Factory of the Future is an initiative of the European Commission. It is highly narrative and describes the transformation of “ordinary” manufacturing operations and structures to fully-integrated cyber-physical manufacturing systems. Basing on case study research performed in the greater area of Vorarlberg, this article aims to explore how Small and Medium Enterprises (SMEs) in the field of manufacturing can evolve to smart-service Factories of the Future. It takes a mixed-methods approach with quantitative research (questionnaire) and qualitative case study interviews and provides findings about three main topics in service system engineering: “transformation of an operational need into a description of system performance parameters”, “integration of related technical parameters and assurance of compatibility of all physical, functional and program interfaces” and “integration of reliability, maintainability, safety, survivability, human and other such factors”. As it turns out, increased servitization measures, service management, service performance and service quality by development of service-oriented architectures (SOA) are key to evolve to a smart-service Factory of the Future.