Introductory Presentation - COVID-19 induced restrictions and recession change the market context - Uptime at a Fraction of the Cost imperative for survival and competitiveness - Technology generally and AR particulary as tools to achieve cost reduction objectives

1. 1LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Uptime at a Fraction of the Cost: Redesigning
Field Service with Augmented Reality
LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
SERVICE LEADERS NETWORK
Virtual Roundtables

2. 2LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
COVID-19: Economic Fallout
Todate:
Jobs lost >150 million
Hours lost > 10x global financial crisis
Massive job retention schemes cushioned
impact in some countries – but deficit/debt
almost double global financial crisis
2020 IMF OECD
China -1.0 -2.6/-3.7*
US -8.0 -7.3/-8.5*
Eurozone -10.2 -9.1/-11.5*
World -4.9 (-3)** -6.0/-7.6*
GDP Forecasts (%) June 2020
* 2nd wave scenario
** April 2020

3. 3LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
COVID-19: Job Losses (Examples)
Airlines > 150,000
United Airlines 36,000
Norwegian Air 9,000
SAS 10,000
Air France 7,500
Air Canada >5000
BA 12,000
Easyjet 4,500
Ryanair 3,000
Lufthansa 22,000
TUI 8,000
Oil & Gas > 100,000
BP, Shell, Chevron,
ExxonMobil ~ 15% of
workforce (> 10,000 each)
250 O&G companies in
bakruptcy by end 2020 (US)
Oil services >15,000 (US)
Major Industrials > 350,000
Renault, Daimler >15,000 each
Nissan >12,000 (Spain, US)
Bombardier 2,500
GE >9,000 (Aviation, Alstom)
Rolls Royce 9,000
Boeing, Airbus >22,000
MTU >1,200
ThyssenKrupp 3,000
Rolls Royce 9,000
SKF 2,500
ZF 15,000
BMW >6,000
Emerson 3,900…
Rentals/Services
Hertz 10,000
Uber 6,700
Lyft 1,000

4. 4LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
COVID-19: Different Impact by Sector (e.g. EU)
1
1 Food & Beverage
2 Chemicals
3 Construction
4 Utilities
5 Metals
6 Pharma
7 Transport excl. AL
8 Other manufacturing
(automotive, el/mech engineering, P&P, …)2
3
4
5
6
7
8
Arts
Airlines
TTH
H
Sources: Eurostat, McKinsey & Co, others
COVID-19
Impact
Structural Challenges pro COVID-19 H

5. 5LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
COVID-19: Structural Changes
Characteristics
Abrupt
Supply & Demand
Deep
Duration?
Permanent Structural Change
Decoupling US/China * * US/EU
Trade patterns / Supply chains
Peak oil / REN / Electrification
Remote working / business
 Business travel
 Commercial
property
 Transport
 City planning
E-Commerce/Retail
 City planning
 Warehousing
 Logistics
DIGITIZATION

6. 6LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
New Drivers for Digitization
Pre COVID-19 driven by vision, productivity and cost expectations, peer pressure
During COVID-19 driven by need: safety, travel restrictions, lack of people
 business & transactions without physical contact…
Post COVID-19 driven by need: remain competitive (cost) and survival
„Years of progress in a few months“ – Sundar Pichai, CEO GoogleDIGITIZATION

7. 7LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
The Service Conundrum
As (product) sales fall  service as the revenue engine, but
Service revenue driven by existing installed base, contracts, people (no capacity cuts)…
 This recession unprecedented (depth, duration virus dependent)
 10 points in lower utilzation of assets leads to 6 points drop in service revenue
 Need for low contact interventions (assymetrical risks, age…)
 Travel restrictions (short-term,medium-term, long-term)
 Very high uncertainty
 As customers face dropping demand
 price pressures increase
 competitive intensity increases

8. 8LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Service Capacity: A balancing act
Always risky to cut service capacity –
service cannot be stored:
- customer complaints
- lost revenue
- reputational damage
- impaired competitiveness
But in (field) service capacity and utilization
define the cost base – which may be no
longer sustainable Ability to provide
service as required &
remain competitive
Reduce cost &
remain
competitive

