Service design in mechanical and plant engineering

Professional service design is the basis for sustainable growth in the service sector. The increasing embedding of classic product-service systems in digital business models creates a wide range of opportunities and potentials for industrial value creation networks and especially for mechanical and plant engineering. In the following article, I would like to give you a brief overview of opportunities and potentials as well as present methods and tools that...

Service Design - Creativity in Mechanical Engineering

Professional service design is the basis for sustainable growth in the service sector. The increasing embedding of classic product-service systems in digital business models creates a wide range of opportunities and potential for industrial value creation networks and especially for mechanical and plant engineering. In the following article, I would like to give you a brief overview of opportunities and potentials and present methods and tools that support you in developing new business models.

Much is possible - opportunities and challenges

From process optimisation and data-based consulting services to various preventive and intelligent maintenance and repair services to completely new, previously unknown service offerings, many things are conceivable. Functional service bundling and the increasing networking of technical systems form the basis for future growth prospects. However, their development requires a completely new orientation of product and service policy towards customer benefits.

In contrast, the classic product service for industrial and capital goods is often still driven by the technical necessity to offer product-related services such as maintenance, repair, training and spare parts. The majority of companies have recognised that there is sustainable growth potential in the service sector in particular, given the digital possibilities, and have begun to expand the existing portfolio to include additional service offerings. However, development and market introduction processes are often insufficiently aligned with customer benefits and the interests of the company as a whole.

In many cases, more far-reaching approaches to innovation management are not used in a targeted manner, which means that possible potentials that go beyond the fulfilment of the core benefit are not utilised. In addition, numerous technology and platform decisions have to be made that require strategic consideration. The ongoing transformation from a technical to an integrative solution provider with increasing software shares is of central importance for the entire company. Within the organisation, a link must be created from a technical view of functions and services to a customer-benefit-oriented product and service portfolio. On the one hand, this should enable a value-based positioning on the market and on the other hand, it should have the scalability and agility that is necessary today.

Limited by know-how and resource availability

In addition to the difficulty that established strategic control instruments no longer provide a sufficiently secure planning basis for investment decisions, companies that have decided to invest in their service portfolio are also quickly thwarted by a lack of know-how and development resources.

One of the reasons for this is that the qualification profile necessary for the design of technical services cannot be gained so easily through personnel measures. What is needed are know-how carriers who have both an understanding of technology and are proficient in business modelling methods, and who also understand the service-specific features (e.g. sensitivity to the human factor). However, these barriers can be removed through cooperation with external partners.

Great opportunities are often hidden in the small - Innovation management in mechanical engineering

In general, not only disruptive and revolutionary innovations have the potential to profoundly change an existing business model. Especially in the service sector, it is often only small increases in customer benefits that lead to a sustainable competitive advantage and thus to a permanent increase in revenue. Here it is important to keep an eye on all fields of innovation and to derive suitable measures and products for the various fields of action.

First, start with an analysis of your current business model. Include both external and internal environmental factors. A comprehensive analysis of the installed base is an important component and helps to identify existing business mechanics and potentials. However, this should not be a limiting factor in the development of new services and service offerings.

This should be followed by a systematic and comprehensive consideration of all fields of innovation in order to define the right focal points and determine suitable strategic thrusts. In a subsequent idea generation and evaluation phase, a wide variety of business model innovations are developed and roughly outlined within a short period of time. Here, the degree of novelty is not primarily decisive, but an imitative and derivative approach often leads to good results. Possible innovation ideas are to be evaluated from the customer's point of view as well as from the data and process point of view. The often reflexive counter-argument that, for example, business models from other sectors are not transferable to the situation in mechanical and plant engineering with its high proportion of project business and customised special solutions should be left aside for the time being.

With the help of product and portfolio management methods as well as agile development processes, we then move on to implementation and market launch. Critical to success is a goal-oriented development mandate that is based on a clear roadmap on the one hand, but at the same time has the necessary degrees of freedom for creative development and enables a flexible reaction to customer feedback. The latter in particular must be obtained and taken into account to a high degree.

Especially new digital services should be accompanied by the introduction of pragmatic and easy-to-implement support processes with a defined service level. This is necessary to constantly optimise the new service in order to lead it to success in the long term.

In all phases, the focus is on adding value for the customer and not on the company's own products.

Developing potential with a method-oriented approach

The design of a successful service portfolio is not a one-off project, but the result of method-based workflows and long-term portfolio management. Depending on the phase in the life cycle, different tools are used. In general, recommendations for setting up a product management process (cf. VDI 4520) provide good orientation. In the case of technical services, which have a strong connection to a wide range of maintenance activities, suitable engineering tools must also be anchored in the design process. Otherwise, there is a risk that well thought-out, new business models will only be moderately successful because the technical service contents are not described in a standardised way or the necessary prerequisites are only given for individual machine types. Conversely, technological innovations often do not develop any business potential in the service sector because technology and business model development do not mesh smoothly. It is therefore important to keep both directions in mind and to think both top-down (from the business model to the technology) and bottom-up (from the technology to the business model).

Service Design - Innovation Paths

Depending on the perspective, either the targeted business model or new technologies can be drivers or enablers for the product-service system. Depending on which approach is taken, the tools and project organisation for the solution definition differ. The top-down approach often starts with an analysis of the customer journey and persona definition, followed by the elaboration of a value proposition. Within the framework of feasibility studies, technologies are determined for the implementation of the derived business models that have the best cost/benefit ratio. If, on the other hand, one comes from the direction of technology, system and functional analyses involving the value network under consideration play a more important role. Especially in the case of new, innovative technologies, in many cases barriers still need to be removed in order to establish successful business models. Complementary services (e.g. assumption of warranty risks) or "as-a-service" models can make the difference.

Professional service design still underrepresented

When developing new or maintaining existing services, many companies in the mechanical and plant engineering sector rely predominantly on in-house resources and project-related support from IT service providers for implementation tasks. From my point of view, it is not surprising that in many cases growth in the service business is purely due to price increases in the already established maintenance and spare parts business. This is also the case when entire business units have been renamed "Digital Business Units". However, I find it even more curious how development budgets are currently allocated and projects managed. Whereas in the past, for example, a detailed business case was required for an increase in spare parts stock with a measurable effect on delivery availability and order probability, and deviations from the plan were tracked to the cent by controlling, today a vague gut feeling is enough to develop a possibly superfluous dashboard for a lot of money. The impression that with the number of buzzwords in the project description, the budget is also increasing to the same extent, while economic success indicators and result-oriented procedures are losing importance, is not so wrong, I think. In my opinion, this development can be counteracted by professional service design and product management structures, with a view to the entire portfolio. Since these resources are not so easy to find, not only internal jobs should be re-labelled, but know-how should be built up or external service providers should be involved on a long-term and success-oriented basis.

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