EXECUTIVE BRIEFING

THE FUTURE OF SERVITIZATION:

Technologies that will make a difference

Veit Dinges, Florian Urmetzer, Veronica Martinez,

Mohamed Zaki and Andy Neely
Cambridge Service Alliance, University of Cambridge, Cambridge, UK
 Acknowledgements

The Cambridge Service Alliance Joining the Cambridge Service Alliance

The Cambridge Service Alliance is a unique global partnership Industrial members
between businesses and universities. It brings together the world’s The Cambridge Service Alliance is a business-led alliance with
leading firms and academics, all of whom are devoted to delivering industrial members who have an active interest in the shift to
today the tools, education and insights needed for the complex services. It brings together companies prepared to make significant
service solutions of tomorrow. and long-term contributions to support the Alliance. The benefits of
About the Cambridge Service Alliance joining include:

Founded in 2010 by BAE Systems, IBM and the University of • Challenging yet practical insights into the design and delivery of
Cambridge’s Institute for Manufacturing and Judge Business School, high-performance complex service solutions.
the Cambridge Service Alliance brings together world-leading • Practical tools, techniques and methodologies.
organisations with an interest in complex service systems to:
• Education and training to enhance capabilities in service and
• Conduct insightful, yet practical research to improve the design support.
and deployment of high-performance complex service systems. • A stimulating international network of the world’s best talent
• Create and develop industrially applicable tools and techniques engaged in solving problems associated with complex service
that deliver competitive advantage. solutions.
• Provide an unparalleled network of academics and industrialists Academic members
that share experience, knowledge and insight in how better to The Alliance draws on members from across the University of
design and deploy high-performance complex service systems. Cambridge, initially from the Institute for Manufacturing and the
• Develop and deliver public and member-only education Judge Business School.
programmes to raise the skill levels of organisations.
Internationally leading researchers and educators will be invited
to join the Cambridge Service Alliance to meet specific research
requirements and the needs of industrial members.

Further information
Email: [email protected]
www.cambridgeservicealliance.org

Cambridge Service Alliance

2
Contents

Acknowledgements....................................... 2

Executive summary....................................... 4

Introduction................................................... 5

Servitization – what we know already......... 6

What we discovered:
key servitization technologies –
now and in the future.................................... 8

The technology drivers............................... 13

Conclusion.................................................... 15

3
 Executive summary

T his executive briefing provides an invaluable guide to the technologies that are likely to play a pivotal role in the future of
servitization. In doing so it offers integrated product–service providers some insights into how they can maintain or gain
competitive advantage in their markets.

The phenomenon of manufacturers shifting their business models Given that many of the academics are engaged in, or aware of, early
to add a services dimension to their product offering is a widespread stage research on technologies that may be useful in servitization,
phenomenon. Servitization has allowed manufacturers to maintain the academic rankings outside the top technologies also provide
their competitive advantage in the face of competitive pressures crucial insights into key technologies for the more distant future.
arising from globalisation, and at the same time create greater value
As well as highlighting important technologies, the research also
for customers.
indicates 22 drivers motivating the adoption of the technologies
However, maintaining this advantage is a challenge, and requires an identified by the panels. The five key drivers from the industrial
innovative and progressive approach to servitization. The adoption perspective of the CEMs are:
of technologies that allow the improvement of existing, and the
• Generating new revenue streams.
development of new, integrated product–services offers a route to
sustaining competiveness. The question is: which technologies are • Improving maintenance efficiency and effectiveness.
and will be the most important?
• Improving product performance.
The existing literature offers limited insight into the game-changing
• Increasing data gathering (volume, quality, data types, etc.).
technologies of the future in a servitization context. Our research
rectifies this significant knowledge gap. • Increasing/improving access to information.

By consulting panels of practitioners and academic experts we Overall there are several messages for integrated product–service
identify 85 technologies that the experts believe are the most providers that emerge from the research.
important technologies for servitization. Furthermore, the research It is incumbent upon manufacturing managers to assess the
combines rankings of the technologies by both academics and individual value of the technologies highlighted in this executive
Capital Equipment Manufacturing (CEM) experts to prioritise the briefing, as a service system component, in order to ensure medium-
technologies and identify the top10. term service competitiveness. This assessment is particularly
Five of the ten top technologies selected by both CEMs and important as the adoption of many technologies is dependent on
academics are identical: lengthy organisational transformation.

• Predictive analytics to predict specific failure modes. In addition, organisational change, the internal mindset and culture,
risk, and organisational infrastructure must be aligned to allow for
• Remote communications to adjust/fix products remotely.
the full employment of a single technology. Organisations need to
• Consumption monitoring to create customer-specific service align their products, technologies, operations and supply chain to
offerings. provide a new service. This takes time and so it is therefore essential
to identify the right technologies, and incorporate these early in the
• Pushing information to employees or customers via mobile
service design process, in order to progress towards the provision of
platforms.
more advanced services■
• Mobile platforms to access the ERP system remotely for
maintenance techniques, product details, etc.

