Overview of the problem and the framework

To answer the needs of contemporary customers, companies need to offer more than just simple products or services as customers nowadays look for complete solutions to solve their problems and improve their business performance (Sawhney, 2006). To an-swer to evolving customer needs and at the same time create competitive advantage, manufacturers increasingly include services in their offerings (Brax, 2005; Ulaga &

Reinartz, 2011) following the trend known as servitization (Vandermerwe and Rada, 1988). According to Neely (2008), over 59% of the US and 53% of Finnish manufacturing companies have adopted a range of servitization strategies. Furthermore, the growing popularity of XaaS models in the IT industry stemming from the ownership and respon-sibilities’ shifting and focus on outputs, i.e., performance, led manufacturing companies to also create a-service offerings (Classen et al., 2019). One of the most common as-a-service offerings among manufacturers is product-as-as-a-service (PaaS) offering.

Despite its popularity, the notion of a PaaS offering is rarely used in academic sources and when it appears, it refers to products sold with service revenue models (Cusumano et al., 2015), the highest degree of an extended product offering placed on the ‘service -end’ of the product-service continuum (Ducq et al., 2012) or just a single service offering composed of bundles of products and services (Classen et al., 2019). While being vaguely defined, PaaS offerings also pose challenges such as how to analyse and com-municate the value of such offerings. Manufacturers have learned how to analyse and communicate the value of product-based offerings, but the value of service-based offer-ings is more complex to analyse and quantify because of service intangibility amongst others (Kindström et al., 2012). The meaning of service and understanding of service value has also evolved over-time (e.g., Vargo and Lusch, 2008b; Grönroos and Voima, 2013), which adds up to the complexity of defining customer value of PaaS offerings.

Customer value of any offering, hence also a PaaS offering, can be expressed in terms of customer perceived value, which is the difference between total customer value and total customer costs incurred in the use of the offering (Anderson et al., 2009). On top of that, customer perceived value should be expressed in a measurable form, i.e., it should be quantified (Hinterhuber et al., 2017) as the quantification, preferably in monetary terms, allows for comparison between offerings (Wouters and Kirchberger, 2015). Cus-tomer value can be quantified and benchmarked with competing offerings during the

value potential identification and baseline assessment stages of the value assessment process (Keränen & Jalkala, 2013; Hinterhuber et al., 2017). Customer-specific value calculations can be performed using various modifiable tools and methods (Anderson and Narus, 1998; Hinterhuber et al., 2017) and the results of comparative value quanti-fication communicated in a customer value proposition (CVP).

There is no agreement on what exactly constitutes a CVP nor what makes one compel-ling (Anderson et al., 2006). There are many definitions of a CVP, and Payne et al. (2017) divided existent definitions based on the implied involvement of the customer in creation of the CVP into a supplier-defined, transitional and mutually defined CVP. There also exist many frameworks that guide how to build each type of a CVP (e.g., Anderson et al., 2006; Rintamäki et al., 2007; Skålén et al., 2015). However, it is not discussed what kind of CVP is suitable for a PaaS offering nor how such a CVP should be created.

Importantly, PaaS offerings belong to the customer solutions kind of offerings and hence PaaS offerings can be seen as the combinations of customized and integrated goods and services intended to meet specific customer needs (Sawhney, 2006). However, Nor-din et al. (2011) emphasizes that while offering services companies should balance be-tween the right amount of customization and standardization. In terms of PaaS offerings, it may mean that those offerings can be built out of pre-defined modules and the specific modules put together for specific customers. According to Voss and Hsuan (2009), such modularity gives the customer choice among different service configurations and at the same time enables the provider to customize the offering for the customer.

If a PaaS offering is customized for each customer, also the customer value is custom-ized for customers, and different customers may derive different customer perceived value that should be reflected in a CVP. The modularity of PaaS offerings should not only help to customize the offering for the customer but also create a matching CVP (Heikka et al., 2018). However, the customization of an offering and the CVP are mainly discussed as done by a service provider (Heikka et al., 2018), and hence these elements are customized (Gilmore and Pine, 1997) as despite the customer’s potential collabora-tion the offering and the CVP are tailored to the customer’s needs by the provider.

