, “where” the data came
organize data), data integration (i.e. common representation of data), from, “when” the data occurred, “who” received the data, “why” the
data exploitation (i.e. analyse, visualize and make decision). The Big data occurred and “how” the data was transferred (Jinson and Mao Lin,
Data Strategy framework in servitization conceptualized in this article 2013). This framework was employed to test the Big Data Strategy
takes up a similar approach. However, compared with Miller and presented in this article. The value of this integration lies in increasing
Mork’s (2013), our framework do not have an individual second the understanding this strategy. Hence, in Table 2 the value of the Big
step of Data Integration, but it has been merged with the third phase Data generation and exploitation strategy is depicted from this
Data Exploitation. Such integration is need, because the representation perspective also.
of the data must be made according to the objective of data usage,
however, in the Big Data Strategy, the consumers of information are 5.2. Positioning Big Data in servitization theory
unknown until the last step, thus making Data Integration infeasible
previously. Furthermore, when benchmarking against the framework of While the previous sub-section depicted the impact of integrating
Miller and Mork (2013), one can notice that the Big Data Strategy the process of servitization into diverse Big Data frameworks, the
framework is already focusing on a sectorial application—the following section in turn depicts the opposite, the impact of the Big
application of Big Data on the process servitization within Data strategy onto servitization. The objective is to scrutinize the
manufacturing enterprises. Consequently, the additional novelty is the added-value of the Big Data strategy for manufacturers.
actual conceptual application of the concept of Big Data on a specific By offering relevant benefits to customers, the product created a
field, which in this case is manufacturing, moreover servitization. As the certain amount of added-value, however not only for consumers,
application is field specific, our Big
Table 2
Big Data Strategy characterization.

Big Data Big Data What Where When Who Why

Strategies

Generation CVs and Text, Human resource As part of preparation The manufacturing enterprise designing To ideate and design new innovative
Human knowledge department, for P–S design, thus as or managing the design of a P–S P–S more rapidly using service
resources items individuals in the part of virtualization engineering
data sets enterprises
Exploitation Data Items, From the P–S in use During usage of a P–S The manufacturer or the organization in Obtain information that can be useful
extracted amounts, charge of exploiting data coming from to a set of partakers as wide as
from a P–S text different P–S of different manufacturers. possible (e.g. marketing agencies,
universities)

Fig. 2. The added-value of Big Data in servitization.

but also for the manufacturer in terms of profit. After time, when established frameworks in the Big Data literature as also in the
the product’s profit margin were decreasing regardless on product servitization literature. The integration of our proposed solution
innovation, manufacturers had to uptake other growth strategies, into existing frameworks as also direct benchmarks gave the
among which, one extremely pervasive is the integration of opportunity to emphasize the differences and novelties of the
services into the customer offering, resulting into a P–S offering. proposed framework in regards to both disciplines, servitizaiton
Thus, insofar, manufacturers had two basis for creating added- and Big Data.
value, profit—one was the product and the other was the service. In
this article a third layer of added-value is introduced based on data,
moreover Big Data. The impact representation is based on Thoben’s 6. Impact of the Big Data Strategy in servitization on
et al. (2001) seminal representation of servitization and of the competitiveness
informatization process (Opresnik et al., 2013a). In Fig. 2 four
combinations of P–S are depicted (Thoben et al., 2001), from a pure This section represents the third and last research design step,
product to a customer offering providing a pure functionality called it evaluates the impact of the Big Data Strategy framework on the
in certain case also product as a service. The inner circles in each competitiveness of manufacturing enterprises. This evaluation is
phases represent the added-value generated by the product and divided into two main parts. First, a general evaluation is per-
remains the same through all the four phases. While the services formed through the evolution of the competitive advantages of
are introduced in the second phase and their added-value increases manufacturers. Then in the second part, the evaluation of the
in each phase and is depicted by grey circles. The novel and third impact of the Big Data Strategy framework is performed through
layer of added-value for manufacturers represents the generated two established theoretical frameworks - RBV and dynamic
data during servitization and is depicted by orange rectangles. This capabilities. Though there introduction is gradual in order to avoid
layer is present in all the phases where services are also present. potential fallacies in causality between the effect of servitizing
This is because it is presumed that data extraction can be within an MSE and the introduction of Big Data exploitation
undertaken only in relation to a service (e.g. remote maintenance). strategies based on the Big Data Strategy framework. Thus, this
This novel layer of added-value, represents a new revenue stream, section is, contextually, divided into two main subsections.
thus it represents a new Value, which is the fifth “V” among the
“5Vs”. Consequently, it means that when Big Data are generated 6.1. The impact of the Big Data Strategy in servitization on
through servitization, the most important “V” among all, is being competitiveness—An evolutionary perspective
generated also. Namely, one of the biggest challenge in Big Data is
the fifth “V”—how to create Value out of data. In order to understand the position and expectations of a Big
The limitation of the representation in Fig. 2 is that the size of Data Strategy, it has first to be positioned in the context of the
the generated added-value is not dependable upon the phase of evolution of the core competitive capabilities of a manufacturing
servitization, but mostly upon the Big Data exploitation strategy enterprise. This will make it clear what should be the role of
and on the type of servitization (e.g. the more services are ICT integrating such a strategy and, moreover, who should or could
supported, the more automatically data extraction can be under- integrate it. The main findings are depicted in Table 3. It presumes
taken). However, those two dimensions are not visible here, as three core steps in the evolution of the competitive advantages of
such level of details requests additional studies. manufacturing enterprises. First, the core of the main competitive
The objective of this section was to additionally evaluate the strength is the product. Until the 1960s, demand was in many
proposed Big Data Strategy framework though the lenses of cases higher than supply, so high profit margins were inevitable.
However, as competition intensified, manufacturers were forced to
Table 3
Evolution of the competitive advantage of manufacturers.

