Computers in Industry 137 (2022) 103607

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Computers in Industry
journal homepage: www.elsevier.com/locate/compind

Conceptualizing customer value in data-driven services and smart PSS

a
Department of Industrial Engineering, University of Florence, Viale Morgagni 40-44, 50134 Firenze, Italy
b
Department of Industrial and Mechanical Engineering, University of Brescia, Via Branze 38, 25123 Brescia, Italy

a r t i cl e i nfo a bstr ac t

Article history: In the age of the industrial internet, manufacturers of industrial equipment compete through the offering of
Received 22 March 2021 digital product-service solutions. These are built integrating smart connected products (SCP) and data-
Received in revised form 16 December 2021 driven services, such as remote control, data analytics, diagnostic and predictive maintenance services.
Accepted 5 January 2022
These services strongly influence the value created in the customer context and, consequently, the at­
Available online 11 January 2022
tractiveness of the integrated offering. A great issue remains about how these services should be designed
by manufacturers of industrial equipment. Through integrative literature review over multiple domains,
Keywords:
Data-driven services this paper provides a conceptual model that shows: i) which benefits can be created from smart product-
Customer value service systems offerings at both business and individual level, in the customer organization; ii) how these
Product-service systems benefits are linked to the choices about design and delivery of data-driven services. In respect to the second
Servitization point, this study merges service science theory and data management to show how the data autonomously
Smart connected products collected by SCP can be transformed into insights that deliver value, as far as the customer and the supplier
interact, share resources and apply their specialized competences. Applying these concepts, we elaborate
four exemplary archetypes of data-driven services that differ in respect to the kind of customer-supplier
interactions along this data life cycle, bringing these options to different kind of customer value co-creation.
Linking the mechanisms of value co-creation to design options of data-driven services, this paper has
therefore notably implications for the research on servitization and smart product-service systems.
© 2022 Elsevier B.V. All rights reserved.

1. Introduction to enable new ways for value co-creation through the provision of
data-driven services (Zheng et al., 2018a, 2018b, 2019). PSS embed­
Manufacturing companies are more and more integrating their ding SCP and digital technologies are appointed in numerous ways,
traditional offerings of products and services (PSS, Product-Service but the most common term is smart PSS (Pirola et al., 2020). It is said
Systems) with digital contents (Baines et al., 2007, 2009). In parti­ that smart PSS transcends the scope of traditional product-centric
cular, digital products such as software and utilities, and digitally- offerings (Liu et al., 2020) and radically changes the business logic of
enabled services such as condition monitoring and real time diag­ manufacturers (Zambetti et al., 2021). Therefore, in this paper we
nostic to connected equipment, are frequently included in these use the term smart PSS to specifically emphasize the components of
digital offerings. Scholars suggest that this move, usually termed the business strategy that, in a B2B setting, delivers value through
‘digital servitization’ (Paschou et al., 2020) brings strategic differ­ data-driven services enabled by the interplay between the equip­
entiation and creates the premises of more disruptive transforma­ ment manufacturer and the customers of its connect base. This is in
tions (Becker and Schmid, 2020). line with recent literature that claims that “the smartness of a pro­
Smart connected products (SCP) and technologies such as cloud duct-service offering is not linked to how many new technologies are
computing, industrial internet and big data analytics (Ardolino et al., exploited. Instead, it depends on the extent it actively enables new forms
2018) are key to this digital transformation (Porter and J. E, 2014; of value co-creation” (West et al., 2018, p. 1317).
Opresnik and Taisch, 2015). Digital technologies are exploited to Despite the strategic relevance coming from a digital service
enforce the connections with the customer base (Bu et al., 2021) and offering by manufacturing firms, a great issue remains about how
these services should be designed and delivered (Pirola et al., 2020).
In particular, the mechanisms through which value is co-created by
means of the interactions between the numerous counterparts, are
⁎
Corresponding author. not yet fully understood (Lim et al., 2018; Zambetti et al., 2021). To
E-mail addresses: [email protected] (M. Rapaccini),
[email protected] (F. Adrodegari).
fill this gap, this paper proposes a conceptual model that facilitates

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0166-3615/© 2022 Elsevier B.V. All rights reserved.
M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

