The development of a generic servitization systems framework

Technology in Society 43 (2015) 97e104

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The development of a generic servitization systems framework Richard Weeks 1, Siebert Benade* Department of Engineering and Technology Management, Graduate School of Technology Management, University of Pretoria, Private Bag, X20, Hatfield, 0028, South Africa

a r t i c l e i n f o

a b s t r a c t

Article history: Received 22 December 2014 Accepted 23 September 2015 Available online 19 November 2015

Manufacturing institutions are increasingly adopting and implementing a servitization strategy directed at enhancing their revenue streams and gaining a competitive advantage in a highly competitive and extremely turbulent marketplace. The focus of this paper is directed at gaining an understanding of (1) the various interactive systems that assume relevance in the creation and execution of the servitization strategy and (2) the development of a generic servitization systems framework. A multidisciplinary literature review was undertaken in order to identify the systems concerned and develop a generic servitization framework that could serve as a source of reference and information in strategy development and operational execution. Supporting evidence as to the relevancy of the model was obtained from a case study analysis conducted at a South African manufacturing institution that had implemented a servitization strategy. An important finding that emerged from the research study was that the institution's business model needed to be adapted, a process that necessitated an understanding of the respective systems involved, their interaction, and the change management difficulties encountered therein. The generic servitization framework was found to assume relevance in this regard. It is contended that the servitisation systems framework could serve as a source of reference and information for executives, management practitioners and technologists involved in similar projects. © 2015 Published by Elsevier Ltd.

Keywords: Servitization framework Strategic management Services economy Complex adaptive systems Technology systems

1. Introduction “Modern corporations are increasingly offering fuller market packages or “bundles” of customer-focussed combinations of goods, services, support, self-service, and knowledge. But services are beginning to dominate. This movement is termed the “servitization of business” Vandermerwe and Rada [38]. The introductory statement attests to the emergent trend of manufacturing institutions offering clients a range of products and supporting services to meet their needs on a holistic all inclusive basis. It also serves as the genesis of the concept “servitization and it is almost certain that the authors, at the time in question, were largely unaware of having coined a term” and concept that would gain increasing significance in an era where services have become

* Corresponding author. E-mail addresses: [email protected] (R. Weeks), [email protected] (S. Benade). 1 Deceased. http://dx.doi.org/10.1016/j.techsoc.2015.09.003 0160-791X/© 2015 Published by Elsevier Ltd.

the dominant sector of the global economy. Desmet, Van Looy, Gemmel and Van Dierdonck [9] attest to the fact that the service sector's increasing share of the economy has become a national trend, one that Paulson [31] contends has led to the development of “service science” as a fully-fledged domain of contemporary institutional management. As a relatively new academic discipline service science, as a field of research and tuition, has shown phenomenal growth over the last decade, with academic institutions globally offering courses therein [31]. The customer focus reflected in Vandermerwe and Rada's [38] introductory statement accentuates the client-centric approach adopted in service design within the literature [3]. Notably, Desmet et al. [10] contend that the traditional orientation, within a servitization context, has been one of an add-on to the product in the form of after-sales services, in contrast to the more contemporary view of providing clients with an integrated business solution. Within the context of this paper it is an orientation that assumes particular pertinence in the development of a strategic and operational system's framework as the two key value chains, namely products and services form an interacting and integrated entity. The servitization literature it appears offers a selection of frameworks, models and classifications that according to Baines et al. [3]

