The Role of E-Services in the Transition from the Product Focus to the Service Focus in the Printing Business: Case Lexmark

The Role of E-Services in the Transition from the Product Focus to the Service Focus in the Printing Business: Case Lexmark

Esko Penttinen (Helsinki School of Economics, Finland), Timo Saarinen (Helsinki School of Economics, Finland) and Pekka Sinervo (Lexmark, Finland)
Copyright: © 2009 |Pages: 10
DOI: 10.4018/978-1-60566-064-6.ch011
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Today, many manufacturing companies are focusing on their service operations, which are often seen as a better source of revenue than the traditional product business. E-services can accelerate this process by offering companies new ways to control products and monitor equipment from a distance. This chapter describes the changes which are taking place in the printing business. It tells the story of Lexmark, a printer manufacturer that has recently created differentiated offerings to its business customers. In the case of Lexmark, this repositioning of offerings has been enabled by e-services. Here, the e-services consist of the Lexmark Fleet Manager system which monitors the use and availability of the equipment and makes suggestions on how to improve the printing processes on the customer site. The case ends with a description of the actual challenges that Lexmark is currently facing.
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Background: Theory Suggests Moving Towards Services

Management theory suggests that product manufacturers should move downstream closer to the customer and provide different kinds of services along with their tangible products (Oliva & Kallenberg, 2003; Penttinen & Palmer, 2007; Quinn, 1992; Vargo & Lusch, 2004; Wise & Baumgartner, 1999). Manufacturers’ traditional value-chain role—producing and selling goods—has become less and less attractive as the demand for products has stagnated throughout the economy (Wise & Baumgartner, 1999). The demand for different kinds of services, on the other hand, has grown considerably. Increasingly, the customers of manufacturing companies are concentrating on their core competencies and, often, do not regard the maintenance of machines as being part of their core business.

Services within the manufacturing business include, for example, maintenance services, condition monitoring services, training services, consultation services, installation services, and documentation services (Oliva & Kallenberg, 2003). Increasingly, these services are in electronic format. As an example of an electronic service, manufacturing companies have innovated information systems that enable condition monitoring from a distance. These systems allow companies to keep an eye on their equipment on the customer site more effectively.

Service industries have grown in importance compared to the agricultural and manufacturing industries. Steady productivity increases in agriculture and manufacturing have meant that it takes ever fewer hours of work to produce or buy an automobile, a piece of furniture, or a home appliance. While productivity has improved, the demand for goods is somewhat capped; people can only consume limited quantities of automobiles, sofas, and washing machines (Quinn, 1992). At the same time, the installed base of products has been expanding steadily in many industries, thanks to the accumulation of past purchases and to longer product life spans (Wise & Baumgartner, 1999). The combination of this stagnant product demand and an expanding installed base has pushed economic value downstream, away from manufacturing and toward providing services required to operate and maintain products (Wise & Baumgartner, 1999).

Many manufacturing companies have learned their lesson and have turned to services in search for growth and increased profitability (Penttinen & Palmer, 2007). Examples of successful companies include the elevator company KONE and the bearing producer SKF (Penttinen, 2007; Penttinen & Palmer, 2007; Penttinen & Saarinen, 2005). These companies have been actively inventing electronic services. For example, SKF has innovated intelligent bearings which report the status of the bearings to SKF. This is done by inserting a sensor to the bearing core which measures the vibration and motion status of the rotating components. These e-services allow SKF to provide maintenance contracts more economically than before. Similarly, KONE has added intelligence to their elevators, allowing a more efficient monitoring of their products from a distance.

Others have not been as successful in making the transition from product manufacturer to service provider. According to Oliva and Kallenberg (2003), there are three successive hurdles to overcome the problems related to the transition from products to services. First, firms might not believe in the economic potential of the service component for their product (e.g., engineers are more excited about building a multimillion-dollar piece of equipment than about a service contract for cleaning it). Second, firms might not have the capabilities and competencies to provide services for their products. Third, firms might fail in deploying a successful service strategy (e.g., Ford Motor Co.’s attempt to enter after-sales services was blocked by its network of independent dealerships) (Oliva & Kallenberg, 2003).

Complete Chapter List

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List of Reviewers
Table of Contents
Virpi Kristiina Tuunainen
Ada Scupola
Chapter 1
Anders Henten
This chapter examines the provision and codevelopment of electronic services, content, and applications at the conceptual level. There is focus on... Sample PDF
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Chapter 2
Ioannis P. Chochliouros
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Chapter 3
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Chapter 4
Calin Gurau
The evolution of information technology applications has changed the landscape of the service industry, offering the possibility of customer... Sample PDF
Self-Service Systems: Quality Dimensions and Users' Profiles
Chapter 5
Carlos Flavián Blanco
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Online Journalistic Services: Are Digital Newspapers Complementary to Traditional Press?
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Benita M. Gullkvist
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Emerging E-Services in Accounting: A Longitudinal Case Study
Chapter 8
Aki Ahonen, Jarno Salonen, Raija Järvinen, Jouni Kivistö-Rahnasto
The chapter introduces an innovative organizational logic for developing and designing electronic services especially in the context of financial... Sample PDF
eInsurance: Developing Customer-Friendly Electronic Insurance Services from the Novel Project Perspective
Chapter 9
Zhongxian Wang, James Yao, Ruiliang Yan, Jeffrey Hsu
eBay provides online marketplaces for the sale of goods and services, online payments, and online communication offerings. Their three primary... Sample PDF
eBay: An E-Titan Success Story
Chapter 10
Hanne Westh Nicolajsen
In this chapter we analyse organizational challenges when an engineering consultancy in the building industry integrates information and... Sample PDF
Limitations and Perspectives on Use of E-Services in Engineering Consulting
Chapter 11
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Today, many manufacturing companies are focusing on their service operations, which are often seen as a better source of revenue than the... Sample PDF
The Role of E-Services in the Transition from the Product Focus to the Service Focus in the Printing Business: Case Lexmark
Chapter 12
Alexander Yap
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Chapter 13
Simon Heilesen
Examining electronic services both as products and as organization, this chapter discusses the development and management of e-services at Roskilde... Sample PDF
The Case of Roskilde University E-Services
Chapter 14
Ada Scupola
This chapter reports the findings of a case study of e-services adoption at research libraries. The case under consideration is Roskilde University... Sample PDF
E-Services in Danish Research Libraries: Issues and Challenges at Roskilde University Library
Chapter 15
Tommaso Federici
This chapter deals with the introduction of electronic procurement in the public healthcare domain. After a brief discussion on the healthcare... Sample PDF
Introducing E-Procurement in a Local Healthcare Agency
Chapter 16
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Chapter 17
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