1. Growing Service Solutions Business Marketing Association January 17, 2012 Center for Services Leadership W.P. Carey School of Business Stephen W. Brown Stephen.brown@asu.edu http://wpcarey.asu.edu/csl/ Copyright Stephen W. Brown, 2012

2. The Roadrunner and the Eagle 2 Copyright ASU Center for Services Leadership

3. Growing Service Solutions Business Marketing Association January 17, 2012 Center for Services Leadership W.P. Carey School of Business Stephen W. Brown Stephen.brown@asu.edu http://wpcarey.asu.edu/csl/ Copyright Stephen W. Brown, 2012

4. Product-dominant Companies Have Always offered Services: Entitlement Services Service Solutions in Support of Customers 4 So What's New? Copyright ASU Center for Services Leadership 2012

5. SERVICES FINANCING SOFTWARE Pretax Income Mix Revenue Growth by Segment Gerstner decides to grow service B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc. HARDWARE 5 Copyright ASU Center for Services Leadership 2012

6. Outline What are key success factors in growing service solutions? What challenges must be overcome to grow service solutions? Why has delivering value through service solutions become a big deal? 6 Copyright ASU Center for Services Leadership 2012

7. Why has delivering value through service solutions become a big deal? Question One: 7 Copyright ASU Center for Services Leadership 2012

8. Companies across industries want to grow through services Retailers Distributors Manufacturers Consumer Goods Companies 8 Copyright ASU Center for Services Leadership 2012

9. 9 Growth and Profits Through Service Innovation http://petshotel.petsmart.com/tour/index.shtml Copyright ASU Center for Services Leadership 2012

10. Why has Delivering Value Through Service Solutions Become a Big Deal? External Drivers Internal Drivers Services Growth 10 Copyright ASU Center for Services Leadership 2012

11. Where’s the Money? Locomotives yard operations, railroad administration, other train operations infrastructure freight car services locomotive services locomotives Total expenditure: 21 x product costs 11 Copyright ASU Center for Services Leadership 2012

12. What challenges must be overcome to grow service solutions? Question Two: 12 Copyright ASU Center for Services Leadership 2012

13. Engineering/Technical Logic - Focus on Products Service Logic - Focus on Customers Cultural Challenge 13 Copyright ASU Center for Services Leadership 2012

14. Major Research Project 14 What challenges do companies need to overcome in growing service solutions? Copyright ASU Center for Services Leadership 2012

15. 15 Research Team – Other Members Mary Jo Bitner, PhDValarie Zeithaml, PhD Jim Salas Copyright ASU Center for Services Leadership 2012

16. Services supporting customersServices supporting products Call Center Maintenance Asset Management Value Added Services Managed Services Software as a Service Warranty E-Support Break Fix Spares Management Installation Business Process Outsourcing Advisory Services Integrated Product- Service Solutions The Service Infusion Continuum Smart Services Entitlement ServicesService Solutions Copyright: Zeithaml, Brown, and Bitner 2012 16

17. Positions on the Service Infusion Continuum Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Business Process Outsourcing includes service processes that one organization takes over and provides in full to another for a fee. Typically, these are single, identifiable service support processes such as network maintenance, mail services, or travel scheduling. Value-added Supplementary Services represent stand-alone service offerings that have independent revenue streams associated with them. This could include standard services such as financing or more innovative services associated with the customer's products or activity streams. Managed Services involve transferring high-level strategic management activities in a particular area to another firm for improved effective and efficient operations--for example, transferring supply chain management, knowledge management or a similar strategic function to another firm. Advisory Services are professional consulting or strategy services. Integrated Product-Service Solutions involve a deep understanding of customer requirements; customizing and integrating the provider’s set of goods and services to achieve customer outcomes/requirements; deploying these goods and services; and providing customer support post-deployment. 17 Copyright: Zeithaml, Brown, and Bitner 2012

