Digital Product-Service Systems: The Role of Data in the Transition to Servitization Business Models

Abstract

The Circular Economy, as a guiding model for business processes, is attracting interest due to its potential for aligning business and societal goals as it offers companies the opportunity to simultaneously focus on economic value creation and on the mitigation of environmental damage. It is becoming increasingly clear that digital technologies are an essential component of this model as they enable transparency and efficiency in closing material and energy cycles. Additionally, digitalization leads to efficient business models that revolve around adapting the value proposition to the insights gained from the continual analysis of data, shifting the emphasis of Product-Service Systems towards the service end of the spectrum. As such, these new business models are categorized as forms of Servitization. Despite the increasing importance of Servitization and digitalizing business processes, such as the move towards what is referred to as Industry 4.0 in the manufacturing industry, the associated transition towards widespread adoption of the principles of the Circular Economy is slow. This explorative study investigates key themes and challenges in transitioning towards digitally-enabled Servitization in the manufacturing industry and the relationship with the Circular Economy. Through interviews with experts from the realms of digital technology, Industry 4.0, and business sustainability, a set of research questions is developed that forms a research agenda.