4
Introduction

G lobalisation has created many opportunities for Western firms. Globalising has allowed firms to improve their competitive
position by offshoring elements of the value chain, and provided new markets and customers. At the same time, however,
the emergence of corporations from developing markets operating globally, coupled with an erosion of cost differentials,
means that many Western firms are under pressure to innovate in order to maintain any competitive advantage they possess.

Product manufacturers are certainly not exempt from this the emerging opportunities arising from advanced technological
competitive challenge. In recent years, for example, many capital development.
equipment manufacturers have adapted their business model
It seems obvious that firms should stay informed about emerging
to include an element of service provision. This has sparked a
technological developments. However, little research exists on the
servitization revolution that has transformed both the way that
topic, accompanied by few other sources of information to help.
customers use their products and how value is created for everyone
This executive briefing, based on the paper “Future Technologies in
in the servitization ecosystem. Yet, in today’s fast-paced business
Servitization: Facilitators in Capital Equipment Manufacturing”, goes
world, any advantage tends to be fleeting and so it is proving
some way to rectifying that. Drawing on the experience of Capital
with servitization as foreign manufacturers increase their service
Equipment Manufacturers and academic experts it identifies some
portfolio.
of the most important technologies related to servitization, both in
Now, as before, capital equipment manufacturers involved in the short term, but also over a mid- to long-term timeframe.
servitization must search for ways to maintain any competitive
The question we set out to answer was: “Which technologies do
advantage that they have managed to secure. One possible solution
academics and experts in the capital equipment manufacturing
lies in identifying and utilising technologies that facilitate innovative
industry perceive to be key in facilitating servitization in the future?”
services, service scalability and improved margins. If firms on the
servitization journey can identify and deploy technologies that In doing so we examined the existing literature on the topic to see
will help them refine and develop their servitization operations to what insight it provided into future technologies in servitization,
create and deliver greater value to customers, more efficiently and and enlisted the help of industry practitioners and academic
effectively, then they may be able to stay ahead of the market. experts to identify and rank the most important technologies and
their drivers. The findings describe the evolving technological
Surprisingly, though, while technology plays an intrinsic role in the
landscape and prioritise viable technologies for manufacturing
development of the servitization business model, and is recognised
services■
as a major service science research priority, fewer than half of UK
manufacturers who provide services perform formal evaluations
to gauge the potential of adopting specific technologies. This
despite that fact that it is ever more challenging to keep pace with

5
 Servitization –
what we know already

T he existing literature provides us with some information on the general concepts of servitization – its meaning, some of the
challenges and benefits, and the process. It also categorises different servitized offerings.

So, for example, servitization has been defined as the process processes in order to create advanced services.
of creating value by adding services to products. It involves
The different combinations of products and services have been
offering “fuller market packages or ‘bundles’ of customer focused
defined and classified in the 2012 publication ‘Toward integration
combinations of goods, services, support, self-service and knowledge
of products and services: Taxonomy and typology’, published in
in order to add value to core product offerings”.
the Journal of Engineering and Technology Management, by the
There are numerous potential benefits from adopting a servitization academics Yongtae Park, Youngjung Geum and Hakyeon Lee. The
approach. The service providers gain increased revenues and better different types of integrated services and products share a number
margins, over a longer time span, which reduces competition. of common characteristics: they all integrate services and products;
Customers can maximise equipment performance and lower the consider the service components in the design phase; and focus
total cost of ownership. Consumers get better products and services on the sale of functions and not products. They differ in that they
that meet their needs more precisely. Society benefits from better can be divided into market-oriented IPS that aim to differentiate
sustainability and environmental performance. products and promote sales, and engineering-oriented IPS, which
integrate products and services in order to provide the outcomes
Naturally, challenges accompany the transitioning to a servitization
that customers want.
approach. The servitization paradox, for example, describes difficulties
associated with an expanded focus on service, which increases costs Integrated products and services
without generating a commensurate increase in returns. Some of
Market-oriented IPS Engineering-oriented IPS
the main obstacles to the effective implementation of value-creating
Bundling Solution
servitization concern service design, organisational strategy and
organisational transformation. System selling Integrated solution
Full service Eco-efficient producer solution
For example, services must be designed with both economies of
Service package Functional sales
scale and scope. In terms of strategy, servitization presents a new
challenge in evaluating the risk-return relationship. At the same time Installed base Functional product
organisational transformation is required to communicate the value Integrated product and service offering
proposition to customers, and to generate the correct internal culture
Table 1: Integrated product-services (IPS) classification1
and mindset. Here, technology can provide assistance in overcoming
these obstacles and avoiding the servitization paradox. Technology and servitization
There is no one definitive version of servitization. Instead, there Increasingly, technology plays an important role in enabling services
are many levels of servitization, ranging along a continuum from and servitization – in the development of services, in product –
the addition of relatively peripheral services with limited, mainly service integration and in service delivery. Take the situation where
transactional, interaction with the customer, all the way to total technology acts as an interface between products and services, a
product–service solutions that are customised and co-designed by common example of technology’s role in a servitization context.
the service provider and customer. Some attempts at servitization technology classification have been
Moving along the servitization continuum involves a shift from a made. It has been suggested, for example, that technologies involved
product-centric to a customer-centric approach, to connecting in servitization can be classified depending on the level at which the
and collaborating with other firms, and building strong front-end technology is involved. Thus technology providing the direct means
customer-facing functions – which support a move from product- to of integration, without which the product–service integration could
process-oriented services, and from transaction- to relationship-
based interactions. This usually entails organisational transformation. 1 Park, Y., Geum, Y. & Lee, H., 2012. ‘Toward integration of products and
services: Taxonomy and typology’. Journal of Engineering and Technology Manage-
Manufacturers need to acquire new structures, capabilities and ment, 29(4), pp.528–545.

