The purpose of this paper is to identify ways in which Machine-to-Machine (M2M) communication can be used by product-based manufacturing firms to deepen and broaden the service aspects of their customer value proposition. The expectation is that an improved customer value proposition leads to improved customer experience, and through this to improved customer retention. Slides used in the presentation.

1. Service
Innovation
|
Dr
Shaun
West
Can
machine-­‐to-­‐machine
communications
be
used
to
improve
customer
experience
in
a
service
environment?
4th
International
Conference
on
Business
Servitization
(ICBS
2015)
Universidad
Rey
Juan
Carlos,
Madrid,
Spain
19-­‐20
November
2015
Dr
Shaun
West
and
Dominik
Kujawski,
Lucerne
University
of
Applied
Sciences
and
Arts
Paolo
Gaiardelli,
University
of
Bergamo,
Italy

2. Service
Innovation
|
Dr
Shaun
West
First…
My
inspiration
for
this
paper
Cat
https://www.youtube.com/watch?v=N7tb5R1PGNw&

3. Service
Innovation
|
Dr
Shaun
West
Objectives
Can
M2M
help
to
improve
the
customer’s
service
experience
in
an
industrial
setting?
Understand
what
the
literature
says
on
this
topic
Understand
what
is
being
done
by
industrials
on
M2M
Understand
what
the
customer
values
If
we
understand
these
aspects,
we
can
make
the
right
customer
value
proposition
Create
a
prototype
process
for
industrial
firms

4. Service
Innovation
|
Dr
Shaun
West
METHODOLOGY
A semi-­‐quantitative
approach
was
taken
to
obtain
the
results

5. Service
Innovation
|
Dr
Shaun
West
Methodology
Literature
survey
to
assess
the
state-­‐of-­‐the-­‐art
Source
materials
-­‐ Academic
literature
-­‐ Use
cases
from
the
industrial
press
-­‐ Videos
of
use
cases
Scope
-­‐ The
value
in
ecosystems
-­‐ Supply
chain
collaboration
creating
open
innovation
-­‐ Customer
value
-­‐ Sustainability
through
customer
engagement
-­‐ Decision
making
by
converting
data
into
information

6. Service
Innovation
|
Dr
Shaun
West
Methodology
A
survey
to
obtain
quantitative
and
qualitative
data
Issues
covered
-­‐ Stakeholder
analysis
-­‐ Systems
in
use
today
-­‐ Issues
associated
with
monitoring,
warranty,
and
equipment
operation
-­‐ Issues
associated
with
data
ownership
and
information
sharing
-­‐ Issues
associated
with
unplanned
downtime
-­‐ An
understanding
of
the
gaps
between
what
stakeholders
expect
and
what
is
delivered
today
-­‐ …

7. Service
Innovation
|
Dr
Shaun
West
Methodology
Interviews
to
gain
deeper
insights
into
the
issues
Issues
covered
in
depth
-­‐ What
are
the
best
customer
value
propositions?
-­‐ What
are
the
negative
aspects
of
monitoring?
-­‐ Who
should
own
the
data?
-­‐ How
should
data
be
accessed
and
shared?
-­‐ Have
you
experience
of
spying
vs
transparency?
-­‐ How
does
smart
(remote)
monitoring
improve
customer/supplier
interactions?
-­‐ Does
it
improve
OEM/customer
contact?
-­‐ How
could
the
contact
be
improved
with
the
data
flows?
-­‐ …

8. Service
Innovation
|
Dr
Shaun
West
LITERATURE
Four
lessons
on
how
M2M
data
can
be
used
to
create
customer
value

9. Service
Innovation
|
Dr
Shaun
West
Literature
The
value
is
in
the
ecosystem
-­‐ Ecosystems
complex
networks
whose
integrated
efforts
address
the
needs
of
the
”end
customer”
-­‐ Industry
4.0
ecosystem:
smart
factories
and
intelligent
machines
and
people
-­‐ Industry
4.0
will
be
a
key
influencer
of
value
creation
-­‐ Manufacturing
companies
in
high-­‐cost
countries
need
to
leverage
this
opportunity
M2M
is
a
technology
that
complements
the
value
creation
in
the
ecosystem
Production
Bogies
Suspenion
Owner
Operator
Maintainer
Lighting
Regulator
Insurers
Investors
System
operator
Spares
Development
System
integrator

