Digital Business Models I Best Practices I NuggetHub

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D I G I T A L B U S I N E S S M O D E L S
Best Practices

Digital Platforms, Strategies and Services2
Introduction1
Agenda
Operating Models3
MVPs and Prototyping4
Platform Design5

DIGITAL
PLATFORMS
“A platform is a plug-and-play business model that allows multiple
participants (producers and consumers) to connect to it, interact with each
other and create and exchange value.”
Sangeet Paul Choudary, MIT/Entrepreneur/Business Thinker

Digital platforms have fundamentally disrupted many industries,
and others are likely to follow
Digital Platforms - What is it?
The world’s largest
… retailer has no counter and owns no warehouses
… accommodation provider owns no real estate
… provider of hotel bookings possesses no hotels
… music provider has never sold a single CD
… video store has never run a physical store
… taxi company owns no taxis
… food delivery service employs no chef

Introduction1
Agenda
Operating Models3
Platform Design5

The success of a digital platform is dependent on its external ecosystem
Digital Platforms - Key success factors
Simplicity for partners to plug in,
share and transact
Capability to attract producers and
consumers
Promotion of co-creation and
exchange of value
Connection Gravity Flow
“Our vision is to be earth's most customer centric company..!”
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by
death. And that is why it is always Day 1.”
Jeff Bezos, Founder and CEO Amazon
Vision
Source: Harvard Business Review, Statista

Traditional industry players are challenged by new technology companies
which are often operating a platform business models
Digital Platforms – Why are they relevant?
▪ In 1958 a company stayed on average 61 years in S&P 500 In
2015 the length of stay decreased to 19 years in S&P 500
▪ It can be assumed that 75 % of the S&P 500 companies
today will be replaced by 2030
Platform firms are becoming more
important in our economy
Source: Van Alstyne, Marshall, “Platforms: How Change in Industry is Driving Change in Strategy”, MIT Platform; Yahoo! Finance as per 04-12-2017
Top 15 publicly listed digital platforms
by market cap (in US$ billion)
▪ The top 15 public listed platform firms have a market cap of
over US$ 3 trillion dollar in total
▪ 7 of 13 most valuable firms in the world are operating a digital
platform business

What to start with, the product or the platform? Both is possible.
Digital Platforms - How to get started?
…than to add a platform to a product.It is easier to add a product to a platform…
Goldcorp
Nike Google
Amazon
Product PlatformServices

We have 6 Modules to complete in order to understand how to set
up a digital platform for our clients
Overall Approach
Digital Strategies
Digital Services
Operating Models
MVPs and Prototyping
Platform Design
Customer research
1
2
4
5
6
3
Approach
It is easier to add a
product to a platform…
Our focus
…than to add a platform
to a product.
Goldcorp
Nike Google
Amazon
Product PlatformServices

Overview of Module 1: Strategy and Business Model
Competitors and New Market Entrants
Trends in Technology and Digitalization
Value Chain
Focus Interviews (Qualitative)
Digital Maturity Assessment (Quantitative)
SWOT Analysis
Energy Market and Beyond
Understand
the Client
Understand
the Market
Understand
the Customer
Understand
the Technology
Market research will be addressed later

A cross-discipline team of experts from the consulting firm and from
the client jointly developed a innovative digital service portfolio roadmap
Team Setup - Project organization and participants
Project Management
Head of R&D and PLMHead of
product line
Project Manager
Client
Project Sponsor Final Approval
Head of global
sales/marketing
Head of
service strategy
CEO, Service
Head of
technology
Project Manager
Consulting Firm

We mobilized and interviewed key stakeholders from our client to
gain a profound understanding of the company and their issues
Understand the Client - Focus Interviews (Qualitative)
Critical Success Factors Capability Gaps Strength & Weaknesses
Ongoing and planned initiatives Current Service Portfolio Validate Hypotheses
Mobilize organization Customers‘ Value Drivers Trends in the Wind Energy Sector

We used SWOT-Analysis for understanding our client’s strengths and
weaknesses, and for identifying both the Opportunities and the Threats
Understand the Client - SWOT-Analysis
Opportunities
▪ One decade of remote diagnostics experience and a fleet of more than 11.000 ▪
turbines (business unit A) + 20.000 turbines (business unit B) in remote service
(long term contracts) -> historical data and knowledge
▪ Advanced model-based diagnostics capabilities (e.g. >1.5 million model instances;
app. 500 models)
▪ Modular service portfolio around the wind-turbine and wind-farm
▪ Assets: Existing digital communication platforms (Wind Dialogue, Wind Diagnostics
App exClient A, customer portal exClient B) and RDS-Center
▪ Organizational ownership for service product development
▪ MEGA Meteo – meteorological capabilities (business unit B)
▪ Financial strength and scalability
▪ Extend footprint of digital services across more phases of the value chain (e.g.
operate as service partner in early and later value chain phases)
▪ Support clients considering their whole fleet integrating further renewables
(solar, water) in the portfolio
▪ Explore energy storage related services to enhance the service portfolio
▪ Establish innovative/ disruptive business models with more focus on customer
value (e.g. direct bundling of production and consumption)
▪ Utilize service back office capabilities to drive demand/business (e.g. proactive
technical recommendations, proposals for additionalservices)
▪ Offer pay-per-use and pay-per-output services
▪ Customers look for cloud-based analyticsplatforms and solutions
Go-to-market approach for digital services & time-to-market; no clear sales targets
for digital services (business unit A)
▪ Organizational responsibilities for digital services and diagnostics separated in the
organization; no clear profit-responsibility
▪ Visibility of profitabilityof digital services portfolio
▪ Customer-value orientation (e.g. understanding of customers project’s needs,
responsiveness to customers)
▪ Digital interaction channels to customers (no transaction-orientation in digital
platforms today)
▪ Still insufficient level of installed base configuration data
▪ Fragmented IT-landscape with low degree of integration
▪ Cost competitiveness
Threats
▪ Cost pressure due to increased competition
▪ Trend for large utilities to perform maintenance and operations themselves
▪ Increased reliability and availabilityof turbines reduces business volume for
maintenance-related services per turbine (compensated with increasing
installed fleet)
▪ Demand of utilities to get direct access to turbine data
▪ Competitors are more ambitious regarding digital services, e.g. covering multiple
OEMs and technologies (e.g. solar & wind)
▪ Digitalization allows pure digital companies to enter the market (e.g. around grid
management)
Strengths Weaknesses

