creating and measuring value: alternative operations and maintenance business models
TRANSCRIPT
ShaunWest
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JC
Creatingandmeasuringvalue:Alternativeoperationsandmaintenancebusinessmodels
TheFutureofGasTurbineTechnology,ETN’s8thInternationalGasTurbineConference,12-13October2016,Brussels,Belgium
ShaunWestIServiceInnovation
IntroductionTheproblemandthepurposeofthispresentation
…toprovidesomeinsightintosituationswhendifferentmodelscouldbeapplicable
Byexaminingusecasesfortheoperationandmaintenanceofturbineswewilldiscoversomenewbusinessmodelsthatcouldincreasecustomervalue
…todescribesomeusecasesfromanassetmanagementperspective
Purposeofthispaper
…notanytwoownersarethesamesowhydoweoftentreatthemasiftheywerethesame…
Problem
ShaunWestIServiceInnovation
IntroductionUsecasesthatwewillexploretheowner’sandtheOEM’sperspective
- TheOEM’sviewontheproductlifecycleisveryshort- TheOwner’sviewontheassetismuchlonger
Theassetlifecycleismuchlongerthantheproductlifecycle– thiscausesconflicts
Initialoperation
Extendedoperation
Conversion,modificationorupgrade
OEM’sproductlifecycle
ShaunWestIServiceInnovation
IntroductionTheapproachforthispresentation
- Considerthesituationfromtheassetowner’sview- UseexamplesofdifferentO&Musecases- Useextremeexamples(wherepossible)- (Re-)imagingthefuture
Thisapproachwillchallengethestatusquoandsuggestpossiblefutureopportunities
Do It Yourself
Do It For MeDo It With Me
ShaunWestIServiceInnovation
IntroductionServicedesignwithusecasesandsituationanalysis
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Iwillbasethispresentationon”usecases”tostimulateideasfromactualcasestofuturepossiblecases
ShaunWestIServiceInnovation
UsecaseTheutilitywhocanactasanarchitectengineer
TakingtheleadallowedEDFtosuccessfullyrepowertheirexistingoil-firedthermalpowerplants
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Background- Re-poweringofanexistingasset- Oilreplacementwithgas- CustomerhasownEPCgroupCustomervalue- Lowerinstallationcosts- Improvedintegrationwithexistingplants- UseofownEPCteamsSuppliervalue- Riskslimitedtoequipmentsupplied- Improvedcustomerrelationships- Equipmentmaintenance
ShaunWestIServiceInnovation
UsecaseTheIPPwhomovedtoself-performandnon-OEMservices
Background- 23GWofadvancedturbines- Ownerneedstocutcosts- TurbinemaintenanceisamajorcostsCustomervalue- Lowermedium/long-termcostofmaintenance- Builtupownturbinemaintenanceknow-how- RiskoftechnologyobsolesceSuppliervalue- OEMlost’aftersales’revenues- Non-OEMsgainedbusiness- Non-OEMsprovidedamoreopenbusinessmodel
WithalargestandardfleettheIPPwasabletointernalise theservicesanddrivecostandriskout
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ShaunWestIServiceInnovation
UsecaseThenewtechnologyriskmanagementusinglong-termcontractualagreements
Background- Powerprojectsneedtobe’bankable’- Newtechnologyriskscanbehardtoaccept- Owners’want’betterperformanceCustomervalue- Newtechnologyriskspushedofftothesupplier- KnownmaintenancecostsperMWh- Somecoverageonavailability/reliabilitySuppliervalue- Cashflowsareknown- Tie-induringearlyevolutionofthetechnology- O&Mknow-howflowsintothesupplier
TheLTSAofferstechnologyriskmanagementduringtheearlyyearsofnewtechnologyintroduction
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ShaunWestIServiceInnovation
UsecaseThematuretechnologymovingtoado-it-yourselfmodel
Background- Theownerknowstheplantwell- Plantoperationishardtoforecast- CostcuttingbecomingevermoreimportantCustomervalue- Repair/replacedecisionsincustomer’shand- Obsolescenceriskiswiththecustomer- Phasedshutdown/cannibalisationbecomepossibleSuppliervalue- Pricesmaybeset– volumesarenotset- Moreconsultingadviceisrequired- Productrebuyopportunitiesthroughrelationships
Thecustomerknowstheplantwellandisabletomanagetheequipmentandperformancerisksgoo.gl/Gvu5tQr
ShaunWestIServiceInnovation
UsecaseUsingowner(or3rd party)craftlabourtosupportaninspection
