Digitalization and servitization: opportunities and challenges for Italian SMES

Abstract

Purpose of the paper: Servitization has presented a series of persistent shortcomings for manufacturing companies that have dramatically slowed down its adoption. Recently, digital transformation (digitalization) is posing a very similar challenge to manufacturing. Technologies like the Internet of Things (IOT) are forcing firms to create entirely new business models, migrating from product-centric approaches to (digitally-based) service-oriented ones. This paper aims at describing the impact of digital transformation on the adoption of service business models in manufacturing, with particular focus on problems, challenges and opportunities for Small- to Medium-sized Enterprises (SMEs). Methodology: Given the exploratory aim of the research, a qualitative research method was adopted . The analysis is based upon six archetypal case-studies regarding different types of manufacturing companies involved in digital transformation, and 10 interviews with business and industrial experts. Findings and implications: In our study, connected products offered by industrial machines, cooking appliances and home appliances manufacturers can trigger new service offerings. Predictive maintenance, accurate warranty modeling, consumption control, energy saving, and customer customized utilization of the products foster unprecedented relations with customers. In one case, the connected product is at the base of a machine-as-a-service (MAAS) model, with invoicing based on uptime and process efficiency. In all of the cases the importance of data analytics is deemed to be strategic for business model changes in the near future. Originality of the paper: Digital disruption and transformation is a rather recent research stream, and at the best of our knowledge no research has been carried out with specific attention to its impact on service business models and servitization in SMEs. The paper contributes to this research stream by describing the main challenges and opportunities that await firms engaged in projects and experiments of digital transformation and service transition.