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provide “some guidance on how to configure an operations strategy for servitized manufacture, but are in themselves insufficient to provide a complete and detailed picture of the integrated delivery of products and services, and their effect of service provision on internal manufacturing operations”. Haasbroek [14] claims that in practice servitization strategies are often adopted to gain not only a competitive advantage in a very competitive and turbulent marketplace but also to enhance an institution's revenue stream. The researcher further suggests that this is often done without a clear understanding of the impact thereof on the various operational systems involved and without clear guidelines as to what the expected effects thereof may be [14]. An important finding that emerges from Haasbroek's [14] research study is industry's apparent “naive attitude towards servitization, addressing it as a practical necessity, possibly without consulting the theoretical foundations” upon which it is based. The result is that frequently the servitization strategy implies the addition of a services layer to the existing manufacturing operations [10], with the main part of the total value creation considered to stem from the physical goods offered to clients [4]. This more traditional approach, however, tends to stand in contrast to a more contemporary perspective that views “the provision of services as a conscious and explicit strategy with services becoming a main differentiating factor in a totally integrated products and service offering” [4]. With the apparent prevailing situation reflected in the introductory discussion in mind, this paper places an emphasis on gaining an understanding of the various interacting systems that collectively assume relevance in the creation and implementation of a servitization strategy, directed at provide clients' with a holistic client-centred business solution. A contemporary literature review in effect forms the basis for the development of an integrated strategic and operational systems framework that could serve as a source of information and reference for practitioners engaged in compiling and implementing a servitization strategy. A South African servitization case study was used to determine the relevance of the framework in practice. The relevance of the research paper may be determined.

2. Servitization: a concept and systems perspective “There are various forms of servitization. They can be positioned on a product-service continuum ranging from products with services as an “add-on”, to services with tangible goods as an “add-on” and provided through a customer centric strategy to deliver desired outcomes for the customer.” Baines et al. [4]. The introductory quotation equates servitization with a continuum of client value derived from both products and their associated services, depending on the relative value clients derive from each. The common denominator is therefore one of a client determined value orientation, namely value-in-exchange or value-inuse [39]. Following a similar sense of thought Visnjic, Neely and Wiengarten [40] claim that “servitization implies the innovation of an organisation's capabilities and processes so that it can better create mutual value through a shift from selling product to selling producteservice systems”. Here again the accent is on an integration of product and service systems or as suggested by Desmet et al. [10] the notion of “a bundle producing company” where the focus is on the client and the realisation of their services related needs. Implied therefore, according to Rajala, Westerlund, Murtonen and Starck [33], is the need for a better understanding of the new

“service-business logic” and the formation of “customer value”. Quite pertinently Rajala et al. [33] theorise that a services-logic requires new approaches, skills and mindsets, as clients for instance become co-producers of the services that are simultaneously generated and consumed. Seen within this context € nroos and Revald's [13] contention that each instance of value Gro creation is unique and can only be assessed from the perspective of an individual service system assumes significance. In a similar vein it is argued by Rajala et al. [33] value from a client perspective emerges from a spectrum of client and service provider interactions, which collectively shape the client's service experience. Adopting a client-centric perspective of value-in-exchange and value-in-use suggests the existence of two distinct value chains bridging client needs and expectations on the one hand and client satisfaction in the realisation of these needs on the other. If a client's service experience or value derived from a product exceeds their initial expectations the consequential quality thereof may be determined as being positive [12]. The contrasting situation could similarly be defined from a quality perspective in negative terms. Fitzsimmons et al. [12] list reliability, responsiveness, assurance, empathy and tangibles as dimensions of consideration in the evaluation and management of service quality, all dimensions that appear to assume a client-centric perspective. A particularly valuable tool “for understanding the voice of customers and their impact on customer satisfaction”, according to Wang and Ji [41], is the Kano model. The model categorizes different client requirements based on how well they are able to achieve customer satisfaction [41]. It is the client's perspective of the service encounter and the value derived therefrom, in relation to their expectation that ultimate surfaces as a determinant of quality. It is therefore hardly surprising to find that Osterwalder [30] in the development of an institution's business model places the value proposition offered to clients at the very centre or core of his model with capability and target client networks linking thereto. The value proposition is therefore defined in terms the valueconfiguration or a bundle of products and services offered to clients by the institution concerned. Smith Maull and Ng [35] in a similar vein quite specifically attest to the fact that servitization has resulted in organisations offering complex packages of both product and service to generate superior customer exchange value and thus enhance their competitive edge within the marketplace. It is interesting to note that Smith et al. [35] further contend that while some researchers refer to product service systems (PSS) as a “value proposition”, others see it as an “innovation strategy” to remain commercially competitive. A pertinent point raised by the researchers is that the underlying operational delivery systems and processes have as a consequence become more complex to manage and co-ordinate [35]. In effect not only the integration of the product and services value chains assume greater complexity but the underpinning operational support systems are similarly more complex to deal with from a design, change management and implementation perspective. Smith et al. [35] are of the view that considerable attention has been given to this increasing systems complexity of servitization. The literature, in this regard, they suggest places a particular emphasis on the human aspects involved such as the knowledge and skills required [35]. Citing Salonen, Smith et al. [35] further identify three further complex challenge that require consideration, namely “organisational culture, external effectiveness at the customer interfacing ‘front office’ and achieving internal efficiency of operations at the ‘back office’ ’’. Notably all of these challenges imply complex support systems design considerations that will be dealt with in the ensuing section dealing with the development of the integrated strategic and operation systems framework. Desmet et al. [10] are of the view that from a strategy