Background- Ownerhasownlabournotfullyutilised- LabourpooloftechnicianswithO&Mknow-how- LabourpoolsunderstandstheworkingenvironmentCustomervalue- Useofexistingresourcereducescosts- Understandcustomer’ssite- Understandthecustomer’sbehavioursSuppliervalue- Improvedcustomerrelationships- Customerbecomespartofthesolution- Reductioninrevenues
Localcraftlabour oftenunderstandsthecustomerbetterthantheOEM
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ShaunWestIServiceInnovation
UsecaseGeneralcontractortomanageallpowerplantmaintenance
Background- Routine,plannedandunplannedcontractedout- Movemaintenanceriskstooneparty- ProvidessimplercostcontrolCustomervalue- Bundlingroutine,plannedandunplannedactivities- Risksplacedwithonecontractor- DifferentrevenuemodelspossibleSuppliervalue- ExpansionofEPCconceptsandthinking- Contractorgainslong-termrelationshipwithowner- Improvedbalancebetweenplantandproduct
Ageneralcontractorcanusetheecosystemtocreatenewofferings
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ShaunWestIServiceInnovation
UsecaseValuenotcostinO&Gcanhelptodrivethecostout
Background- Customerrevenueisbasedonperbarrelofoil- Facilityhada’cost’mentality- TheavailabilityandHSEwerepoorCustomervalue- Customervalueisderivedfromoilsold- Outsourcetocompetentparty- AlignmentofgoalsSuppliervalue- Incomebasedonperbarrel- Removesprocurementdistractions- Alignmentofgoals
Movingfromcostplustoatariff-likeagreementcanprovideopportunitiestocutperbarrelcosts
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ShaunWestIServiceInnovation
UsecaseConversions,modificationsandupgrades– providingcustomerandsuppliervalue
Background- AllassetownersgainfromreducecostsperMWh- Somecustomersgainfrommorecapacity- SomecustomersgainfromfewerinspectionsCustomervalue- Morecapacityorloweroperationalcosts- Thecustomerisinthedrivingseat- KnowncostswithknownperformanceSuppliervalue- Customerlock-in/non-OEMlockout- Standardisedfleet- Basedonexistingtechnology
Thevalueoftheupgradeisthatitaddressestwomarkets:cost-savingandrevenuegrowing
AlstomPower:13E2MXL2Brochure
ShaunWestIServiceInnovation
UsecaseTheapplicationoftechnicalupdateshasvalueforallparties
Background- Technicalupdatesoccuronallequipment- Somearerequired,someareoptional- WhyshouldIpayextraforrequiredupdates?Customervalue- Safereliableoperationoftheequipment- Riskofequipmentobsolescence- RiskoflossofwarrantySuppliervalue- Opportunitytogainextrarevenues- Standardisedfleet– easiertosupport- Improvedcustomerexperience/betterretention
Whatisthebalanceof’freeissue’updatesvscustomerpaidupdates?goo.gl/hbMYjp
ShaunWestIServiceInnovation
UsecaseLNGtrainisthecorevaluecreationforthecustomer
Background- ValueisderivedfromtheLNGshipments- Costorpoorreliabilityishigh- AvailabilityiscriticalCustomervalue- Productioncapacity- Instabilityinmaingastraindestroysvalue- Costofpower(inputs)Suppliervalue- Singlepointofcontact- Fulltrainsolutions- Sparesavailability
ThecustomerisunlikelytomovefromtheOEMonthemainLNGtrainasdownsideriskishigh
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ShaunWestIServiceInnovation
UsecasePowerforLNGprovidesopportunitiesfordifferentbusinessmodels
Background- FocusremainsonLNGshipments- ElectricitycostsimpactonLNGcosts- ElectricitycanbeimportedCustomervalue- ProductionofLNGiscorevaluecreationactivity- CompetencyistheO(&M)oftheLNGtrain- ElectricitycostsaretranslatedtommBTU’s shippedSuppliervalue- Long-termagreementtoprovidepower- LNG-trainproduction- Tradingofexcesspower
Providinghighqualitypower’over-the-fence’solutionscansupporttheLNGoperations
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ShaunWestIServiceInnovation
UsecaseTheInd4.0– oneOEMsupportingallofyouroutcomes
Background- M&Donasemi-openplatform- ItsupportsO&M/assetmanagementoutcomes- IntegratesallequipmentCustomervalue- ReducingO&Mcosts- Improvedequipmentriskmanagement- AdvisoryserviceshelpingyoutoachievemoreSuppliervalue- Manyhundredsofmachinesinarrogate- Becomesmoreeffectiveatprovidingsupport- LocksoutotherInd4.0providers
