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Data Capture has evolved massively in a relatively short period of time, but if done correctly it can transform a business. A new whitepaper by the Advanced Services Group brings clarity to the hype around digital technologies and services and outlines what you really need to know about capturing data, and how to make money from it, Aston Universities’ Professor Tim Baines gives us an overview. 

Digital technologies, IoT and digitalisation have been big topics in the manufacturing sector. Combined with services, digital seems to be the answer for a multitude of manufacturing questions, if you take the hype at face value.

But for many manufacturers, digital actually raises more questions than it answers, with one particular question at the centre: how to capture the value of digitally-enabled services?

The Advanced Services Group at Aston Business School has recently released a whitepaper on performance advisory services, which aims to cut through the hype and provide clear information and insight into how manufacturers can make the most of digitally-enabled services.

Real business insight
In this whitepaper, we wanted to reflect real business insight and real business challenges. We invited senior executives from a range of manufacturing companies - from multinationals such as GE Power and Siemens to local SMEs – for a structured debate on digitally-enabled services.

The discussion and its outcomes formed the basis of the research for the whitepaper and helped crystallise the three areas that are most important to manufacturers:

1. Performance intelligence and data as a service offering; 
2. How to capture value from these services;
3. How to approach the design process to achieve success. 

What are performance advisory services?
The process by which a manufacturer transforms it business model to focus on the provision of services, not just the product, is called servitization. Generally, we distinguish three types of services. Base services, such as warranties and spare parts, are standard for many manufacturers and focus on the provision of the product. Intermediate services, such as maintenance, repair and remanufacturing, focus on the condition of the product. Advanced services take a step further and focus on the capability that the product enables.

In this framework, performance advisory services are situated in between intermediate and advanced services. Typically, these are services that utilise digital technologies to monitor and capture data on the product whilst in use by the customer. These insights can include data on performance, condition, operating time and location – valuable intelligence that is offered back to the customer, in order to improve asset management and increase productivity.

Why are they attractive to manufacturers?
Performance advisory services are attractive to manufacturers because they allow the creation and capture of value from digital technologies that are likely in use already. Take the example of a photocopier - with the addition of sensors that monitor paper and toner stocks, it can send alerts when stocks are getting low. This kind of data is valuable to the customer, as it will help improve inventory management and avoid service  disruptions or downtime, but it is also valuable to the manufacturer in helping them understand how the product is used, providing data that they can use to re-design products or to develop and offer new services.

Making money from performance advisory services.
Performance advisory services offer the manufacturer the potential to capture value either directly or indirectly and there is a strong business case for either. Whilst charging a fee directly for data or a service provided is compelling, the potential indirect value for the manufacturer should not be underestimated, as it can yield not only greater control and further sales, but also new and innovative offers, as well as improved efficiencies.

"Performance advisory services are situated in between intermediate and advanced services..."

In the photocopier scenario, the data generated could be sold to the customer as a service subscription, thus earning money directly.
Alternatively, the manufacturer could use the data generated for maintenance programmes or pre-emptive toner and paper sales, thus earning money indirectly.  In reality, however, direct and indirect value capture are likely to go hand in hand. A prime example of this is equipment manufacturer JCB, whose machines are fitted with technology to alert the customer if the equipment leaves a predefined geographical area.

For the customer, knowing the exact location of the equipment is valuable – as it may have been stolen. But it also greatly improves efficiency for the manufacturer when field technicians are sent out for maintenance work and do not lose time locating the vehicle.

Performance advisory services - just one step on the journey to servitization
Performance advisory services present a compelling business case for manufacturers looking to innovate services through digital technologies, in order to improve growth and business resilience.

With the immediate opportunity to capture value, these digitally-enabled services are a first step for many manufacturers towards more service-led strategies and servitization.

But that is what they are – just one step on the journey to servitization. Manufacturers looking to compete through services should not stop with performance advisory services.

In the environment of a more and more outcome based economy, it is imperative to understand the potential of taking a step further to advanced  services and to recognise performance advisory services as a step toward this.

The full whitepaper Performance Advisory Services: A pathway to creating value through digital technologies and servitization by The Advanced Services Group at Aston Business School is available for purchase online here. 

Servitization is becoming a huge topic in the field service sector as we see more and more organisations step on a path towards advanced services we must realise that they cannot do it alone, their customers must be prepared to come along on the ride as well...

Ross Townshend, EMEA Business Manager - Advanced Services & Data for Ishida Europe talks to Kris Oldland and outlines some of the challenges he has faced in building advanced services within his organisation...

The topic of servitization is of course highly complex and for those just starting to explore the area, it can be a daunting prospect to get one's head around. However, Ross Townsend,  Advanced Services Business Manager, Ishida has had been able to get a bit of a head start by not only arriving into an organisation that has already embraced the idea, but that is also working with the Advanced Services Group, headed by Professor Tim Baines, Aston University, one of the leading proponents and thinkers within the servitization movement.

Kris Oldland, Editor-in-Chief, Field Service News caught up with Townshend to find out how he is adapting to a world of servitization some six months into the job…

“Before I joined servitization was something I knew nothing about,” states Townshend as we begin our conversation.

This was one of the key reasons I was so keen to speak with Townshend in the first place.

Pleasant and approachable, Townshend is one of those people that you find it instantly easy to talk to. A very subtle hint of slight West Country burr to his accent adds an earnestness and integrity that could be perhaps lost in the international world of servitization, but for us here in the UK, it is noticeable and adds a natural ease to Townshend’s manner.

Certainly, what comes across even within just a few moments of speaking with him is that he has that key ingredient that all great service people have, he is able to communicate effectively and eloquently within a comfortable use of language that feels all the time natural, relaxed and honest. In my experience people with such a manner, often speak with authority in areas they know well and integrity and humility in areas in which they are slightly less surefooted.