this understanding. In particular, we focus on the mechanisms novel business ecosystems and digital service platforms (Adrodegari
through which the data collected from SCP are exploited to support and Saccani, 2017; Kohtamäki et al., 2019). There is agreement on the
decision making in business contexts. We show that value co-cre­ fact that basic capabilities of SCP are collecting, managing and ex­
ated by data-driven services have both aggregate (i.e., for the cus­ changing field data (McFarlane et al., 2003), via sensors, digital
tomer business) and individual impacts (i.e., for the people involved controllers/embedded software and connectivity. Data collected
in data collection), and that the corresponding benefits are con­ from SCP may regard operating and environmental conditions of
nected to the capabilities that arise from the interplay between the products and manufacturing processes. SCP can also exchange in­
actors. formation with other objects of the manufacturing/logistic system,
To address these complex and interdisciplinary issues, this study to be which they are physically and/or logically integrated to con­
integrates multiple domains of scientific research. The synthesis of stitute larger systems (Schneider, 2018). In this sense, SCP enable an
this integrative literature review is presented in Section 2. Section 3 entirely new set of capabilities that are key in value creation. Ac­
develops a conceptual framework that shows the mechanisms of cording to Porter and J. E (2014), these capabilities enable four dif­
customer value creation from data-driven services. This framework ferent goals: a) monitoring, b) controlling, c) optimizing, and d)
is then used in Section 4 to elaborate four archetypes that show the being autonomous in performing some business tasks. Each cap­
relationship between customer value and design choices of data- ability has value in itself and sets the point for moving to the next
driven services. Last, Section 5 makes some considerations about the level. For instance, the basic level can be related to the (simple)
implications and the limits of this research, together with suggesting monitoring and notifying problems to the product owner/users
avenues of future research. Most considerations specifically apply to through collecting and elaborating field data, using IoT/cloud con­
B2B settings. However, as explained in this section, they may have nection, and setting alerts thresholds. Higher levels of intelligence
broader validity. allow controlling and customizing the product’s activities. By far, the
knowledge generated from controlling and customizing can be used
2. Integrative review of the literature to develop sophisticated algorithms that optimize and enhance,
eventually in real time, the product and process performance (e.g.,
This paper uses integrative review to synthesize the literature on predict faults, activate service requests, configure operations, etc.).
a research topic in a way that enables new theoretical frameworks Finally, the last level regards those products that embed artificial
and perspectives to emerge (Torraco, 2005, Alcayaga et al., 2019). For intelligence to evaluate, decide, interact and act autonomously, in
emerging topics such as smart PSS, “the purpose [of integrative re­ order to achieve some objectives (Thomson et al., 2021). This view is
view] is rather to create initial or preliminary conceptualizations and consistent with the literature dealing with cyber-physical systems
theoretical models” (Snyder, 2019 p. 336). It is self-evident, therefore, (CPS) and digital transformation in manufacturing context (Wiesner
that this type of review does not follow a structured approach such et al., 2016). It is not surprising, therefore, that some literature on
as systematic literature review (Whittemore and Knafl, 2005). Con­ SCP focuses also on how machine intelligence can be augmented by
versely, it requires more creative ways to search for valuable source algorithms that facilitate and support decision-making in business
(MacInnis, 2011), as the researchers aim not to collect all contribu­ contexts (Zheng et al., 2020). In sum, the discussion around the
tions ever published on a given argument but rather to combine capabilities of SCP - from simple data collector/notifier of alerts to
insights from different domains (Snyder, 2019). intelligent artifacts that embed predictive and prescriptive in­
In line with the objective of this paper, we adopt this approach to telligence to decide (even autonomously) what should be done –
derive a conceptual framework (Miles and Huberman, 1994) that have greatly inspired the conceptualizations of this paper.
defines the fundamental constructs and mechanisms of value crea­
tion in data-driven services. Given the remarkable interdisciplinary, 2.2. Digital servitization and smart PSS
our review has been conducted on numerous domains such as SCP
(Section 2.1), digital servitization and smart PSS (Section 2.2), data Literature on smart PSS and digital servitization have analogously
management in smart PSS (Section 2.3), service systems described inspired our work. As illustrated in Fig. 1, this literature finds its
on the base of service science/service-dominant logic (2.4), and origin from the studies dealing with the move of manufacturing
customer value (2.5). The relevant concepts from this review are companies to service-business (Lightfoot et al., 2013). As well know,
presented in Fig. 1, that also provides key definitions, references to the focus here is on the transformation of manufacturing firms that
seminal papers and keywords that characterize the corresponding progressively integrate their product-based offering with services
literature. and move along the product-service continuum (Oliva and
We have conducted numerous searches on databases such as Kallenberg, 2003). Technological innovations are seen as both critical
Scopus and WoS using the mentioned keywords in specific combi­ challenges and enablers of this transformation (Kindström and
nations, to search for the relevant contributions laying on the binary Kowalkowski, 2014). Analogously, the studies on the concept of PSS
intersections between the mentioned domains. These contributions contribute to this literature stream, as they explore how novel
have been inductively and iteratively evaluated to extract the con­ combinations of products and services can bring environmental,
cepts that have been included in the framework. The next sub-sec­ social and economic benefits (Rabetino et al., 2018). Recently, the
tions summarize these concepts and illustrates how they contribute research on servitization and PSS have generated a growing strand
to this paper. that focuses on the role of digital technologies (Ardolino et al., 2018;
Paschou et al., 2018). These studies have coined a good number of
2.1. Smart connected products new terms, such as smart PSS, digitally-enhanced PSS, or digitally-
enabled PSS (Lerch and Gotsch, 2015; Pirola et al., 2020). In this case,
The first research that gives contribution to this research deals breakthroughs such as Cloud Computing, Industrial Internet, and Big
with intelligent/SCP. We have specifically focused on studies in Data Analytics to mention a few are seen as pillars of these novel
which technology is a mean to create value through the integration digital offerings (Vendrell-Herrero et al., 2017; Rymaszewska et al.,
and transformation of data and information from SCP and equip­ 2017; Grubic, 2018). Some studies show specifically how global
ment (Oztemel and Gursev, 2020). Seminal articles are those of companies such as General Electric (Evans and Annunziata, 2012)
Allmendinger and Lombreglia (2005), Meyer et al. (2009), Porter and and Rolls-Royce (Parida et al., 2014) are pioneer of this transfor­
J. E (2014). These investigate how manufacturers can use SCP to mation, as they exploit these technologies to deliver data-driven
innovate their business models and facilitate the development of services with higher value, efficiency, accessibility, and quality. The