9. 9LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Uptime as a Fraction of the Cost
Service provider
Customer
Technology provider
Uptime*
at a fraction
of the Cost
Outcome based services /As-a-Service offerings
 transaction costs, risk sharing (incl. dynamic warranties)
 pay for result (OEE) –not action (generates cost)
Digitization
 risk reduction
 reduce/eliminate unnecessary work (prevent)
 execute work at required quality/time with minimum
cost
Business model issue
Operations issue
Product supplier
*e.g.OEE

10. 10LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Towards Uptime at a Fraction of the Cost
Reduce/eliminate unnecessary work (prevent)
- Prevent unnecessary work from arising (predictive systems)
- Eliminate errors (zero defects)
Execute work at required quality/time with minimum cost
- Reduce waiting times (people, tools, materials, travel…)
- Reduce capacity costs (lowest possible capacity)
- Reduce execution times (diagnosis, intervention)
- Maximize utilization (spread resources over maximum possible
jobs)
- Utilize most cost-effective resources
- Utilize resources in most cost-effective way
X%
30?
50?
70?

11. 11LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Augmented Reality Potential
 Reduce travel / Reduce service
visits/calls/errors (follow-up/repeat calls)
 Overcome travel or trade restrictions 
strengthen local capacity
 Redeploy resources: Experts at base -
novices in field
 Make better use of older, more experienced
resources (deep smarts)
 Reduce the retirement of institutional
knowledge (what is average age of
experienced field service engineers?
 Offload intervention work to customers
(ATM strategy) or local subcontractors
 Reduce nominal capacity without impacting
capability (reduce need to recruit service
workers)
 Redesign field service approach (full capacity v
expert capacity ( offloading or outsourcing)
 Frees resources to build up sector/domain
expertise (focus on outcomes, performance
based models, productivity)
 Vastly Accelerate training and cut training times
(own personnel, subcontractors/dealers,
customers)
 Eliminate training manuals/reduce human
trainers/increase trainer productivity
 AR with digital contect (superimposed data,
instructions, case files) speeds up interventions
 Enable remote task sharing
 Integrate with IoT (training, remote diagnostics,
toubleshooting, interventions) for max
outcomes

12. 12LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
AR Tactical Introduction Approaches (examples)

13. 13LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Augmented Reality Potential
Task complexity
Task frequency
H
H
Standard
(Automated)
Digital Support
AI Support
Human Expert
Support
L
L

14. 14LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Augmented Reality Potential
AR enhancement Low Medium High
Low
Speed ↑
Errors ↓
Training ↓
Speed ↑
Errors ↓
Training ↓
Medium
Speed ↑
Errors ↓
Training ↓
Speed ↑
Errors ↓
Training ↓
Speed ↑
Errors ↓
Training ↓
High
Speed ↑
Errors ↓
Training ↓
Speed ↑
Errors ↓
Training ↓
Experience Level
Task complexity

15. 15LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Si2 2018 AR in Service Survey |n=120
60% Electro-mechanical): engineering, manufacturing or maintenance services.
Remainder even: Automation/instruments, O&G service, powergen, utilities, energy.
67%
19%
8%

16. 16LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Acute Problems with AR in Field Service

17. 17LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Acute Problems with AR in Field Service

18. 18LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Acute Problems with AR in Field Service

19. 19LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Acute Problems with AR in Field Service

20. 20LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Acute Problems with AR in Field Service

21. 21LEVERAGING SERVICES TO WIN IN INDUSTRIAL MARKETS
Blueprint for AR in Service
 Link to strategy, organizational structure & processes
 Resource allocation, capacity, offloading & outsourcing
 Quantification of cost reductions
 Voice of the Customer (satisfaction, costs/benefits, challenges & solutions)
 Technical optimization / Vendors
 Overcoming challenges (organizational, managerial, technical)