10. Service
Innovation
|
Dr
Shaun
West
Literature
Supply
chain
collaboration
creating
open
innovation
-­‐ Ecosystem
collaboration
is
crucial for
servitization
-­‐ M2M
communication
within
the
ecosystem
supports
collaboration
-­‐ M2M
data
flows
support
proactive
actions
-­‐ Trust
of
all
players
in
the
ecosystem
is
key
– without
it
Industry
4.0
business
model
will
not
be
successful
-­‐ Clear
ground
rules
for
the
interactions
Typical
business
scenario
in
the
Internet
of
Things
(Schönthaler,
2015)
M2M
needs
trust
and
open
innovation
to
be
unleash
the
know-­‐how
in
the
ecosystem

11. Service
Innovation
|
Dr
Shaun
West
Literature
Customer
value
is
where
it
all
starts
-­‐ Customer
value
must
be
created
within
the
ecosystem
-­‐ Value
has
many
currencies:
$,
risk,
ease
of
use,
data…
-­‐ Customer
value
requires
a
more
customer
centric
approach
-­‐ M2M
allows
for
a
more
business/customer
orientation
given
rather
than
to
the
product
and
standardized
-­‐ Customer
value
can
be
created
in
new
ways
that
shift
in
the
traditional
service
boundary
between
provider
and
customer
-­‐ To
understand
customer
value
you
must
understand
customer
jobs
Value
Graphic
adapted
from
Anderson
(2006)
Customer
centricity
and
understanding
of
value
is
central
to
success

12. Service
Innovation
|
Dr
Shaun
West
Literature
Sustainability
through
customer
engagement
-­‐ Suitability
of
a
customer
is
an
important
business
asset
-­‐ Sustainability
can
be
enhanced
through
customer
engagement
-­‐ Customer
engagement
should
support
the
customer
to
achieve
their
business
goals
-­‐ An
engaged
customer
generates
significant
premiums
in
sales,
profitability
-­‐ How
and
what
is
the
appropriate
level
of
customer
engagement
is
a
important
question
Sustainable
Customer
Engagement
by
(Deloitte,
2014)
Look
for
opportunities
to
support
the
customers
business
goals

13. Service
Innovation
|
Dr
Shaun
West
Literature
Decision
making
by
converting
data
into
information
-­‐ The
optimal
decision-­‐making
process:
-­‐ delivery
the
right
information
-­‐ in
the
correct
form
-­‐ to people who
are
able
to
make
the
decision
-­‐ Expertise
lies
within
the
ecosystem
-­‐ One
player
does
not
have
all
of
the
answers!
Translation
of
data
into
information
to
support
business
decision
making
Rowley
(2007)
Decisions
are
made
by
people,
information
is
supplied
by
machines

14. Service
Innovation
|
Dr
Shaun
West
SURVEY
AND
INTERVIEWS
Key
lessons
from
the
surveys
and
interviews

15. Service
Innovation
|
Dr
Shaun
West
Survey
and
interviews
Overview
of
responses
– who
is
using
M2M
in
some
form
today?
0 2 4 6 8 10 12 14
0% 5% 10% 15% 20%
Equipment2maintenance
Equipment2service2provider
Consulting2firm
Other2(please2specify)
OEM2D service
Equipment2operator
Equipment/asset2owner
OEM2D new2build
Financial2investor/bank
Insurance2company -­‐ 35
survey
responses
-­‐ 15
follow-­‐up
interview
-­‐ Range
of
industrial
players
-­‐ Some
firms
active
in
more
then
one
area
Wide
range
of
actors
within
the
ecosystem

