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Managing the transition from products to services

At the time of writing, many of the larger retailers are re-engineering their business processes, and they also re-consider their organisation. Due to improvements in infrastructure and logistics (e.g. the just in time principle) as well as information technology advances (e.g. through Electronic Data Interchange; EDI), many retailers are currently centralising their sourcing policies. Table 10 shows recent developments in this respect, while table 11 gives an outlook on current trends and the expected evolution | The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at http www.emeraldinsight.com researchregister http www.emeraldinsight.com 0956-4233.htm IJSIM 14 2 160 InternationalJournal of Service Industry Management Vol. 14 No. 2 2003 pp. 160-172 MCB UP Limited 0956-4233 DOI 10.1108 09564230310474138 Managing the transition from products to services Rogelio Oliva Harvard Business School Boston Massachusetts USA and Robert Kallenberg Porsche AG Stuttgart Germany Keywords Service Management Strategy After-sales service Abstract Management literature is almost unanimous in suggesting to manufacturers that they should integrate services into their core product offering. The literature however is surprisingly sparse in describing to what extent services should be integrated how this integration should be carried out or in detailing the challenges inherent in the transition to services. Reports on a study of 11 capital equipment manufacturers developing service offerings for their products. Focuses on identifying the dimensions considered when creating a service organization in the context of a manufacturing rm and successful strategies to navigate the transition. Analysis of qualitative data suggests that the transition involves a deliberate developmentalprocess to build capabilities as rms shift the nature of the relationship with the product end-users and the focus of the service offering. The report concludes identifying implications of our ndings for further research and practitioners. Introduction Management literature is almost unanimous in suggesting to product manufacturers to integrate services into their core product offerings e.g. Bowen et al. 1991 Gadiesh and Gilbert 1998 Quinn et al. 1990 Wise and Baumgartner 1999 . The rationale for such integration is normally put forth along three lines. First there are economic arguments. Substantial revenue can be generated from an installed base