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M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

Fig. 1. Scientific domains integrated in this paper.

discussion of this literature around the nature of customer value light of previous knowledge and experience of decision makers, in
from smart PSS (Zambetti et al., 2021) has therefore given a great order to gain factual understanding of choices, alternatives, and
contribution to this paper. In particular it is said that smart PSS implications of each possibility. This gives awareness around the fact
deliver customers value in numerous ways: higher availability of that acting (or not) in a certain way can likely allow the achievement
assets (Grubic, 2018), greater flexibility and customization of the expected business goals. As illustrated by West et al. (2021),
(Allmendinger and Lombreglia, 2005), higher productivity the process through which data are transformed into insights in
(Weinman, 2016), people empowerment (Hernández Pardo et al., smart PSS can be structured in certain stages. First, data have to be
2012). We have used the lens of service science and service-domi­ collected and elaborated (e.g., decimated, averaged, cleansed) from
nant logic to organize these value dimensions, as illustrated in the connected bases, before being archived in formats that are
Section 5. Central to this conceptualization is however the role adequate for further analysis. Second, data can be used to feed de­
played by the flow of data collected by SCP and smart PSS (Valencia cision-support systems (DSS), such as analytical, heuristic, discrete
et al., 2015). In fact, the substantial difference with traditional PSS events/dynamic/agent-based simulations, statistical and machine
lies in the use of these data for value co-creation (Watanabe et al., learning models. The purposes of these DDS vary to a great extent. In
2020). It is agreed that data enable value creation as far as they are fact, they can be used for descriptive (what has been) or diagnostic
transformed into digital services that meet each specific customer’s (why has happened) purposes. More sophistication is then in pre­
needs (Chiu et al., 2021). However, there is scant literature in­ dictive (what/when could be) and prescriptive (what should be done)
vestigating how the data life cycle in smart PSS is structured. This is models. Third, the outcomes from these models – that can be viewed
the reason why this paper also takes inspiration from seminal as key performance indicators, statistics, data stories, etc. - are vi­
(Gibson and Nolan, 1974) and recent (Lim et al., 2018) studies in the sualized to allow insights generation. This latter task may have dif­
domain of data management. As illustrated in the next sub-section, ferent degrees of automation (i.e., human vs. machine, manual vs
these contributions are used to introduce the data journey models of automated decisions). Very few works have addressed the extent to
smart PSS, and to explain how these influence the mechanisms for which these decisions should be automated, or left to technology-
value creation. This topic is discussed further in the next sub-section. empowered humans, in the context of smart PSS and data-driven
services offered by servitizing companies. Even fewer have in­
2.3. Using data to create value in smart PSS vestigated how much the structure of the data-driven service pro­
cess can influence the value co-creation potentials (Bu et al., 2020). A
There is a good number of works in the field of data analytics contribution of this paper, therefore, is to develop a greater under­
(Venkatraman and Venkatraman, 2019) and business intelligence standing around these arguments via integrating concepts from
(Vercellis, 2011; Zolbanin and Delen, 2018). Basically, these studies different literature domains. In particular we found interesting
agree on the steps through which data are exploited to reduce the contributions in the service systems literature, that focus on the
uncertainty that affect any business decision (Vercellis, 2011). There mechanisms of value creation through data-driven services. This is
is indeed agreement on the fact that data are elementary pieces of illustrated in the next subsection.
information, with little or no meaning (Liew, 2007). Therefore, they
have to be aggregated and elaborated to produce information, that 2.4. Service systems
conversely is meaning-laden and has descriptive power (Rowley,
2007). Business knowledge is generated in the form of ‘actionable The vast literature on service systems represents another domain
insights’, as far as this information is analysed and interpreted at the that inspired this paper (Maglio and Spohrer, 2008). Basically, this

