Today, servitization has reached its saturation point as enterprises in almost every business and continent pursued it as a differentiation strategy. Data analytics may offer the next frontier of innovation and hold the potential for enterprises to create value for their customers. Nevertheless, organizations face a series of barriers when utilizing the technologies. We apply a rigorous qualitative analysis process based on grounded theory and interview data of 15 business-to-business companies that already successfully utilize data analytics to create value for their customers. We analyzed our results in the lights of the barriers organization face in servitization and reveal that data analytics adds an additional layer of complexity. Our work contributes to the fundamental understanding of organizational transformation and should provide concrete guidance to business leaders on how to address transformation regarding the utilization of data and analytics.

1. www.ksri.kit.edu
KIT – The Research University in the Helmholtz Association
KARLSRUHE SERVICE RESEARCH INSTITUTE (KSRI)
www.kit.edu
Datatization as the Next Frontier of Servitization
Understanding the Challenges for Transforming Organizations
Ronny Schüritz
ICIS 2017

2. Karlsruhe Service Research Institute
www.ksri.kit.edu
Servitization has reached almost every business & continent
Dinges, V., Urmetzer, F., Martinez, V., Zaki, M., and Neely, A. 2015. “The future of servitization: Technologies that will make a difference,” (available at
http://cambridgeservicealliance.eng.cam.ac.uk/resources/Downloads/Monthly Papers/150623FutureTechnologiesinServitization.pdf).
Baines, T. S., Lightfoot, H. W., and Kay, J. 2009. “Servitized manufacture: practical challenges of delivering integrated products and services,” in Proceedings of the Institution of Mechanical Engineers, Part B
Journal of Engineering Manufacture (Vol. 223), pp. 1207–1215
Neely, A., “Exploring the financial consequences of the servitization of manufacturing” 2009
 Servitization – “the innovation of an
organization’s capabilities and processes to
shift from selling products to selling integrated
products and services that deliver value in use”
(Baines, Lightfoot, Benedettini, et al. 2009, p.
555)
 Motivations to servitize:
 competitive motivations
 demand-based motivations
 economic motivations
 Servitization has been the leading trend in
Europe to capture additional value and for
differentiation from low-cost markets
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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0
10
20
30
40
50
60
70
Malaysia
Singapore
Spain
Finland
UnitedStates
Austria
Thailand
Netherlands
Germany
HongKong
Australia
Vietnam
Japan
Taiwan
India
China
% Servitized in 2007 % Servitized in 2013
 In this context, the integration of technology is
becoming a crucial element for organizations to
develop, integrate and deliver novel services,
and advancing the original limits of servitization
(Dinges et al. 2015)
Proportion of Manufacturing Firms that have servitized

3. Karlsruhe Service Research Institute
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Big Data and Advanced Analytics holds great potential for
existing businesses
 From 2013 to 2020, the digital universe will
grow by a factor of 10
 Most of the digital universe is transient (e.g.
unsaved Netflix or Hulu movie streams)
 Current driver of this development is the
availability of:
 Big Data (senosrs, social media, etc.)
 Support enablement (methods and tools)
 Capabilities (“Data science” educations)
 Complementary technologies (cloud, mobile,etc.)
DatavolumeinExabytes
Turner, V., Gantz, J., Reinsel, D., and Minton, S. 2014. The digital universe of opportunities: Rich data and the increasing value of the internet of things., IDC (available at
http://www.emc.com/collateral/analyst-reports/idc-digital-universe-2014.pdf)
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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Estimate of worldwide data by 2020

