Evolving Through Life Service Business Models in Aerospace & Defence: Increasing service levels, revenue and profit

The ADS industry body has a goal to help its members develop from equipment manufacturers to through life solution providers.  Accordingly the ADS Through Life Service Group committee wished to understand:

  • If there is demand for service-based business models
  • If so, the resulting economic position for providers
  • Any barriers to realising profitable growth from through life services

To understand these and other questions, Aczel, Achieving the Difference and Inaventure conducted an industry-wide study through an on line survey and face to face interviews

Aczel went further and conducted financial analysis of a range of through life companies to demonstrate the link between financial success and degree of sophistication of through life contracts

Executive summary

The study showed that, as expected, there is an increasing trend towards more sophisticated through life contracts with providers taking an increasing role in equipment availability and capability. Contrary to expectations however, few of these providers expect margin growth. This is backed up by Aczel’s financial analysis which, alarmingly, shows that margins actually appear to decline as revenue from more advanced services increases

The main cause appears to be insufficient investment in the critical capabilities required to transition from equipment manufacturer to through life service provide. The study showed clear evidence of continued investment in those capabilities which “Got us to where we are now”. But the through life domain is fundamentally different and the study uncovered consistent lack of investment in capabilities for this new world. Across all participants we found shortfalls in 4 key areas management areas

  • Risk, supply chain, commercial, and Intellectual Property (IP)

And three key technical areas

  • Data collaboration, predictive analytics and new technology management

Aczel's role in the delivery of through life business models

For many years Aczel has been at the forefront of some of the world’s most advanced through life contracts. We’ve helped define the business propositions and operating models to create winning though life propositions. Crucially we then define and implement the system of critical capabilities to successfully deliver the services ensuring both customer and provider achieve the results they desire

Your contact

Dean Gilmore

Director

dean.gilmore@aczel.org

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