16. Service
Innovation
|
Dr
Shaun
West
Survey
and
interviews
Overview
of
responses
– how
do
people
use
M2M
today?
0
2
4
6
8
10
12
14
16
0
5
10
15
20
25
30
35
40
45
Periodic01during0inspection/overhaul
Periodic01operational
Continual
Remote
Supports0achievement0of0outcomes
Fault0finding
-­‐ Data
produced and
consumed is
more
than M2M
data
-­‐ Data
collected
continually and
intermittently
-­‐ Data
on
operational
performance
and
equipment status
collected
-­‐ Some
data
collected
remotely
-­‐ Data
was
use
to support
business
outcomes and
fault
finding
M2M
is
much
wider
than
simple
machine-­‐to-­‐machine
data
collection

17. Service
Innovation
|
Dr
Shaun
West
Survey
and
interviews
Operations
and
maintenance
considerations
– what
are
the
business
goal
at
each
phase?
New
build Operation
Normal
operations
Planned
maintenance
Unplanned
maintenance
Upgrades
-­‐ New
build
(warranty
fulfillment)
-­‐ Within
recommendations
-­‐ Feedback
on
actual
operation
-­‐ Normal
operations
-­‐ Proactive
maintenance
-­‐ Improve
efficiency
-­‐ Stable plant
performance
-­‐ Planned
maintenance
-­‐ Support
risk
based
maintenance
-­‐ Reduce
maintenance
costs
-­‐ Unplanned
maintenance
-­‐ Opportunity
based
maintenance
-­‐ Problem
solving
Important
to
understand
the
equipment
life-­‐cycle
and
roles
when
providing
M2M
solutions

18. Service
Innovation
|
Dr
Shaun
West
Survey
and
interviews
Data
sharing
and
ownership
– this
is
a
very
emotional
topic…
The$data$is$
commercially$
sensitive
The$equipment$
owner$should$own$
the$data
The$data$should$be$
shared$with$all$
stakeholders
The$OEM$must$have$
access$to$the$data
The$OEM$should$
own$the$data
-­‐ Information/output/reporting
from
the
system
needs
customizing
-­‐ The
data
is
commercially
sensitive
-­‐ The
equipment
owner should
own
the
data
Important
or
very
important
Data
sharing
is
based
on
trust
and
trust
is
a
very
fragile
attribute
100%

19. Service
Innovation
|
Dr
Shaun
West
Survey
and
interviews
Descriptions
of
customer
value
propositions
and
value
for
money
But…
…
only
33%
of
interviewees
said
that
they
actually
received
the
value
they
were
expecting
…
equipment
owner/operators were
better
able
to
describe the
value
creation
from
M2M
solutions
Examples
of
value
propositions
described
by
the
interviewees
-­‐ Warranty
– “data
used
to
show
that
the
‘warranty’
issue
was
partially
caused
by
the
OEM”
(owner/operator)
-­‐ Operations
– “we
use
the
combined
data
for
our
business
reporting
and
optimization”
(owner/operator)
-­‐ Maintenance
– “we
used
the
data
to
support
cost
reduction
by
moving
to
risk-­‐based
maintenance”
(owner/operator)
-­‐ Advanced
services
– “…underpinned
by
monitoring,
we
could
de-­‐risk
our
service
contracts”
(OEM)
-­‐ Unplanned
maintenance
– “operational
technical
data
helps
increase
speed
of
troubleshooting”
(owner/operator)
-­‐ Unplanned
maintenance
– “value
comes
from
a
holistic
view”
(OEM
and
owner/operator)
The
use
cases
described
provided
valuable
insights
into
the
value
M2M
can
create

20. Service
Innovation
|
Dr
Shaun
West
LESSONS
LEARNT
How
M2M
can
build
customer
value

21. Service
Innovation
|
Dr
Shaun
West
Lessons
learnt
Negative
aspects
of
monitoring
– it
is
not
all
positive!
-­‐ M2M
should
not
be
used
as
a
“spy-­‐in-­‐the-­‐cab”
-­‐ OEMs
“push”
the
technology
onto
us
-­‐ Data
overload
and
data
security
-­‐ Use
of
the
data
-­‐ Reporting/controlling
verses
transparency
-­‐ “The
OEMs
also
had
a
concern
that
owner/operators
did
not
want
to
expose
their
stupidity”
(utility
O&M)
-­‐ “Need
to
know
what
is
needed
by
whom
and
why”
(LNG,
O&M)
Collect
data
appropriately
and
be
transparent
with
its
use