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perspective, redefining services and goods offered to clients constitutes only half of the servitization story, realising the strategic benefits to be derived from the strategy it is argued, requires a far more complex infrastructure and systems realignment, often including the development of new skill sets for their implementation and management. The researches therefore appear to concur with Smith et al. [35] in this regard. Adapting to the dual role of the client as both a customer and a co-producer, and managing this increased participation, is seen by Desmet et al. [10] as also constituting a further serious challenge. Fitzsimmons et al. [12] similarly contend that the presence of the client as a participant in the services process requires attention to facility location, access, servicescape design and capacity planning; aspects not normally attributed significant attention in traditional manufacturing operations. The establishment of a customer facing front office and a technology driven back office support facility is a particularly important aspect of consideration in implementing the servitization strategy [12,36]. It raises issues such as the interactive systems that need to be established between the front and back office, support technology systems and a host of human considerations, such the knowledge and skills required, as well as the need to deal with culture and climate as perceptual and behavioural determinants. Khalil [18] in defining the concept “technology” as “all the knowledge, products, processes, tools, methods and systems employed in the creation of goods or in providing services”, similarly integrates technology, human and business systems into a holistic product and services delivery mechanism. In defining what they mean by the concept “technology”, Burgelman, Christensen and Wheelwright [8] claim that it refers to “the theoretical and practical knowledge, skills, and artefacts that can be used to develop products and services, as well as their productive and delivery systems”. The strategic alignment of these systems is identified by Henderson and Venkatraman [15] as being particularly pertinent from a strategy creation and execution perspective, a case in point being the servitization strategy. Seen in this context Rockart and Short's [34] assertion assumes importance, namely that an information and communication technology (ICT) enabled networked organisational approach constitutes a major design challenge, as without the appropriate business systems and human resources with the requisite knowledge and skills the organisation will not be able to exploit the opportunities created by the technology concerned. The picture that therefore emerges is one of technology, human resources and business process systems collectively supporting and enabling the servitization process. It would seem that Baines [5] would have little difficulty in concurring with this contention as the researcher specifically states that “people, technologies and business processes all change” when a manufacturer sets out to compete by adding services to its value offerings made available to clients. Oliva and Kallenberg's [28] research findings relating to the management of the transition from products to services brings into consideration the reality that “services require organizational principles, structures and processes new to the product manufacturer. Not only are new capabilities, metrics and incentives needed, but also the emphasis of the business model changes from transaction-to relationship-based”. The researchers further emphasise that given these a considerations, “the literature is surprisingly sparse in describing how this integration could be carried out, or in detailing the challenges inherent in the transition” [28]. It is an emphasis that underscores a primary objective of this paper, namely to gain an understanding of the interacting systems that assume relevance in the creation and execution of the servitization strategy. The preceding decision reflects the complexity involved in bringing all the systems that play a vital role in the

