What were the challenges, results and lessons learned from manufacturing companies when making the transition to a new business model, driven by digital services? These were the topics of the webinar hosted by Noventum and HSO, on June 23rd. Knorr Bremse and Huisman Equipment, companies that have also been involved in our research project ‘Drivers for Growth in Service’, shared their experiences with the development and launch of new, customer business related services. In this blog we share some of the highlights of this webinar.
Knorr Bremse is the global market leader for braking systems and a leading supplier of other rail and commercial vehicle systems. The company has around 29,000 employees at over 100 sites in more than 30 countries. Meike van ‘t Hoen is head of the Rail Service Product Management Team and responsible for the service portfolio with KB Rail. In 2018 the company started their service transformation journey.
Huisman Equipment engineers, builds, installs, and maintains large offshore equipment, such as cranes, drilling and pipelay equipment. The company has around 2.200 employees, of which around 250 work in services. The services branch focusses on maintenance, repair, and upgrade of all delivered equipment, with service engineers flying all over the world. In the webinar, Martijn Reissenweber, Director Huisman Services, shared his experiences with the introduction of new digital services.
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Meike ‘t Hoen, Head of Retail Service Product Management Team at Knorr Bremse: ‘We have seen that the margins of our products are under pressure. To achieve a healthy growth is one of the reasons that we are developing new service models, and also because we want to stay the business partner of choice for our customers.’
Martijn Reissenweber, Director Huisman Services: ‘We strive to grow a more sustainable revenue, plus we want a 100% return of our customers. That is why services are so relevant for us.’
Delivering added value for the customer
Martijn: ‘Our drone-inspections added value to our customers directly, especially in the past few months, when our engineers could hardly travel around the world, during the lockdown. In addition, we find that the quality of our reporting is better, because it is based on objective data instead of human observations. Drone inspections are less expensive for customers, easier to organize and safer. We can deliver the report faster, since it is generated automatically instead of written manually.’
Meike: ‘We find that our customers not only benefit financially from our Energy Saving Service, they also reduce their ecological footprint and are able to meet for example legal and tender requirements. They also get a lot more insight into the factors that influence energy consumption, so they know how to change and control these.’
Challenges and lessons learned at Huisman and Knorr Bremse
Meike: ‘We found that to sell this new offering, we needed to find other stakeholders at our customers, and we also must get a better understanding of the customer’s needs. Another challenge is that customers are still hesitant when it comes to sharing and exchanging data. This means we need people with technical and consulting skills. It is a different game than selling spare parts.
Internally we met resistance to change, as we expected. Knorr is a proud company, a worldwide market leader, so why should we change? We need to keep communicating and explaining this strategy to our people. This is also one of the main reasons that we involved the management team from the start and made them sponsors of each new service we were developing. Our services offering has impact on all processes, tooling and for example also our accounting department when moving from selling products to subscriptions.
We have also learned that this transition is a multi-year project because there is so much to learn. As mentioned, how to sell new services in a tender-driven market? We learned that to create demand this requires a consultant-driven sales process.’
Martijn: ‘For Huisman Services it was quite a challenge to find the right partner with enough knowledge to develop the AI we use. In line with this, it has also been quite difficult to draft the requirements for a tool we did not know yet. In the meantime, we have learned a lot about data and AI.
Huisman is still a very product-oriented company and our cranes are actually doing well. So, to make services development a priority has been difficult. We deliberately selected a relatively small location, Singapore, for the development and roll-out of this service. There is a lot of AI knowledge in the region and an eagerness to innovate. Now that the drone inspection service is doing really well, others also see the opportunities this offers and that we can move to a service-oriented business model. We foresee that in the future, instead of offering drone inspections as a service, will offer uptime of our equipment.’
Three lessons learned from Knorr Bremse:
- Implement a thorough change management strategy, including communication plan.
- Involve top management; for example, we made board members sponsors of each new service to be developed.
- Make sure to develop new skill sets, for example additional consulting capabilities.
Three lessons learned from Huisman Equipment:
- With regards to AI, many companies say they can do but very few companies really deliver, so it’s important to challenge and assess them thoroughly.
- Start developing a new service in small, lean and efficient small companies. For that reason, we have dedicated Singapore as our testing ground.
- Educate yourself, be critical and keep asking questions to keep improving your offering.
Interested in listening to the full webinar? You can find the recording via this link.
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