Search

In many sectors customers are increasingly seeking service contracts rather than buying products. High tech capital equipment firms attracted by the potential revenue benefits are choosing to move from supplying product only to supplying product and services. This concept is known as ‘Servitization’. Through empirical evidence the academic literature has shown that businesses face challenges in undertaking the transformation from product to service provision and that organisational, cultural, commercial and operational challenges have the potential to erode the desired and expected benefits sought from such a transition. The research presented in this thesis investigates and identifies the features and challenges of servitization in the context of a complex engineering service provided by the UK Aerospace Defence industry. The research also explores the reported costs and front of mind costs for the provision of a complex engineering service. Particular attention is given to the problem of less than expected profitability during and post transformation to service. This research adopts a qualitative approach through the use of a single case study with multiple case examples of the complex engineering service. Findings identify a number of challenges associated with the transformation from product to service provision that include strategy, organisation and enterprise management, contracting, risk, culture and operations. Considering these findings holistically it is suggested that a paradigm shift needs to occur, changing both managers perspective and the business models employed if the firm is to provide a sustainable service offering. New ways of structuring and managing the enterprise to deliver the service value proposition will be required. This will include the development of performance management of all operations across the enterprise required as a minimum to ensure optimum performance of service delivery at lowest cost.