22. Service
Innovation
|
Dr
Shaun
West
Lessons
learnt
Challenges
for
improving
customer/supplier
interactions
and
the
sharing
of
data
-­‐ The
system
integrator
is
a
key
party
in
the
ecosystem
-­‐ The
system
integrator
must
facilitate
data
sharing
-­‐ Be
proactive
– OEM
can
be
ready
to
help
with
trouble
shooting
or
spares
-­‐ Single
source
of
data
– information
must
flow
in
both
directions
to
improve
trouble
shooting
-­‐ Engagement
– joint
problem
solving
helps
to
mature
the
relationships
-­‐ Collaboration
– sharing
of
resources
helps
to
drive
out
cost
yet
risks
deskilling
staff
-­‐ Supply
chain
– second
tier
OEMs
have
problems
with
data
access
“...you
should
work
'open
book'
with
the
data...”

23. Service
Innovation
|
Dr
Shaun
West
Lessons
learnt
Main
issues
found
that
drive
customer
relationships
- Use
the
ecosystem
to
help
find
the
‘customer’
- The
‘customer’
may
not
describe
clearly
their
needs
- Segmentation
must
be
undertaken
based
on
the
outcomes
they
are
seeking
- Each
customer
persona
must
have
a
clear
value
proposition
- Loss
of
personal
interactions
can
lead
to
a
perception
of
a
lower
level
of
value
First
identify
your
customers

24. Service
Innovation
|
Dr
Shaun
West
Lessons
learnt
Main
issues
underlying
considerations
Development
and
application
of
M2M
requires
outside-­‐in
thinking
- There
must
be
transparency
in
the
data
collection
- Data
sharing
so
that
with
a
‘single
point
of
truth’
- The
data
collected
must
be
used
openly
for
joint
problem
solving
- There
are
internal
consumers
of
the
technical
and
operational
data
as
well
as
external
- Trust
between
the
players
in
the
ecosystem
is
key

25. Service
Innovation
|
Dr
Shaun
West
Lessons
learnt
Proposed
process
description
to
assist
development
of
value
proposition
for
M2M
Where
do
you
sit
in
the
ecosystem
and
who
brings
what
value?
Do
you
understand
your
customer's
gains
and
pains?
Do
you
understand
the
customer's
outcomes
and
their
influencers?
Can
you
clearly
describe
the
customer
value
proposition?
Can
you
describe
clearly
where
the
customer’s
value
accrues?
The
technology
exists
today
(or
tomorrow…)
Much
of
the
customer
value
comes
from
intangibles!
OEM’s
should
look
with
the
eyes
of
the
“customer”
rather
than
as
a
manufacturer

26. Service
Innovation
|
Dr
Shaun
West
CONCLUSIONS
AND
RECOMMENDATIONS
Services
build
on
M2M
are
not
about
technology,
but
about
improving
the
customer
experience
and
building
a
relationship
of
trust

27. Service
Innovation
|
Dr
Shaun
West
Conclusions
Important
to
work
with
M2M
to
improve
customer
experiences
Owner/operators
were
expecting
new
M2M
solutions
M2M
solutions
should
be
on
a
more
individual
basis
Consumers
of
the
data
could
be
anywhere
in
the
ecosystem
Owner/operators
are
expecting
greater
engagement
based
on
M2M
data.
The
expectation
is
that
joint
problem
solving
would
increase
the
speed
of
problem
resolution,
reduce
costs
and
create
better
solutions.Engagement
within
the
ecosystem
improves
root
cause
analysis

28. Service
Innovation
|
Dr
Shaun
West
Recommendations
The
parties
in
the
ecosystem
must
co-­‐create
to
find
new
value
propositions
Identify
your
customers
and
their
outcomes
Engage
with
the
customers
and
focus
where
value
is
created
Ensure
that
personal
interactions
are
not
neglected
Any
firm
that
is
creating
an
M2M
solution
for
its
customers
should
consider
during
the
development
of
the
customer
value
proposition.
Be
open
about
the
use
of
data

29. Service
Innovation
|
Dr
Shaun
West
Thanks
for
your
time!