Success factors of industrial services--an empirical study.

Amberg, Michael ; Holm, Timo ; Gepp, Michael 等

1. INTRODUCTION

In times of decreasing competitive advantages in technology and satisfied markets capital goods producers are looking for new business opportunities in industrial services. Reasons for this service trend are the facts that companies can generate additional turnover, intensify customer relations and differentiate themselves from competitors in their market (Gebauer et al., 2006).

With 950,000 employees and a turnover of more than 190 billion Euros in 2008, machine and plant engineering companies constitute the core of Germany's capital goods industry. According to a survey of the Fraunhofer Institute of Industrial Engineering and Organization machine and plant engineering companies generate 15 % of their turnover with services (Bienzeisler & Kunkis, 2008). Since central element of these services are in-kind products--namely production systems--the services are of technical nature and in their core revolve around production system's maintenance.

2. RESEARCH METHOLOGY AND DATA POOL

For this survey 466 experts of industrial services were asked to answer a web-based questionnaire with--depending on the experts field of activity--up to 27 questions. Of these 466 persons 250 responded to the survey between March 9th and April 10th 2009. 157 of them were excluded due to incomplete information. 101 questionnaires were completed, which equals a response rate of 22 %. All experts were approached via electronic mail. 338 of the addresses were gathered using XING (http://www.xing.com), a global social network of business contacts. Persons within XING were chosen if their profiles mentioned relevant key words, like industrial service(s) or service engineering. In a second step service experts were identified, by manually selecting persons who either had working experience in industrial services or were managers in companies providing industrial services. The remaining 128 persons were personal contacts of the authors. Geographically and language-wise the survey was limited to German speaking experts executing industrial services all over the world.

Basic limitations of this quantitative research approach are the lack of control over the participants and whether they answer truthfully as well as the need for simple questions due to the lack of a common terminology.

3. RESULTS

The survey consisted of introductory questions concerning general business data. The majority of the participants were employees of machinery and equipment manufacturers (59 %) followed by exclusive service providers (15 %) and electronic industries (11 %). The most important industrial services measured by their turnover are so called traditional industrial services such as commissioning, assembly, maintenance as well as planning & consultancy services. The determined service portfolio is representative and equals very much that of other surveys conducted in the German capital goods industry (for instance Wiechers & Schneider, 2008). This affirms that the given sample is indeed representative.

Afterwards, the degree of implementation of various success factors, which have been identified by a preliminary literature study, as well as questions regarding industrial information systems were determined. Table 1 gives an overview of generally accepted success factors of industrial services and an assessment of their importance by the service experts (1 = very important, 2 = important, 3 = neutral, 4 = rather unimportant, 5 = unimportant).

To identify the most important success factors companies have been separated into service champions and less successful service providers, so-called runner-ups. Service champions have been defined as companies whose return of industrial services grew more than 20 % over the last 5 years. Thereby from the total of 101 participants 23 could be identified as service champions and 78 as runner-ups.

3.1 Service Strategy

For machine and plant engineering companies service strategy is a main aspect of their business strategy. It defines how a company differentiates itself from its competitors by means of service offerings. Generally service champions frequently follow a strategy of quality leadership (39 % compared to 16 %) while the prior strategy of less successful firms is an innovation or technology leadership (44 % compared to 34 %).

3.2 Service Culture

Literature corroborates a certain importance of service- oriented corporate culture (Frambach et al., 1997). But successful service providers only put a little more effort in measures to build a service culture. Three quarters state to regularly take action to improve their employee's service mentality like for instance workshops or trainings. After all 66 % of the runner-ups did so too. According to our study the influence of a service-oriented business culture on the success in service business is rather unimportant in comparison.

3.3 Service Function Implementation

The most common organizational form in practice is a separated service department (41 % total), followed by an own cost center for services (24 %) and organizing services as projects (12 %). The study shows no correlation between the implementation of service functions (department, cost-center or project) in the organizational structure influence and the company's success in services.

