The development of connected services in an ecosystem setting
In a world where ‘servitization of manufacturing’ has become a growing trend, interesting questions arise. In our Servitization Research Stories you will find out how students have managed to answer them. This time: Maxim Speetjens master’s thesis focusing on how to support managerial decision-making of an established firm in the Automotive Industry regarding the development of connected services in an ecosystem setting.
Where it started
In times of emerging new trends such as digitalization and increasingly complex technology, original equipment manufacturers (OEMs) operating in the truck market experience that both the market and their business models are under pressure. Failure to adapt to these new trends can lead to lower truck sales, as both customer needs and competitive offerings grow with them. Therefore, OEMs are seeking new opportunities to generate additional income by expanding their customer-oriented service offerings. This implies that revenue models are increasingly shifting from selling vehicles to offering services around it, as part of servitization. To do so, OEMs need to build new relationships and engage in new collaborations with external parties. This leads to more open business structures and the emergence of business ecosystems (a business arrangement between two or more entities). Hence, OEMs are facing challenges regarding their business models behind connected services and are stuck with questions such as: what are customers willing to pay for additional services and what is the actual value of these services to both customers and other stakeholders in the new emerging ecosystem?
Lack of knowledge and experience in both operating and managing such ecosystems can have a profound impact on the ability of OEMs to prioritize and maximize opportunities. It was therefore Maxim’s job to gain insight into the structure of business ecosystems that arise because of the increasing degree of digitalization and to come up with a tool to support managerial decision-making.
In his study, Maxim indicates that the ecosystem perspective is a valuable approach to a company’s innovation strategy. The extensive mapping of the ecosystem for remote software updates, characterized as one of the first connected services on the roadmap of OEMs, has led to identification of the principles and dimensions underlying ecosystems (e.g. processes, structures and roles) that influence the development of connected services and associated managerial decision-making. By synthesizing these empirical results with the acquired theoretical findings, a final set of design principles was compiled. These design principles served as input for Maxim’s final design as a solution to the objectives of his research.
Maxim came up with a final design named ‘the Connected Services Evaluation Tool’. This tool enables managers to evaluate and compare different connected services based on three scores, including feasibility, desirability and viability. These scores are calculated by means of a checklist containing statements that enable managers to screen or evaluate potential connected services on crucial ecosystem considerations. By comparing multiple potential services by means of various scores, managers can make well-founded decisions regarding the prioritization and selection of a connected services portfolio.