This thesis, however, argues that the customer value and the customer value proposition for a PaaS offering can be also customizable. Build on idea of a customizable offering, i.e., adaptive customization (Gilmore and Pine, 1997), customizable value is the effect of a customer’s actions, capabilities and the specific use of a PaaS offering. It means that even identical configuration of a PaaS offering may result in different customer value for different customers. The difference in perceived customer value is a result of varying

use situations in which the PaaS offering is used (Fennell, 1978; Woodruff, 1997; Grön-roos and Voima, 2013). Thus, a provider can offer customized value estimations while value becomes customizable at the customer. This also implies that customer value proposition to be customizable requires involvement of the customer in the process of crafting the CVP. However, the customizable CVP is not only mutually defined (Payne et al., 2017) but as customer value evolves over time (Vargo, 2009; Grönroos and Voima, 2013), also the CVP proposition evolves based on changing customer use situation. The idea of customizable value proposition for PaaS offerings has been turned into the final framework of this thesis. The figure below presents the final framework of the thesis and how it was constructed.

Theoretical framework of the thesis – chapter breakdown.

To conclude, this thesis argues that the value of the PaaS offerings can be communi-cated using a customizable value proposition approach. The use situation of the PaaS offering should be considered in the initial value potential estimations to customize the value statement for the customer and with the customer. Also, capabilities and resources needed to derive the estimated value potential, and how the potential value can be de-rived should be discussed within the CVP. However, as the needs of a customer or use

Chapter 2 + Chapter 3

PaaS

Hinterhuber et al., 2017), Anderson et al.

(Keränen and Jalka, 2013;

Lyly-Yrjänäinen et al., 2019) Building blocks Types of CVP Practices/Steps Resources

• Customer s role (Kozlenkova et al., 2014;

Payne et al., 2017) Building blocks Types of CVP Practices/Steps Resources

• Customer s role (Kozlenkova et al., 2014;

Payne et al., 2017) Building blocks Types of CVP Practices/Steps Resources

• Customer s role (Kozlenkova et al., 2014;

Payne et al., 2017) Building blocks Types of CVP Practices/Steps Resources

• Customer s role (Kozlenkova et al., 2014;

Payne et al., 2017)

CVP 1 - Configuration 1 CVP 1 - Configuration N

Anderson et al.

(1998) Menon et al.

(2005) Smith and Colgate (2007)

Hinterhuber et al., 2017), (Keränen and Jalkala, 2013;

Lyly-Yrjänäinen et al., 2019) Anderson et al.

(1998) Menon et al.

(2005) Smith and Colgate (2007)

Hinterhuber et al., 2017), Anderson et al.

(Keränen and Jalka, 2013;

Lyly-Yrjänäinen et al., 2019)

Hinterhuber et al., 2017), Anderson et al.

(1998) Menon et al.

(2005) Smith and Colgate (2007)

(Keränen and Jalkala, 2013;

Lyly-Yrjänäinen et al., 2019)

(Keränen and Jalkala, 2013) Baseline Assessment

(Keränen and Jalkala, 2013;

Lyly-Yrjänäinen et al., 2019)

Hinterhuber et al., 2017), Customer 2 Building blocks Types of CVP Practices/Steps Resources

• Customer s role (Kozlenkova et al., 2014;

Payne et al., 2017)

situation of a PaaS offering may be changing over time, these changes should be re-flected in the CVP, and hence the CVP should be reconfigured. Therefore, a customiza-ble CVP should not be treated as a passive provider-customer communication tool but a platform to reflect customer-driven changes in what value is derived and how is it done to understand the value creation process better and be able to respond to unwanted or unpredicted changes so that the customer and provider are satisfied from the outcomes of the business relationship.