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Not Just Selling Data - How Companies Co-Create Value in Analytics-Based Service Innovation
Authors: Ronny Schüritz (Karlsruhe Institute of Technology, Germany), Killian Farrell (Karlsruhe Institute of Technology, Germany), Fabian Hunke (Karlsruhe Institute of Technology, Germany), Gerhard Satzger (IBM)
For decades, companies used the increased availability of data and the means of making sense of that data to make better decisions and drive operational efficiencies inside the company. Since then, the possibilities to collect and analyze data have come a long way. Today, companies are increasingly using analytics to connect with customers by helping their customers make decisions and solve problems. Heavy equipment manufacturers predict the failure of parts and proactively maintain equipment in order to reduce operational downtime for their customers; banks communicate to their account owners a breakdown of the spending in categories to increase transparency.
In our research, we interviewed 43 business and IT managers and surveyed 511 product managers responsible for an analytics-based services to analyze how companies apply analytics to innovate their service portfolio.We explore how companies connect with their customers to co-create value. Our analysis identifies that analytics-based services are not just about selling data. Instead their maturity can be conceptualized analogously to the established data value chain: services create value by delivering data, by providing insightsand by taking actions. Taking a service dominant logic perspective shows us that–depending on the design of the service–the data value chain is split between the provider and the customer and value is co-created to a different extent.
In some services the provider delivers datavia reports, dashboards, APIs or visualizations – the customer being a mere recipient. In others, the provider clearly delivers insightsby offering alerts, aberrational activities, benchmarks or suggested next steps. The customer enables this service by giving the provider a richer understanding of its processes, practices and access to data – value is co-created. In some cases, providers are enabled to actbased on the insights they derived. They make decisions for their customer and change the situation in a favorable way (e.g. predictive maintenance). These analytics-based service innovations act in the form of automated tasks, manual interventions or self-service options–provider and customer are deeply linked. Growing from delivering data to automated action amplifies the value effectively co-created and the provider’s influence on the value creation process, increasing the value capturing potential for companies.
The findings from this research contribute to the understanding of analytics-based service innovation and inform practitioners who want to effectively use analytics to increase the value of their service portfolios. Furthermore, they contribute to the understanding of value co-creation by showing how stronger customer interaction can more reliably lead to value for the customer.