As part of the Advanced Services Group, Ishida and Townshend will be working alongside the like of Prof. Tim Baines and Dr. Ali Bigdeli.In the context of this conversation then it would be interesting to not only hear his thoughts and gain his insights on how Ishida are approaching servitization, but also to understand first hand how daunting it was to leap into this baptism of servitization fire that few elsewhere have had the opportunity to do.

In Ishida, Townshend has arrived in an organisation that has fully embraced servitization, his former colleague Jason Smith is the only man I’ve personally met who has been involved within two separate companies moving to a servitized business model and as part of the Advanced Services Group, Ishida and Townsend will be working alongside the like of Prof. Tim Baines and Dr. Ali Bigdeli.

So whilst he may have to endure a baptism of fire to get him up to speed, he has some heavyweight support to help him get through it.

“When I look at the transformational roadmap that the Advanced Services Group have created, we have this cycle that we are going through exploring it and trying to work through it,” Townshend explains.

However, it has not been plain sailing for Townshend and the team at Ishida to introduce advanced services to their market - and the reluctance of the market itself is something Townshend thinks could be a factor, having arrived from an entirely different vertical that was further along the road in terms of acceptance of servitization and digitalisation.

Whilst that is a separate issue to the conversation around servitization in a way it does add some context to the arena we are working in“I’m not from the food industry most of my work was in automotive having worked with Bosch Rexroth for a number of years with a background in design engineering, product management,” Townshend explains.

“In terms of the digitisation side of things generally, I find the food industry is massively behind and that’s not just in terms of technology but also in terms of mindset to work with technology. Whilst that is a separate issue to the conversation around servitization in a way it does add some context to the arena we are working in. It can be a frustration even just to get the software adopted let alone the advanced services longer term,” he continues.

“In terms of why the business is diversifying into advanced services is another interesting point. I view this as a journey for a manufacturer and then also as a journey for a manufacturer within the food sector. The suggestion would be that we are a long way down the journey but I think we are still packing the car up at the moment – we haven’t even actually started on the actual journey yet.”

“A part of that is the fact that we are in the food sector, where the adoption of technology is somewhat lagging behind where it is in other sectors.”

“Also the food sector is the largest, it's highly profitable and its growing. We are growing double digit year on year so why would we diversify?”

Of course, the food sector is one which by the very nature of the products it generates will always remain transactional. There isn’t a service contract that can be sold on a packet of oven chips. You buy them, you eat them, then you buy some more.

I wonder if the fact that Ishida’s customers themselves will always have that transactional relationship with their customers is in part responsible for creating a mindset that is hard to overcome in terms of raising conversations around outcome-based contracts?

“I think it is,” Townshend concurs.

At the moment as part of our work with the team at Aston are trying to find pilot customers to establish a proof of concept and even that is proving to be a significant challenge“At the moment as part of our work with the team at Aston are trying to find pilot customers to establish a proof of concept and even that is proving to be a significant challenge. We have had conversations with a couple of parties where we thought OK, we’ve got a reasonable amount of equipment in there, you could argue that we’ve got a fair amount of ownership of the process which is quite critical when you're looking to establish this type of working agreement."

"They have five or six pieces of machinery in a line so we can really add some value there and take ownership of that process and work towards what we would ultimately be our vision of a servitized contract which internally we are terming pay-per-pack, which is the holy grail for us in terms of advanced services to achieve this pay per pack model. Securing a pilot has been very difficult.”

“We had a large manufacturer of salad that we were speaking to and they showed interest. We had a meeting with them and their senior directors and they could certainly see the mileage but as it is in the case of lots of businesses they are too busy to be able to really think about it and they don’t really need it at the moment.”

This is an interesting point here.

In the case of Rolls Royce’s power by the hour there was a strong customer pull from American Airlines. In the case of MAN UK there was a huge backdrop of hauliers and logistics firms struggling to make a profit.

Perhaps the burning platform factor is a necessary element in the equation for creating an environment in which an approach to business that steps as far away from the traditional path as servitization does. It is perhaps far less easy to be a driving innovative force in an industry that is profitable and ticking along nicely.

As the old adage goes if it ain't broke…

I do think that the sector you are operating in is one factor in the ability to drive something innovative like servitization forwards“Whilst I absolutely won’t take anything away from the achievement that companies like Rolls Royce or MAN Trucks have managed, I do think that the sector you are operating in is one factor in the ability to drive something innovative like servitization forwards. Another area to consider within there success also is that they have complete control of the process,” Townshend says expanding on the discussion.

“In our industry and with our customers, at best there may be one significant chunk of a production line which is our equipment. If they are a major manufacturer they will certainly have other lines that are our competitors' machines or they will have a line with six different manufacturers equipment in them so certainly whatever we do needs to be scalable, unless we go in and basically say 'we will provide you with all the equipment for your factory'. Unless your in the lucky position to be on a greenfield site where you're in the right place at the right time that is very difficult to achieve.”

Signs of an emerging appetite for such advanced services are beginning to appear as Townsend recalls one such example.However, signs of an emerging appetitie for such advanced services are begining to appear as Townsend recalls one such example.

“A big dairy producer approached us within the last six months and they were looking for a supplier that could take on all of their quality control equipment, on every site across Europe. They were looking for one supplier to look after everybody's equipment service maintenance in the full acceptance that that is a very difficult job and while you're going through that period of changing out equipment it is going to be a difficult thing to manage.”

“But it is interesting that they were asking that and the reason they were doing so was that they didn’t want the hassle. Clearly they of course also wanted a good price but they accepted that this removal of the hassle came at a premium. Also financially to them, it would be more visible on their books versus the huge maintenance and hidden costs that they would have to deal with on a daily basis.”

“And they were going to several suppliers and there was a huge team of people set up to go and find the right supplier for this so they took this very seriously - it wasn’t just one person’s crusade.”