Competitive Potential benefits Type of environment

advantage

Product  Through product innovation, an increase in revenues and  Products still enjoy an adequate level of profit margin, thus the market is
profit margin still not saturated

Product–service  A second revenue stream (usually with a higher margin and a  The targeted market is saturated, competition is strong, customers are
more stable stream) demanding (lowering prices, shorter PLC phases), and the previously
 Closer interactions with consumers and higher customer satisfactory profit margin has now been eroded
retention rate  Thus, the need to differentiate strongly against competitors and to retain
this competitive advantage longer than the one arising from product
innovation. It also involves entering new, niche, markets

Big Data Strategy  A third revenue stream that could be so disruptive in terms of  Customers are no longer willing to pay a relevant price premium for
(based on business model as to enable the manufacturer to drastically services, but start to take them for granted, as part of the P–S offering
product–services) decrease the price of its P–S  Thus a significant number of competitors have already servitized their
 Continuous P–S innovation based on the extracted data indicating business to a certain, “safe”, level, meaning that the differentiation based
consumers’ behaviour upon service integration is slowly disappearing and indicating that,
because of the service profit margin decrease, the service paradox is
becoming an even greater threat
 A need for a new hard to imitate basis for competitive advantage is
needed, being data exploitation
 A parallel market is created—an information market
 Reaction to customers’ needs turns into their prediction

