Competition among original equipment manufacturers are increasing and firms are looking for new ways to compete without dumping the prices. A growing approach is to move from selling traditional products into solutions with a combination of product and services by offering product service systems (PSS). This can provide business opportunities and strengthen the relationship with existing customers, but to reap the rewards there are both internal and external challenges that the firm needs to overcome, they also need to look at new ways of working to be able to handle the increased complexity of selling solutions. This master thesis has investigated how Xylem should approach servitization from a customer oriented perspective. It also discusses how the incentives and challenges for servitization for customers differ depending on segment and compared to literature. Through a combination of existing literature and qualitative interviews with Xylems customer it has been possible to identify the key components and drivers for when a customer is mature to approach servitization. It has resulted in an alternative list and ways of approaching servitization where the customer characteristics are taken into consideration. The findings from this thesis highlight a number of critical customer characteristics that need to be considered. It shows the importance of understanding a larger part of the customers business model when selling a product service system compared to when selling a product. / Konkurrensen mellan original utrustnings tillverkare tätnar och firmor letar efter nya sätt att tävla utan att dumpa priserna. Ett växande sätt att hantera det är att övergå från att sälja traditionella produkter till att sälja lösningar som består av en kombination av produkter och tjänster genom att erbjuda produkt- och tjänstesystem (PSS). Det här kan erbjuda affärsmöjligheter and stärka kundrelationen, men för att kunna skörda frukterna av detta så måste firman övervinna både interna och externa utmaningar. De behöver även titta på nya sätt att hantera den ökade komplexiteten som kommer med att sälja lösningar. Det här mastersarbetet har undersökt hur Xylem bör närma sig tjänstefiering från ett kundorienterat tilltalssätt. Det diskuterar även hur drivkrafterna och utmaningarna för tjänstefiering varierar beroende på segment and jämfört med litteraturen. Genom en combination av existerande litteratur and kvalitativa intervjuer med Xylems kunder hard et blivit möjligt att identifiera nyckelkomponenter och drivkrafter för när kunderna är mogna nog att närma sig tjänstefiering. Det här har resulterat i en alternativ lista och angreppssätt när det kommer till tjänstefiering där kundprofilen tas med i bejakande. Slutsatsen betonar ett antal kritiska kundegenskaper som behöver ta i åtanke. Den visar också hur viktigt det är att förstå en större del av kundens affärsplan när man säljer ett produkt- och tjänstesystem jämfört med när man säljer en produkt.

Manufacturing companies have begun developing Product Service Systems to provide customers with enhanced product-service offerings. Transitioning to a service-oriented development process allows companies to restructure risks, responsibilities, and costs normally associated with owning products. They potentially allow companies to sell products through different channels and offer additional elements of differentiation to their competitors. However, PSS comes with a lot of challenges that manufacturing companies have struggled to overcome. Some of these challenges include switching away from traditional hardware-focused mindset and the service manufacturing paradox. This thesis focused on challenges regarding integrating services within product development processes. A Swedish manufacturing company was considered as the primary case study for investigation. 14 people from different functions were interviewed. The investigation revealed 17 challenges categorized into five main themes. These themes were lack of clear company messaging regarding services, immature service development process, sub-optimal division of tasks and responsibilities, resources issues, and lack of integration in processes. Additionally, three external companies were interviewed to investigate their service maturity level and how they were able to overcome common challenges in service integration. Based on the insights gained from both internal and external interviews three solutions were created. These solutions are new roles and updated responsibilities, a new integrated service process, and a Product-Service Readiness Level chart. Future considerations for the investigated company were also submitted to provide a guide for further development of these solutions. / Tillverkningsföretag har börjat utveckla produktservicesystem för att ge kunderna förbättrade produkttjänster. Övergången till en tjänsteorienterad utvecklingsprocess tillåter företag att omstrukturera risker, ansvar och kostnader som normalt är förknippade med att äga produkter. De tillåter potentiellt företag att sälja produkter genom olika kanaler och erbjuder ytterligare inslag av differentiering till sina konkurrenter. Men PSS kommer med många utmaningar som tillverkande företag har kämpat för att övervinna. Några av dessa utmaningar inkluderar att byta bort från traditionella hårdvarufokuserade tänkesätt och tjänstetillverkningsparadoxen. Detta examensarbete fokuserade på utmaningar när det gäller att integrera tjänster i produktutvecklingsprocesser. Ett svenskt tillverkningsföretag ansågs vara den primära fallstudien för utredning. 14 personer från olika funktioner intervjuades. Undersökningen avslöjade 17 utmaningar kategoriserade i fem huvudteman. Dessa teman var brist på tydliga företagsmeddelanden om tjänster, omogen tjänsteutvecklingsprocess, suboptimal fördelning av uppgifter och ansvar, resursfrågor och bristande integration i processer. Dessutom intervjuades tre externa företag för att undersöka deras mognadsnivå för tjänster och hur de kunde övervinna vanliga utmaningar inom tjänsteintegration. Baserat på insikterna från både interna och externa intervjuer skapades tre lösningar. Dessa lösningar är nya roller och uppdaterade ansvarsområden, en ny integrerad serviceprocess och ett diagram för produkt-tjänstberedskapsnivå. Framtida överväganden för det undersökta företaget lämnades också in för att ge vägledning för vidareutveckling av dessa lösningar.

