The Role of Internet-of-Things for Service Transformation

Abstract

The Internet of Things (IoT) is increasingly becoming a key technology for service transformation, that is, the transition from pure product sales to so-called “bundles” of customer-focused combinations of products and services. These combinations are termed product-service systems. They aim to add value for the customer. However, the role of IoT in this context is not quite clear. In this contribution, therefore, we examine the role of IoT in the context of service transformation. Our structured analysis of transformation processes reveals IoT as essential enabler of digital service transformation. We explain IoT-relevance on a strategic and operational level of IoT-capable business models. IoT not only can supplement a portfolio of products on a strategic level, but also completely replace a product. At the operational level, capabilities such as remote monitoring or remote control play a crucial role. IoT also plays a crucial enabling role when the convergence between service transformation and Industry 4.0 is targeted. However, when realizing service transformation, the various IoT capabilities are mutually dependent. Hence, implementation follows in some way a waterfall-like process in which certain results are required to trigger the next development step. We describe these dependencies, and thus facilitate decision making when IoT is used for service transformation processes. Organizations can then take appropriate development actions.