Enabling servitization by retrofitting legacy equipment for Industry 4.0 applications: benefits and barriers for OEMs

In the wake of industry 4.0, many industries have started to pivot towards digital, collaborative, and smart manufacturing systems by connecting their machinery as part of the Internet of Things (IoT). IoT has the potential to provide visibility and improve manufacturing systems through data collection, analysis, and subsequent actions based on insights generated from large amounts of manufacturing data. Even though comparatively newer equipment come readily equipped with embedded sensors and industrial connectivity necessary to connect to the IoT environment, there are many manufacturers (equipment users) who rely on long standing “legacy systems” that offer no or very limited connectivity. In this context, solutions mostly result in the development of low-cost retrofit or upgrade kits that allow integrating legacy equipment into Industry 4.0 environment and thus enable digital servitization. Servitization is a transformation journey that involves firms developing the capabilities they need to provide technical and data-driven services that supplement traditional product offerings. However, retrofitting solutions of legacy equipment rarely involve Original Equipment Manufacturers (OEMs) who may otherwise leverage the opportunity to create and capture unique value by retrofitting and then provisioning data-driven value-added services for the manufacturers. Hence, the primary objective of this paper is to identify and analyze the available literature on retrofitting and upgrading of the legacy equipment for Industry 4.0 integration. In doing so, this study also investigates the potential opportunities and challenges of OEMs in supporting the Industry 4.0 transition of legacy equipment in a servitization context.