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M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

literature postulates that value is co-created by means of purposeful 2.5. Customer value
interactions among multiple entities (Spohrer and Maglio, 2010),
such as people and organizations. These entities interact to mutually From the above considerations follows that to be effective in
integrate their resources and reach common goals. This is in line delivering smart PSS, manufacturers should distinguish the benefits
with the premises of service-dominant logic (sdl) (Vargo and Lusch, that customers can obtain from their offering, in particular those
2004) that assumes that the production of services, not goods, is the benefits that originate from interactions, resource sharing and in­
primary economic activity. Services are thus the basis of value tegration. To further explore these arguments our review integrates
creation, and these consequences are clear: service systems are the also studies in management and marketing science that explore
solely unit of analysis for fully understanding the mechanisms of value as a complex and multi-faceted construct (Christopher, 1993).
value creation (Campbell et al., 2011). In sum, value is co-created in Basically, the marketing literature agrees upon the fact that cus­
service systems by means of resource integration, through “the ap­ tomer value can be measured by the ratio between benefits
plication of specialized competences (knowledge and skills), […] for the (achievable or attained) and costs (to be incurred or sustained)
benefit of another entity or the entity itself” (Lusch et al., 2010, p. 15). A (Woodruff, 1997). In addition, value is deducible ex ante (e.g., from
service system is generally composed by operant and operand re­ perceptions and expectations), but can be realized only ex post, in
sources (Vargo and Akaka, 2012) such as people, information and the context in which the value creation process is experienced by
technologies (Maglio et al., 2009, 2015). The mechanisms of value value beneficiaries. For these reasons it is said that value is “uniquely
creation take place as far as the operant resources (e.g., a service and phenomenologically determined by the beneficiary” (Vargo and
provider, a customer, or both) apply their specialized skills to in­ Lusch, 2008, p.7). Recently, the notion of ‘value’ has become also
teract and act upon the operand ones (Clatworthy, 2011). This can pivotal in the PSS debate (Liu et al., 2021). Notwithstanding this
also be applied to smart PSS and servitization. In fact, as explained consensus, the literature still fails in reconciling the multiple entities
by Grönroos (2011, p. 287), in a service system “both the manu­ that receive value in hybrid product-service offerings (Rapaccini and
facturer and the customer are involved in an unspecified, all-encom­ Visintin, 2015). Integrated offerings can in fact generate benefits that
passing process of value creation”. Interactions among actors in are both relevant for the business and for individuals (Anderson and
service systems can be either direct (among two or more operant Narus, 1998). In line with this reasoning, this paper uses two distinct
resources/entities) or indirect (among one operant resource/entity layers. The first refers to the value that originates as a consequence
and other operand resources/entities). The first is the case of inter­ of the better/positive outcomes delivered to the business by the
actions taking place, for instance, between a technical crew that is in digital service (see Section 2.5.1). This is evaluated in comparison to
charge of maintaining an industrial equipment, and the product the existing alternatives (if any), and appear in form of economic and
specialist of the equipment manufacturer that remotely provides strategic effects. The second layer relates to the value created for the
this crew with technical support. The second is the case of the same people engaged in the digital service process (Section 2.5.2). As well
crew that download the latest diagnostic tools from the provider’s known, these latter are greatly affected by the quality of this ex­
customer support web site, and autonomously (i.e., in self-service/ perience (Berry and Parasuraman, 2004). The next sub-sections
do-it-yourself mode) troubleshoot the equipment malfunctioning. apply these considerations to the domain of our interest (i.e.,
Alternatively, indirect interactions are also in the case of the smart PSS).
equipment specialist that from remote periodically connect to the
equipment and elaborates (i.e., in super-service/do-it-for-you mode) 2.5.1. Dimension of customer value in smart PSS: the business
the operational data to produce and send to the customer a pro­ perspective
ductivity report. In the digital world, both direct and indirect inter­ Numerous studies explore the value generated by product-ser­
actions may occur remotely, with the use of advanced vice offerings, in particular in B2B settings (Kowalkowski and Ulaga,
communication technologies (Sampson and Chase, 2020). Value co- 2017; Rapaccini and Visintin,2015; Smith et al., 2012). This literature
creation is then influenced by the integrative efforts and compe­ has also nurtured the discrimination between basic and advanced
tences of both people, information, communication and technologies services, which most scholars agree upon (Baines and Lightfoot,
(Ardolino et al., 2018). Service science literature employs different 2013). In fact, it is recognized that through advanced services the
terms to distinguish between direct and indirect interactions (Bitner original equipment manufacturer (OEM) provides their customers
et al., 2008; Sampson, 2012). Irrespective of this ambiguity, there is with new capabilities. These capabilities relieve the customer from
agreement about pros and cons of the different options: the higher putting in place its own specific resources. In this sense, advanced
the intimacy between the customer and the service provider, the services generate customer value in the form of strategic focus. This
greater the inefficiency of the service process (Chase and Tansik, is also in line with what the service system literature suggests
1983). Today, digital breakthroughs have enlarged the opportunities (Campbell and Maglio, 2011). Since value is context-dependent,
for creating value through self- and super-services (Campbell and there are few situations in which the available alternatives can be
Maglio, 2011). Similarly, the advances in technologies for digital easily procured and implemented. More frequently, the digital ser­
collaboration enable more satisfying interactions and experiences vice provider puts on the table new capabilities that allow the cus­
between remote users (Wünderlich et al., 2013; Ardolino et al., 2020; tomer to keep its focus on core/strategic processes. In this case, the
Sampson and Chase, 2020). This discussion is core to the emergent digital service has significant implication for the customer’s business
literature on ‘smart service system’, that originates recently from strategy, as its provision reduces the risk of running a portion of the
service science (Lim and Maglio, 2019). Similarly to the streaming business without the required skills and resources. In many other
out of smart PSS, these studies advocate that intelligent connected cases, however, the digital service does not bring any new cap­
objects (e.g., cars, buildings, homes) can now perform more and abilities to the customer but just produces higher efficiency and/or
more tasks autonomously. Finding the right trade-off between ma­ efficacy. Efficiency means time and resource savings. In this per­
chine-to-machine, human-to-machine, and human-to-human in­ spective, the delivery of the digital service enables a lower con­
teractions is thus of paramount importance. What is missing so far is sumption of resources (input) in the customer business, and it is
exploring how resource integration mechanisms that are enabled by thus the more attractive the more it reduces the risk of producing
digital technologies can produce customer value for the different the expected outcomes in ways that are less efficient in respect to
actors in the context of smart PSS. The next subsection sheds some the given alternatives. Conversely, efficacy is the result of better
lights on this subject. process quality (i.e., lower scraps), higher volumes and thus pro­
ductivity. In this case, the digital service is the more attractive the

