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A subscription business model - that sounds like significant economic advantages. Therefore, the question arises: Why haven't all manufacturing companies established this type of participative business model yet?
The answer: The development and implementation of subscription business models go hand in hand with central challenges that companies have to overcome in the course of a business model transformation. This expert paper helps with this.
Industrial manufacturers faced and mastered several economic challenges and disruptive changes in the past. In particular, changes to business models emerge very slowly, whereas crises such as the banking crisis or covid-19 outbreak lead to significant short-term effects and are difficult to manage.
Over the past year, the world experienced an unprecedented form of disruption due to the global covid-19 pandemic. Compared to former economic crises, the implications of social distancing, lockdowns, and supply chain shortages triggered a rapid economic and societal disruption at a global scale, which impacted all sectors and levels of society.
For a holistic understanding of the impact of the current and former crises on industrial manufacturers, the Institute for Industrial Management at RWTH Aachen and BearingPoint conducted a survey as well as expert interviews to investigate the scope and type of affects for industrial manufacturers with a strong focus on service business. Based on this a framework to successfully address these new challenges and – also – opportunities was developed.
Today, however, agility is seen more than ever as a critical success factor for companies. In times of an increasing degree of digital interconnection and minimum viable products, a mentality is entering the industrial service sector that has so far only been exemplified by Internet companies (e.g. Google): New products and especially digital services are developed in highly iterative processes. To this end, customers are involved in early test phases of development and provide feedback on individual functional modules, which – in contrast to the previous approach – are only gradually assembled into a market-ready “100 percent version”. But especially with the development of new digital services, companies must ensure more than ever that both the existing analog service business and the design of new digital services are geared to effectiveness and efficiency in order to meet the growing demands of customers and competitors.
To achieve this, companies must not only be familiar with the products currently on the market, but also master the entire product history, which in some cases goes back more than 30 years and varies greatly from one industry to another.
Today, maintenance exceeds this definition, it is significantly more.
In many companies, it plays the role of an incubator for development
and drives digital transformation forward. The very essence of
Industrie 4.0 is the optimisation of the flow of information within as
well as outside of a company to accelerate the adjustment of company
organisations in the context of increasing competitive pressure.
Because of the variety of interfaces, information and data that
is available as well as its service character, maintenance lends itself easily as the area of choice for a company to make Industrie 4.0 real. Whilst doing so, the aim is not to equip employees with the
latest “gimmick“ for order processment or to be the company with
the highest number of lighthouse projects. Instead, maintenance
ensures reliable and cost-efficient production and, consequently,
the primary creation of added value of the manufacturing company.
Those who were identified as top performers during the “Smart
Maintenance“ consortium benchmarking by FIR at RWTH Aachen
University gain particular useful ideas twice as often as other follower companies directly from staff, thus releasing the right potential.
Information and data help to reach these goals and transfer the
vision of smart maintenance into actual pratice. But what is smart
maintenance exactly and how far along are you in the development
of your individual smart maintenance concept?
Industry 4.0 and Smart Maintenance represent a great opportunity to make manufacturing and maintenance more effective, safer, and reliable. However, they also represent massive change and corresponding challenges for industrial companies, as many different options and starting points have to be weighed and the individual right paths for achieving Smart Maintenance need to be identified. In our paper, we describe our approach to evaluating maintenance organizations in a case study for the oil and gas industry, developing a shared vision for the future, and deriving economical and effective measures. We will demonstrate our approach, by showcasing a specific example from the oil and gas industry, where a need for action on HSE-relevant critical flanges in the company's piping systems was identified. We describe the steps, that were taken to identify the need for action, the specifications of the project and the criticality analysis of the piping system. This resulted in the derivation of a digitalization measure for critical flanges, which was first commercially analyzed and then the flanges were equipped with a continuous monitoring solution. Finally, a conclusion is drawn on the performed procedure and the achieved improvements.
Industrial food production represents one of the largest industries, accounting for a share of ten percent of the world’s gross domestic product. Simultaneously, it is responsible for 26 percent of global greenhouse gas emissions. Due to increasing CO2 taxes and population’s call for sustainability and CO2 reduction, it is facing challenges in terms of economic profitability and stakeholder demands. These challenges could partly be overcome by participating in data ecosystems in which data are refined as data products, understood, exchanged and monetized as economic goods. Despite large amounts of data, collected parenthetically along the value chain in food production, potentials of data analytics and data ecosystems are only marginally exploited. Food production mainly focuses on traditional, product-centric business models. This work shows the conceptualization of a data ecosystem for food production, enabling data-based business models. Therefore, resources, ac- tors, roles and underlying relationships of future ecosystem are analyzed. Building on these, corresponding architectural and analytical artifacts that support data ecosystem exploitation are presented. A food production data ecosystem is exemplified by applying data analytics to compressor data, which reveals high potentials for CO2 reduction.
Manufacturing companies are constantly increasing their efforts in the subscription business, also known as product-as-a-service business, offering usage and outcome based solutions (value-in-use) instead of transactional services and products (value-in-exchange). Customers are becoming contractual subscribers of the solution in return for recurring, performance-related payments. To address arising, inevitable challenges like (1) reducing customer churn, (2) increasing usage intensity and outcome quality, (3) ensuring the adoption of product and software releases as well as (4) fostering customer loyalty, leading manufacturing companies are setting up a new organizational, customer-facing unit, called Customer Success Management (CSM). This unit has its origins in the software-as-a-service business, operating next to established entities like sales, key account management and customer service. Since there are currently no holistic models for an end-to-end description of CSM-tasks in the manufacturing industry, this paper contributes to a taskoriented reference model, using a grounded theory approach, examining both manufacturing and software companies. Containing a reference framework with 8 main tasks, 17 basic tasks and 76 elementary tasks, the reference model supports manufacturing companies in adapting and customizing a company-specific CSM concept.
Industrial service is currently undergoing tremendous changes, largely driven by the development of new technologies, in particular the advancing digitalization. Never before have organizations had more comprehensive and insightful data assets - and never before have the opportunities to fully exploit this potential been better. However, most companies are unaware of how they can make use of this potential and which development steps are necessary to react to the current situation. To change this, a maturity-based approach was developed which describes four development stages of an industrial service company from a technological, organizational and cultural point of view. The maturity model makes it possible to develop a digital roadmap that is tailormade to each company, which helps to introduce Industrie 4.0 and transform industrial service companies into learning, agile organizations.
Subscription business models provide an important component for monetizing the potential of Industrie 4.0. Subscription business is based on a long-term and participative business relationship between customer and provider. However, only digitalization offers the necessary framework conditions to realize the characteristic recurring and performance-based billing, and to ensure the necessary transparency about the usage phase of products as well as continuous performance improvements in the customer process. Against this background, companies must not only recognize the much-cited potential that lies in the total dedication to the success of individual subscription customers. Rather, the central obstacles must be addressed, examined, and subsequently overcome in a targeted manner in order to successfully establish subscription business models and place them on the market.
This chapter addresses the market launch and sales of smart services. It opens with an introduction of the new challenges that the market launch of smart services creates for companies. Then follows the discussion of a four-phase approach to the market launch of smart services. Subsequently, successful practices are presented for this approach along eight design fields of the market launch. [https://link.springer.com/chapter/10.1007/978-3-030-58182-4_8]