innovate or find new markets to apply their existing products. market, etc. Such strategies are considered, unfortunately, to be
However, product innovation alone also reached its limits over evident.
time, as consumers demanded more flexible offerings, but that was
hard to fulfil based solely on products. Thus, manufacturing 6.2. The impact of the Big Data Strategy in strategy on
enterprises had to find new ways to satisfy consumers’ needs and competitiveness–A Resource Based View and Dynamic Capabilities
to differentiate against competitors, since pure products, even
though they were improved, were no longer enough to keep one The second part of the section deals with scrutinizing the Big Data
nose ahead of the competition. Among other factors, customer Strategy through the theoretical frameworks of RBV and its dynamic
retention was low and expansive (e.g. the white goods industry) capabilities. Since this article is dealing with assets and service
though, on the other hand, market growth was expansive to engineering, the RBV (Peteraf, 1993; Wernerfelt, 1984) and the dyn-
achieve due to a high market saturation rate. amic capabilities perspective (Teece et al., 1997) have been chosen to
Therefore, one alternative to these strategic and operational convey the effect of the Big Data System Model. Although RBV does not
problems, that has proved itself to be extremely successful, was the currently appear to meet the empirical content criterion required of
integration of services into product offerings. This gave manufacturers theoretical systems, it does not mean that conceptual work initiated
the opportunity to increase their profit margins, to create a new revenue from a resource perspective is not a theory (Barney, 2001). Further-
streams or “just” to increase the customer retention rate (that can be more, RBV has already shown itself to be a robust and integrative tool
problematic and costly in some cases). However, this strategy that was (Peteraf, 1993). According to Barney (1991), RBV presents a basis for
introduced officially at the end of the 1980s (Vandermerwe and Rada, sustained competitive advantage only when four conditions are met.
1988), and is today already pervasive around the globe, even in This is when the enterprise resources are: (a) valuable—these enable
countries with a still significant industrial growth and in not yet mature strategies to be conceived or implemented that improve efficiency and
economies. Consequently, more and more types of services are slowly effectiveness, (b) rare, (c) imperfectly imitable—valuable and rare orga-
becoming commoditized and are turning into a necessity, rather than a nizational resources can only be sources of sustained competitive
basis for competitive advantage, similarly to quality management that advantage if enterprises that do not possess them cannot obtain them;
was a basis for competitive advantage from appro-ximately the 1970s (d) non-substitutable—there must be no strategically equivalent valu-
onward, but today is present in every manufactur-ing enterprise. The able resources that are themselves either not rare or imitable. Manu-
same thing goes for servitization. facturing enterprises have access to a wide pool of potentially valuable,
Thus, in response to the upcoming need for a new basis for rare and hard to imitate assets through data virtualization. These data
competitive advantage, a new business strategy that exploits the could not have been obtained otherwise, outside the MSE. Hence, based
existing competitive advantage of product–services is being intro- on the RBV, such a manufacturing enterprise, by joining an MSE, has
duced—the Big Data Strategy. On the one hand, it builds upon the increased its competitive advantage over other enterprises that are
existing P–S infrastructure and market, while on the other it is servitizing outside the MSE. In addition to the changes to those factors
building up a new competitive advantage that is even harder to that occur when a manufacturing enterprise enters an MSE, there are
imitate. In theory, it could disrupt existing business models of other opportunities. Such factor markets would enable the manufac-
manufacturing enterprises and their markets. In this case it would turing enterprise to diminish information asymmetry, thus minimizing
generate significant revenues from data exploitation generated its assets price, while maximizing the quality of such assets. This
during the P–S usage, since it would allow the actual price of the P– means that “factors markets” of I/T assets are key in an enterprise’s
S to decrease. In this case, consumers would also benefit, as would strategy.This isnovel,asRBV hasnotbeen applied systematicallyto strategic
other participants in our society, like research centres and policy alliances (Das and Teng, 2000), such as ecosystems.
makers. The limits set in this evolutionary representation exclude However, it appears that the RBV is not enough to support a
other strategies minimizing manufacturing costs, like significant competitive advantage, since the winners in the global
delocalization, wage reduction, introduction of a “flexible” labour marketplace have demonstrated timely responsiveness and rapid and
flexible product innovation, coupled with the management capability to to combine different resources with different needs, thus
effectively coordinate and redeploy internal and external competences improving the possibility to step out of path dependency.
(Teece et al., 1997). Therefore, dynamic capabilities are introduced as
another perspective on competitive advantage. Teece et al. (1997) defined
“dynamic capabilities” as follows. The term “dynamic” refers to the 7. Discussion and paths for future research
capacity to renew competences so as to achieve congruence with the
changing business environment. The term “capabilities” emphasizes the Generating profit from P–S is not self-standing, especially if taking
key role of strategic management in appropriately adapting, integrating, into account the servitization paradox (Neely, 2008). Nonetheless, more
and reconfiguring internal and external organizational skills, resources, and more manufacturing enterprises are servitizing their products and
and functional competences to match the requirements of a changing in the future there will be a need for a new evolvement of the
environment. To delineate the difference between RBV and dynamic servitization strategy. One such possibility is proposed herein. Through
capabilities, Wang and Ahmed (2007) hierarchical depiction of the article we have shown that the hypothesis of this article is accepted,
competitive advantage is used. It is stated that Resources (assets) are the meaning that Big Data exploitation can be the next step of the value
