- The document describes a methodology used to help two manufacturers identify new service opportunities by applying equipment life-cycle analysis and customer value propositions. - Workshops were conducted using visual tools to map the total cost of ownership over the life of equipment and identify value propositions for specific activities. - This helped uncover new service opportunities around areas like upgrades, spare parts, and end-of-life services, as well as improve understanding of customer needs. - Evaluating showed the approach was effective at identifying services, and its further development combining additional tools like customer journey mapping was recommended.

1. Service Innovation | Dr Shaun West
The use of equipment life-­‐cycle analysis
to identify new service opportunities
Aston Spring Servitization Conference, May 2015
Dr Shaun West and Adriano Pascual

2. Service Innovation | Dr Shaun West
Introduction
The problem and the purpose of this paper
Describe an approach that links both
product and service development
Service discovery tools
for engineered equipment
Describe a methodology used to assist two manufacturers in
identifying opportunities for developing services based on the
Purpose of this paper
… manufacturing firms often have difficulty understanding the
service needs for the full operational life of their equipment …
Problem
(Baines and Lightfoot, 2013 and Fischer, 2012)

3. Service Innovation | Dr Shaun West
Total cost of ownership
Equipment life-­‐cycle based on the total cost of ownership
It helps when you have a background in modelling LTSAs and O&M contracts
What must the owner/operator do to keep the equipment operating for +20 years?

4. Service Innovation | Dr Shaun West
The customer value proposition
Learning to understand the difference between the price paid and value received
Customer value proposition flipped to force manufactures
to start thinking first about their customers
Proceedings!of!the!Spring!Servitization!Conference!(SSC2015)!
2.3$Best$practice$in$workshops$
Workshop! success! can! be! improved! by! using! structured! visual! approaches! to! decision! making!
according!to!Stickdorn!(2012).!!Further!analysis!can!(and!in!some!cases!must)!be!completed!outside!
of!the!workshop!with!the! full! team!or!part!of!the!team!reforming!to!review!further!the!analysis.!!
Stickdorn! (2012)! recommends! that! multi<disciplinary! teams! should! be! used! in! a! workshop!
environment! to! ensure! that! wide! ranges! of! inputs! are! captured! and! so! that! commonly! held!
assumptions!can!be!challenged.!!Where!possible!a!‘user’!should!also!be!included!in!the!discussions.!
!
!
Figure!3:!Value!proposition!design!
based!on!Anderson!(1999)!and!Osterwalder!(2014)!
Value proposition design based on Anderson (1999) and Osterwalder (2014)

5. Service Innovation | Dr Shaun West
Methodology
Three steps were used in the workshops
• To ensure a minimal level of service understanding
• To share information on service know-­‐how
Introduction
• To provide a 'safe' environment to learn:
-­‐ Cradle-­‐to-­‐grave equipment life-­‐cycle
-­‐ Customer value proposition for one important activity
Car example
• To provide a cradle-­‐to-­‐grave equipment life-­‐cycle
• To provide a customer value proposition for one activity
Own product
Mixed teams were used to get a wider range of inputs

6. Service Innovation | Dr Shaun West
The companies
Both from different market segments
Mixed teams were used to get a wider range of inputs
David Brown Skan
HQ UK Switzerland
Sales 120MGBP / 70% service 50MGBP / 20% service
Employees 700 / not given 320 / 70 service
Segments Industrial gear boxes Medial and lab equipment
Workshop
focus
Gearboxes for coal mills
(engineered)
Isolators (engineered)
Flow cabinets (standardised)

7. Service Innovation | Dr Shaun West
Proceedings!of!the!Spring!Servitization!Conference!(SSC2015)!
!
The!agenda!was!designed!so!that!everyone!would!have!at!least!a!limited!understanding!of!
and!opportunities!to!work!together.!!The!teams!were!instructed!to!work!together!using!Pos
creative! risk<free! environment! based! on! the! approach! described! by! Stickdorn! (2012).! ! T
deliberately!used!to!allow!all!participants!to!take!an!active!role!in!the!process.!!Poster<te
were!also!used!so!that!the!team!members!could!actively!engage!in!the!workshop.!!A!blank!t
was!used!for!both!the!car!and!the!company<specific!equipment!life<cycle.!!Figure!4!shows!an!
of!the!completed!life<cycle!of!a!car!using!the!poster!template!from!the!workshops.!!Figure!5!p
an! example! of! the! value! proposition! for! the! car! associated! with! the! modification! of! the! c
petrol!to!biogas.!!!
!
Figure!4:!Cradle<to<grave!life<cycle!of!a!car$
Applying total cost of ownership
Cradle-­‐to-­‐grave life-­‐cycle for a car from the owner’s perspective
Additional tasks/costs were identified that previously had not been considered

