Category: Design & Smart Service

General Digital Services Catergory, Digital technologies and Service Design

Implementing Total Cost of Ownership (TCO): A SMART Strategy for Service Growth

For many industrial OEMs and technology providers, the greatest growth opportunity is often hidden in plain sight.
Most manufacturers can tell you exactly what it costs to build their equipment. They know their material costs, production overheads, warranty reserves, and sales margins. Yet when asked a much more important question — what does it actually cost your customer to own and operate your equipment over its lifetime? — the answers are often surprisingly vague, incomplete, or entirely absent.
This gap in understanding matters enormously.
At Si2-Group, we have observed this repeatedly across industrial sectors ranging from Equipment Manufacturers to components, to heavy vehicles, aerospace, energy systems, as well as larger assets such as building infrastructure. The businesses that consistently outperform their competitors are not necessarily those with the best products. They are the businesses that deeply understand their customers’ Total Cost of Ownership (TCO) and use that understanding to shape their service strategy, innovation roadmap, commercial model, and operational priorities.
The most successful industrial organisations do not simply sell products. They help customers improve profitability!
They understand where the real cost drivers sit inside the customer’s operation and identify the hidden risks and inefficiencies that damage profitability. They develop services that reduce those costs and risks and crucially, they communicate this value in a way that resonates commercially and emotionally with decision makers.
This is where TCO becomes strategically powerful.
Unfortunately, many organisations still treat TCO as a narrow procurement calculation focused on acquisition cost, maintenance expense, and lifecycle accounting. While these elements are important, this approach alone misses the broader strategic value of TCO thinking.
Used correctly, TCO is not simply a finance tool, it is a TOOL FOR GROWTH!

Automated support powered by AI – First step in Si2’s journey

If you are reading this article, you are probably interested in how AI Consult Group have helped Si2 to automate our customer support. Call Kaya on +49 611 76039705 to experience the power of AI powered support for yourself! Tell her the language you want to speak and then ask her a question about Si2. […]

Service Contracts for Growth and Loyalty

On 30th September 2025, senior service executives from across the industrial sector gathered Gebhardt Group Sinsheim for the latest Si2 Service Leaders Network (SLN) meeting. Hosted by Si2, the summit focused on how industrial product companies can design and implement effective service agreements that drive customer value, strengthen internal alignment, and build sustainable, profitable growth. The […]

Leading with AI: A Blueprint for Service Innovation in Customer Support

At the recent Si2 Summit, ten service professionals came together to explore a pressing question: How do we lead with AI in the automation of customer support? The discussion was rooted in practical experience, facilitated by Si2 and enriched by expert contributions from Eva Kunczicky and Nicholas Bartschat. From this in-depth exchange emerged four guiding principles that any organization can use to meaningfully integrate AI into its service strategy:
• Mindset – Focus on software solutions, not AI buzzwords
• Value – Clearly define value and let the solutions follow
• Vision – Inspire with vivid, detailed future states
• Leadership – Listen deeply and enable innovation
By the end of this article, you will understand these practitioner-derived principles and be able to:
1. Develop a compelling vision for the use of AI in customer support—one that inspires both your team and your customers
2. Apply a simple five-step adoption process to identify high-value AI-based applications
3. Assess your organization against the key enablers for successfully implementing data- or knowledge-driven processes

Indeed this was a deep dive into the challenge of getting started, with industry experts Eva Kunczicky and Nicolas Bartschat acting as catalysts for the discussion.

Knowledge Management enhances Augmented Reality and drives Field Service performance

Knowledge is power, this insight of the English philosopher Francis Bacon from 1597 is even more valid today. In earlier times, knowledge was usually kept to oneself to gain a personal advantage. Today, it is the sharing of knowledge that leads companies to success. Knowledge is the most valuable asset of a company, especially in times of […]

Augmented Reality Deployment in Service For Maximum Cost Impact

Digitization enables continuously increasing automation in business execution, operations, and decision making. As a matter of course, this not only opens up numerous opportunities for major improvements, for example in productivity, but, when certain thresholds are reached, fundamentally changes the nature of the business and brings therefore numerous risks.

Technology is servitizing the value paradigm. Time to change management thinking

As digitization servitizes business models it is also shifting the source of value -from products to data and information. For most product companies this is an existential threat. But for a few a big opportunity. Almost 10 years ago, Nokia, then still the global leader in mobile phones, was busy undertaking project after project to […]

How digitization is changing the competitive space in industrial after-sales services

Digitization enables continuously increasing automation in business execution, operations, and decision making. As a matter of course, this not only opens up numerous opportunities for major improvements, for example in productivity, but, when certain thresholds are reached, fundamentally changes the nature of the business and brings therefore numerous risks.

