The role of data in the transition to service business models

Abstract

The circular economy, as one of the new models of business process design, is attracting interest due to its ability to align business and societal goals, as it allows companies to simultaneously focus on creating value and reducing environmental damage. It is becoming increasingly clear that digital technologies are a critical component of this model, as they provide transparency and efficiency in closing material and energy cycles. In addition, digitalization is leading to efficient business models that are based on adapting the value proposition to the insights gained from continuous data analysis, which shifts the focus of product-service systems towards services. These new business models are thus classified as forms of Servitization. Despite the growing importance of Servitization and digitalization of business processes, the associated transition towards widespread adoption of closed-loop economy principles has been slow. This study examines the challenges associated with the transition to digital Servitization in the manufacturing industry and its relationship with the circular economy.