4. Karlsruhe Service Research Institute
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There are distinct possibilities for existing organizations to
take advantage of big data and advanced analytics
ValueProposition
changed
ValueProposition
notaffected
Data-Driven
Services
Data-Enabled
Improvements
Data-Enriched
Products and Services
Integration with
product or service Stand-alone service
Datatizatiom
Datatization is the innovation of an organizations capabilities and
processes to change its value proposition using data analytics
B.H. Wixxom and R. Schüritz, „Creating Customer Value using Analytics“, MIT CISR Research Briefing, Vol. XVII, No. 11, November 2017
Hartmann, P. M., Zaki, M., Feldmann, N., and Neely, A. 2016. “Capturing value from big data – a taxonomy of data-driven business models used by start-up firms,” International Journal of Operations & Production Management (36:10), Emerald Group
Publishing Limited, pp. 1382–1406
Chen, J. Kreulen, M. Campbell, and C. Abrams, “Analytics ecosystem transformation: A force for business model innovation,” Proc. - 2011 Annu. SRII Glob. Conf. SRII 2011, pp. 11–20, 2011.
Davenport, T. H. 2013. “Analytics 3.0,” Harvard Business Review (91:12), p. 64.
Wixom, B. H., and Ross, J. W. 2017. “How to monetize your data?,” MIT Sloan Management Review (Spring) (available at http://sloanreview.mit.edu/article/how-to-monetize-your-data/).
 Use of data analytics to improve decision making, to
optimize processes, drive efficiency and so on (Capgemini
and Informatica 2016; IBM 2016; Manyika et al. 2011)
 Analytics 3.0 means
“... to compete on
analytics not only in
the traditional sense
but also by creating
more-valuable
products and
services” (Davenport
2013)
 Reinforce, streamline
or enrich the usage
and experience of
an offering (Wixxom
and Schüritz 2017,
Wixxom and Ross
2017)
 Data-as-a-Service
and Analytics-as-a-
Service (Chen et al.
2011)
 Create completely
new stand-alone
services based on
data as a key
resscource
(Hartmann et al.
2016)
~20%
~80%
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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5. Karlsruhe Service Research Institute
www.ksri.kit.edu
What challenges that organizations face when utilizing data
analytics to offer new services or to enrich existing products and
services in a business-to-business (B2B) context?
(Adapted from Fernandez et al. 2002)
Extant Literature
Entering
the Field
Theoretical
Saturation?
Case 2
Case 2
Case 2
Case 1 .. n
Theoretical Sampling
No
Yes
Coding
Open Coding
Theoretical Coding
Literature Review
Stable Categories
Category
(Properties)
Category
(Properties)
Category
(Properties)
Category
(Properties)
Category
(Properties)
Category
(Properties)
Category
(Properties)
Category
(Properties)
1
2
4
3
15 B2B cases
>13h of interviews
> 90.000 Words of transcripts
58 paper revealed 56 challenges that are aggregated into 10 categories
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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6. Karlsruhe Service Research Institute
www.ksri.kit.edu
Design of
Revenue
Model
Processes
Org.
Structure &
Governance
Market
Skills &
Capabilities
Strategy Design of
offering Culture
Co-
Creation
Transfor-
mation
Organizations face servitization and datatization barriers in
transformation among different categories
Servitization (sub-)categories Datatization (sub-)categories
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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7. Karlsruhe Service Research Institute
www.ksri.kit.edu
Product-focused
organization
Servitized
organization
Datatized
organizations
Product-focused
organization
Integrated product-
service-strategy
Additional data strategyStrategy
Supplier-network Partner-network Partner-information-ecosystemNetwork
Customer
Relationship
Short-term transaction
based
Long-term with new
customer facing roles
Deep relationships and
new interfaces
Development
practice
Product - oriented Service - oriented
Analytics and software
oriented
Skills &
Capabilities
Manufacturing capabilities Customer facing skills
Data science, IT infrastructure
capabilities and software
development skills
As an advanced step of servitization, datatization leads to an
evolution of certain transformation characteristics
Revenue
stream
One revenue stream
Additional stream or
replacing existing one
Additional stream and indirect
pay-off through product/service
uplift
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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8. Karlsruhe Service Research Institute
www.ksri.kit.edu
Our qualitative analysis of 15 datatized organizations provides a
comprehensive overview of the barriers organization face when
pursuing this advanced step of servitization.
 Datatization opens up a wide space of research in the area of service science. There is
still need for more research in the field : e.g. (1) new value propositions that can be
created by data analytics, (2) revenue mechanisms that apply, (3) new networks that
form and (4) integration of data analytics in the development process of the organization
?Future Research
!Limitations
 Focus on use of analytics for new value propositions (external focus only)
 Focus on the transformation, not on non-trivial IT challenges
 We have focused on the barriers and do not claim to give a full picture on possible
solutions
Conclusion
 The use of data analytics for new offerings faces organizations with similar challenges
 Datatization adds an additional lay of complexity to some aspects of the transformation
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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9. Karlsruhe Service Research Institute
www.ksri.kit.edu
Thank you – Please get connected!
Karlsruhe Service Research Institute –
Karlsruhe Institute of Technology (KIT)
http://www.ksri.kit.edu/
https://de.linkedin.com/compa
ny/karlsruhe-service-
research-institute-ksri-
https://twitter.com/ksri_kit
Dr. Ronny Schüritz
Phone: +49 (0) 721 608 – 45625
Email: ronny.schueritz@kit.edu
https://de.linkedin.com/in/ronnyschueritz
Center for Information System Research –
MIT Sloan School for Management
11. Dec. 2017 Datatization as the Next Frontier of Servitization
Ronny Schüritz
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https://cisr.mit.edu/