18. Customization Capabilities Challenges Changes in Organizational Structure Collaboration with Customers Culture The Service Infusion Continuum 18 Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Copyright: Zeithaml, Brown, and Bitner 2012

19. Major Research Project 19 What challenges do companies need to overcome in growing service solutions? Copyright ASU Center for Services Leadership 2012

20. What are key success factors to grow service solutions? Question Three: 20 Copyright ASU Center for Services Leadership 2012

21. Customization Capabilities Challenges Changes in Organizational Structure Collaboration with Customers Culture Key Success Factor – Customization 21 Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Copyright: Zeithaml, Brown, and Bitner 2012

22. Key Success Factor – Customization 22 Customization Standardization Copyright ASU Center for Services Leadership 2012

23. Key Success Factor – Customization 23 Customer - Facing SM-A SM-C SM-BSM-E SM-D SM-F Back - Office Copyright ASU Center for Services Leadership 2012

24. Capabilities Customization Challenges Changes in Organizational Structure Collaboration with Customers Culture Key Success Factor – Capabilities 24 Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Copyright: Zeithaml, Brown, and Bitner 2012

25. 25 Key Success Factor – Capabilities Sales Copyright ASU Center for Services Leadership 2012

26. 26 Key Success Factor – Capabilities Service Delivery Copyright ASU Center for Services Leadership 2012

27. 27 Channel Partners Key Success Factor – Capabilities Copyright ASU Center for Services Leadership 2012

28. Condition- Monitoring Industrial Sealing August 2006 - Acquisition of Economos Austria GmbH Lubrication Systems August 2004 – Acquisition of Willy Vogel AG Vibration Analysis 28 Key Success Factor Copyright ASU Center for Services Leadership 2012

29. Collaboration with Customers Capabilities Challenges Changes in Organizational Structure Customization Culture Key Success Factor – Collaboration with Customers 29 Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Copyright: Zeithaml, Brown, and Bitner 2012

30. 30 Voice of the Customer (VOC) Key Success Factor – Collaboration with Customers Advisory Boards C-SAT Focus Groups Personal Interviews User Groups Copyright: Zeithaml, Brown, and Bitner 2012

31. 31 Little evidence of Service: Key Success Factor – Collaboration with Customers Co-delivery Co-production Co-development Co-design Copyright: Zeithaml, Brown, and Bitner 2012

32. IKEA Customers and company understand each others’ roles Expectations are managed throughout the process All communication elements reinforce these mutual expectations 32 Key Success Factor – Collaboration with Customers Copyright ASU Center for Services Leadership 2012

33. 33 Copyright ASU Center for Services Leadership 2012

34. Business Process Consulting Supply Chain Management Chemical & Inventory Management Instrument Calibration Equipment Maintenance 34 Asset Management Miscellaneous (glass washing, mail room, etc.) Copyright ASU Center for Services Leadership 2012

35. What are the session’s key take-aways? Why delivering value through service solutions has become a big deal What challenges must be overcome to grow service solutions What are key success factors for growing service solutions 35 Copyright ASU Center for Services Leadership 2012

36. Customization Capabilities Challenges Changes in Organizational Structure Collaboration with Customers Culture The Service Infusion Continuum 36 Asset Management Value Added Services Managed Services Value Added Supplementary Services Business Process Outsourcing Advisory Services Integrated Product- Service Solutions Smart Services Entitlement Services Copyright: Zeithaml, Brown, and Bitner 2012

37. ASU/CSL Resources Copyright ASU Center for Services Leadership 2012 37 Webinar – Thursday, January 19, 11:00 am “Service Infusion Study Results” White Paper “Service Logic: Transforming Product-focused Businesses” Workshops “Growing Service Solutions” Keynote Speaking “Growing Service Solutions”

38. Growing Service Solutions Business Marketing Association January 17, 2012 Center for Services Leadership W.P. Carey School of Business Stephen W. Brown Stephen.brown@asu.edu http://wpcarey.asu.edu/csl/ Copyright Stephen W. Brown, 2012