6
not be achieved, might be termed enabling technology. Technology applied to the product or the service before integration occurs would
be mediating technology. And facilitating technology would provide additional help to bring the product closer to the service, or vice versa.

Beyond its integration role, technology is important with respect to the customisation of offerings, the administration of products and
effective customer service delivery through communication channels.

A thorough search through the existing literature on the topic of servitization did reveal some technologies linked to servitization, they
ranged across sectors and many had a digital theme. However, most descriptions of servitization-associated technology in the existing
literature tend to have a historical or current focus. The literature fails to tell us what is likely to be important in the future, and therefore limits
its value in allowing firms to get or stay ahead of the servitization curve■

METHODOLOGY - WHAT WE DID

We used a structured communication method, the Delphi method, to obtain consensus about future technologies between two
panels of experts. One panel represented capital equipment manufacturers (CEM), manufacturers of plant or equipment with
lifespans of over one year. They were selected from across 13 organisations, which operate in a variety of capital equipment segments
ranging from construction equipment, rail, power generation, and defence, to industrial machinery.
The other panel represented academic experts chosen from nine institutions based on their involvement in the service science and/
or technology domain.
The three-step process began with telephone or face-to-face interviews, followed by standardised questionnaires. Participants were
asked to name and give brief qualitative descriptions of each technology. Once similar responses were combined, 200 initial answers
were reduced to 85 individual technologies.
Phase two used a questionnaire to sort all technologies by importance, with participants using a five-point scale from 0-Not
Important to 4-Significantly Important. The voting in phase two was used to select the top 10 technologies prior to the start of phase
three.
Phase three generated consensus on the rank of the top 10 technologies. Participants submitted a rank from 1 to 10 for each item on
each list, allowing a final ranked list of technologies to be created.

Panels Phase 1 Phase 2 Phase 3

A Academics
Service science and/
Process
Face-to-face or phone
Process
A digital questionnaire asked
Process
Participants ranked the top 10
or technology from 9 interviews participants to rank the 85 technologies relative to one another
institutions individual technologies from
Interviewees were asked to list
phase 1 from ‘not important’
key technologies and give brief
to ‘significantly important’
descriptions

B Capital Equipment
Manufacturers
Output Output Output

Experts from 13 200 responses combined into Identification of top 10 Ranked list of key technologies per
manufactures across a long list of 85 technologies technologies per panel panel
construction, raise,
Degree of consensus between and
power and defence
among panel