This thesis explores the conditions under which traditional Small and Medium Enterprises (SMEs) can be involved in the design of sustainable Product Service Systems (PSS). The integration between design and Information and Communication Technologies (ICT) in the context of sustainable business development was used to define the space for this exploration. The research was carried out through a case study with a group of Colombian Manufacturing SMEs. As a result of the case study a business framework was developed to guide the design of sustainable PSS. In order to establish the basis of the research a review of the literature on sustainable business development, ICT, design, product service systems and SMEs was carried out. This review brought to light the main features of a sustainable PSS and the challenges associated with its design. These challenges were further investigated in the context of SMEs with a scoping study involving a group of 38 Colombian SMEs. Additionally, 36 PSS already on the market were analysed to identify the possible relationships between design and ICT, and to determine how they could contribute to develop sustainable PSS. The scoping study and the analysis of the 36 PSS gave structure to the case study with a second group of Colombian Manufacturing SMEs. This case study aimed to build understanding of the connection between the characteristics of these SMEs and the main features of a sustainable PSS. As a result of this case study a set of concepts, drivers and barriers to take into account to design sustainable PSS formed the basis of a business framework developed and validated in the final part of the research. The business framework proposed can help to understand the resources and changes needed to develop a sustainable PSS, reducing the uncertainty that it may cause. The integration between product and service design and ICT is used in the framework to outline the areas of opportunity in the design of sustainable PSS. This business framework developed as a result of the research promises to be a helpful tool for organisations working to support the transformation of SMEs toward competitive and sustainable business models using as a basis the integration between product and service design and ICT. Despite the Colombian context the results and outcomes of this research are described in general terms to be applicable in other contexts around the world working with SMEs in the design of sustainable PSS.

There is an intersection of challenges where society’s social and ecological problems coincide with the industrial firm’s challenge to maintain profitability in a globalizing world. Products connect these challenges. The development of these products together with services (product-service systems) therefore provides a critical intervention point to address these challenges. This includes e.g. defining what the products and services are, how they will deliver value to users, and the business models that enable them to be realized, as well as how these can contribute to sustainable development of society. The overarching goal of this research is to contribute to sustainable development of society by better understanding how a strategic sustainable development perspective based on backcasting from basic principles for a sustainable society can be brought into and guide product-service system innovation. Interviews with industry professionals, workshops with both manufacturing companies and within student projects, and industrial cases studies, together with a review of literature and theoretical considerations, provide the methodological basis for this work. This thesis contributes to clarifying theoretical and practical possibilities and limitations for a strategic sustainable development perspective to guide product-service system innovation and provides a basis for the integration of these concepts. The findings indicate that the co-innovation of products and services in product-service systems can contribute to sustainable development of society both by supporting reduced material and energy use and by supporting improved life cycle management of materials. Further, a strategic sustainable development perspective can contribute to the refinement of existing tools and methods in product-service system innovation by providing an operational definition of sustainability articulated in the form of first-order principles that describe the boundary conditions for a sustainable society, and by providing guidelines for how to approach a vision of success inside those boundaries in a strategic way. In order to identify solutions that meet society’s pressing challenges, new solution spaces may need to be identified, and this can be enabled by a shift from product development with service as “add-ons” to their co-innovation in product-service systems. An initial approach for how this could be enabled through bringing together set-based approaches to design product-service systems with a strategic sustainable development perspective is presented.

