At Si2 we perceive that Digital Servitisation (or data driven service business models) can occur when companies have digitised their back-office processes, digitised their installed base and customer touch points. See our recent article on Digital Servitisation.

So it is very interesting to see research and other perspectives and we thank Theoni Paschou and her team for allowing us to publish their excellent  piece of recent research. In particular I am interested that they found that the “soft” competencies such as Problem Solving / Trusted Advisor language / team working / Leadership which are more important than the technology capabilities.

The Competences for Digital Servitization: A Survey on Italian Companies

Like many of the transformations, which are taking place nowadays, digital servitization creates a strong discontinuity with the past, mostly in terms of the required competences. Therefore, it is essential to overcome this gap by identifying, which professional figures and competences are the most needed by companies. These aspects were discussed during the workshop organized by ASAP, the Italian community on service management and servitization, on 27 February in Brescia.

During the event, after a brief introduction to the research topic by Prof.Nicola SaccaniFederico Adrodegari spoke about the evolution of the concept of Digital Servitization, such as the development of new services through the exploitation of data, and how the theme of competences can constitute an increasingly significant obstacle for the development of services.

Servitization indicates a new business model that shifts the offer from the product sale to the product service system sale. Rolls Royce was one of the first companies which began to sell, instead of engines, the flight hours. Some years later, the digital revolution constrained even services to enter the interconnected ecosystem. Today we refer to Digital Servitization as a new digital business model with a strong customer orientation. From a model focused on the product sales we move to a model that increases the value of the offer thanks to the service sales. From supplying spare parts to predictive maintenance, Digital Servitization is now changing the jobs and identity of companies.

An interesting example is given by the multinational company Pietro Fiorentini, leader in the production of natural gas distribution products. During the last ten years, the company “has tripled its business by focusing on services – says the senior advisor Gianfranco De Feo-. We went from a turnover of 150 million euros in 2008 to 340 million euros in 2018, with an investment of 27% of the total in Digital Content”. In addition to regulators and valves, the group has started offering “Smart metering” services, using 4.0 technologies such as Smart grids and IoT. “A total transformation of our image as a mechanical company” comments De Feo. It is not easy to make a similar change in a conservative sector such as the Oil & Gas sector. Although De Feo notes, that there is a big difference between one country and another: “In China we provide a selection of data, we sell an item with ten years of connectivity and insured services. It is the most advanced country, while Italy, with the same offered services and identical electronic objects, until now asks only for data management”.

Exploring the degree of servitization and competences diffusion among Italian companies is the latest research of ASAP. For that reason, a survey was conducted, between October 2018 and January 2019. More than 140 companies were asked to specify which competencies, according to them, were the most necessary in order to activate a servitization process in the face of a constantly evolving 4.0 scenario. Although 80% of the investigated companies declared that they have already applied a project related to industry 4.0, expecting positive benefits (85%), the research found a significant gap between the importance attributed to skills and their real presence within the companies. Four macro-categories were examined (based on the framework that was developed during a previous study of ASAP): Data analysis, Digital content creation, Soft skills, and Innovation appetite.

Regarding the phenomenon of Digital Servitization, the following competences were considered the most important for the whole sample of the examined companies: problem solving, data analysis and team working. Furthermore, the identified key roles were Data Scientist and the Chief Innovation Officer. From the research results, however, there seems to be a good propensity towards the new business model, but, according to the researchers, “more efficient communication between different functions is needed to change the transformation processes”.

The discussion therefore entered into the subject when Theoni Paschou presented the results of the ASAP research which was based on a preliminary study of the literature, case studies on 25 leading companies in different sectors and an extensive survey involving more than 140 companies. Some of the results are following.

The survey was completed by 141 respondents coming from different companies. In regards to the participants’ functions; 38% belongs to the managing directors, 31% to service and the rest is divided to HR, R&D, Marketing and Sales, etc. According to the dimension classification of European Community, we classified respondents based on companies’ size: micro and small 30%, medium 21% and large 49%. The sample is characterized by a greater share of large companies due to their greater awareness and interest on the field of digital servitization. The responding companies mainly operate in the Capital Goods (39%; i.e. aerospace and defense, construction, medicine machinery, etc.), Consumer Goods (17%, i.e. consumer electronics, electrical appliances, etc.), Oil and Gas, Energy, Chemicals and Materials (15%, i.e. plastics, metals, mining, paper, etc.), Information technology (15%, i.e. hardware, software provider, system integration) and other sectors (14%) such as media and consulting services.

First, we investigated the competences importance and presence of the sample based on the company’s dimension (see Table 1). The data show that the average importance of the examined competences is much higher for the large-size (2.83) followed by small and medium firms. However, the average presence is lower, creating a significant gap mostly for the large firms. It is notable that medium size companies show the lowest importance and presence among all.