7
 What we discovered:
key servitization technologies
– now and in the future
The leading technologies examined listed technologies that were likely to have an impact further into
To begin with, the participants, capital equipment manufacturers the future, rather than in the relatively predictable short- to mid-
(CEMs) and academics identified 85 technologies that they believe term.
are important in a servitization context. Next, the list of technologies These technologies included genetics, nanotechnology and
was given to the two panels – the CEMs and the academics – to rank cognitive systems, for example. Given the longer time frames
all results relative to one another. Finally, the panels ranked their top involved, it is not surprising that there was less agreement over the
10 technologies. future significance of these technologies for servitization. However,
There was a good deal of overlap between the two lists of top it also suggests, despite a lack of consensus, these are technologies
technologies, with five technologies appearing in both lists: that may well have an industry-transforming impact on servitization
predictive analysis; remote communications; consumption over the longer term and as such merit some attention. The
monitoring; and two aspects of mobile communication platforms. agreement on short-term technologies among the CEM panel
shows that industrial participants lacked some breadth in their
Although there was agreement between the top ten technologies exposure to future technological developments compared to their
on the two lists, there was a significant difference in the level academic counterparts.
of consensus attained over the ranking of technologies by the
respective panels. While the CEMs achieved a high level of The top five technologies
consensus over their top 10 ranking, there was considerable Predictive analytics
disagreement among the academics. Three related forms of analytics were listed during the technology
This disagreement highlights an important aspect of the findings. identification exercise: descriptive, predictive and prescriptive
Part of the reason for the diverse opinions over ranking the top 10 analytics.
was to do with the particular area of expertise and research interests Predictive analytics – using a combination of hardware and
and objectives of the academics. However, another significant software technologies to predict the future state of a product – was
reason for the divergence of opinion is that the academics often ranked by both CEMs and academics as the most important of all

Rank % in Top Capital Equipment Manufacturers Panel Rank % in Top Academic Panel
Five Five
1 100% Predictive Analytics used to predict specific 1 77% Predictive Analytics used to predict specific
failure modes. failure modes.
2 92% Increasing analysis of existing data sets used 2 46% Remote communications used to remotely
to find causality and patterns of failures, instead adjust, fix, or send software updates to Machines/
of simply tracking trends. Products.
3 83% Remote communications used to remotely 3 62% GPS or Geo-spatial technologies used to track
adjust, fix, or send software updates to Machines/Products, People, or Components.
Machines/Products.
4 67% Dash boarding technologies used to provide 4 69% Consumption Monitoring used to create
KPIs to make services more tangible and visible. consumption driven supply chains for consumer
specific offerings.
5 58% Case Based Reasoning (using historic data) 5 54% Mobile Phones (or other mobile platforms)
in failure pattern recognition, frequent failure used to receive internal data or customer
pattern analysis. information in real time. E.g. control system data
or information pushed to customers.

Table 2: Ranked List of Top 5 Technologies

8
the technologies identified. In particular, the use of prognostic Mobile platforms – customer communication and data
technology to predict the specific failure modes of equipment or access
machinery. A number of different uses of mobile communication technologies
Prescriptive analytics – providing decision support and making were considered important. Both the CEMs and academics listed
recommendations based on predictive analytics – and descriptive the use of mobile platforms “to communicate with customers and
analytics – using diagnostic technology to identify the current state to access data for enterprise resource planning purposes” as top 10
of a product, as in engine monitoring and asset management, for technologies. In the servitization context, for example, this might
example – were ranked fifteenth and twentieth by the CEMs. involve sending real-time data via smart phones.

This was possibly because CEMs consider descriptive analytics to Thus, mobile platforms can extend the value generated by other
be well established, while the widespread use of robust prescriptive technologies, for example, by pushing diagnostic messages to
analytics is some way off. customers – something that is already common for capital assets
using GSM technology.
Research suggests that while monitoring and diagnostic analysis
are adopted in roughly a quarter of organisations using similar On the data access side, a good example is Toyota Materials
technologies, prognostic and decision-support technologies are Handling Europe, which has employed a mobile business system
adopted in only 13 and 11 per cent of cases respectively. This shows and hand-held computers to access customer information, fleet
that there is considerable scope for improvement in this area – and data and spare parts information since 2002. More recently Toyota
consequently for firms to gain competitive advantage. expanded the system to collect data from the machines wirelessly
and allow for process analysis and consulting.
A related technology, likely to become more significant in the
longer term, is the self-ordering of spare parts by machines One participating CEM detailed organisational plans to allow
themselves. At present this automated process is too complex and business reporting on tablets, and operational control systems
immature for the CEMs and academics to reach consensus on, governing large assets to be made accessible from mobile phones
yet academics still ranked the technology as #30. This finding is within the next 10 years.
congruent with the service automation driver identified as one of A third use of mobile platforms “to feed machine/product, process,
the top 10 in this research. or other operational data into central data server remotely,” –
Remote communications focusing on data input, facilitating efficient mobile data entry
– was listed by CEMs in their top 10 technologies, but not by
CEMs and academics expressed similar views on the importance
academics. As one panel member pointed out, allowing operators
of remote communications, with CEMs ranking these third in
to use private mobile devices enhances operations by providing
the top 10 technologies, while academics placed them second.
engagement, as well as richness and confidence in data.
The particular interest was in technologies where the ability to
receive, store and transmit data remotely would enable someone One CEM explained that the use of mobile communications
to “remotely adjust, fix, or send software updates to machines/ supported the implementation of the early stages of servitization by
products”. This would support greater autonomy of machines, and their organisation, through practices such as the booking of spare
also provide an opportunity for the creation of new services. parts from client sites by service staff using iPads.
The CEMs anticipated a future that would allow remote control Consumption monitoring
of the customer’s production line, based on sensor feedback and Another technology ranked in the top 10 technologies by both
analytics. Indeed, “remote control used to automatically change the CEMs and academics was consumption monitoring. When CEMs
physical behaviour of machines/products to give better operational have a better understanding of how their customers use the
performance. For example, a remote change to settings based on machines and products, it is easier for them to offer personalised
suggestion driven by analytics” was one of the 85 technologies service offerings, tailoring servitization to the needs of the customer,
identified originally, and ranked twenty-first by the CEMs.

