Abstract: Building a service-centric business model requires
new knowledge and capabilities in companies. This paper enlightens
the challenges small and medium sized firms (SMEs) face when
developing their service-centric business models. This paper
examines the premise for knowledge transfer and capability
development required. The objective of this paper is to increase
knowledge about SME-s transformation to service-centric business
models.This paper reports an action research based case study. The
paper provides empirical evidence from three case companies. The
empirical data was collected through multiple methods. The findings
of the paper are: First, the developed model to analyze the current
state in companies. Second, the process of building the service –
centric business models. Third, the selection of suitable service
development methods. The lack of a holistic understanding on
service logic suggests that SMEs need practical and easy to use
methods to improve their business