Applying IIoT and AI - Opportunities, Requirements and Challenges for Industrial Machine and Equipment Manufacturers to Expand Their Services

Peter Qvist-Sørensen

Central European Business Review, 2020, vol. 2020, issue 2, 46-77

Abstract: Theroretically, servitization benefits industrial companies to generate more revenue, integrate themselves deeper into the value chains of their customers and improves the competitiveness. The ongoing digital transformation can enable servitization towards more advanced services with a more customer centric view. Macro economically, the industrial sector is very important for most of the developed countries. The digital transformation is posing a triple challenge to the machining and equipment manufacturers and will require a continued development of the existing business models, a change of organizational structures and a strong leadership to remain successful. The companies will need to re-evaluate their market justification and define their value proposition to both existing and potentially new customers. New skills are required as data and analytics, represented by IIoT and AI, will play an ever-larger role in the companies' interaction with their present and new customers. For the industrial companies, servitization is both linked to higher risk and to a higher earnings potential. Implications for Central European audience: The implications for Central European industrial companies of the ongoing digitalisation and servitization will be profound. The European car industry is undergoing significant changes and not only due to E-mobility. Also Products-as-Service will have an impact on their whole value chain. The industrial sector in general and the machining industry in particular will need to re-assess its business models and revenue generation. In addition, senior management is already confronted with the need for both new skill-sets and possibly more agile organisational structures, where the industrial mind-set will be challenged by new service models and the thinking of the digital natives.

Keywords: Servitization; SSPs; SSCs; machining and equipment manufacturers; digital transformation; Industrial services; IIoT; Artificial intelligence (search for similar items in EconPapers)
JEL-codes: M15 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.18267/j.cebr.234

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