9
 and to co-create value with customers. This in turn creates a and sophisticated business intelligence applications.
competitive advantage.
Dashboarding
Consumption monitoring used to “create consumption driven The use of dashboarding technologies to “provide KPIs to make
supply chains for consumer specific offerings” was ranked the sixth services more tangible and visible” was the fourth most highly
most important technology by the CEM panel, and among the top ranked technology by the CEMs and fifteenth by the academics.
five technologies by 69 per cent of academics.
For example, CEMs highlight the ability to develop and use KPIs to
Interestingly, the use of advanced customer relationship dashboard service performance, demonstrating that an agreed-
management (CRM) tools, in conjunction with consumption upon service was delivered, thus “ROI-proofing” services.
monitoring and analysis, helps to facilitate the development of
personalised services. As a technology, advanced CRM tools (to One CEM described how their organisation specified the
combine collected data and target customers with tailored service dimensions of service benchmarking based on internal and external
offerings to reduce the cost and increase the effectiveness of service KPIs. Financial measures and order handling dimensions, such
provision) were ranked sixteenth overall by CEMs. as first-time fix rate, and time to offer a service, were observed
internally, versus uptime as an external customer KPI. It is worth
Other top ranked technologies noting that uptime monitoring, in particular, is impacted by other
A number of other technologies – including the use of mobile technologies mentioned in the study, including cloud and data-
platforms for data input, as already mentioned – were rated top 10 handling technologies, for example, which support a move to real-
technologies by either academics or CEMs, but not by both panels. time KPIs and virtual reporting.
For the CEMs these technologies were: the analysis of existing
In the future dashboarding will become an important component in
data sets; dashboarding; case-based reasoning; and inventory
the provision of cloud-based business intelligence. Dashboards will
management.
highlight issues, provide possible strategies to address problems,
The technologies rated by academics included: position tracking; and, as one expert interviewee pointed out, could represent an
RFID and 3D barcodes; sensor network integration; customer intermediate step to the 20-year future of cognitive systems to
behaviour monitoring; and additive manufacturing. support human decision-making in service systems.

Ranked highly by CEMs However, while it may seem likely that outcome-based contracts
Analysis of existing data sets would be significantly enabled by ICTs, one academic sounded a
note of caution. They argued that KPIs may become incapable of
CEMs ranked the analysis of existing data sets, and in particular
their envisaged use in helping to structure contracts in the face of
its use “to find causality and patterns of failures, instead of simple
increasingly complex and intangible services. In such a future risk
trend tracking” as the second most important technology. This
sharing will be integrated into relationship-based contracts.
technology is closely linked to sensor technology – sensors featured
in 11 of the 85 technologies identified. Case-based reasoning
The integration of existing sensor networks and use of smart Using past experiences to find solutions and insights to existing and
networking sensors were seen by CEMs as more important priorities new problems is known as case-based reasoning. As a technology
than incremental gains in sensor technology. The integration of used specifically for “failure pattern recognition, and frequent failure
sensor networks and their data, and the use of advanced databases, pattern analysis” case-based reasoning was ranked in fifth place by
and real-time data management, allows more complicated analysis the CEMs, but only thirty-sixth by the academics.

