## 3 Servitization Scenarios of Top 5 IT Enterprises
### IBM Servitization Scenario  
In this subsection, we perform an IBM Servitization scenario analysis. First, we examine the changes faced by business segments and the revenue distribution. Then, we discuss the challenges and positive/negative effects of the Servitization transition [6; 7; 8]. (1) Changes Assessment by Business Segment  
During an observation period (from 2005 until recent years), IBM business segments remained the same, but their priority shifted. To start with, there was only a global services segment, which included every service provided. In the last decade, IBM started focusing more and more on services by splitting global services into two business segments. Furthermore, although IBM already had a strong service-oriented Product Service System (PSS) it increased its efforts in some areas. In addition, it worked towards a result-oriented PSS in terms of its outsourcing [53; 54; 55; 56; 57; 58; 59; 60; 61; 62; 63; 64]. In Figure 5[53; 54; 55; 56; 57; 58; 59; 61; 62; 63; 64], we show the results of the change analysis by IBM Servitization transition in the period between 2005 and recent years. Several terms used in the figure are as follows: Global Business Services (GBS), Global Financial Services (GFS), Global Technology Services (GTS), Systems and Hardware (S&H), and Systems and Technology (S&T). In Figures 6-8[53-64], we present the results of our analysis in three primary segments: hardware, software, and services. The analyzed time-period--a decade--showed a shift in all segments towards (IT) Products/Services. Figure 5: IBM Servitization Transition – Changes Analysis. Figure 6: Hardware Offering (own illustration according to the IBM annual reports). Figure 7: Software Offering (own illustration according to the IBM annual reports). As illustrated in Figures 6-8, IBM has decreased the number of products and services they offer. Most of IBM's hardware business was disinvested, as they did not include it in their new business model. IBM's software offerings have increased in the last decade. In addition, today, IBM includes advanced innovations to further move towards a result-oriented PSS. Moreover, almost 50% of the software revenue that IBM earns is delivered via their cloud service or on demand. This is further evidence of a switch from selling products to selling services. Through the process of changing from offering individual services to an all-round solution package, many of the services offered over the decade have been bundled and technically integrated [53; 54; 55; 56; 57; 58; 59; 60; 61; 62; 63; 64]. (2) Revenue Distribution  
Herein, we perform an assessment of the revenue distribution by using available industrial sources (Figures 9 and 10) [53; 63]. The revenue comparison over the decade displays the previous importance of services for IBM in 2005, which was because IBM was one of the key leaders of the Servitization initiative in the IT sector. From 2015, IBM increased their percentage of services, although the primary services global technology and global business services have stagnated [53; 54; 55; 56; 57; 58; 59; 60; 61; 62; 63; 64]. Figure 8: Service Offering (own illustration according to the IBM annual reports). Figure 9: Own Illustration of the IBM Revenue 2005. The explanation for such a high percentage of services being offered from 2015 onwards is an adaptation of the Cloud concept \"Software-As-A-Service\", which was a pioneering project in the last decade. (3) Transition Analysis--Challenges  
The most challenging aspect for the IBM was the shift in their sales model. They had to change from long-term contracts to short-term, customized contracts with flexibility. This has been successful, as evidenced by a decrease in the duration of contracts over the 10 year period. Another challenge was to quickly slow-down their hardware business. Their hardware business was a major factor for switching to an alternative Cloud concept \"Infrastructure-as-a-Service\", because customers were spending less on hardware.