SMEs Transform from Product Manufacturers into Solution Providers

Steinbeis experts develop product service systems for SMEs as part of a network project

In 2015, the Federal Ministry for Economic Affairs and Energy launched a partnership project as part of a funding initiative aimed at supporting digital technology strategies within SMEs and the digital transformation of business processes. The project was named Use-PSS (usability of commercial product service systems among SMEs). The background for the project is the sea change affecting the role played by manufacturing companies. Previously, manufacturers focused primarily on the development, production, and selling of premium quality tangible goods, but in the future, customers will expect end-to-end solutions. A particularly effective way to provide such 360° solutions is to adopt a “product-service system” (PSS), with one element being the product and the other being its related services. How much emphasis is placed on each element depends largely on the area of application. The aim of the project is to provide SMEs with support in setting up such a PSS. This is being achieved by working on real application scenarios with SME partners in order to develop and then test an innovative usability template for creating a PSS. The organizations that worked as partners on the project include the Pforzheim-based Steinbeis Innovation Center 2 Digital Business, Pforzheim University, bwcon GmbH (Stuttgart) – all of which belong to the Steinbeis Network – and their partners from industry, doubleSlash Net-Business GmbH (Friedrichshafen), NETSYNO Software GmbH (Karlsruhe), and teXXmo Mobile Solution GmbH & Co. KG (Böblingen).

Across all sectors of industry, manufacturers face a similar challenge, which they all need to react to quickly. Customer requirements are changing, shifting away from only wanting tangible products to buying usercentric holistic solutions instead. These are end-to-end packages combining products and services. Continual product upgrades and premium quality are no longer enough in the long term to remain competitive. The types of things that can become a USP include products enhanced by smart services and add-ons that allow them to be embedded into the processes of end users. PSS’s are now being designed and implemented as part of an extended value chain network with close ties to the customer. These will allow manufacturers to undergo a fundamental strategic change and transform into customer-oriented service providers. However, this is particularly challenging for companies if they are an SME.

To show how companies can be transformed into a PSS provider, the project team likes to draw on the example of a mechanical engineering com- pany that used to only ever think about its products. As it shifts gradually toward becoming a solution provider, the company is confronted by the need to develop an appropriate business model. This will allow the business to pull together a PSS that revolves around its current offering, and thus offer customers an end-to-end solution that focuses on solving customer problems. So instead of simply selling machines like it used to, the firm could start by renting out its machines. The client then benefits from extended support such as training, maintenance services, or help with process optimization. As the emphasis shifts firmly to focusing on services, the company still offers its customers the same machines, but as part of a 360° service package, even allowing for payment per produced component. Such end-to-end solutions cover all tasks linked to the life cycle of the customer’s own product, from procurement to selling and disposal.

To help SMEs develop and introduce a PSS that is easy to follow, the Use-PSS initiative is introducing a number of tools and measures:

  • The project team has created a design template for developing a PSS, taking certain usability criteria into account.
  • These procedure models will be tested with SME providers and users in the second phase of the project in order to arrive at validated best practices regarding the right approach to adopt when developing and implementing a PSS for an SME.
  • To share findings with a broader audience, further stages of the project will involve posting information online for specific target groups and organizing information days, seminars, and training.

Using PSS solutions makes it possible for providers to raise their turnover in the long term and offer customers more benefits. As a result, customer loyalty is enhanced resulting in competitive advantage. To help companies undergo such a transformation, one of the key outcomes of the Use-PSS project will involve setting up a competence center for SMEs and thus providing a first port of call and networking platform. The plan is to continue running the center to provide SMEs with support even after the project has been completed. Two main areas that the 2 Digital Business center at Steinbeis is working on as part of the project are firstly to pull together examples of best practice when using the new methods and models at an SME, and secondly to develop services that will work in practice. The results of this work will then be shared with SMEs. The Use-PSS project is part of a initiative backed by the Federal Ministry for Economic Affairs called Simply Intuitive – Usability for SMEs


For further information on the Use-PSS project, go to

Prof. Uwe Dittmann, Prof. Alfred Schätter
Steinbeis Innovation Center 2 Digital Business (Pforzheim)

Share this page