10
Many of the technologies that were ranked highly complement servitization (compared to only 14 per cent of stationary CEMs). The
one another. This is the case with case-based reasoning, predictive use of GPS is well established in servitization, and is likely to play a
analytics, and the analysis of existing data sets, for example. greater role in the future, in areas such as autonomous vehicles and
The ranking of these three in the top five technologies by CEMs service robots, for example, both of which are emerging servitization
emphasises the importance of finding ways to capture operational technologies ranked eightieth and eighty-first by the CEM panel.
data, analyse that data, and take actions based on that analysis.
The adoption of GPS technology is driven by a number of factors. It
One CEM, for example, explained how they had co-developed a creates opportunities for CEMs to create new services and revenue
software platform with a large enterprise software corporation in streams and impacts maintenance efficiency by allowing for
order to analyse and find patterns in internal data. The intention was improved delivery of repair and spare parts to mobile assets.
to use this platform to help integrate analysis functions within their
Customer behaviour monitoring
ERP system, allowing them to order spare parts and engineers based
on a remote analysis. As well as consumption mentoring, academics also ranked another
customer-related technology in their top 10 – customer behaviour
Inventory management monitoring – and, at #13, this was only just outside the CEMs top 10.
CEMs and academics did not simply identify cutting-edge emerging
The use of consumer behaviour monitoring impacts services in a
technologies. They also highlighted the importance of some
number of ways. One academic, for example, described the ability
well-established technologies. Although well established, these
to tailor supermarket offerings instantly in real time facilitated by
technologies often need to be adapted to meet the demands of
big data analysis of previous purchasing behaviour mixed with
servitization.
customer video monitoring data. Some CEMs explained how
A good example of this is inventory management, ranked in product utilisation report packages might allow manufacturers to
tenth place by CEMs, but some way down the list in forty-fourth create more proactive, high-quality maintenance and operational
place by academics. CEMs were focused on the use of inventory services through the collection of more product usage data,
management to price spare parts based on demand. Thus one CEM wirelessly and in real time.
described a recent project in which spare part categories were
However, there are challenges involved in the successful
significantly simplified to improve pricing as a component of new
implementation of this technology, not least being able to
service contract types. Indeed, the dynamic pricing of spare parts is
understand how behavioural data actually predicts future needs and
likely to become commonplace.
then how to link the data with innovation and customer relationship
Ranked highly by academics management.
Position tracking RFID and 3D barcodes
GPS or Geo-spatial technologies used for “tracking machines/ Another example of a well-established technology playing an
products, people or components” were placed in the top five important role in servitization is RFID and 3D barcode technology
technologies for academics, and just outside the top ten at #11 for and its use in the “storing of information throughout the supply
CEMs. This despite the fact that 44 per cent of the CEM panel was chain”.
composed of manufacturers of stationary equipment, who clearly
obtain fewer benefits from tracking technologies. While RFID and 3D barcode technology was ranked in the top 10
technologies by the academics, it was ranked just forty-fourth by
Among mobile-CEMs, however, 66 per cent believed that CEMs. The technology was mentioned in several of the interviews
the technology was “significantly important” for the future of with academic and CEM panellists, but there were few new uses

11
 associated with it. When discussing the benefits arising from the was ranked in the top 10 by academics, but only sixty-eighth by
use of RFID and 3D barcode technology, the focus was on logistics CEMs. At the same time, academics ranked the use of additive
and gradual improvements to materials handling procedures manufacturing to create spare parts at #25 and to refurbish parts at
and traceability. While some interviewees mentioned increased #51. CEMs were less impressed, placing the three uses of additive
maintenance efficiency due to the rapid identification of parts, or manufacturing sixty-ninth, seventieth and seventy-first.
the stored maintenance information about parts, it was not in the
The difference in perception between the academics and CEMs over
context of a fully developed cyber-physical system.
the merits of additive manufacturing suggest that the technology
Sensor network integration and its various uses are likely to have an impact on servitization
Linked to a number of other technologies, sensor network at some time in the mid- to long-term. One CEM outlined the
integration technology is fundamental to the establishment and advantages of additive manufacturing technologies as their ability
growth of servitization. Its use in “facilitating big data analytics” to “…reduce inventory carrying requirements, deliver parts more
was ranked in the top 10 technologies by the academics and in quickly […][and] shorten the spares supply chain”.
eighteenth place by the CEMs. Another CEM interviewee mentioned the value of additive
Initially, sensor technology tended to involve the use of static manufacturing in the context of facilitating zero-trip maintenance.
sensors; however, advances in mobile communications technology Maintenance of an asset typically required two trips, one to
mean that a variety of sensing capabilities – GPS, compass, proximity diagnose problems and one to effect repairs, but descriptive and
sensors, for example – are prevalent in mobile devices. The ability predictive analytics will enable a single repair trip in the mid-term.
to sense and monitor information in the environment dynamically In the longer term customers will be able to fit their own spare parts
presents new challenges in the context of servitization. created in a just-in-time additive manufacturing device based on a
predictive analytical input. This transforms the role of the OEM from
These are real challenges for CEMs, who, in their research interviews, value creation to design and IP.
highlighted the need to integrate existing diagnostic sensors
into a single system, and combine data currently in isolation, to This section has detailed specific technologies that will drive the
create a big data environment supportive of data analysis. If CEMs future of servitization for CEMs. These technologies ranged from
are to be able to provide predictive analytics for a customer’s predictive analytics to additive manufacturing. From an academic
entire production line, for example, connecting machines from a perspective the top technologies will impact servitization in a
variety of manufacturers, then progress will need to be made on medium-term time frame and these have been supplemented with
standardisation. At present, a lack of standardisation is a barrier to some important long-term views■
sensor data sharing and integration between OEMs and, as a result,
to remote monitoring.