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M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

more it reduces the risk of not reaching the expected outcome (i.e., These interactions are notably affected by the design and delivery
getting some not desirable outcomes), in comparison to the available options (i.e., service options) of the digital service. In particular, our
alternatives. In sum, to unveil the nature of customer value in pro­ framework establishes linkages between the ways data are trans­
duct-service offerings, is key understanding whether the capabilities formed into insights (i.e., the data journey) and the way people in­
provided by the OEM via the data-driven services are already in the teract (i.e., the service options). In line with Section 2.4, value is
customer's grasp, or totally new for the customer organization always co-created by the interplay (i.e., interactions and applications
(Smith et al., 2012). In this latter case, the offering of smart PSS can of specialized competences) of the counterparts. However, in the
bring to the customer strategic benefits in addition to generic gains digital world people can interact either synchronously or asyn­
in terms of efficiency and/or efficacy. chronously, leading this to different service options (Sampson and
Chase, 2020). As shown in Fig. 2, the first option concerns the case in
2.5.2. Dimension of customer value in PSS: the people perspective which both counterparts interact directly and actively (high-touch
In addition to the benefits for the business, data-driven services services). The second option regards the case in which there is only
can be beneficial to the people involved in the service process. While one active part. This can be, respectively, the service provider (super-
important, these benefits may not have any significant impact in service) or the customer (self-service) (Campbell and Maglio, 2011).
terms of financial or strategic implications. However, the overall Keeping this in mind, we need to understand what could be the best
attractiveness of the smart PSS offering could be notably influenced option for implementing each stage of the data journey of smart PSS.
by how the service experience is designed to create value for the In fact, data collected from SCP and elaborated into actionable in­
people involved. For instance, people could refuse of either being sights are, as said, key to value co-creation. For describing the data
engaged in time consuming activities or using complicated tech­ journey, we adopt the model of Lim et al. (2018). In particular, we
nologies. In these cases, the users could show resistance toward the condensate this model in three distinct stages (see Fig. 2, left side).
adoption of smart PSS offerings. These resistances, in their turn, The first stage concerns data collection from the customer’s in­
could influence the decision of buying these services. Therefore, stalled base. In line with the paradigms of data management, such as
manufacturers should consider these aspects when designing and ETL (Extract, Transform and Load), this may also include the ela­
developing their data-driven services. As said, the literature debating boration, transfer, storage and integration with data from other re­
about the dimensions of consumer value is rather unanimous positories. Therefore, this stage synthetizes the first three stages of
(Anderson and Narus 1988; Holbrook, 2006; Payne et al., 2020). the model from Lim et al. (2018), whose purpose is to create in­
Some benefits that may first affect the behaviors of people are formational repositories.
functional or economic in their nature (i.e., utilitarian view). These The second stage is the essence of intellectual activities that are
correspond, for instance, to earning money, saving time, saving typical of data science, for instance modeling, analyzing, and vi­
mental and physical resources, experimenting less mental attention, sualizing (MAV). In this case, the objective is to transform the stored
discomfort, inconvenience, fatigue. Second, the users of data-driven information into actionable insights that will lead to informed de­
services will value the experience along the cognitive dimension. cisions, in relation to well circumstantiated business problems. The
This is the case in which the service produces an increase of the problem setting stage, in fact, precedes these activities and influence
faculties (i.e., knowledge, competences, skills) of people receiving which data (e.g., product health, asset productivity, process setting,
the services. Examples are learning the use of a new tool, or dis­ etc.) will be collected and elaborated. The purpose of the MAV stage,
covering some hidden phenomena. Third, there can be also social therefore, is to produce a given number of feasible alternatives, and
benefits. In this case, the being engaged in the service process en­ to show up those that are more consistent with the problem upon
ables new connections between the different parties. In their turn, which the decision has to be taken, i.e., that satisfy better all the
these connections bring value in different forms, basically as new economic, technical, ethical, and/or compliancy constraints
opportunities for professional networking and socialization (e.g., (Vercellis, 2011). In certain cases, this task is done by the provider
knowing who can help solving a problem). Fourth and last, people (i.e., super-service mode), in other by the customer in isolation from
can receive emotional (or esthetics) value. In this case, the benefits the provider (i.e., self-service mode). Third, the customer and the
can be translated in good feeling (e.g., relax, reassurance, etc.). In this provider mutually collaborate (i.e., high-touch service). The last
case, the data-driven service will enable experiences that are plea­ stage determines who is responsible of evaluating the alternatives,
sant and gratifying for the involved users. taking decisions and (eventually) doing the corresponding actions.
As with the case of value for the business, individual benefits can Basically, in the context of smart PSS/SCP the ETL stages are
accrue in combination. In any case, their achievement is greatly in­ carried out automatically, thanks to sensing technologies, commu­
fluenced by how individuals working in organizations of the busi­ nication technologies, cloud computing, and Industrial Internet
ness ecosystem interact reciprocally, access to and integrate the platforms. Conversely, the design options for the MAV stage can vary
resources provided by their counterparts. to a large extent, going from fully automated decisions (such as in
the case of CPS and autonomous/intelligent products), to super-
3. Conceptualizing customer value creation from data driven services, self-services, and high-touch services (Zambetti et al.,
services 2021). Irrespective of the degree of automation, people get more and
more empowered by digital tools such as business intelligence
As said, the numerous aspects discussed above have been in­ dashboards, simulation models, diagnostic tools, etc. (Ardolino et al.,
tegrated in the conceptual framework of this paper (see Fig. 2). This 2018). However, the reviewed literature shows divergencies about
section illustrates this framework and advance the discussion on strategic trends. In fact, on one side we have the spreading of au­
how the options for delivering a data-driven service affect the value tonomous/intelligent products (Thomson et al., 2021) that are cap­
creation mechanisms. able of fulfilling more and more complex missions without human
As said, customer value in smart PSS offering assumes the form of assistance. On the other, we assist to an increase of the offering of
net benefits (i.e., what you get against what you sacrifice), for both advanced services from manufacturers of industrial equipment
the business and the people involved. In line with above, business (Rapaccini, 2015). In these cases, the good producer is partly re­
benefits can be measured in terms of higher efficiency, efficacy, and sponsible for the outcome obtained by customer/product user. That
strategic focus. Benefits for people appear, instead, as utilitarian, is, products are sold as mechanisms for service-provision (Vargo and
cognitive, social and/or esthetics gains. Always, customer value is co- Lusch, 2008). Last, under other circumstances, the customer prefers
created by means of interactions among people and technologies. to keep full control over their decisions and processes, to gain

