CAN MACHINE-TO-MACHINE COMMUNICATIONS BE USED TO IMPROVE CUSTOMER EXPERIENCE IN A SERVICE ENVIRONMENT?

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, Spain19-‐20 November 2015 Dr Shaun West and Dominik Kujawski, Lucerne University of Applied Sciences and ArtsPaolo Gaiardelli, University of Bergamo, Italy


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ObjectivesCan 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


METHODOLOGYA semi-‐quantitative approach was taken to obtain the results


MethodologyLiterature survey to assess the state-‐of-‐the-‐art

Source materials-‐ Academic literature -‐ Use cases from the industrial press-‐ Videos of use casesScope

-‐ The value in ecosystems-‐ Supply chain collaboration creating open innovation

-‐ Customer value-‐ Sustainability through customer engagement-‐ Decision making by converting data into information


MethodologyA 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

-‐ …


MethodologyInterviews 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?

-‐ …


LITERATUREFour lessons on how M2M data can be used to create customer value


LiteratureThe 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

ProductionBogies

SuspenionOwner

Operator

MaintainerLighting

Regulator

Insurers

Investors

System operator

Spares

Development

System integrator


LiteratureSupply 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


LiteratureCustomer 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

Improvedsafety,reducedemissions…

Costsavings(improvedfuelefficiency,reducetime…)Value

Graphic adapted from Anderson (2006)

Customer centricity and understanding of value is central to success


LiteratureSustainability 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


LiteratureDecision making by converting data into information

-‐ The optimal decision-‐making process:-‐ delivery the right information-‐ in the correct form -‐ to peoplewho 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


SURVEY AND INTERVIEWSKey lessons from the surveys and interviews


Survey and interviewsOverview 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


Survey and interviewsOverview 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

Periodic01 during0inspection/overhaul

Periodic01 operational

Continual

Remote

Supports0achievement0of0outcomes

Fault0finding

-‐ Data produced and consumed is more thanM2M 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


Survey and interviewsOperations and maintenance considerations – what are the business goal at each phase?

New build Operation

Normaloperations

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


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%


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/operatorswere 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


LESSONS LEARNTHow M2M can build customer value


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


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...”


Lessons learntMain 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


Lessons learntMain 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


Lessons learntProposed 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


CONCLUSIONS AND RECOMMENDATIONSServices build on M2M are not about technology, but about improving the customer experience and building a relationship of trust


ConclusionsImportant 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


RecommendationsThe 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


Thanks for your time!

Marketing

CAN MACHINE-TO-MACHINE COMMUNICATIONS BE USED TO IMPROVE CUSTOMER EXPERIENCE IN A SERVICE ENVIRONMENT?