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execution of a servitization strategy into alignment. 3. Research design Alluded to in the introduction to this paper was the emphasis on gaining an understanding of the various interacting systems that collectively assume relevance in the creation and implementation of a servitization strategy, directed at provide clients' with a holistic client-centred business solution. A multi-disciplinary literature review formed the basis for identifying the systems concerned and gaining an understanding of their complex interaction. The literature study is based on the most contemporary literature available relating to servitization and product service systems. It included books, journal articles, and academic research reports available from reputable academic resources. The research study being an insight study is essentially analytical-descriptive and not statistically orientated in nature. From the insights gained from the literature a “generic servitization systems framework” was developed that could service as a source of reference and information for practitioners involved in formulating and executing a servitization strategy in practice. The relevance of the framework, from a practical perspective, was determined by analysing the use thereof in a case study conducted at a South African institution that had implemented a servitization strategy. The case study in essence constituted a narrative enquiry directed at gaining a first-hand insight into the systems, processes and experiences of the practitioners involved in the crafting and executing a servitization strategy. Open-ended interviews were conducted with the owners and executive management team of the institution concerned to learn from their hands-on experience, challenges encountered and knowledge gained in moving from a purely manufacturing institution to one providing clients with a bundle of products and services. Oliver and Snowden [29] attest to the use of narrative as “an accepted approach to sharing knowledge on topics such as client service delivery, innovation, leadership, and strategy”. They suggest it can reveal unexpected insights and serves as an important sensemaking tool [29]. Lawlor and Mattingly [19] in an analogous sense claim that rich narrative depictions are much more useful than abstract generalizations or belief statements and personal accounts of events provide the interviewer with an inside perspective of what had taken place. The servitisation systems framework was then used determine the degree of correlation that existed between the framework that had been constructed by the authors and the insights gained from the narrative enquiry and where relevant the framework was adapted to reflect the practicalities and insights gained from the narrative enquiry-based case study. Due to the sensitive nature of the information collected the narrative enquiry-based case study was conducted on a basis of anonymity and neither the name of the enterprise nor the names of the respondents are divulged. 4. Development of a generic servitization systems framework “A product-service system is a system of products, services, supporting networks and infrastructure that is designed to be: competitive, satisfy customer needs and having lower environmental impact than traditional business models”. Mont, cited by Henze, Mulder and Stappers [16]. The introductory extract highlights a number of aspects that need to be taken into consideration in the development of a generic servitization systems framework. As mentioned in the preceding

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discussion a client-centric approach is deemed to be of fundamental importance in formulating and executing a servitization strategy. This by implication, as inferred in the extract, requires clarification as to the bundle of products and associated services that will be provided by an institution in order to meet client needs and expectations. The client's perception of the value derived and the service encounter itself, seen in relation to the client's needs and expectations completes the process and serves as the defining determinant of the quality of the encounter from the client's perspective. This client-centric orientation forms the very foundational fabric for the development of the generic servitization systems framework presented in Fig. 1. The servitization process itself is reflected in terms of the interaction that takes place between the products and the services value chains and is denoted by means of the circle encompassing the two value chains. The respective value chains detail will largely be determined by the nature of the operations concerned and the specific industry involved. The technology systems triad; namely technology support systems, business processes and human socio-cultural systems, play an important role in the implementation of the servitization strategy. Baines [5] specifically confirms that “people, technologies and business processes all change” when a manufacturer sets out to compete by adding services to its value offerings made available to clients. Pretorius [32] is yet another researcher who brings the triad into focus in defining the technology systemic component as “the integration of people, knowledge, tools and systems with the objective to improve peoples lives”. There are institutions that in implementing a servitization strategy make use of innovative technology in order provide clients with a complete business solution. The Aston Business School [2] describes these innovation capabilities, “manifest as research, design and production processes that result in intellectual property that differentiates these organisations from more conventional services providers”, as enable them to “exhibit a capability to actually create a product (or asset),

Fig. 1. Servitization: a systems framework. Source: Weeks and Benade [42].

put it in the field, manage it, maintain it, repair it, improve it, and dispose of it at end of life”. The preceding description quite pertinently correlates with the systems theory life cycle depicted in Fig. 1, which extends from the preliminary conceptual design of the services system and its support systems through to the detailed design, implementation, operation and eventual phasing-out [6] It may therefore be concluded that an important tenet in the development of the framework was the application of a system engineering life cycle that originates from client needs and an expectation in terms of a bundle of services and products required and ends with the client's perception as to how well these expectations have been realized. Blanchard's [6] description of a “system” is adopted for the development of the framework, namely: “a complex combination of resources (in the form of human beings, materials, equipment, software, data, information, services, etc.), integrated in such a manner as to fulfil a designated need”. It is further accentuated that having an understanding of the overall “context” is deemed to constitute a prerequisite for the successful implementation of the system engineering principles and concepts concerned. In this regard the generic model depicted in Fig. 1 has been applied and tested in two pertinent contexts, namely servitization and healthcare services delivery [42,43]. These research projects were done as part of Masters' studies in the field of Service Science and presented at IAMOT and PICMET Conferences. In dealing with context it is important to note, as stressed by Blanchard [6], that contextual requirements for new systems are frequently changing as a result of dynamic contextual conditions, thereby in effect implying the existence of a complex emerging integrated system. The researchers specifically mention that “it appears that the structures of many systems are becoming more complex with the introduction of evolving new technologies” [6]. The business systems and process that support the two value chains are inherently complex construed and interrelated in nature, both in terms of systemic interaction and client involvement. The