Table 2 shows the same analysis but using the industry sector segmentation. Important differences emerge among industrial sectors; in fact, companies operating in the information technology sector appear to be more advanced. On the other hand, capital goods sector seems to be the least skilled. Another important aspect is the difference among the competences’ importance and presence. For instance, consumer goods sector has the greatest gap, which means that although they valuated the identified competences very important for their reality, their presence is rather low in contrary to the information technology sector.

Furthermore, we explored the average importance and presence of each competence (see Figure 1). Problem solving seems to be the most significant and present competence as well, followed by data analysis and team working. We notice that there is an important gap among presence and importance. Hence, manufacturers need to understand deeply their needs and problems, and then invest accordingly in order to fill this gap either by reskilling or recruiting new talents.

Figure 2 demonstrates the correlation between the average competence importance and the difference between average importance and presence. On the one axis we have the average importance and on the other one the difference among the average importance and presence. We examined the correlation of these two factors and we can distinguish 3 key areas. The green area is critical because the importance is very high and at the same time the difference of importance to presence is also very high. Practically, it means that these competences (data analysis and problem solving) are crucial for the companies however they are not that developed. The red area in the middle is of a lower importance (medium to high) with the same gap which indicates that these competences are of a lower importance, however there is room for further improvement. The blue area has approximately the same average importance as the red one, but the gap is smaller. Despite having the same importance as the competences in the red area, they are more present.

Aiming at understanding better the above results, we proceeded by breaking down the whole sample based, initially, on the firms’ size. In particular, the ability of solving complex problems and being creative remains in the first position for the small and large size firms. However, for medium companies, data analysis is the most important competence, followed by problem solving. Table 3 shows the average competence importance based on the firm’s dimension. Competences like problem solving, data analysis, team working and results orientation are positioned always in the first places but sometimes in different order. This strengthens the fact that these are the most crucial competences regardless the company size.

In addition, investigating the competence significance based on each sector, a series of important differences emerge. In fact, for companies which operate in oil and gas, capital goods and information technology sectors, the competence with the higher value is the problem solving. The same competence is in the second position for consumer goods sector. Furthermore, the ability to search and analyze data gets much of attention in all sectors. Table 4 presents in detail the importance of the competence for every examined sector.

With particular reference to the skills gap to be filled by the companies, Mark Homer of ServiceMax therefore indicated that a possible answer to the problem could be a right balance between highly specialized professionals and freelancer technicians. The event ended with a round table moderated by the Prof. Mario Rapacciniand involved Antonio Caizzi, Director of Technical Support Service of IBM Italy, who explained how he managed the digital transformation of their service through the use and training of highly specialized workforce; Gianfranco De Feo, Senior Advisor of Pietro Fiorentini SpA, a manufacturing company with a targeted acquisition plan of highly specialized companies in the Digital and other sectors, has managed to increase its turnover level related to services since 10 years from 3% to 27%; Paola Liberace, head of Vetrya Academyemphasized how important it is for companies to instill the culture of re-learning to their employees; Umberto Frigelli, National Coordinator of the Research Center – AIDP and professor of work psychology at the Catholic University concluded the round discussion by suggesting the audience not to focus only on what skills they need now but rather on the skills of that have a long-term vision.

The workshop therefore offered a series of very interesting ideas to the participants which can be summarized as follows:

  • a transformation and growth strategy driven by the offer of advanced digital services (“digital servitization”) requires an organizational development and creation of new competencesfor the companies;
  • the development of new competences can be achieved through alliances and partnerships and / or through the acquisition of software houses
  • the technician is always a key figure in the provision of these services, and must be involved and placed at the center of the reskilling processes (power, rationality, emotions);
  • the on-boarding of millennials must be designed considering the different needs (flexibility), the socio-cultural aspects (e.g. GIG economy, freelance, entrepreneurship, soft skills) and the digital tools typical of each generation, whose use can facilitate access and integration of skills and knowledge.
  • creative and co-creative problem solving will always be the key competence.

Theoni Paschou has studied Business and Economics and has international educational and working experience in five different countries of the EU. is currently completing her Ph.D. studies at the University of Brescia, Italy, in the department of Mechanical and Industrial Engineering. Her research field is related to the phenomenon of digital servitization, in which she focused on how the digital technologies like Internet of Things, Big Data, Artificial Intelligence and Virtual and Augmented Reality are changing the service business (strategy, people, processes). More specifically, she identified and developed a framework of the most required competences for the workforce of a company, which is under the digital transformation. During her research, she got a great experience in different scientific methodologies such as interviews, case studies, survey and modelling. Moreover, one third of her research project was conducted at the University of St.Gallen, Switzerland, in the Institute of Information Management.