So clearly there is at least the seeds of some companies looking for servitization from providers within the sector“They’ve gone through the analysis at their end and decided that outsourcing this area of their business was the direction they wanted to go. So clearly there is at least the seeds of some companies looking for servitization from providers within the sector."

“This organisation is clearly looking to remove the headache of maintenance for them and the next logical step along that path would be some form of advanced services contract where maybe you go in there and say, yes, we can take on the entirety of your maintenance contracts and we can take all of our competitors machines out and put ours in but it will be on a cost per usage basis. It’s a big leap forward but it certainly follows that path."

However, until that one customer makes the leap that pulls the entire industry forward it is perhaps a wiser move to bring customers with you on the journey in a more incremental manner.

This is certainly how Townshend is approaching the task…

“The direction I am taking with the business is to start to bundle in certain value added functions and features to start to drive some customer pull and start at a lower level than pay-per-pack just to get the appetite there. I used the term holy grail and the problem is it is just that it is just too far away for our customers to grab. They get it and they go wow that’s good but they have no idea about how to move forwards to implement it.”

The move to advanced services needs to be a symbiotic relationship, it needs to be something that you go to your clients with and they come with you on the journey. Whoever leads that journey whether it be a customer pull or a client push you both need to be going on that journey at the same time.

 

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Kris Oldland, Editor-in-Chief, Field Service News talks to Prof. Tim Baines about the recent Spring Servitization Conference hosted by The Advanced Services Group and how the conversation around servitization is continuing to evolve as academia and industry come together to drive advanced services forwards...

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Insights from a recent study by the Advanced Services Group at Aston Business School can help you understand if you’re on the right path to advanced services. Professor Tim Baines explains...

Is Servitization a burning topic for your organisation - join Professor Baines and the Advanced Services Group for the Spring Servitization Conference, Copenhagen, Denmark, 14 - 16 May 2018 more info @ https://www.advancedservicesgroup.co.uk/ssc2018

Researchers and pioneering manufacturers have been singing the praises of servitization and its benefits to business – and it seems industry is starting to listen.

Increasing numbers of manufacturing and technology companies are trying to implement services-led strategies. How to go about doing this in practice, however, still presents a challenge to many. The leaders of today’s industry see the success of Rolls-Royce and Xerox in this area, yet they often struggle to work out how to achieve the same for their own businesses.

Within the Advanced Services Group at Aston Business School we’ve been working with manufacturers around the world using the latest research to support them in finding their path to compete through advanced services.

Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.While most manufacturers already offer ‘base services’ focusing on product provision such as warranty and spare parts, others take a further step by providing ‘intermediate services’ focused on the product condition such as maintenance, repair, overhaul and remanufacturing,. ‘Advanced services’ go a step beyond the product condition and focus on the outcomes that the product enables.

Real-life examples include Rolls-Royce’s Total-Care offer on gas turbines for their airline customers based on a ‘fixed dollar per flying hour’; Xerox delivering ‘pay-per-click’ scanning, copying and printing of documents; and Alstom Train-Life Services supporting Virgin by assuring the availability, reliability and performance of their Pendolino trains on the UK West Coast Mainline. Advanced services such as these are a core concept in servitization.

With their potential to radically disrupt and alter the face of manufacturing, understanding the process of introducing them is vital to businesses and the economy.

At the Advanced Services Group, this is the focus of our work.

In a recent study, we examined two key questions about the path to servitization:

1. What stages do manufacturing companies go through to achieve competitive advantage through advanced services?
2. What factors and forces affect their progression through those stages?

We conducted interviews with 14 multinational manufacturing companies, all on a trajectory to compete through advanced services, representing a range of industries – from aerospace, defence and road transport through to air filtration and precision motion control systems.

The four stages of transformation

We found that manufacturing companies go through four stages in their transformation to compete through advanced services: exploration, engagement, expansion and exploitation. As manufacturers become conscious of the concept of servitization and suspect that advanced services may be relevant to their organisation, they will start out in a stage of Exploration, where they are doing their research to find out more about the concept and how it could benefit their business.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.

If the Exploration stage yields a viable opportunity for growth, the initiative will move to Engagement. Here, companies experiment and run pilots with customers and relevant technology, to evaluate and demonstrate the potential value of advanced services.Once a constructive outcome is achieved, the attention moves to Expansion, where advanced services are innovated and implemented with increased scale and speed. When the value of these is demonstrated, attention will switch from individual projects, to initiatives focused on the reliable and efficient delivery of a portfolio of services across the organisation. In doing this, manufacturers are focusing on Exploitation of advanced services.

In each of these stages you can expect multiple iterations and interactions until there is sufficient evidence and consent to move to the following stage.

Progression through the four stages – or in some cases falling back – is influenced by five forces.

Five forces affecting transformation

1. Customer Pull

Customers’ appetite for services has a significant influence on progression.

Several companies described their decision to offer more advanced services, together with usage-based revenue models (i.e. pay-for-flight-hours or pay-for-passengers-moved) as a direct reaction to customer demand.

2. Technology Push

Other manufacturers start servitization having become aware of the technology that could record how their products are being used and transmit this data back. The data makes it possible to develop advanced services contracts based around payment for outputs achieved rather than asset ownership.

The majority of the companies we studied said they had been influenced by this ‘technology push’; IoT and industry 4.0, which are hot topics in industry at the moment, were often mentioned. Fewer companies mentioned the ‘customer pull’ factor, and yet customers’ growing appetite for ‘experiences’ over ownership is arguably just as significant.

In the UK for example, the appetite for services has grown 2.4% per year for the past 20 years according to the Office for National Statistics, significantly outstripping that for selling products – a trend that is being replicated in every developed economy across the world.

3. Value network position

The position of the organisation within the wider value network can affect business transformation.