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complexity involved is reflected in the product service value chain integration and the supporting systems underpinning these systems, as depicted by means of the servitization framework. With this in mind it is hardly surprising to find that Oliva and Kallenberg [28] suggest that services related activities need to be consolidated within a separate operational unit, an important consideration for establishing such a unit being the culture differential that exists between the manufacturing and the services entities. Mills Neaga, Parry and Crute [22] very specifically state that contemporary research findings are unanimous on the necessity to make the services function and independent unit and with its own profit centre. An important motivation therefore cited by the researchers being the development of a services culture [22]. The manufacturing unit will have developed a strong cultural identity that acts as a behavioural determinant and in adding a services layer to the institutions operations the conflicting cultural implications will need to be addressed. Notably Magnusson and Stratton [21] stress that “services require a different mind-set all together; the knowledge base is more ‘intellectual’ in nature and, because of the higher interpersonal involvement, interactional skills gain weight and meaning”. The human and socio cultural systems dimension depicted in Fig. 1 assume an alternative perspective, depending on their specific contextual setting and the associated management approach adopted. So for instance an important feature of the traditional management approach in dealing with culture transformation is the contention that the concept “culture” can be intentionally managed [20]. Trompenaars and Prud'Homme [37] state that institutions that had bought into the notion that culture can be actively managed have spent significant financial resources on consultants brought in to assist them to “roll-out” a new desired culture. The researchers also claim that this is generally followed by a sense of frustration that has left management and staff of these institutions rather cynical [37]. Bennet and Bennet [7] confirm that many theories and process exist in relation to culture change, yet most apparently offer no guaranteed solutions. It is also suggested by Bennet and Bennet [7] that resistance to a change in mindset is usually high and in instances could even go unrecognized by management. An alternative complex adaptive systems approach views culture as an emergent system of values, beliefs, new traditions, and ways of doing things emanating from the servitization discourse and interaction that takes place within the institutions as the strategy unfolds. The social connotation and its associated complexity it is argued are reflected in the interaction that takes place within institutions. The picture that emerges is one of culture as a “living system” that naturally evolves [7]. The IFM and IBM [17] service science management white paper attests to the need for a new skills and knowledge base in order to effectively manage a transition to a services dominant business environment. Also stressed is the need for an ability to be able to operate and function across traditional disciplinary boundaries [17]. It is contended that what is required is “T-shaped professionals, who are adaptive innovators with a service mindset”, they are described as being excellent problem solvers in their home discipline but also capable of interacting and communicating with as well as understanding specialists from a wide range of disciplines and functional areas [17]. The forgoing discussion highlights the importance attributed to the human and socio-cultural systems in supporting the servitization process. A more detailed elaboration of the system can unfortunately not be accommodated within a paper such as this where the accent is on gaining an insight into the servitization systems and their interaction within a generic systems framework. Nordin & Servadio [27] in researching servitization highlighted the need for financial acumen and legal skills, but did not elaborate