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M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

Fig. 2. A conceptual framework to understand the mechanisms of value creation in smart PSS.

flexibility and be independent from third parties (Sampson, 2012). costs, higher availability) due to automation and machine in­
This is the domain in which self-service offerings are greatly ap­ telligence. Other benefits, of course, can originate from focalization.
preciated (Campbell et al., 2011). On the base of these considera­ Since the personnel of the customer company are not involved in the
tions, we assume that MAV stages can be delivered through all the service process, they can only obtain utilitarian benefits. In fact,
service options of Fig. 2. they are automatically informed of the progress, outcome, anoma­
The last stage regards who is entitled to take the decision. Again, lies, etc. about the business process and this saves them time, mental
value can be created in more ways. In certain cases, the service and physical efforts, in respect to the alternatives. It is also to con­
provider keeps responsibility of deciding on what is best for the sider that the provider of a technology-trusted service can even­
customer. In other cases, customers are willing to keeping control, tually sell customer support services, directed to both the digital and
since they want to decide autonomously which decisions/actions physical components of the smart PSS offering. Examples of the
should be taken on the base of the information/insights given by the former are the remote releases of life cycle upgrades of the equip­
provider. Last, SCP (in their maximum sophistication) could even be ment firmware, in order to fix bugs and increase the local in­
autonomous in taking decisions an also performing actions (such as telligence. The latter are typical field service activities, such as repair,
CPS, collaborative robots, autonomous vehicles, etc.). contractual maintenance, and modernization. Among the many,
exemplary to this category are the data-driven services provided by
large OEM – such as Rolls Royce, GE and ABB - to the customers of
4. Linking value to delivery options: the archetypes of data-
their complex industrial equipment, more and more covered by full-
driven services
service contracts. These combine machine learning and fault analysis
algorithms to implement automated/self-diagnostic and main­
This section uses four archetypes, illustrated in Fig. 3, to explain
tenance alerting to the service network. In fact, the huge amounts of
the value propositions that pertain to different service options and
data collected by online monitoring have been used to develop so­
shed lights on the benefits that an originate for people and business
phisticated diagnostic models that is usually embedded in the
in each option.
equipment control software, to raise the degree of autonomy and
intelligence of these complex systems.
4.1. Technology-trusted services