As an example, working through distributors can restrict access to customers and inhibit the changes needed to deliver services. In several cases, manufacturers chose to acquire their distributors.

One manufacturer was stalled by the access to remote sensing technologies, wrestling for some time over acquiring a technology vendor, to give them access and control over information. Positioning in the value network that delivers dependable access to both customers and suppliers has a significant influence.

4. Readiness to change

Internal organisational factors influence readiness to change and can affect progression. Having reliable and well-performing products, for example, is a prerequisite to compete through services. It also leads to an interest in advanced services in cases where, increasingly, product reliability and performance are no longer differentiators.

Organisational commitment is also important. In some cases, where the support of the management board was in place from the outset, companies progressed quickly through the exploration and engagement stages. Without this, progress can be much slower.

5. Competitor threat

The actions of competitors significantly affect organisational commitment. In one case, organisational commitment to advanced services came about when a principal competitor acquired a network of service providers.

This caused anxiety amongst the leadership of the company and led to significant investment in its own advanced services programme.

Are you on the right path?

The findings of our study suggest that transformation towards servitization is neither a clear-cut, linear processnor an easy one. In each of the four stages, key milestones have to be achieved before a company can move to the next stage.

The five influencing forces work internally and externally, affecting progress in each stage. These five forces may be so strong that the manufacturer moves rapidly through all four stages. In other instances, they may be so weak that the manufacturer fails to progress entirely.

Next month we will be running the seventh annual Spring Servitization Conference, this time in partnership with Copenhagen Business School, where we will examine research into the detail of these stages and influencing forces.

The Conference is the go-to place for researchers from around the world to present and discuss their latest work, and topics this year will include: changing the mindset of the organisation in order to compete through services; pricing advanced services; how to use data as an enabler for servitization; how SMEs, in particular, can create value through servitization; internal and external enablers and inhibitors.

To book your place, visit https://www.advancedservicesgroup.co.uk/ssc2018. 

Field Service News will be reporting from the conference and interviewing some of the industrial speakers; look out for updates in future issues.

Can’t join us at the conference?

You can still develop the skills, knowledge and action plans to implement servitization and advanced services at our Skills for Servitization workshop on 22 May 2018. Find out more at https://www.advancedservicesgroup.co.uk/skills-for-servitization In the meantime if you want to assess where your company stands today in terms of adopting a services strategy and where you’re aiming to get to- and compare your thoughts with colleagues to test your alignment- our quick survey Unlock Your Insight will give you a personalised set of feedback in under five minutes. Visit https://www.unlockyourinsight.co.uk/

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Kris Oldland, Editor-in-Chief, Field Service News talks to Professor Tim Baines of the Aston Centre for Servitization Research and Practice, about the key themes at their 2017 Spring Servitization Conference held in Lucerne and how Servitization is becoming a mainstream topic of conversation amongst manufacturers.

 

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With the topic of Servitization gaining more and more traction both in manufacturing circles and beyond a new industry book that provides a roadmap to making the shift towards advanced, outcome based services could well be of vital use for service executives across the globe. One such book Service Strategy in Action has just been published and Kris Oldland spoke exclusively to co-author Christian Kowalkowski...

I’ve met with Kowalkowski a number of times over the last few years.

More often than not it is at the Spring Servitization Conference, arranged by the Aston Centre for Servitization, (who themselves are part of Aston University,) which in itself is an interesting few days as it brings the universes of industry and academia together and there seem to be more and more people in attendance from both sides of the table each year.

Indeed, this should come as little surprise to anyone who has attended any field service oriented conference across the last few years. Servitization, arguably driven by the growing maturity of IoT, has become a mainstream topic within our industry and academics such as Aston’s own Professor Tim Baines, or Cambridge University’s Andy Neely - are both highly sought after for speaking engagements on the topic.

So given the rise in interest in Servitization, it is perhaps something of an anomaly that there are so few books dedicated to the topic. There is Baines’ own offering written with Cranfield’s Howard Lightfoot, 'Made to Serve' that is generally regarded as the go to book on the topic. Then there is Dr. Michael Provost’s excellent work ‘Everything Work’s Wonderfully’ but there is not a huge amount else.

At least until now.

Kowalkowski's new book Service Strategy in Action, co-written by Wolfgang Ulaga , is in many ways perhaps a natural sequel to Baines’ & Lightfoot’s Made to Serve, which although still superbly relevant to anyone wanting to understand the topic of servitization - is now approaching it’s fifth birthday.

And while the philosophy and concept remains the same, the conversation has evolved considerably within that period.

So how does Kowalkowski view the book?

“It is really written with executives in mind,” he explains “for business managers as well as service development consultants who are focussing on these issues. What we wanted to do was come up with a really simple road map for service strategy in action, divided into twelve distinct steps - so dependent on how mature the company is when they start, they can pick up the roadmap at the right point for their organisation.”

 

Indeed, the book certainly has the well ordered structure of a manual or how-to-guide. However, given the heavy weight nature of the content this not only makes absolute sense but is probably essential for it to be easily digested as a whole.

Kowalkowski himself, is a softly spoken and quietly intense academic with a clear passion and dedication to his topic and this also flows into his written work. Without, the roadmap structure, there could have been a danger that this book could’ve become a book for academics, that lay-folk like myself (and much of it’s intended audience) may have found hard to navigate through.

As it is however, it provides a perfect reference tool for companies making their way through the maze of moving from a traditional break-fix/SLA based business model to an outcome based services model, where uptime and CSAT are the new golden KPIS.

So how does the book plot out your path towards a truly servitized business?

Actually, the path laid out by Kowalkowski and Ulaga is a fairly straightforward one, based on their work with a number of differing organisations. As with all good ideas this journey starts at the beginning by establishing a clear understanding of why companies should be taking this path in the first place.