Doesthispotentiallyconcentratealloftheknow-howintoonesupplier
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ShaunWestIServiceInnovation
UsecaseTheInd4.0– anopenplatformsupportingyouroutcomes
Background- M&Donanopenplatform- ItsupportsO&M/assetmanagementoutcomes- IntegratesallequipmentCustomervalue- ReducingO&Mcosts- Improvedequipmentriskmanagement- Dataandknow-howislocalwithremotesupportSuppliervalue- Expertscanaccessthesystem- Becomesmoreeffectiveatprovidingsupport- Allowsengagementwithotherexperts
Anopensystemallowswiderecosystemengagementandbetterfastersolutions
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ShaunWestIServiceInnovation
UsecaseTheonsiterepairshotgascomponentschangingservicedeliverymodels
Background- Onsitemachiningis’normal’duringaninspection- Onsiterefurbishmentofcapitalpartsisnew- ContainerisationoftherepaircentreCustomervalue- Reductioninnumberofsparessets- Outgoingshipmentsareremoved- EarlierwarningofscrappingSuppliervalue- Workingatsiteimprovescustomerexperience- Reducedworkinprogress- Flexibledelivery
Convertingarepairshopintoasite-basedserviceshopprevides newopportunities
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ShaunWestIServiceInnovation
UsecaseTheonsiteadditivemanufacturingcreatingsparesasneeded
Background- Onsitemachiningis’normal’duringaninspection- Onsiteadditivemanufacturingisnew- Containerisationoftheadditivemachining- Customervalue- Increasedavailabilityofreplacementparts- Reductioninnumberofsparessets- OutgoingshipmentsareremovedSuppliervalue- ’Xerox’printingmachineatsite- Simplersparesmanagement- Accidentalbreakagecanbesupported
Sparescanbeprintedandfinalmachinedatsiteprovidingrealjust-in-timeservice
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ShaunWestIServiceInnovation
LessonsfromtheusecasesWhatdotheusecasestellus?
Whatisthesituation?- Doweunderstandthecontext?- Doweunderstandthecustomer’soutcomes?- Whatisrelevantforusfromthesituationandtheusecase?
Wheredoesthevalueaccrue?- Isvaluecapturedbytheowner,supplierorinotherstheecosystem?- Whatistheformofthevalue?- Doesvalueaccrueintop-line,bottom-lineorbusinesssuitability?
Usecasesfeedourimagination!
Fromthesituationanalysiswelearnmoreaboutourcustomersandtheiroutcomes.Wecanthenstarttounderstandwhoandwherethevalueaccruesandhowandwhoshouldpay.
ShaunWestIServiceInnovation
LessonsfromtheusecasesMyquestionsfromtheusecases
- DoyouunderstandhowLTSAsreducetechnologyrisks?- DoyouunderstandwhyanIPPmightmoveawayfromtheOEM?- CouldyoucreatenewmaintenancemodelstodriveO&Mcostsout?- Couldyouuse3rd partylabourtoimprovethecustomerexperience?- Howcouldyouhelpanownermovetoaself-performmodel?- CouldanLTSAbedeliveredbyageneralcontractor?- HowcouldyoudesignCMUstoproviderealcustomervalue?- WhoandhowcouldyouchargeforCMUs?- WheredoyoufitintotheLNGvaluechain?- WhatoptionsdoyouhaveforInd4.0services?- Couldyoudelivermoreonsite?
Whatquestionsdoyouhave?
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ShaunWestIServiceInnovation
ConclusionsWehaveseenmanyusecases– notallarefullyapplicablebutallhavelessonsforus
Thereisalwaysmorethanone’right’solution
Situationschangeovertheassetlife:newmission,newtechnology
Therearemanydifferentmodelsthatwecandrawfrom
Allcustomersfacedifferentsituationssoweneedtolearntoaddresstheiroutcomesandnotassumewhatis’bestforthem’
Businessmodelsneedusecasestosupportunderstanding
ShaunWestIServiceInnovation
RecommendationsLearnfromotherusecasesandgetclosertoyourcustomers
Alwaysconsideratleastthreesolutionstooneproblem
Understandthesituationsyourcustomersfindthemselvesin
Lookatdifferentusecasesandlearnfromthem
Fromalternativeusecasesandunderstandinghowtheycouldhelpourcustomersyouwilllearnhowtodesignbettervaluepropositionsandbusinessmodels
Buildabusinessmodelthatsupportsyourcustomer’soutcomes
ShaunWestIServiceInnovation
Thanksforyourtime!Questionsovercoffee… SlidespostedonSlideShare.com