Service in Industry

Deep Dive into the industrial service business.

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Service Innovation for value-driven opportunities:

Facilitated by Professor Mairi McIntyre from the University of Warwick, the workshop explored service innovation processes that help us understand what makes our customers successful.

In particular, the Customer Value Iceberg principle goes beyond the typical Total Cost of Ownership view of the equipment world and explores how that equipment impacts the success of the business. It forces us to consider not only direct costs associated with usage of the equipment such but also indirect costs such as working capital and risks.

As an example, we looked at how MAN Truck UK used this method to develop services that went beyond the prevailing repairs, parts and maintenance to methods (through telematics and clever analytics) to monitor and improve the performance and  fuel consumption of their trucks. This approach helped grow their business by an order of magnitude over a number of years.

Mining Service Management Data to improve performance

We then took a deep dive into how Endress + Hauser have developed applications that can mine Service Management data to improve service performance:  

Thomas Fricke (Service Manager) and Enrico De Stasio (Head of Corporate Quality & Lean) facilitated a 3 hour discussion on their journey from idea to a real working application integrated into their Service processes. These were the key learning points that emerged:

Leadership

In 2018 the Senior leadership concluded that to stay competitive they needed to do far more to consolidate their global service data into a “data lake’ that could be used to improve their own service processes and bring more value to customers. As a company they had already seen the value of organising data as over the past 20 years for every new system they already had a “digital twin” which held electronically all the data for that system in an organised fashion. Initially, it was basic Bill of Material data, but has since grown in sophistication. So a good start but they needed to go further, and the leadership team committed resources to do this.

  • The first try: The project initially focused on collecting and organising data from its global service operations into a data lake.  This first phase required the development of infrastructure, processes and applications that could analyse service report data and turn it into actionable intelligence. The initial goal was to make internal processes more efficient, and so improve the customer experience. E+H looked for patterns in the reports of service engineers that could:
    • Be used to improve the performance of Service through processes and individuals
    • Be used by other groups such as engineering to improve and enhance product quality.
  • Outcome: Eventhough progress was made in many areas, nevertheless, even using advanced statistical methods, they could not extract or deliver the value they had hoped   for from the data. They needed to look at something different.
  • Leveraging AI technologies: The Endress+Hauser team knew they needed to look for patterns in large data sets. They had the knowledge that self-learning technologies that are frequently termed as AI, could potentially help solve this problem. They teamed up with a local university and created a project to develop a ‘Proof of Concept’. This helped the project gain traction as the potential of the application they had created started to emerge. It was not an easy journey and required “courage to trust the outcomes, see them fail and then learn from the process”. However after about 18 months they were able to integrate the application into their normal working processes where every day they scan the service reports from around the world in different languages to identify common patterns in product problems, or anomalies in the local service team activities. This information is fed back to the appropriate service teams for action. The application also acts as a central hub where anyone in the organisation can access and interrogate service report data to improve performance and develop new value propositions.
  • Improvement:  The project does not stop there. It is now embedded in the service operations and used as a basic tool for continuous improvement. In effect, this has shifted the whole organization to be more aware of the value of their data.

Utilizing AI in B2B services

Regarding AI, our task was to uncover some of the myths and benefits for service businesses and the first task was to agree on what we really mean by AI among the participants. It took time, but we discovered that there are really two interpretations which makes the term rather confusing. The first is a generic term used by visionaries and AI professionals to describe a world of intelligent machines and applications. Important at a social & macroeconomic level, but perhaps not so useful for business operations -at least at a practical level. The second is an umbrella term for a group of technologies that are good at finding patterns in large data sets (machine learning, neural networks, big data, computer vision), that can interface with human beings (Natural Language Processing) and that mimic human intelligence through being based on self-learning algorithms. Understanding this second definition and how these technologies can be used to overcome real business challenges is where the immediate value of AI sits for today’s businesses. It was also clear that the implication of integrating these technologies into business processes will require leaders to look at the change management challenges for their teams and customers.

To understand options for moving ahead at a practical level we first looked briefly at Husky through an interview with CIO Jean-Christophe Wiltz to CIOnet where we learned that i) real business needs should tailored drive technology implementation, and ii) that before getting to AI technologies, there is a need to build the appropriate infrastructure in terms of database and data collection, and, most importantly, the need to be prepared to continually adapt this infrastructure as the business needs change.