And of course not all companies are created equal, and very few scenarios are ever the same. So the opening section of the book deals with understanding your organisations position.

“First of all the service imperative, why at all move into service in the first place,” Kowalkowski comments.

“Is such a move a defensive stance to defend a product business? Or is it more offensive to gain additional revenue streams? What internal and external drivers towards advanced services exist within your organisation? Are you perhaps already on a burning platform - in which case maybe you better move a lot faster?”

“It [Understanding your position] also enables you to access the low hanging fruit, but then if you want to make more profound changes then you need to transform your business model more extensively and different elements of it.”

“What are B2B services – what are the key challenges? Products, are of course very heterogeneous but services are even more so - so, you really need to understand that it is a very different animal selling spare parts to promising up-gain sharing – it’s different worlds.”

 

The book also focuses on the cultural elements of such activities which typically are overlooked in a lot of the other academic literature on servitization which do not touch much upon the softer issues.

Yet the cultural aspect is really important and a key inclusion the book as Kowalkowski explains.

“We have a framework, key characteristics of what becomes important when building a service culture,” he begins.

“It’s all about the starting points – you often start in a service desert, a very myopic perspective where service is a necessary evil. Then the journey is through a dark tunnel before you the see the first glimpse of the promising light where service becomes a key growth engine - and that should be the aim.”

Then this framework can also be used for analysing and diagnosing the internal organisation – where are you today and what do you need to do to get to where you need to be.

Do we have some people who are really strong and supportive within the service business and if so are they in the right place?

“It’s not enough to have a service enthusiast in middle management level.” Kowalkowski asserts.

“You might need to have some service evangelist on the top level and you need the service promoters on the front office. Then you need to convince enough people who are fairly indifferent towards this, you can’t convince those that are the outright obstructers, but to form a guiding coalition large and powerful enough to make it stick – this is something that is important and we focus on this in the chapter on division and leadership.”

 

“We explore how can you do this using established change management framework and how to apply that to a servitization context – so forming a strong guiding and coalition and then empowering others to act upon that vision,” he adds.

In fact, the approach outlined in the book utilises the well established Kotter’s eight step framework which we then applied to this context.

“We said what are the service specific traits of change management here and provide some examples of that instead of re-inventing the wheel,” Kowalkowski comments.

“You have these proven frameworks already and this is very much a change management effort. It is not necessarily the hard things that fail, you might have the technology in place but maybe a company may focus to much on what is technically possible.”

“It becomes this double edge sword - do too much and you just rely on your technological features, investing in technology is of course OK, but ask what can the end customer do with it? You need someone who can analyse the data and suggest improvements for your client’s business, and provide them with insight that they don’t necessarily have the time and resources to do themselves perhaps?”

 

In fact, the questions around how, when and why customers should be engaged within the process of moving to a servitized business model are also covered extensively within the book.

“We focus on the customer and the job to be done in really understanding and outlining how service innovation and development is different from product innovation. We look at strategy and how it is aligned to corporate thoughts?”

“Are you really prepared to cannibalise your business – is that even really necessary?” It may that it is not - depending on what your goal is for the service growth initiative is.”

Again the emphasis is very much about establishing a firm understanding of your own current position before proceeding further. “We offer a diagnostic  test that asks are you are you fit for services, do you have the right resource for what it takes? We look at this in a very straight forward manner but it can be a good starting point for many companies.”

“Then we also look at how to move from free to fee, that is how to capture more value from your existing services – which again is a good starting point for moving towards advanced services, but is also useful for maximising revenue from and getting the most mileage out of your existing services.”

Finally, there is then a focus on building a service factory, which is also about improving existing services.

“We include an example of service blueprinting and how it can be used to improve the efficiency and productivity of the service business," Kowalkowski states.

“It’s all about managing efficiency, effectiveness and capacity utilisation. Again depending on the type of service business, then what productivity aspects are important can be defined.”

Whilst the change management and cultural question are in the main handled by Kowalkowski, the discussion around the transition from selling items, to selling services is a complex one and this part of the equation is handled predominantly by Ulaga.

“Transforming sales is of course a big thing as well and Wolfgang has been working a lot with the sales management - so this part of the book is all based on his extensive work in that area,” explains Kowalkowski.

There is, of course, a very different mindset between a service sales team and a product sales team. But should companies who move to advance services be focussed on retraining their existing staff or replacing them with a specialist sales team that understands and gets service sales?

“Obviously with the magnitude of change, understanding how important it is to get this right is key,” replies Kowalkowski when I put this question to him.

“We dedicate time to looking at the key aspects; what is the difference between industrial sales and service sales? The differences in learning orientation? Customer service orientation?”

“Sometimes, they [service sales professionals] have to be more introverted - which is interesting as you generally look at sales professionals as extroverted people.”

 

‘But look at those who sell service, and who does so well and there is often a much more introverted personality amongst those who are successful.”

It is of course all about the organisation and how to fit service into your organisation.

You will never have a one size fits all solution as different companies work in different ways but Kowalkowski points out that they have noted some “different development patterns over time, such as breaking up the silo mentality, how to foster the collaboration of central and local units and so on,” insight into which would pay for the price of the book itself.

Similarly, understanding if Servitization is right for your business is just a first step on that journey, having a road-map like this book is useful in terms of knowing where you are heading and how to get there. However, it’s also good to know how fast you should be going on various elements of the journey as well.

And this has been embedded into Kowalkowski and Ulaga work also. “In terms of what comes first, strategy or structure - for us it is about having enough in place to be able to initiate the change and execute it,” Kowalkowski comments.

“Maybe you can quite easily identify things that are currently lacking – e.g ‘we are not strong in risk management’. Obviously if a company is about to offer output based services they need to improve that before they can move forward.”

“Yet, whilst that is quite concrete and you could still grab some further low hanging fruit by reviewing your current service pricing – can you start doing something about that?”

