{"id":115443,"date":"2026-11-11T07:52:33","date_gmt":"2026-11-11T06:52:33","guid":{"rendered":"https:\/\/industry-science.com\/?post_type=article&p=115443"},"modified":"2026-11-11T07:54:51","modified_gmt":"2026-11-11T06:54:51","slug":"establishing-smart-service-systems-is-a-challenge","status":"publish","type":"article","link":"https:\/\/industry-science.com\/en\/articles\/establishing-smart-service-systems-is-a-challenge\/","title":{"rendered":"Establishing Smart Service Systems is a Challenge"},"content":{"rendered":"\n

A Case Study on Pitfalls and Implications<\/strong><\/p>\n\n\n\n

Abstract<\/h2>\n\n\n\n

The trend for \u2018servitization\u2019 reflects manufacturers\u2019 increasing efforts to offer services along with their physical goods. Organizations establish smart \u00a0service systems with digitally networked products\u2014e.g., cars, industrial machinery, or home appliances\u2014as boundary objects that connect the organization with customers, offering them digital channels for communication \u00a0and interaction. While anecdotal evidence indicates that many manufacturers \u00a0fail to establish profitable services, few studies have traced the underlying \u00a0causes for failure. We perform a revelatory case study at a global white-goods \u00a0manufacturer to identify pitfalls and derive guidelines for establishing smart \u00a0service systems. Based on interpreting qualitative data from interviews and \u00a0additional organizational resources, we analyze how and why the manufacturer\u2019s efforts to establish pay-per-use services based on a smart laundry machine failed. While we provide insights that can guide management \u00a0in establishing smart service systems, our findings also motivate updating \u00a0concepts and methods currently discussed in service science.<\/p>\n\n\n\n

Introduction<\/h2>\n\n\n\n

Almost four out of five manufacturers acknowledge servitization is an opportunity for  differentiation and growth [1]. Not surprisingly, many organizations seek to expand  their product portfolio and establish smart service systems by equipping their physical  products with connectivity and information processing capabilities, to transform these  products into boundary objects that are situated at the customer interface [2].<\/p>\n\n\n\n

Technological trends, such as drones, AI platforms, and immersive technology can \u00a0offer great opportunities, but they can also increase the complexity of servitization. \u00a0Hence, the transformation to become a service provider is more challenging than ever \u00a0[3] and it might even jeopardize an organization\u2019s overall success. For instance, Siemens\u2019 service division \u201cSiemens Business Services\u201d turned out to be unviable [4]. Especially for manufacturers, resources and capabilities established in an organization can oppose innovation [5], since they may interfere with creativity and restrict the mindset for service development. Therefore, organizations need to overcome established structures, redefine their strategy, and promote change for transforming \u00a0into service providers [6, 7]. Service logic reiterates that service providers cannot \u00a0determine the value of their offerings for customers\u2014in terms of the offerings\u2019 value-in-exchange\u2014but they need to offer value propositions that attract customers to \u00a0engage in value co-creation [8]. Value co-creation refers to joint and reciprocal \u00a0interactions between multiple actors that integrate their resources and apply their \u00a0competencies to create value [9] in a smart service system [10]. As a beneficiary, \u00a0customers perceive and determine a service\u2019s value during its consumption (value-in-use) [8]. \u00a0<\/p>\n\n\n\n

Service research reports successful service transformation projects [11\u201313], while \u00a0few (if any) studies explored abortive smart service systems. Analyzing reasons for \u00a0unsuccessful smart service systems is imperative, since many manufacturers conduct \u00a0servitization projects and might, without proper guidance, reiterate the same mistakes. \u00a0Hence, we set out to perform a single case study to investigate \u201cHow and why do<\/em> attempts to establish smart service systems fail?<\/em>\u201d. We analyze an organization\u2019s \u00a0unsuccessful attempt to establish pay-per-use services based on using a smart laundry \u00a0machine. The organization is an established manufacturer that is now trying to add \u00a0value by offering supplementary services. By analyzing qualitative data from \u00a0interviews and complementary data sources, we identify six pitfalls from which we \u00a0derive implications and guidelines for implementing smart service systems.<\/p>\n\n\n\n

From analyzing the case of an unsuccessful transformation, we add unique \u00a0empirical insights to the emerging literature on smart service systems. We discuss \u00a0why servitization is a systemic approach that goes beyond developing service-oriented value propositions as additional units of output. Also, our findings provide an \u00a0impetus for service research to update and refine theory, recognizing servitization as a transformation process. Further, we highlight that updating smart products and \u00a0transforming organizational structures is vital for establishing a smart service system. \u00a0The paper is structured as follows. Section two provides a theoretical background \u00a0of smart service systems and its engineering. In section three, we illustrate and justify \u00a0our research method. In section four, we present our case and pinpoint the pitfalls of \u00a0the smart service system engineering project. In section five, we interpret and discuss \u00a0our findings to derive implications for establishing smart service systems. Section six \u00a0summarizes our findings, identifies limitations, and sketches a path for further \u00a0research.<\/p>\n

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