In recent years, although many incumbent manufacturers are seeking sources of revenue from service using web technology (e-service), many such firms have failed to succeed. In this study, three major perspectives relating to service business are reviewed, followed by an indepth case study on a new e-service business design and implementation initiative at a heavy machinery manufacturing firm to examine the applicability of these perspectives and to discuss the implications. It is thus confirmed that profitable e-services can be designed based on strategic fitting to capability and position already built by the firm in its conventional business, with repeat prototyping to elicit potential customers' requirements. The resulting e-service system makes the service offering complementary to and dependent upon products the firm manufactures to raise the entry barrier against competitors. Furthermore, back office improvements are considered to be essential to implement e-services, especially for firms having complex and lengthy supply chains such as in the heavy machinery industry. Key success factors in the context of back office improvements are discussed.
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