“Maybe you need to just start changing cultures and processes for certain things – or even leave some problem areas as they are - as in the long term it may encourages other service and product sales, having a delayed benefit that outweighs the problem it creates today.”

Indeed, the questions around servitization are often as complex as they are numerous, yet the long-term rewards are numerous and long lasting. For anyone going through the shift to servitization books like this are going to be of huge use.

 

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Who are the most influential people in the global field service sector that you need to pay attention to in 2017?

The Field Service News #FSN20 is our list of the individuals we believe will be key influencers in our industry across the next twelve months. Those included in the list have been selected by our own panel of industry insiders, who were given the simple criteria of identifying people who will have a significant impact on field service thinking.

However, more than just an annual list of 20 individuals the #FSN20 has grown since it’s launch to become a true celebration of excellence and innovation within our industry.

There are some familiar names and some new faces on this years list and as always we don’t expect everyone to agree with our selection - at it’s heart the #FSN20 was conceived as a tool to get everyone in our industry thinking about who it is that they have come across in the global field service sector that has made them think, who has made them question the accepted paradigms, who has inspired them to do just one little thing more in their own day to day role.

The #FSN20 is not just about the list our panel has put together. It is about fostering discussion that celebrates the unsung heroes of the field service sector. So look out for the online version of this list as well to take part in the debate.

But for now, ladies and gentleman and without further a do, in no particular order, we are pleased to introduce the #FSN20 of 2017...

Mark Brewer, Global Industry Director - Service Management

Brewer is a new entry to the #FSN20 having recently moved to IFS from PTC.

The message from the IFS hierarchy was loud and clear when they held their last World Conference in Gothenburg towards the end of last year. Field Service was a key priority moving forward and their new owners EQT had every intention of pushing the Swedish company to keep doing what has made them a well respected brand within manufacturing and field service management circles - but do it bigger, better and to get to there faster.

Having taken the reigns of the service management division globally Brewer is set to figure prominently in the industry across the next twelve months.

 

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Professor Tim Baines, Group Director of the Aston Centre for Servitization Research and Practice

Baines retains his place on this years list and is perhaps he one person that has appeared multiple times on the list whose entry becomes even more deserved each year.

Baines has been at the centre of the servitization movement for as long as anyone and although many of his peers such as Neely and Lightfoot should share equal status for being the Godfathers of Servitization, it is fair to say that Baines’ work as a leading proponent of the servitization movement is as unparalleled as it is inexhaustible. The Aston Spring Servitization Conference which is the show-piece of the Aston Centre for Research and Practice continues to grow in terms of both audience and importance each year and it’s location in Lucerne, Switzerland this year is a testament to it’s growing status on the international industrial map. Whilst Baines’ would humbly point to the great team he has working with him at Aston, his role in the global shift towards servitization simply cannot be overlooked.

 

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Bill Pollock, President and Principal Consultant, Strategies for GrowthSM

Another that has been ever present on the #FSN20 since it’s inception and someone who is likely to remain on the list until the day comes where he retires, which given Pollock’s passion for the industry and seemingly eternal youth may won’t be any time soon!

Pollock is not only still a key commentator and analyst within our sector whose papers and features are not only widely read but also hugely respected, but he has been a mentor for a number of key figures within the global field service industry, including a number of other #FSN20 members, and also Field Service News’ own highly respected Editor-in-Chief, Kris Oldland.

However, Pollock’s inclusion on the #FSN20 isn’t just based on his past merits, his organisation Strategies for GrowthSM continues to provide some of the most detailed research and insightful analysis for the field service sector that is essential reading for any field service executives that wish to stay in touch with what is driving our industry forward.

 

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Thomas Igou, Editorial Director, Copperberg

Igou has been integral to Copperberg’s continued success and growth in the European field service conference circuit, In fact with five industry focussed events now running across the continent that should be of interest to senior field service and aftermarket executives, Copperberg are firmly established central pillar within the European field service community, and Igou sits proudly at the heart of that. In his role as Editorial Director, Igou is responsible for making sure the key topics in the industry are raised and the leading thinkers within our space are given a voice.

A key influencer within our industry.

 

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Mark Holleran, COO, Xplore Technologies

Under Holleran’s leadership Xplore Technologies acquired Motion Computing and became the 2nd largest manufacturer of rugged tablets in the world.

Holleran is a man who not only truly understands the different sectors his clients operate in but also who truly appreciates the importance of understanding his customers’ work-flows and therefore their technological needs.

A perfect case in point being the inclusion of a HDMI in on their XSLATE D10 rugged tablet, which makes it a perfect device for Telco and Pay TV engineers needing to test signals - which is exactly why it is there.

We don’t expect anything other than rugged tablets to be coming out of Xplore, but we do expect them to keep delivering best-in-class products in this form factor. As Holleran says “that’s what we do and we are the worlds best at it.

 

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Dr John Erkoyuncu, Through-life Engineering Services Institute, Cranfield University

Erkoyuncu takes over from Professor Howard Lightfoot as a representative of Cranfield University in the #FSN20 this year, however it isn’t just a straight like for like swap. Whilst the two worked together at the Through Life Services Institute, Erkoyuncu’s place on this year list is based primarily around the work he is doing in both industrial maintenance simulation and also augmented reality, and as such we believe he will be a key commentator and influencer on our sector in the years to come.

 

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Jonathan Massoud, Divisional Director & Market Analyst Field Service, WBR

Massoud’s role as Divisional Director at WBR puts him in control of a number of the industry’s key events including Field Service USA which is the jewel in the crown as the key point in the USA field service calender.