3.4 Service Development

In literature there is a consensus about the importance of structured and formalized service development in order to achieve high service revenues. The term formalized refers to a stepwise development, where each step defines a task to be done, methods to be used as well as expected results. The most common steps are idea generation, analysis of customer needs, service design, implementation and rollout (Spath et al., 2008).

About 40 % of the service champions have a highly formalized service development whereas only 13 % of the runner-ups do (see Fig. 1). The number of runner-ups who did not have any formalized development at all was more than twice as high compared to the service champions.

3.5 Service Portfolio

Many companies confront their customers with a ballooning service portfolio, which does not necessarily meet the customers needs. These often historically grown offerings have to be re-structured and consolidated. The survey shows that regularly conducted surveys among customers and other methods of market research are a key to success in the industrial service business. Roundabout one third of successful firms did market research at least once a year to meet customer requirements (see Fig. 2). 52 % conduct market research once in 1 to 3 years to optimize their service offerings. The runner-ups are not that market oriented: Just 9 % optimize their portfolio once a year and 31 % once in 3 years. Actually 13 % update their services less frequently--only once in 10 years.

[FIGURE 1 OMITTED]

[FIGURE 2 OMITTED]

3.6 Information Systems

The survey shows the importance of an overall, process-oriented IT. Service champions avoid changes in media and prefer process-oriented development and provision of services. They have a high accessibility to knowledge and a comprehensive management of their know-how. Their information systems support these activities. Service champions use more often than others software like Work-flow- Management Systems to establish an integrated production of goods and services. Their employees have better access to company know-how by using knowledge management systems. Regarding other software tools like computer aided selling, technical documentation systems or office software, there were no significant differences between both groups.

In service distribution knowledge databases are used much more often by service champions. Customer relationship management is used by both groups equally often. But there are differences in how they are used: Successful companies try to establish comprehensive customer management systems, where runner-ups implement CRM only in a single department.

4. CONCLUSION AND OUTLOOK

This contribution describes the influence of several factors on a capital goods producer's success in the field of industrial services. The conducted survey suggests that the three most important success factors are a formalized service development process, a regular evaluation of market needs and information systems that support industrial services adequately. This contradicts the service provider's self-assessment, which suggests the success factor personnel to be the most important one, followed by service culture and service marketing. The survey also shows that there still is--despite of a large body of literature regarding industrial service--a need of research in many fields of the industrial service environment. Service champions give much relevance to research regarding industrial services, whereas runner-ups think research plays an inferior role. It is therefore likely that runner-ups underestimate the complexity of industrial service. Reasons for that will be researched in future work.

5. REFERENCES

Bienzeisler, B.; Kunkis, M. (2008). Dienen und mehr verdienen?--Hybride Wertschopfung im Maschinen und Anlagenbau--Eine empirische Studie im Rahmen des Forschungsprojektes "Serv.biz", Fraunhofer IRB Verlag, ISBN 978-3-8167-7792-2, Stuttgart, Germany

Spath, D.; van Husen, C.; Meyer, & K.; Elze, R. (2007) Integrated Development of Software and Service--The Challenges of IT-Enabled Service Products in: Advances in Services Innovations, Springer, ISBN 978-3-540-29860-1, Berlin, Germany

Gebauer, H.; Friedli, T. & Fleisch, E. (2006). Success factors for achieving high service revenues in manufacturing companies. Benchmarking: An International Journal, Vol. 13, No. 3, 2006, pp. 374-386, ISSN 1463-5771

Frambach, R.; Wels-Lips, I. & Gundlach, A. (1997). Proactive Product Service Strategies, Industrial Marketing Management, Vol. 26, No. 2, pp. 341-352, ISSN 0019-8501

Wiechers, R.; Schneider, G. (2008). VDMA--Volkswirtschaft und Statistik--Maschinenbau in Zahl und Bild 2008, Frankfurt am Main, Germany

Tab. 1. Success factors of industrial services

 Average
 importance

Personnel qualification 1.02
Service-oriented business culture 1.50
Commercialization of industrial services 1.52
Service-oriented organizational structure 1.72
Service portfolio close to market 1.78
Systematic development of services 1.80
Quality management 1.83
Information systems 2.01
Process orientation 2.07
(Product-) Design for service 2.39