1.Why can we state that Rolls Royce has become a service provider? What kind of services do they offer?
At first, Rolls-Royce only sold engines while support and maintenance activities were mostly licensed out to other companies. Rose, the CEO of Rolls-Royce at that time, recognized however the revenue potential from after-sales services and decided to head in a new direction. He created a highly customer-centric business model that combined manufacturing and services. The central concept they used for the maintence contracts Rolls Royce offered was called ‘Power by the Hour’. In concreto, the customer had to pay a maintenance fee per aircraft flight hour and in return Rolls-Royce would maintain the engines en replace them if they broke down. In addition to engine repair and overhaul, Rolls-Royce provided other services such as: engines on lease, repair of accessory units, asset management services, providing engine support equipment, offering logistics and engineering support,…
After the joint venture with SAIC called DS&S, Rolls-Royce was able to offer other, more IT-related services to their customers too. The joint venture enabled Rolls-Royce to provide an engine health monitoring facility, predictive maintenance technologies and asset management services. More concrete examples of the services they offered are: the engine health management (EHM) service to monitor engine performance and detect anomalies, Aeromanager.com to provide it’s customers with access to technical information so that they were able to optimize engine operation, an operations helpdesk for airline operators who had signed up for the TotalCare program, building a global repair and overhaul network so that they could maintain a network of service centers, workshops and teams of technicians around the world and at least the On-Wing Care service providing direct response and problem resolution services to operators who faced unexpected engine problems and other maintenance issues.
2.What are the operational capabilities to be succesful in this service business?
First of all, Rolls-Royce needed that joint venture with SAIC to get the IT systems knowledge it needed to build out a succesful after-sales service system. It was very important that all services were available and ready to provide solutions 24 hours a day, 7 days a week so Rolls-Royce needed to create a global network of services, as summed up in the previous paragraph, which had to been runned efficiently and customer-oriented.
Secondly, it is important that all operations related to the services Rolls-Royce offers are reliable and well executed as it involves people’s lives. A single misunderstanding in communication or interpretaion can have tremendous consequences. Finally, the two other big engine manufacturers, GE and P&W, are copying the service system of Rolls-Royce the best they can so to stay succesful in this service business, Rolls-Royce need to maintain a technological lead over its rivals. This will definitely be the big challenge Rolls-Royce will face concerning their service business in the years to come!