In addition to Field Service USA, WBR also run a number of important industry focussed events including Field Service Medical and Field Service Europe and in his role as Divisional Director Massoud is directly involved with each of the events and responsible for delivering industry leading content to keep field service professionals up to date with the key trends with in the industry. Massoud is also responsible for overseeing WBR’s research and a respected analyst within the sector

 

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Sumair Dutta, Customer Satisfaction Officer, The Service Council

Chief Customer Officer for The Service Council™ Dutta is responsible for new member acquisition, member engagement, community expansion, as well as the development and expansion of TSC’s Smarter Services oriented research agenda and portfolio.

He is also heavily involved in The Service Council’s ability to provide service executives the ability to benchmark their operations and also provide guided insight to improve service organisation performance through dedicated research programs. Dutta also plays a key role in building out TSC’s community platform focused on becoming the single source of information and networking for service executives globally and is a prolific author on the matter of field service.

 

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Click here to see page two of the 2017 #FSN20

 

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As a leading figure spearheading the servitization movement Professor Tim Baines of the Aston Centre for Servitization Research and Practice has seen manufacturers begin to focus far more heavily on service as a revenue stream in recent years...

Over the past few years servitization has become a topic of hot debate.

Several years ago, when I talked to businesses about my work on servitization, managers would look at me blankly and ask what it was all about.

Often they would get hung up on the spelling, or simply say ‘what’s new here? We offer services anyway’.

The concepts of advanced services, IOT and Industry 4.0 were largely unheard of, and the term servitization was often dismissed as ‘a bit too academic’.

Now the world has changed, and servitization has become more mainstream. I’ve always taken the view that servitization is simply ‘manufacturers growing their revenues and profits through services’ and that ultimately we are looking at a paradigm shift in our ideas about manufacturing.

Relax this definition a little and you will see that servitization is all around us; it might be Goodyear implementing proactive services in commercial trucking, GE following through on their digital industrialisation strategy in power generation, BMW offering a new MINI on a Personal Finance Plan with a package of services, or Brompton Bikes being offered to hire by the hour in the high street.

Servitization is happening in many guises, and technological innovations are helping to bring about rapid change.

Industry 4.0 is popular today, while just yesterday it was IOT and before that Big Data. Innovative use of technology is attractive, and understandably so for people within manufacturing who come from a technology background.

 

However I think there is also an element of fear; we’ve all witnessed the rise of IT giants, whether it’s UBER, Apple, Facebook or EBay- many businesses are anxious about the next innovation from Silicon Valley and what it might mean for them and I have heard IT vendors countless times pushing businesses to invest in IT and develop ‘the killer app’.

A word of warning here: remember that service is not an app or a new technology. Take a step back before you invest and think: How can you really make money through technology? What outcomes will it help you deliver to customers?

So my conversations about servitization have moved from ‘what is it?’ to ‘how do you do it?’ My team at Aston Business School and I have now worked with over 100 manufacturers helping them to discover and implement servitization.

There are four fundamental stages through which every company must go; Exploration, Traction, Acceleration and Exploitation.

Today, most want help with the first stage, and to those business leaders who want to get started with servitization we suggest three steps:

Step 1: Think clinically, and understand servitization as an innovation: 

The recent popularity of servitization has inspired some business leaders, consultants and vendors, to re-brand their older offerings and muddy the water in the process.

This can significantly undermine your chances of success.

Go to established sources such as the Aston Business School Servitization website (short url - fs-ne.ws/FOwP304KRAq) to tap into the wealth of critical and rigorous knowledge that exists in this field.

Understand that servitization embraces business model innovation, organisational change, and new technology adoption. That services exist in various forms, and represent differing values to both the customer and provider.

Also understand the limits of our knowledge, for instance large scale surveys will help to give you a sense for how the world is changing, but don’t expect any to tell you exactly how the revenue and profits will change for your own business.

Step 2: Allow yourself to imagine an advanced service proposition but only a little:

Imagine what types of services you might offer, but don’t get too drawn into the people, processes and technologies you might need to deliver these, in the same way that a design engineer will conceptualise the form and function of a car, rather than be constrained by design of the production line.

Keep it simple, don’t yet begin to think that these ideas will ultimately transpire into ‘the’ customer value proposition, just try to give your ideas a sense of realism.

Step 3: Explore, benchmark and validate your ideas:

Identify a business in your wider value chain that has moved forward with services- this might be a distributor, competitor, or one of your own suppliers that is asking to do more for your business.

Alternatively you may need to look to an analogous market sector which has some similarities to your own. In each case visit both the service providers and customers, and try to get a sense of how each collaborated to form a proposition, and how they have behaved to make services a success.

 

Compare your own thoughts on services against these, and use this insights to inform your own ideas, and so test whether your own thoughts are indeed realistic.

The outcome of these three steps is simply a better understanding of servitization and what it could mean for your business. They are elementary but they will improve realism and confidence.

After this, the hard work really begins, as you will need to develop new relationships with customers, innovate you customer value propositions, form new value chain relationships, adapt your business model and much more- and even these are still only part of the exploration phase.

 

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As the worlds of academia and industry came together once more at the annual Aston Spring Servitization Conference the message was clear. Servitization has moved from concept to reality and now it is time to start moving the conversation beyond the theory and into real world applications...

The concept of servitization, whilst still fresh to many is not actually particularly new.

Indeed, many of the often cited examples of servitization such as Caterpillar, MAN UK and Xerox have been providing advanced services and outcome based solutions business models to their clients for many, many years.

Rolls Royce, the much celebrated poster boys of the servitization movement have been delivering ‘power-by-the-hour’, their own brand of servitization, ever since the late sixties when they were given an ultimatum by American Airlines to offer a new business model or lose their business.

From an academic standpoint, the first reference to Servitization as a concept is widely accredited to a paper published by Vandermerwe & Rada entitled “Servitization of Business: Adding Value by Adding Services” which appeared in the European Management Journal in 1988.

Yet here we are some 28 years later and still the terminology is foreign to many, outside specific circles of industry and academia.

