A life of service

Posted on 11 Feb 2014 by The Manufacturer

Jane Gray reports from PTC’s Service Lifecycle Management Executive Exchange event in Nice

Technology vendor PTC brought its Service Lifecycle Management (SLM) technology portfolio to market in 2012 to complement its popular CAD and Product Lifecycle Management products and enable the growing trend for the ‘servitization’ of manufacturing.

Since its launch PTC SLM has become PTC’s fastest growing business unit and a gravitational centre for investment according to Lee Smith, executive vice president for PTCs SLM Segment, who kicked of the company’s Executive Exchange event taking place in Nice this week.

The morning has focusses on education and inspiration around the concept of advanced service provision and what it means for competitive differentiation in the manufacturing space.

Technology drivers

Mr Smith’s introduction detailed the key drivers which are shaping PTC’s approach to SLM product development.

Briefly, these include:

  1. Digitisation
  2. Globalisation
  3. Regulation
  4. Personalisation
  5. Software intensive products
  6. Connectivity
  7. Servitization

Smith identified the issue of regulation as a key driver behind the need for more capable service management technologies, but also as a potential “headwind” in the adoption of service-based business models by more manufacturers since proliferating regulation in a globalised world can feasibly pose daunting complexity and risk to many.

He gave some insight however, into PTC’s response to handling regulation within its SLM technology portfolio, particularly focussing on regulations which require manufacturers to design-out mission critical but scarce materials.

Service models

Professor Tim Baines of Aston University, UK – a respected global authority on servitization trends – presented a popular keynote which detailed some of the practicalities and business considerations for manufacturers as they look grow their service revenues.

He cautioned companies not to be alarmed should they begin to see profit margins decline as a result of service growth. This is a common scenario says Baines, but one which tends to come in line with overall profit growth.

“Remember you are taking a smaller slice of a much bigger number,” he explained to delegates.

Prof Baines detailed the different levels of service provision present in the manufacturing sector today through basic, medium and advanced.

Most manufacturers today offer at least basic services he claimed, but advanced services offer the greatest potential for transforming competitiveness and profitability he elaborated.

Advanced services can be characterised as outcome-based contracts, usually made for a long term period and often involving pay-as-you-go payment models so that customers are only charged for a specified desired capability as and when they use it.

In order to make such services effective, Baines identifies that service providers must carefully interpret customer value and convert it into appropriate KPIs.

Manufacturers cannot assume that the traditional KPIs of cost, quality and delivery – which have served industry well since the advent of mass production – will transfer to a service-based business model he said.

Leading into a PTC presentation on technology as an enabler of servitization, Baines warned that servitisation can only succeed where manufacturers have put appropriate systems and procedures in place to support their delivery.

Look out tomorrow for an exclusive TM interview with Prof Tim Baines including insight into his work with UK SMEs and the way in which servitization can alter OEM supply chain expectations.

The morning session wrapped up with insight into PTC’s technology support for servitization and a case study presentation from Dell which guided delegates through the technology and supply chain expert’s journey toward enabled service provision.

Internet of Things

The important role of the Internet of Things in enabling servitization has been a strong theme so far at this Executive Exchange event.

The idea of service provision as a means for increasing manufacturing revenues is not new.

The term was coined in the US in the 1980s according to Tim Baines, and the development of the concept has been matched by parallel research into Product Service Systems in Scandinavia he acknowledged.

However, with the advent of mobile technologies and affordable connectivity the scope of the concept has exploded.

Interest in the Internet of Things as a core tenet of future business and industry is reverberating across Europe as this event continues.

TM contributing editor Will Stirling tweeted from a press preparation day at the German technology exhibition Hanover Messe: “Prof Detlef Zuehlke #hannovermesse ‘Preparing for world where we’ve access to ANY data, ANY time, ANY device’”

Meanwhile, TM is preparing for debate over the uptake of connected industrial technologies and the UK’s readiness for an Industry 4.0-style revolution at its own Automate UK conference later this month.

A related hot topic at PTC’s European SLM gathering has been the firm’s recent acquisition of ThingWorx, a US SME with big ambitions in the connected technology space.

Speaking about this acquisition, PTC’s Smith said that it will be “disruptive for our industry”.

He claimed that ThingWorx would help PTC “capitalise on the Internet of Things,” and “put the ‘L’ in SLM” indicating a common missing link in asset operation between most product and service development methodologies.

Brian Lindauer, senior vice president SLM Solutions Strategy at PTC elaborated that ThingWorx would accelerate “application enablement” for customers with growing connected technology portfolios.

More detail on PTCs strategy for ThingWorx’ capability will be revealed at its global user conference in June this year.

More news from @PTC_SLM Executive Exchange coming soon. Also watch out for live tweets from the event from @janefagray.

Presentations this PM include a case study from defence company Selex ES. The session will be delivered by UK-based Andrew Grant, MIS manager, support and services solutions.