Problem: Development of a firm’s offering is a vital weapon for competition. Obtaining knowledge on customer expectations and translating those into product development and superior service delivery is surrounded by prioritisation decisions. Industrial vending systems are proven to be a growing field in terms of deployments but have received little academic attention, especially regarding service quality perception to support customer-oriented innovation processes for suppliers, facilitating such decisions. Purpose: To identify key drivers of positive service quality perception and customer satisfaction as well as trust and commitment indicators for business-to-business industrial vending systems. Method: Through an explanatory approach, qualitative data on multiple cases was gathered. 14 in-depth semi-structured interviews were held with customers currently using a specific industrial vending system. Conclusion: Solution characteristics of industrial vending systems impact service quality perception through compliance with customer requirements. A total of 13 customer satisfaction drivers were identified for the investigated industrial vending system, the most important being efficiency, user-friendliness and timeliness. Further, the presence of individual- and company level trust in customer-supplier relationships positively impacts commitment intentions. Contribution: Adds novel knowledge on customer satisfaction for industrial vending systems and contributes with suggestions for managers on how trust and commitment affect customer satisfaction, which can be incorporated into the value promise design, product development and marketing strategies. / ISNET (finansierad av KK-stiftelsen)

Purpose – The purpose of this study is to increase knowledge regarding sustainable product-service systems (SPSS) barriers and solutions for non-assembled products. To answer this purpose, we developed the following research questions: (1) what barriers do providers face when utilizing SPSS in a non-assembled product context and (2) what solutions can be used to overcome these barriers? Method – This study was conducted as an abductive case study within SPSS in the renewable energy industry. We interviewed a total of 20 respondents from 16 different companies operating in China, Cyprus, and Sweden. Each respondent was chosen based on their experience and knowledge within the area. Findings – The findings are summarized in a framework that links the identified barriers with specific solutions. In brief, finding stakeholders for large and long-term investments was identified as a major barrier while educating stakeholders was suggested as a common solution. Theoretical and practical implications – The results disqualify two of the barriers in the existing literature while suggesting that varying market conditions is a new barrier. Furthermore, the study provides new insights to the existing literature and presents a framework that managers can use to matchmake SPSS-barriers with solutions. Limitations and future research – The study is limited to a case study focused on barriers and solutions for SPSS-providers. As a result, future research is suggested to validate the findings in another context and among other stakeholders.

An increasing number of manufacturing firms are developing new business models to improve sustainability in the face of growing environmental and social challenges. Product-service systems (PSS) are regarded as promising sustainable business models with significant potential to synergise economic, environmental and social value, together termed ‘sustainable value’. This research investigates ways in which manufacturing firms can identify opportunities for sustainable value creation in PSS business models. The research aims to make theoretical and practical contributions to the fields of sustainable business models, sustainable PSS and sustainable value. The research adopts a qualitative theory building approach, in which theory can be transformed into practice. It involves eight case studies and one focus group formed of manufacturers who provide PSS solutions. A practical-research tool, the Sustainable Value Analysis Tool, is developed to collect data and to provide business support. The key research findings and contributions to theory and practice are: · The research proposes a new PSS classification system based on the ownership of products and changes in ownership. This classification distinguishes the potential for sustainability of each PSS type more clearly than existing PSS classifications. · The research introduces a new concept, value uncaptured, and identifies four forms of this. The introduction of this concept provides a novel perspective of studying value exchange in business models. · The research identifies 26 sources of value uncaptured throughout the product life cycle. These can be used to help industrial practitioners to identify value uncaptured in a structured way. · The research proposed that the act of turning value uncaptured into value opportunities is an effective approach for improving sustainable value creation in business models. This has been empirically demonstrated. · The research proposes a model to understand how and where value uncaptured can be turned into value opportunities. This model comprises two mechanisms, two directions, and fourteen key tactics. The model improves theoretical understanding of the sustainable value creation system and can be applied in practice to help companies search for value opportunities in a systematic and strategic way. · The challenges of turning value opportunities into value are identified. The findings have been used to develop a framework for sustainable value creation in PSS business models. The proposed tool has been validated and used in workshops for purposes including research, consultancy, business education and university education. This research thus makes contributions to both academic knowledge and industrial practice.