 

But at the same time, we are seeing a growing number of examples of servitization by significant companies.

Last year in Field Service News, we reported how John Cooper at Sony Professional Services had moved their business towards what was essentially a servitized business model in their broadcast services division by equipping Tele-Madrid with an entire new TV suite on a cost per usage basis, an agreement that puts the full onus on Sony to ensure they delivered 100% uptime.

Yet at no point in our conversation did the word servitization come up.

Then there is Air France KNB.

When Field Service News interviewed him at last year’s Aston Spring Servitization Conference, Harman Lanser of AirFrance KNB admitted that he hadn’t come across the concept until he saw Prof. Tim Baines give a presentation at the Aftermarket Conference in Amsterdam, whereby he immediately identified with the concept as exactly the process he was trying to take the MRO unit of the world’s 2nd largest airline through.

So is there this disconnect between the theoretical world of academia and the world of industry, especially when the evidence would seem to point out that they are indeed both heading in a similar direction?

 

What hasn’t helped is that academics in the past have used a number of interchangeable phrases like ‘life-cycle through services’, ‘advanced services’, ‘outcome based solutions’ and ‘servitization’ when discussing the topic - which has weakened the focus somewhat. Add to this that the research community has tended to focus very much around isolated individual companies in many instances, and the type of benchmarking that makes industry sit up and listen more attentively has been somewhat lacking as a result.

This sentiment sat very much at the heart of the opening keynote presentation of this year’s conference given by Prof. Rogelio Oliva, of Mays Business School, Texas A&M University.

“We’ve basically got stuck in a research mode,”began Oliva

“We like to go out and work with companies, do a case study, write it up and then we’re very happy with it.”

“The problem with doing that is that it is very difficult to aggregate and come up with a theory  that is realisable across several industries or even across several companies.”

“What you end up with is a whole bunch of anecdotes. ‘Company A did this and Company B did that and it’s very difficult to make progress under theoretical developments.”

“I think we as academics, have fallen short of delivering a set of theories, a set of concepts and a set of principals that managers could actually use.”

 

“Of course they [the theories and concepts] are going to need to be modified to a particular  situation, but overall there ought to be some overarching principals to navigate this and we have failed to do that.”

A similar sentiment was also offered by Prof. Tim Baines, Aston Centre for Servitization, Aston University when he gave us his reflections at the end of what was a busy two days.

“I think what we have to accept that the lens that we are using to look at the different adoptions of services throughout the world is imperfect,” admitted Baines.

“It’s useful to reflect on services gaining traction, but as yet we haven’t got the techniques to say with certainty economy A is competing more on the basis of servitization whilst economy B is competing more on the basis of productization.”

However, that is not to say that the move to servitization is floundering, in fact the opposite is very much true. It is now in a stage of evolution where it is beginning to move from the fringe slowly towards the mainstream.

That said, there is still a long way to go towards more widespread understanding. Currently there is a very specific type of company that is suited to servitization, especially when it comes to doing so hand in hand with the academics.

“There are three types of companies,” explains Baines.

 

“Firstly there are those companies that are doing incredibly well selling products and they don’t want to talk about servitization at all. Then there are the companies that are struggling financially and they are prepared to look at servitization because they are prepared to look at anything that can help them get out of the mess that they‘re in and then there is the third set, which are companies that are competing but are getting some kind of feeling that the world that they operate in is changing.”

“It is the companies that are seeing new business models emerge, those who’ve still got stability but who know they’ve got to evolve the way in which they capture value, these are the businesses that we want to work with because if we can help those, we can learn an awful lot about this transformation process and we can position these companies to compete better in future years.”

However, Baines believes that there is definitely a synergy growing between academia and industry.

“This is the fifth time we’ve done this conference” he begins.

“The first year we did the conference we created an event where we had practitioners and we had academics and actually there was a huge gulf between them which was really quite hard to reconcile. We didn’t have a language to describe what was actually going on.”

“I think what has happened is that the academics have accelerated in that they now have a better understanding of industrial practice so they can talk more coherently with practitioners and conversely the practitioners are starting to understand the language of servitization.”

“Through conversations around base, intermediate and advanced services they are beginning to be able to converse with the academics. There are still differences and there always will be - we’ve got different sets of priorities when we are both doing our jobs, but there is a definite sense of it coming together.”

 

“We have now established the language of servitization the notion of these base, intermediary and advanced services is becoming well established, most of the presenters are using those terms and those languages now. We really don’t want any other papers coming along offering different frameworks for this topic because we have moved beyond it,” he continues.

So how can the academics move forward to support their counterparts in industry?

“I would say the first thing we need to do to move forward is to leverage what we have done,” Oliva explains.

“We have been out there writing case studies, interacting with firms, learning from them. Let’s step back and spend a bit more time with those cases, do the hard work of thinking about what it means as opposed to just documenting the story.”

“Then we need to look at the phenomena that we are researching. “We are looking at servitization, which is a transformation that is hard for companies and there is a very long tradition in research that says if you as an academic get involved in the change journey, you can learn from this process - this is something that we call ‘actual research’.”

“So the next strategy is engaging in that process, the research will take longer because we are going to walk with that company, but that is what it takes to get the work done.”

“The final strategy I propose is a push for being relevant,” Oliva continues.

“If we put relevance at the front of our research goals: how we design research questions, how we design research hypothesis, how we design and develop research implications, if we do that with a manager at hand and thinking about the manager and about being relevant, I think that will also help us shape our own work.”

One thing is certainly clear after the two days of exhaustive presentations and debate, servitization has begun to move forward both as an industrial movement and as a topic for academic research.

The key questions are moving from what and why to how. As Baines commented in summing up the conference in the final session:

“Really, now the conversation needs to be about how do we get traction within an organisation, how do we advance this concept.”

“That’s where the real challenges are.”

 

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