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further as to the specific need for these skills. Neely [26] in researching the financial consequences of servitization discovered that a significant percentage of institutions that had implemented a servitization strategy had in fact declared bankruptcy, suggesting that the transition from a manufacturing firm to a servitized firm might be problematic from a financial perspective. A more in detailed analysis by Neely [26] revealed that “while servitized firms generate higher revenues they tend to generate lower net profits as a % of revenues than pure manufacturing firms. The reasons for this are that servitized firms have higher average labour costs, working capital and net assets. And they appear unable to generate high enough revenues or margins to cover the additional investment they have to make over and above the investment made by pure manufacturing firms”. It would consequently appear that financial systems have an important role to play that needs to be considered and consequently ought to be incorporated within the servitization systems framework. The remaining two systems depicted in the framework, legal and socio-political systems were all found to have relevance within a healthcare services dispensation and were consequently added to the framework [41]. Their pertinence within a servitization context will need to be determined in the ensuing case study. 5. Servitization: a South African case study 5.1. Background The institution selected for the case study manufactured electronic gate access systems and due to the quality of the products manufactured had shown phenomenal growth. Clients purchasing the systems, however, were faced with the difficulty of having to get the systems installed and maintained and before long pressure mounted on the institution to offer clients a range of services that included product customisation, installation, maintenance and repair. The owners were both engineers and their primary focus were on designing and manufacturing outstanding products that meet the client needs. It soon became apparent that if they did not implement a servitization strategy, so as to meet client service needs, their sales of products would be constrained. The sales and distribution of their products was initially dealt with by means of major regional security system distributors, but they did not provide installation services and clients had to arrange for the installation of the systems themselves. The owners soon realised that manufacturing high quality electronic security access systems only partially meet client needs and the systems would really only add value the their client base if they could be readily acquired, installed, maintained and when required repaired. This by implication necessitated the need for the establishment of a chain of regional distributors for the marketing of their products and smaller geographically dispersed installation, repair and maintenance facilities. The owners realised that it was a challenge that necessitated a fundamental change in their business model and in particular the way that services required by clients could be integrated within the value offering made available to clients. The owners reiterated that as engineers their vision was one of focussing on state of the art, high quality access system design and manufacture. They therefore needed to get a network of small independent installation and maintenance service providers in place, who would be able to provide the required services to end-user clients. This, according to both owners, turned out to be quite difficult as the service providers needed to be trained in the marketing, installation and repair of the enterprise's specific range of products. It was found by the management team that the best means of getting this done was to establish a training facility at the factory. Seen in the context of servitization systems framework the

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human skills and knowledge factor entered into the picture as the services providers needed to acquire an insight into the application of the manufactured products from an installation and client-use perspective, the accent being on the total value to be derived in acquiring, installation and use of the electronic access systems by the client. Many of the managers interviewed indicated that this in general entailed a paradigmatic change from focussing on technology aspects to bringing the end-user cent and the distributors and service provider intermediaries involved into the bigger picture. 5.2. The servitization strategy The servitization strategy adopted was one of establishing a separate services business unit to deal with the marketing of the products as well their distribution. Quite significantly, Oliva and Kallenberg [28] similarly conclude that one of the initial steps in managing the servitization process is the need to consolidate the services related activities within a single operational unit. The production facilities could thus remain focused on what they did best, while allowing the services unit to establish operations that would meet clients' service needs. The culture supporting each of the production and services value chains also differed significantly and according to the respondents interviewed this in itself necessitated a physical separation of the two value streams. A marketing and sales business unit, it was noted by the respondents interviewed, needed to also be established with an appropriate business and ICT support infrastructure. The previously alluded to training of installers also featured within the services business unit's operational activities and required appropriate client orientated support infrastructure to be established. Common to both the manufacturing and services business operational units was a need for a sharing of information across the relative operational boundaries. A case in point cited by one of the management respondents was the need to keep the manufacturing division informed as to the nature of trends encountered in repairs, as well as design considerations that could enhance ability to effectively repair of units brought in by both installers and clients. Although physically separated the units concerned made use of a common information exchange support infrastructure. Feedback from installers received during training was also passed on to the design staff within the manufacturing section. The need for a common and interconnected flow of information it was suggested by respondents enhanced the quality of the product design, as aspects that facilitated installation, maintenance and repairs, as suggested by installers, could be taken into consideration. Morris and Jamieson [25] are of the view that as strategy flows through an organisation, it crosses a number of functional boundaries or disciplines. The executives interviewed claimed that at a strategic level the vision and objectives formulated for the enterprise as an entity assumed relevance. The strategy specifically was client-centred as the focus was on providing clients with a complete solution that would meet their access security needs. It is stressed by Morris and Jamieson [25] that corporate strategy serves as a means of considering and articulating how an organisation's corporate goals and objectives are pursued and achieved. The executive team members interviewed would seem to concur with this contention in claiming that at a strategy level the quality of the product design and manufacture, as well as the services rendered to a diverse client base of distributors, installers and end-users was a key objective of the organisation. Quality and value co-creation surfaced as a key determinant of the institution's strategy. It is reflected at an operational level by the training provided for both distributors and installers to ensure that all the people involved in the value co-creation process have the necessary skills, knowledge