Företag hittar ständigt nya sätt att arbeta genom olika strategier. En ny sådan strategi kallas extrem tjänstefiering som innebär att företag går från att sälja fysiska produkter, till att sälja funktionen av en produkt. Istället för att exempelvis sälja en borrmaskin, säljer man antal borrhål som maskinen producerar. Denna nya strategi har växt till ett nytt fenomen som företag börjat implementera i sina affärsmodeller. Detta fenomen har till stor del studerats inom området för innovation och miljö, men redovisningsaspekten av strategin saknas helt. I och med att det är ett relativt nytt sätt att arbeta har inga studier gjorts inom ämnet för redovisning, samt finns det inget specifikt regelverk som behandlar detta fenomen. Studiens syfte formulerades därför till att beskriva revisorers tolkningar av avtal som innefattar extrem tjänstefiering samt analysera problematiken som uppstår med detta och se hur normgivare förhåller sig till den problematiken. För att kunna besvara studiens syfte valdes följande frågeställningar; 1) Hur anser revisorer i Sverige att noterade företag bör redovisa avtal som innefattar extrem tjänstefiering? 2) Vilken redovisningsproblematik anser revisorerna uppstå med denna typ av avtal? Och 3) Hur förhåller sig normgivare till den identifierade redovisningsproblematiken för denna typ avtal? Genom en kvalitativ metodansats består empirin av totalt en intervju med ett företag som arbetar med extrem tjänstefiering, sex revisorer samt två normgivare inom redovisning i Sverige. Studiens resultat visar på att extrem tjänstefiering bör redovisas genom att kostnadsföra avgiften löpande. Den största problematiken som framkommer i studien är jämförbarheten av de finansiella rapporterna. Extrem tjänstefiering verkar redovisas på ett helt annat sätt än andra liknande affärsstrategier. Det efterfrågas en tydlighet kring hur denna problematik ska lösas, men studiens resultat visar på att huruvida ansvaret för den tydligheten bör ligga hos normgivarna eller revisorerna är de båda parterna oense om. Revisorerna efterfrågar förändring från normgivarnas sida, medan normgivarna anser att de befintliga regelverken är tillräckliga och att det är upp till de redovisningsansvariga att vara tydliga i sin redovisning och upp till revisorerna att vara tydliga i sin bedömning. / Companies are constantly trying to improve their business models by implementing new strategies. A new strategy that recently has become popular is called product service systems (PSS). This phenomenon is when companies instead of traditionally selling and buying physical products, now is selling or buying the function of a product. For example; instead of selling a drilling machine, the company sell the produced holes per hour that the machine is capable of making. This phenomenon has been studied mostly within the area of innovation and sustainability, but no studies has yet been written with an accounting perspective. There is no existing standard that regulate this specific business strategy, hence there is a lack of knowledge of this subject in an accounting perspective. Therefore we compiled the following purpose of this study to be; describe auditors interpretations and the assessments of business contracts that are involving PSS and also analyze the problems that come with it. We also want to highlight the norm setter’s view of the identified problems. To be able to answer the given purpose we decided to compile the following research questions; 1) How should a PSS contract be reported in the financial reports according to auditors in Sweden? 2) What accounting problems, regarding PSS contracts, does the auditors raise? 3) How does Swedish norm setters in accounting view the identified problems? Through a qualitative method the empirical chapter consists of a total of one interview with a PSS company, six auditors and two norm setters. The results of the study show that PSS should be expensed in the financial reports. The most important problem appears in the comparability between companies financial reports. PSS is being treated differently from other similar business strategies in the financial reports. There seems to be a need for clarification surrounding PSS contracts. The results show that there is a contradiction on whether that clarification should come from the norm setters or the auditors. The auditors claims that the norm setters should create and publish distinct guidelines on the topic, aiming for all auditors to make an equal assessment. While on the other hand the norm setters rather think that the existing standards are enough and that it is the auditors or the accountant’s responsibility to be transparent in the financial reports. Through transparency the norm setters believe that comparability between companies can be achieved.