The first archetype (see Fig. 3 - A) corresponds to the case in 4.2. Managed services
which data-driven services are fully automated (Porter and J. E,
2014). As said, this is the realm of advanced technologies such as In this archetype (see Fig. 3 - B) the analysis, decisions and
sensors, microcontrollers, actuators, connectivity, cloud computing presumably the corresponding actions (if any) are under the re­
and industrial internet platforms, big data and analytics/predictive sponsibilities of the service provider, irrespective it is the equipment
models. Technology-trusted services, therefore, aim at creating manufacturer or a service partner /independent organization. Again,
benefits in terms of higher efficiency and/or efficacy (e.g., lower benefits at collective level are related to focalization. They are

6
M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

Fig. 3. Four archetypes of data-driven services.

presumably less convenient than in the previous example, since the FSE from a service station) according to well defined service level
customers entitle highly skilled/specialized labor - such as data agreements. People that interact in this process receive mainly
scientist, maintenance engineering, field technicians, etc. to manage cognitive and social benefits. An example is given by Caterpillar,
the business process on their behalf. However, they are willing to that recently developed a data-driven consultancy services for the
pay for premium prices as far as the outcomes produced by the customers of its trucks and earth-moving equipment. Through re­
application of specialized skills optimize and enhance the process mote control of lubricant consumption, experts from caterpillar
performance (i.e., higher efficacy). Again, at individual level the discuss with their customer’s counterparts to identify problems and
benefits are mostly related to time and effort savings (i.e., utilitarian detect opportunities for improving and optimizing the way the
benefits). For instance, this is the case of the so-called managed print customer fleet is operated. The correct use of these machines is, in
services. These are offered by companies of the printing industries, fact, key to improve productivity and reduce safety risks on con­
such as Xerox and Ricoh, to the customers of connected fleet. Ac­ struction sites.
cording to a managed print service contract, the provider autono­
mously decides the time at which they are going to substitute the
ink cartridges of the customer fleet. The optimal time is based on the 4.4. Data-driven self-service
analysis of the data collected from the connected fleet, that people
and algorithms of the service operations center periodically perform Last, we have the example of Fig. 3 - D. In this case, the provider
to determine the residual time before out-of-ink. deploys the technologies that the customer will use for data analysis.
Decisions are taken by the customers on the base of the information
4.3. Interactive services collected by the SCP, that they transform into insights. At individual
level, most benefits originate from the empowerment of people
In this case (see Fig. 3 - C) decisions are taken in collaboration (cognitive benefit). In the long term, this empowerment can bring
between the customer and the provider. At collective level, there are higher efficacy and, presumably, efficiency. In fact, the customer
no benefits in the form of focalization strategy. Nor, presumably, keeps control of the process, and its people learn from the best
these data-driven services are more convenient than the previous. available technologies (product and data-driven services) that the
However, customer can expect the highest efficacy by the combi­ equipment manufacturers put in place in the customer context.
nation of the most specialized knowledge from both sides. Usually, Again, the actions can be done by either the customer itself, or by the
the provider is entitled to develop models and introduce state of the provider’s network. In this latter case, the customer personnel have
art technologies. Customers are responsible to provide clean and also utilitarian, and eventually esthetics gains. An example is given
representative data, validate these data and eventually integrate by Rolls-Royce Plc, that has recently launched a unique new range of
with new information. In addition, the customer should facilitate apps designed specifically for customer airline pilots. The app allows
problem setting and use case analysis. Even in this case, actions are the pilot to connect to the airplane engines of the flight they are
usually performed by some actors of the provider’s ecosystem (e.g., a piloting, check conditions, obtain insights and evaluate how to