and expertise, in relation to the products and services provided to end-users. The picture that emerges from the narrative enquiry would suggest that the servitization strategy essentially unfolded over the pace of time in response to contextual conditions and situations that had emerged and that were either unforeseen or unexpected. The executive management group's narrative account of the servitization strategy and the related business process that evolved in response to contextual issues that arose over the course of time, give support to Mintzberg's [24] observation that, while institutions often pursue what may be called umbrella strategies, the actual details are allowed to emerge within them. As noted by Du Plessis [11] this would seem to contradict the theory of having well formulated long term strategic plans in place to direct the servitization process. It also gives credence to Mintzberg's [24] observation that “the real world inevitably involves some thinking ahead of the time as well as some adaptation en route”. The respondents description of the servitization process is therefore one of incremental adaption and implementation of service systems and appropriate support system infrastructure. So for instance the need for training of distributors and installers, in terms of the institutions range of products, only became evident when difficulty was encountered from marketing and meeting of clients' needs for specific services became more apparent. 5.3. Case study evidence in support of the servitization systems framework Both the owners and the managers interviewed confirmed that a number of new technologies needed to be implemented to deal with the client services. A website for one was established that served to inform clients of the institution's range of products and services offered to clients. An external consultancy was brought in to develop the website as the owners were of the view that a state of the art system was essential for effective client information transfer. The owners and senior managers indicated that it had also become apparent that an enterprise resource planning (ERP) system was required to deal with the new operations and financial management necessitated by the implementation of the servitization strategy, a process that was rather complex to deal with. The phenomenal growth of the institution, however, necessitated a more effect ICT system to support both the product and services operations of the organization. Change management featured as an important aspect of the ICT systems realignment to meet the operational requirements of the institution. Bringing the corporate and ICT strategy into alignment formed an important part of the first phase of the servitization process. It was confirmed by the owners that the costs entailed were quite extensive, but were deemed as being essential. It may be concluded therefore that ICT support systems featured as an important aspect of consideration and management in the execution of the servitization strategy. The senior managers interviewed contended that the organisation focused on modularity of pro-duct design, which in turn was driven by a need for simplified installation, maintenance and repairs. Feedback from distributors and installation agents formed an important source of information as to practical considerations in this regard. Moving from a product manufacturer to one providing outsourced installation, maintenance and repair services as well implied that the service providers needed to be trained and appropriate training facilities needed to be established at the factory. This formed an important initial liaison and contact interface between the organisation and the service providers as well. Relationship management with both end users and services providers assumed a critical aspect of the services operations unit. A repair facility was established at the factory, as service providers needed