This thesis considers how the development of Product-Service Systems (PSS) relates to cultural changes in the organizations doing the development. On one hand, reducing cultural shift is desirable to absorb shocks and reduce obstacles that come from internal relations. And on the other hand, the cultural changes may be an opportunity and a breakthrough - or even necessary - to develop PSS. In exploring the possibility of managing culture, the Analytic Hierarchy Process (AHP) was used to prioritize three possible actions to support the best culture to help PSS development. A survey was also carried out through sending questionnaires to nineteen experts. The results suggest that when people prioritized the three actions, the most important was related to pursuing “economic benefits”, and adopted “strengthen executive support and performance management”. This study proposes a portfolio of practices which is targeted at deep into the prioritized action and figure out an action plan as well as some sub-activities around the four quadrants which formed by the integration of Fulfillment, Informal, Innovation, and Formal approach. And each action and planning could still be applied to PSS development as well as other changes, prepare organizational culture changes and create a more harmonious enterprise culture. / 46769611005

L’évolution permanente de l’environnement de l’entreprise pousse les décideurs à s’inscrire dans un processus d’innovation. Nous assistons à une mutation des pratiques de certaines entreprises en intégrant de plus en plus une offre d’un système « produits-services ». Notre objectif, à travers cette thèse, est d’apporter une aide à la décision qui reposera sur la capacité à anticiper la performance du système en fonction de différentes décisions de gestion et face à différents types d’aléas lors de la servicisation. Le premier besoin d’aide à la décision est la nécessité de construire une démarche de modélisation et de simulation avec un modèle conceptuel du système de production orienté PSS. Pour cela nous avons proposé une décomposition de notre système entreprise orientée PSS en deux sous-systèmes : (i) Le sous-système d’usage et (ii) le sous système productif. Les deux sous-systèmes sont connectés et interdépendant. Un deuxième besoin qui apparait pour notre problématique est la construction d’un modèle simulable et exploitable. Nous avons utilisé la simulation à évènements discret afin de profiter de l’aspect « évènementiel » de cette approche et ainsi coupler entre le système d’usage et le système productif d’une part, et d’autre part entre les activités de services et les activités de production. Une application de notre démarche de modélisation et simulation sur un cas d’étude (Entreprise ENVIE) a été effectué et une analyses et interprétation des résultats suivies d’un ensemble de propositions de gestion pour une meilleure transition vers une offre PSS ont été apportées. / The ever-continuing evolution of business practices leads the decision-makers to develop strategies based on Innovative approaches. One of them is the transition to a product-services system, called servitization. The main goal of this thesis is to provide a decision support in order to anticipate the performance of a company when different transition management scenarios are implemented. The first step toward this objective is the formalization of a conceptual model of product-service systems. They consist of two subsystems: (i) user-oriented subsystem and (ii) production-oriented subsystem. These subsystems are connected and interdependent. The model developped in the second step of the thesis takes into account this coupling, whose influence on the overall performance of the company is assessed thanks to a discret-event simulation approach. Finally a case study is performed for a french SME (ENVIE) whose line of business is the re-manufacturing of electrical equipment. The analysis results highlight the main areas of improvement for the company, allowing a better transition to a product-service system.