The Nature of Risk Management in the Early Phase of IPS2 Design

It is well known that Industrial Product-Service Systems (IPS2) are providing added value for both the customer and the provider. Within inno- vative IPS2 business models, risks that are traditionally related to the business processes of the customer are transferred to the provider by linking the revenue streams directly to the usage, performance or value of a system.However the majority of production companies in Germany keep out of that business, despite the high potentials of IPS2 for gaining long last- ing sustainable competitive advantages. On the one hand side the transfer of risks is the key for new business models but on the other hand side it is one of the most challenging factors that hinder the successful implementation up to now. Therefore it is necessary to identify and manage both values and risks already within the early phase of IPS2 design. Due to the heterogeneity and fuzzy understanding of the design object and process itself, the role of uncertainties and risks in this surrounding is not clarified at all.By literature-based research this paper is able to contribute to the understanding of uncertainty and risk management in IPS2 businesses and proposes a new and holistic approach for integrating the concept into the early design phase.