foundation and can be a source of competitive advantage when demon- creation after a manufacturing enterprise has servitized its products
strating the four necessary conditions for sustaining competitive adva- within an MSE. Understandingly, it does not mean that servitization
ntage. However, in dynamic market environments, such resources do not and the exploitation strategies as integrated within the Big Data
persist over time and hence cannot be a source of sustainable competitive Strategy framework exclude each other, but conversely they do
advantage. Therefore, there is a need for “capabilities”, which are to result reinforce each other. The more a manufacturing enterprise servitizes its
in improved performance, when firms demonstrate the ability to deploy products, the more users they have, the more data can be collected and
resources to attain a desired goal and also for “core capabilities”, which information exploited through resell and/or reuse. Thus, a novel
are the ones that are strategically important to the enterprise. Though, hierarchy of bases for competitive advantage, from a servitization
when the core capabilities become obsolete due to the changes in the perspective, is proposed: (a) a manufacturing enterprise servitizes
environment, it can create a competency trap (Levitt and March, 1988). standalone or with ad hoc partners; (b) servitization within an MSE; (c)
Hence, dynamic capabilities are introduced as a constant pursuit of the servitization within an MSE applying a Big Data Strategy framework.
renewal, reconfiguration and re-creation of resources and capabilities to This means that a manufacturing enterprise do not differentiate itself
address the environmental change and are seen as the “ultimate” solely d on the basis of its products, nor of the services that are related
organizational capabilities that are conductive to long-term performance. to the products (P–S), but foremost on the type of Big Data exploitation
As already seen, servitizing within an MSE has a positive effect strategies and their efficient incorpora-tion into the servitization
on an enterprise’s competitive advantage. The output of the Big process, so to spur the most important of the Big Data’s five “Vs”—Value.
Data Strategy framework in servitization comprises data and In terms of future research, it would be complementary to
information which, from the RBV perspective, represent, for a operationalize the concept of a “factor market” for data/information
manufacturing enterprise, new assets and resources, which can resell. Such an information ecosystem would gather interested parties
potentially have the four characteristics needed for sustained in exploiting data derived from the P–S usage. Furthermore it would
competitive advantage. Data are generated by the virtualization interesting to assess and offer concrete solutions to practitioners in
procedure, by management of I/T assets and by automatic terms of business analytics. Each manufacturing enterprise does not
collection during the P–S usage. Some of those I/T assets will be hold within itself the ability to analyse such a volume of data in a
used to compose new P–S, where some core assets will be owned dynamic manner. One possibility would be to make data analysis
by only one specific MSE partner and, due to factors like causal available as a service within the information ecosystem. Finally, such a
ambiguity (Reed and Defillippi, 1990), will be imitable only with new strategic opportunity of Big Data exploitation in relation to
difficulty and, finally, where there is otherwise no direct servitization could enable the manufacturer to revise business models
substitute for such an asset. The information generated during the that are based on the idea to sell as many products as possible, hence
exploitation phase, as the result of data analysis, also constitutes not being adequate in terms of sustainability (Garetti and Taisch, 2012).
new assets. Compared with a manufacturing enter-prise that is The limitations of this work are at least twofold. First, although some
servitizing without generating and exploiting the Big Data, it has parts of the Big Data Strategy framework in servitization have already
greater potential to sustain competitive advantage. However, the been operationalized successfully within industry, the entire model still
Big Data Strategy framework does not provide only static assets, rests a conceptual one. To avoid potential fallacies, rigorous theories have
but also processes to constantly generate new assets and to been employed and conceptual simulation performed in stages. Second,
exploit them, hence to give them value. The need to compose a one of the most relevant impediments for effective utilization of Big Data
new P–S or to ideate or simply to reconfigure an existing P–S can for supporting decision making arises from “organizational silos”,
come from the analysed information that has been collected meaning that data are connected to certain organizational functions and
during the P–S usage. This means that the manufacturing are often not made available to the other departments within the
enterprise can quickly predict and sense the changes in organization. If there is a problem in the data flow inside an enterprise,
consumption habits, needs or simply optimize its P–S to maximize than the question is how the flow of Big Data would behave between
revenues. Consequently, the Big Data Strategy framework multiple partakers and organizations. Strict regulations and governance
undergird the dynamic capabilities of a manufactur-ing enterprise would have to be put in place, however this perspective is not within the
to reconfigure, more quickly and more efficiently, its capabilities scope of this article.
(core or non-core) in congruence with the need of a dynamic
environment. However, reaching congruence with the
environment does not indicate that a manufacturing enterprise
must solely follow the existing needs of the market, thus 8. Conclusion
innovating incrementally and being too path dependent. Hence,
from a Schumpeterian perspective, a manufacturing enterprise As the servitization level in markets with lower production costs
should also innovate radically in order to create new needs and not is sharply on the rise (from 1% in 2007 to 20% in 2011) (Neely et al.,
just follow existing ones. The MSE, in relation with the 2008), manufacturing enterprises in mature economies will have to
informatization process, provides to each partner the possibility obtain a new basis for competitive advantage that goes one step
beyond servitization. However, until now no such strategy has been
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