Additive manufacturing
The last of the top 10 ranked technologies was additive
manufacturing, when used in combination with predictive analytics
to create spare parts on customers’ sites just in time. This technology

12
 The technology drivers

A t the same time as investigating which technologies were considered most important by the two panels of experts, we also
identified the drivers for the adoption of those technologies.

Interview responses were used to match the 85 research technologies technology adoption by CEMs, and thus servitization itself. The full list is
with one, or multiple, individual drivers. Similar responses were combined shown in Figure 1 below.
to leave a final list of 22 thematically clustered drivers. In addition, a
The top five are: generating new revenue streams; improving
targeted list of the drivers among the top 30 technologies for CEMs was
maintenance efficiency and effectiveness; improving product
compiled.
performance; increasing data gathering; and increasing/improving access
The results of this list are, perhaps, the more significant. While the drivers to information.
may seem obvious, they provide an insight into the main trends driving
Figure 1: Average Prevalence of Drivers in all 85 compared to prevalence in top 27 technologies

Improve  Service  Resource  EfViciency  and  Effectiveness   20%  

25%  

Increase  Data  Gathering  (volume,  quality,  data  type,  etc.)   23%  

22%  

Improving  Maintenance  EfViciency  and  Effectiveness   30%  

22%  

Increased/Improved  Access  to  Information  (internal  and  external)   23%  

21%  

Generate  new  Revenue  Source   40%  

18%  

Provide  more  Services   17%  

15%  

Provide  Ability  to  Analyse/Manipulate  Data   17%  

15%  

Improving  Product  Performance  (e.g.  reliability)   23%  

14%  

Improve  Service  Quality   20%  

14%  
Increase  Degree  of  Service  Automation  (automated  delivery,  analysis,   3%  
maintenance  ordering,  etc.)   12%  

Systems  or  Data  Integration   20%  

11%  

Support  Customers,  or  Relationships  with  Customers   13%  

9%  

Reduce  Costs   7%  
9%  

Providing  more  Functionality   13%  

9%  
Improve  Spare  Parts  Supply  Chain  Structure/Performance  (cost,  speed  of   10%  
delivery,  etc.)   9%  

Supports  Product  or  Service  Customisation/Personalisation   10%  

8%  

Supports  Risk  Management   10%  

5%  

Measure,  Benchmark,  or  make  Services  Tangible   10%  

4%  

0%   5%   10%   15%   20%   25%   30%   35%   40%   45%  

Top
           To  30  CEM   30 CAM Technologies
Technologies                                                AAll
ll  885
5  TDrivers
echnologies                                              Top 30 CEM Technologies over 20%
 

13
 Generate new revenue streams The panellists agreed that object connectivity enables manufacturers
Perhaps unsurprisingly the most significant driver for the adoption of to transform into service and solutions providers. However, some were
the CEMs’ top 30 technologies was the generation of new revenue. focused on obtaining analytical capabilities, some wanted access to
Technologies motivated by this driver appeared twice as frequently in adequately rich databases, while others stressed how significant further
the top 30, as across all technologies, with 40 per cent motivated by data collection was for their servitization process.
generating new revenue streams. So, for example, one organisation revealed the need to capture more
Evidence suggests that many of the most important technologies do data, and to connect existing data together to create a “whole greater
provide opportunities for new revenue generation. For example, a 2011 than the sum of the parts”. Another CEM described lacking data analysis
paper by Cranfield University academic Tonci Grubic, ‘The adoption infrastructure as the primary cause for not having sensors on their
and use of diagnostic and prognostic technology within UK-based equipment. The firm will need to focus on integrating existing sensor
manufacturers’, revealed that diagnostic and prognostic technologies technology into its equipment as it is currently co-developing a data-
generated increased and sustained revenues for 70 per cent of analysis module to find patterns in its existing data in order to enable
companies that adopted them. advanced services.