7
M. Rapaccini and F. Adrodegari Computers in Industry 137 (2022) 103607

increase the flight performance. This mitigates the risk of running offer. Last, as far as social benefits are concerned, the services should
the airplane engines not in optimal setting. be also purposed to enlarge the professional network of the people
involved through chats, internal social media, newsfeed about ‘who
5. Considerations and concluding remarks is who’, etc.
As in any research, this paper comes also with limitations. The
This paper presents a model to characterize how customer value most relevant is the fact that the proposed model is conceptually
is created in digital services. Although previous literature addresses built on integrative literature review (Snyder, 2019) as well as on the
the nature of customer value from integrated product-service of­ authors’ long experience in digital servitization projects. However, it
ferings and smart PSS (Gebauer et al., 2021; Zambetti et al., 2021), lacks empirical and cross-industry validation which would require
apart few exceptions these studies do not explore in sufficient de­ extensive field research. Second, we believe that numerous techni­
tails how data-driven services should be designed and delivered. In ques for decision support systems, such as discrete-event simula­
particular, the linkages between design options and value creation tion, digital twins, statistical machine learning, time series and
mechanisms are really underexplored. Integrating concepts from regressive models, to mention a few, could give different contribu­
different research streams this paper assumes that value from smart tions to the effectiveness and timeliness of business decisions,
PSS is generated through resource integration. On this base, the having thus direct implications of value realization. Although out of
paper shows how field data collected by SCP are transformed into this paper’s scope, exploring the implications of each technique in
insights by the application of different combinations of people smart PSS could be an interesting avenue of future research. Third, it
knowledge/skills and algorithmic intelligence. As a result, we dis­ is authors’ opinion that more research is needed to explore the re­
criminate the nature of customer value brought by data-driven levance of emotional/esthetics benefits in industrial B2B contexts.
services and show that the benefits have distinct beneficiaries. In These are relevant, in particular, in situations in which the bound­
fact, some benefits have direct impact on the customer business, in aries between business and consumer markets are blurred (Vargo
the form of economic and strategic outcomes. Others relate to the and Lusch, 2011). An example is when the data-driven service is
value created for the people engaged in the digital service process. delivered to the driver of a connected car. This could create value for
These could eventually have indirect or no impact at all on the both work and personal activities. Therefore, with little revision the
customer business. In this respect, we postulate that combining di­ proposed model could be extended to also include the offering of
gital products (SCP) and data-driven services does not automatically data-driven services in settings other than industrial/B2B firms, such
transform any product-service offering (i.e., smart PSS) into an ad­ as smart home, smart mobility, smart buildings, etc. Last, the paper
vanced service offering (Baines et al., 2011), in the sense that this mostly assumes a dyadic perspective, and focuses on the interactions
advancement is dictated not by the technologies in themselves but between a manufacturing company and the customers of its in­
rather from the capabilities enabled by the interplay between the dustrial equipment. However, the recent literature points out the
actors involved in the digital service process. This is in line whit relevance of service platforms and service ecosystem (West et al.,
exiting literature that postulate that the adoption of digital tech­ 2021), in which actors other than the manufacturer can provide
nologies does not bring strategic benefits to the business, particu­ specialized competences to deliver digital and data-driven services
larly in those cases in which data exploitation does not deliver new (Cimini et al., 2021), thus enabling further ways of value creation.
capabilities (Porter and J. E, 2014; Ardolino et al., 2018). However, However, the literature on how digital strategies of manufacturers is
irrespective of the presence of this strategic intent, several oppor­ affected by a greater openness and systemic approach to smart PSS/
tunities for value co-creation for business and individuals can be digital servitization is still scant (Cenamor et al., 2017). Therefore,
enabled by smart PSS offerings. This is illustrated through four ar­ this is also avenue of future research.
chetypes of digital services, that differ in respect to the combination
of machines autonomy, people-to-people and people-to-machine CRediT authorship contribution statement
interactions.
Shedding lights on the delivery options that are consistent with Federico Adrodegari: Conceptualization, Methodology, Writing-
the value proposition that the customer expects, the proposed Original draft preparation, Reviewing and Editing, Mario Rapaccini:
model is of fundamental importance to design data-driven services Conceptualization, Methodology, Writing- Original draft prepara­
providing implications from both theoretical and managerial point tion, Reviewing and Editing.
of view. First, integrating numerous streams of fragmented litera­
ture, this study shows promising avenues of investigation in the field Declaration of Competing Interest
of smart PSS and data-drive services. Second, linking the value co-
creation mechanisms to the service delivery options, this paper The authors declare that they have no known competing fi­
brings new knowledge in the field of smart PSS design and en­ nancial interests or personal relationships that could have appeared
gineering. In fact, the archetypes proposed in this paper represent to influence the work reported in this paper.
first attempt to answer to the call for new methods and con­
ceptualizations that support servitization of manufacturing compa­ Acknowledgments
nies. For instance, Data-Driven Self-Services (Fig. 3 - D) should be
conceived to be highly accessible and usable. Therefore, a company The paper was inspired by the activity of the ASAP SMF, an in­
should focus on features such as easy-of-use, learnability, navigation dustry-academia community aimed at developing knowledge and
intuitiveness, portability, plug & play, etc. Conversely, interactive innovation in product-services and service management (www.a­
services can be appreciated as far as they enable frictionless inter­ sapsmf.org). The authors would like to thank the anonymous re­
actions. The service platforms should thus integrate, supposedly, viewers for their thoughtful comments and efforts towards
virtual collaboration technologies such as meeting solutions, aug­ improving our manuscript.
mented and mixed reality applications, etc. (Leonardi, 2021). When
people are attracted by the opportunity of gaining new knowledge References
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