Determinants of successful servitization strategy: A case study with Finnish IoT scale-ups

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Volume Title

School of Business | Master's thesis

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Date

2023

Department

Tieto- ja palvelujohtamisen laitos

Major/Subject

Mcode

Degree programme

Information and Service Management (ISM)

Language

en

Pages

83

Series

Abstract

The increasingly dynamic, global competitive environment and the emergence of new technological innovations create opportunities for companies to create new, more innovative business models. As a new trend, companies have moved from selling products to providing products as a service. This movement from product-centric business towards service-centric business is called servitization. Servitization is an increasingly common sales strategy and business model among companies that provide digital, IoT (Internet of Things), or other data-centric products. This is because these types of products can provide continuous value for clients without investing in ownership of the product. Servitization can offer companies a larger customer base, stronger and more stable revenue streams, and more resource-efficient business operations. However, achieving these benefits is challenging and requires extensive business planning from several perspectives. This thesis focuses on finding the determinants of servitization success in IoT companies. This research was conducted by qualitative semi-structured interviews with two case companies that have recently adopted a servitization strategy. A total of six interviews were held to provide diverse perspectives on the topic and leverage company executives' broad understanding of the topic. The data were analyzed with thematic analysis to identify the key aspects and challenges affecting the success of servitization in IoT companies. The findings suggest that the high-level productization and design of the service concept create a base for successful servitization in IoT business. The organizational transformation from product-centric to service-centric requires organizational, cultural, and operational capabilities. Furthermore, service business requires stronger communications with customers and partner networks as well as careful management of financial performance. The role of foresight increases when a company operates and grows with a service model. A comprehensive list of factors affecting the success of servitization, compiled based on empirical research and previous literature, is presented in the study.

Description

Thesis advisor

Movarrei, Reza

Keywords

servitization, strategic transformation, service business, business model innovation, digital services, product-service systems, growth companies, internet of things (IoT)

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202308204925

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[gradu] Kauppakorkeakoulu / BIZ