Improve maintenance efficiency and effectiveness Increased/improved access to information

The adoption of technology by CEMs enables more efficient Another of the top five drivers of technologies that CEMs ranked
maintenance processes – the second most important driver for CEMs’ highest, the desire to increase/improve access to information, is linked
top 30 technologies. Remote ICTs, for example, reduce the cost of to technologies such as comprehensive online customer portals and the
communicating maintenance needs and requirements. Technologies cloud, as well as digital knowledge-sharing technologies.
motivated by this driver included the top ranked technology, predictive The cloud, in particular, facilitates this access to information through
analytics, as well as GPS, and supply chain analytics. low-cost storage, remote access to data, record tracking and analysis,
Improving product performance and the ability to serve manuals, videos and other media, in a consistent
and manageable way. Another technology likely to have an impact on
For CEMs this is one of the top five drivers for technology implementation.
information access in the future, wearable technologies, will provide real-
Technologies that were motivated by this driver included inter-machine
time efficient data access and, increasingly, context-aware answers.
communication for optimised performance, remote control and digital
integration of the production line. Remote monitoring, for example, is one Others
research technology that allows for enhanced product productivity and There are also other drivers that, although not in the top five drivers
reliability, and for future product designs. for the technologies ranked highest by CEMs, were still considered
The importance of this driver also highlights a major challenge facing important across all 85 technologies. These included: improving service
CEMs who are focused on servitization. During the CEMs’ phase one resource efficiency and effectiveness (associated technologies included
interviews an internal product-centric mindset was described as a major mobile phones, autonomous maintenance robots); providing more
hurdle in the transition to services. Yet CEMs still focus on technologies services (software-as-a-service [in the cloud], apps to allow customer
that they hope will improve product performance. As one CEM reflected co-design of services, GPS); providing the ability to analyse/manipulate
“the focus has still been on product development and not so much on data (the hub, the cloud); improving service quality (customer behaviour
revenue from the aftermarket business”. monitoring, cognitive systems to support humans, and service ecosystem
simulations); and increasing the degree of service automation (remote
Increase data gathering (volume, quality, data types, control of machinery, automated data analysis)■
etc.)
Another of the top five drivers for the CEMs’ top 30 technologies, specific
technologies motivated by the desire to increase data gathering include
mobile phones, GPS and smart sensors with networking capabilities.

14
Conclusion

It is clear from the research that technology is central to both effective and efficient servitization, and innovation in
servitization to create greater value for the stakeholders in the servitization ecosystem. As such it offers a potential route to
competitive advantage for manufacturers engaged in the provision of integrated product–services.

At the same time, the research both identifies the broad technological Thus, for example, the benchmarking of processes was described as
themes that underpin the development of servitization today, as well as one such facilitator in improving service contract design. Measuring and
providing a glimpse into the future, by detailing the key technologies benchmarking of services to support tangibility is over twice as important
for the future of servitization, as identified by practitioner and academic among the top 30 technologies as among all 85. Dashboarding was
experts. voted into the top 10 technologies by CEMs, yet dashboarding is hardly
a new academic concept or technology and has been available for some
While the academics do not agree on the relative importance of the key
time now.
technologies, there is agreement between academics and CEM experts
over the five most important technologies in the future of servitization. The capital equipment manufacturing industry lags in the adoption of
integrated product–service technology, both because it struggles to
• Predictive analytics to predict specific failure modes.
identify relevant future technologies and it suffers from slow internal
• Remote communications to adjust/fix products remotely. adoption of technologies.
• Consumption monitoring to create customer-specific service Another important message from the study is that successful business
offerings. transformation is essential. Organisational change, the internal mindset
and culture, risk and organisational infrastructure must be aligned to allow
• Pushing information to employees or customers via mobile
for the full employment of a technology. Organisations need to align
platforms.
their products, technologies, operations, and supply chain to provide a
• Mobile Platforms to access the ERP system remotely for new service. It is this alignment process that is likely to cause a lag in the
maintenance techniques, product details, etc. adoption of technology.
It is incumbent upon manufacturing managers to assess the individual It seems sensible therefore to incorporate technologies at an early point
value of these technologies, and other highly ranked technologies, in the service design process. A possible barrier to early integration,
as a service system component, to ensure medium-term service though, may be reputational risk. As one CEM pointed out there is greater
competitiveness. This assessment is particularly important, as the risk of damaging the reputation of a service provider with the increased
adoption of many technologies is dependent on lengthy organisational adoption of unrefined technologies. Risk aversion may lead CEMs to hold
transformations. out on integrating underdeveloped technologies into their integrated
The research findings also suggest that such an evaluation may be product–service offerings.
challenging for many organisations, as there is strong evidence that CEMs For this reason the findings outlined in this executive brief are particularly
lag in their adoption of technologies. useful. They help organisations identify the right enabling technologies,
Interestingly, the research revealed the primary drivers motivating and so help them to reduce the potential risk to reputation inherent in
technology adoption. New and increased revenue is a primary objective adopting relatively novel technologies. In particular the research assists
for CEMs, even outweighing the motivation to employ technologies to manufacturers in designing competitive integrated product–services
create cost reductions. Beyond generating revenues, however, there was more effectively by assessing long-term technologies such as automated
a desire to improve contract design and generate business models to production control, nanotechnology or service automation, which are
support service revenues. identified as technologies likely to play an important role in servitization
in the future.■

15