Background: Over the last few decades, industrial manufacturing firms have had a harder time to stay competitive with supplying products and have therefore sought new ways of differentiating themselves by pursuing servitization. Recently, digitalization has enabled this transition to a greater extent and resulted in digital servitization that uses technologies to offer completely new digital services and business models. However, as industrial manufacturing firms are undertaking digital servitization, there are requirements and challenges to consider.

Purpose: The purpose of this thesis is to explore how digital servitization influences the value co-creation in order to advance the general understanding of digital servitization and its customer centricity. Therefore, this thesis aims to identify the current requirements and challenges for industrial manufacturing firms pursuing digital servitization and value co-creation.

Method: For this research, a qualitative study was conducted with a case study strategy including two case companies with 17 interviews in total. Data was collected from semi-structured interviews and secondary data was gathered in the form of an extensive literature review and other public sources from the case companies. The analysis was conducted with a combination of a content and grounded analysis approach where empirical findings were later on cross-analyzed and compared to theoretical findings.

Findings: The results of this thesis revealed that digital servitization stems a closer relationship between supplier and customers, where for example trust and data sharing are key aspects in order to co-create value. Some of the most critical requirements identified were the ability to work customer-centric, have the right sales capabilities and business models and to implement cross-functional teams.

Conclusion: Digital servitization and value co-creation are closely interlinked and managers in the industrial manufacturing context should acknowledge this, as it becomes even more important in the digital era where competition is increasing. Along with it, managers should seek to fulfil the identified requirements and reduce the constraints of the challenges that come with it.