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to send units back to the factory that they were unable to repair on site and that were still under warranty. The design and manufacturing operations engineers took note of reports relating to problems encountered and where relevant the feedback was used to inform product design. The manufacturing and services units consequently, from a communication perspective functioned interactively and this in itself according to a few of the respondents interviewed entailed a mindset change, one adopting a client perspective in the structuring of the value-chains. Almeida, Miguel and Silva [1] are researchers who also accentuate that client relations form key aspect of management in the servitization process. They are not alone in this regard Two important aspects emanate from these insights gained, namely that while the establishment of a new separate operational services unit deemed essential the product and services value-chain remained interconnected from a communication and information transfer perspective, and client relationship management featured quite pertinently as a management consideration. A difficulty encountered, as noted by a few of the managers interviewed, was that the product distributors and services providers acted as an interface with the end-user clients and the organization thus largely lost contact with these clients. To address the situation the warranty system instituted required end-users register the warranty online and complete a client questionnaire that served as feedback on the services rendered. It also served to provide contact details of endusers for marketing and costumers relationship management (CRM) purposes. Wilson, Zeithaml, Bitner and Gremler [44] acknowledge that relationship management constitutes “a philosophy of doing business”, one that assumes clients preferring to have a direct on-going relationship with the organisation and at best, as seen from the respondents comments, the institution could only achieve this by using its website, on-line information services and warranty system. The executive management team tried to promote a clientservices oriented culture from the top-down by living out the services orientation in their day to day actions. Both middle management and design engineers however noted that with the growth of the company, the entire culture and all its values do not necessarily trickle all the way down to new employees. In fact it was suggested that with the establishment of new departments within the organisation there was an element of departmentalisation reflected in the culture that has emerged. Clear service-related communication protocols between the various business units exist, but at times these are circumvented under excessive workloads, it was claimed by a few of the respondents. Executives and managers, however, all agreed as to the need for inculcating a client services directed culture and mindset within the organisation, the difficulty experienced was in turning this into a reality at all levels within the enterprise. The training of distributor staff and service providers also accentuated the need for adopting a client-centred approach in dealing with end-user clients. The establishment of the services business unit entailed bringing employees on-board with the required skills-base. In addition existing staff training took place to upgrade their skillsbase and in the process client-centred values and practices became embedded in the relevant business systems deployed. The executive management team confirmed that the culture transformation tended to be incremental adaptive in nature and not an over-night transformation process. The employment of people with the required services related skills and appropriate clientorientated values by implication also resulted in the emergence of what was termed to be, by the executive team, a desired “clientcentric” cultural value system. It may consequently be concluded that the human dimension of servitization management, while entailing the acquisition of the appropriate skills required, also

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necessitates the need for embracing a services orientated value system. The insights gained from the case study would also seem to attain synergy from the literature as may be seen from Magnusson and Stratton's [21] contention that one of the primary differences between an industrial product and services based company is the focus placed on employees, whom they suggest form the “backbone of any service-based organization”. The researchers express the need to train employees in customer relationship management and the associated practices relating thereto [21]. They also conclude on the basis of their research that the “model emphasis in ‘employee skills’ is the need for companies to change employees' focus from productorientation to one of solution-orientation” [21]. As seen from the case study a complex adaptive systems approach would seem to correlate with that adopted in by the institution in dealing the human aspects of change management. The financial system implications were not directly addressed by the responds, other than the mention of the additional resources required, namely human, technology and consequently additional financial resources. It was found that the institution had not attempted to make a profit from the training of the product distributors and the service providers, in fact in some cases this was done at a loss. The motivation for the subsidised training was the need to generate the required capacity for ensuring a high standard of service delivery across a widely dispersed geographical landscape. As mentioned by some of the engineers interviewed, producing a high quality product was but one side of the coin, if the services rendered during installation were poor it would reflect on the product itself. From a client perspective the accent was on the total quality derived from the acquisition and installation of the access security system. The phenomenal growth in infrastructure and capacity would indirectly appear to imply that the servitization strategy has been successful. The legal systemic implications referred to by the respondents largely focused on issues such as warranties and contractual implications associated with the marketing and distribution of products by regional agencies. These were not really addressed in depth and it would thus be incorrect to draw any conclusions in this regard. Socio-political systemic issues did not feature at all during the interviews. The correlation that exists between the literature and the case study would appear to confirm the role played by the systems identified as assuming relevance in the servitization process. The insights gained from the case study, in particular, would seem to suggest that the integrated strategic and operational systems framework can serve as a source of reference and information, as to the systems that need to be considered and managed in crafting and executing a servitization strategy. This case study focused on a single institution's experience in implementing the servitization strategy and it is acknowledged that a more extensive study is required to confirm the generic validity of the framework. 6. Conclusion Underpinning the servitization framework is a systems perspective derived from a multidisciplinary literature review. The case study would seem to suggest that the framework and the theory on which it is based has practical relevance, both as a source of reference in the formulation and the execution of a servitization strategy. The framework has also served as the basis for a research study undertaken in the healthcare sector and was found to be informative [42]. At present the framework is still in an emergent phase and as additional systems are found to assume relevance, in alterative contexts, these need to be added with their underpinning theoretical motivation. It is therefore contended that this is but a

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