8. Service Innovation | Dr Shaun West
Applying the customer value proposition
Value proposition for one task – the upgrade to biogas
West!&!Pascual!
!
Figure!5:!Value!proposition!design!for!a!car!engine!upgrade/replacement!
sults$and$discussion$
escribed! by! Neeley! (2007)! and! Cohen! (2006)! it! is! essential! for! manufacturing! companies!
rstand! the! service! needs! of! their! customers.! ! Without! this! understanding! they! will! offer! th
g! services! with! little! value! addition! or! no! service! at! all.! ! The! combination! of! the! two! too
The process worked well for ‘own’ products
– important to select initially one service from the cradle-­‐to-­‐grave life-­‐cycle

9. Service Innovation | Dr Shaun West
Lessons learnt
New opportunities and improved customer understanding were important outcomes
The value of the discussions was high with questioning of assumptions
New service opportunities were discovered
• End life opportunities – second-­‐hand market
• Upgrade opportunities – triggers for upgrades
• Spare parts sales – triggers for service
The approach improved customer understanding
• Some customers have the wrong equipment
• Some customers need help to buy services
• The tools help to understand the value
propositions of today’s services better
• Customers in the same segment may
experience different pains and gains
• Timing for new technology or services injections
“The purpose of a business is to
create and keep a customer”
Peter Drucker

10. Service Innovation | Dr Shaun West
Lessons learnt
Integration of the equipment life-­‐cycle with the customer value proposition
Other extensions to the methodology:
-­‐ Estimated total market value
-­‐ Share of spend (faithfulness)
-­‐ Forecast sales with timing of owner’s spend
-­‐ Identify trigger points for conversion,
modifications and upgrades
-­‐ Combine with customer journey mapping
-­‐ Business model mapping
…can a visual methodology be developed to
understand how owners use their equipment
and how owners/operators can best be
supported?
West!&!Pascual!
6.!!The!examples!developed!by!both!firms!only!considered!single!events!and!were!considered!
ntial.!
!
Figure!3:!Every!activity!should!have!a!customer!value!proposition!associated!with!it!
clear! after! the! workshops! that! all! of! the! tasks! should! have! a! customer! value! proposition!
ted!with!them!and!this!is!confirmed!by!Anderson!(2008)!and!Osterwalder!(2014)!who!state!
customer! value! proposition! should! be! created! for! all! products! and! services.! ! Before! the!
ops,!it!was!considered!that!this!might!not!be!the!case.!!However,!the!insights!that!it!provides!
Every task or cost driver should have its own Customer Value Proposition

11. Service Innovation | Dr Shaun West
Conclusions
The prototyping of the combination of the two tools was successful!
The methodology was easily understood
The graphic forms captured valuable information
Use of the tools helped to identify new services
The combining of the cradle-­‐
to-­‐grave equipment life-­‐cycle
with the customer value
proposition was successful as
a prototype
Extensions to the approach were idetified

12. Service Innovation | Dr Shaun West
Recommendation
The tools should be further tested and developed!
More testing of the visual tools life-­‐cycle and CVP
Extend testing with customer journey mapping
Confirm quantitative uses of captured data
The prototype tested, based
on the total cost of
ownership and the customer
value proposition, should be
further developed
Confirm the business models for each CVP

13. Service Innovation | Dr Shaun West
Closing
Acknowledgments
The authors would like to thank the Lucerne
University of Applied Sciences and Arts, Switzerland
for its support and the two companies David Brown
Gears LTD and Skan AG.
The authors
Dr Shaun West
Wirtschaftsingenieurwesen | innovation,
Lucerne University of Applied Sciences and Arts,
Switzerland
Email: shaun.west@hslu.ch
Phone: +41 79 770 5986
Adriano Pascual
Engineering Business Management Student
Coventry University, United Kingdom
Email: pascuala@uni.coventry.ac.uk
Phone: +41 76 416 0864

14. Service Innovation | Dr Shaun West
Questions?