Increasing information intensity in industrial services: towards Industrial Internet and Industrie 4.0 servitizing industrial OEMs

Abstract

Digitization has been transforming organizations for decades, but only recently has the general interest turned to digitization in industrial context. It has been proposed that new technologies are driving towards the next industrial revolution, having profound economic implications. This discussion is referred as Industrie 4.0 or Industrial Internet by industry practitioners.

Information is the key enabler and resource that companies use in achieving the higher productivity levels that the Industrial Internet promises. Industrial processes are often highly complex and companies are continually seeking to improve the efficiency of these processes.

In this work, many companies use services from various service providers, notably those of original equipment manufacturers (OEM). Over time, many OEMs have transformed from goods producers to advanced solutions providers, supporting their clients e.g., in asset availability with maintenance services and improving their process efficiency with consultancy services. Academic research has been interested in this transformation of OEMs towards service providers, but the role of information and related technologies have not been addressed in any satisfying depth.

This thesis investigates the impacts of the proposed industrial revolution from the OEM perspective, focusing on industrial services. Although focused on OEMs, most of the study's findings should be valuable also for other industrial value network participants. An abstract concept termed "information intensity" is developed and applied to avoid restricting the focus to contemporary development only. A broad, multidisciplinary literature review synthetizes existing knowledge on the topic, and a case study on a process manufacturing sector OEM provides further perspectives contributing to the discussion on servitization.

It was found that various sectors and service types differ greatly in the scale of benefits that increased information intensity offers. Especially in manufacturing, very high efficiency levels have been achieved relatively early, offering less radical improvement opportunities when compared to e.g., fleet management. In mature sectors, client focus on cost efficiency may also push service market backwards to lower information intensity services. A conceptual division into thing- and system-oriented businesses is proposed, structuring topic discussion and research.

Information-based businesses build on contextual expertise, protecting OEMs from disruption from IT-sector companies. However, the competitive environment is becoming more complex, and many players will be trying to encapsulate the service networks. Information may enable sector-specific OEMs to vertically expand further towards client processes while the largest cross-sector OEMs may drive ecosystem development forward horizontally. Basic services are becoming commoditized and consumerized. Importance of service network orchestration increases.

Industrial digitization is rapidly evolving, and an understanding of its technical and conceptual foundations would benefit both industry practitioners and academicians. The concept of information intensity provides a novel perspective on advanced services and offers an analytical tool with which to investigate digitization also outside this context. Findings have practical relevance and they contribute theoretically to services transformation and service strategy topics within the discourse on servitization, as well as others focusing on industrial sectors and digitization.