The entire energy sector is undergoing profound changes throughout
the whole value chain driven by rapidly emerging, interrelated trends
Understand the Market - Why are we doing this: Trends in
Digitalization, Energy Market and Beyond
Energy efficiency
Focus shift from
energy production to
energy efficiency
smart services to
reduce consumption
Energy price
decrease
Price pressure due to
enhanced production
(automatized
processes) and
customer expectation
Continuing
decarbonation
Increasing demand
for green energy
leads to new market
entries higher
competition
New players/
Energy ecosystem
New entrants
disrupting the value
chain More tech
companies and start-ups
expected to join due to
growing market
From consumer to
prosumer
Increasing collective
consumptions/
communities
demanding for digital
solutions
Customer-centric
solutions
Increasing
interaction with
customers through
digital touch points
Data platforms
Rise of sophisticated
data platforms
supporting
information
exchanges between
energy players
throughout the value
chain
New business
models
Arise of vehicle-to-
grid applications,
energy-as-a-service
and smart home
technologies

Digital companies are entering the market and traditional client’s
competitors and customers are shifting their positions in the value chain
Understand the Market - Why are we doing this: Competitors and New
Market Entrants
OEMs
(direct competitors)
Data platform provider /
Pure digital players
Energy storage
solution providers
Niche players Utilities / IPPs / ISPs
Providing data platformsto
analyze data (e.g. from
turbines) and to
distribute/exchange
insights amongenergy
players
Offering energy storage
solutionsto establish
renewables as a reliable
energy source
Designingdigital services to
make consumptionof
renewable energy more
easy and manageable
Providing services for
turbines and startingto
offer digital services
Producingand distributing
electricity, maintaining
turbines and operating
wind farms
Investing in technologies
increasing the turbine’s
performance and reliability
Investing in data infra-
structures to enable real-
time data transfer between
energy players
Investing in storage
technologies (e.g. batteries)
and digital technologiesfor
grid stabilization
Investing in energy
solutions(e.g. smart home
devices) including end
consumers as target groups
Investing in technologies to
enhance service efficiency
and to keep costs down
Current competitorsEmerging competitors Potential future competitors

Our client’s services only cover a small portion of the customer’s
value chain
Understand the Customer - Client’s digital services across the energy
value chain
Consumer
Planning
Ownership Operation Maintenance
Siting &
Development
Power Generation
Network Management
Contruction &
InstallationFunding
Energy
Storage
Trading &
Direct Marketing
Transmission &
Distribution
Grid Operation
& Platform
Provider
Techn.
Infrastrucutre &
Conn. Home Prosuming
Selling &
Integration
Platforms
Remote Diagnostics
24/7 alarm, software updates, diagnostic support, turbine contr. setup, vibration diagnostics, anti-virus, remote health check
PerformanceWarranties
Yield-based availabiliity, time-based availability
Energy Output Boost
Power curve upgrade and optimization, high wind ride through, power boost function
Compatability
Noise/wake control, wildlife schedule, release mode
Knowledge
Historical data interface, online data interface, fastlog viewer, alarm notification mail configuration
Current Focus client‘s
digital services

We analyzed industry best practices and studies for a deeper
understanding of the technology as well as related trends
Understand the Technology
Configure-Price-Quote Augmented Reality Cobotics
TechnologyBestPractices
Smart Grid Laser-Doppler wind profiler Break-Fix Analytics

The targeted positioning has been defined as “Digital Profitability
Optimizer” for the timeframe of 2-3 years
Ambition - Consolidated stakeholder priorities
Value chain/ ecosystem/ technology coverage
Degreeofbusinessmodelextension/
innovation/disruption
Digital Turbine
Partner
Digital Wind
Farm Operator
Digital
Profitability
Optimizer
Digital Lifecycle
Partner
Mandatory to be
mastered short-term
Mid-term ambition
level (2-3 years)
Long-term ambition; to be discussed &
aligned with Client’s strategy

The four ambition levels provide scenarios for a positioning that
targets different parts of the energy value chain
Ambition - Positioning of ambition levels according to target customers
and offerings
Planning Power Generation Network Management
Ownership Operation Maintenance
Siting &
Development
Contruction &
InstallationFunding
Energy
Storage
Trading &
Direct Marketing
Transmission &
Distribution
Grid Operation
& Platform
Provider
Techn.
Infrastrucutre &
Conn. Home Prosuming*
Selling &
Integration
Platforms
TARGET
Consumer
Digital Lifecycle Partner
4 Lifecycle partner for multiple customer segments across the whole lifecycle of renewable energy, integrated plant solutions
(mixed energy sources), open marketplace, new business models (e.g. services linking production w/ consumption)
Digital Profitability Optimizer
3
Diagnostics/ performance improvement solutions for wind farms, + renewable power plant operation platform, storage
management , financial solutions/output based business models (power by the hour) to optimize customer profitability
Digital Wind Farm Operator
2 Turbine related solutions + wind farm
operation solutions (e.g. fleet mgmt.)
Digital Turbine Partner
1 Turbine related diagnostics/
performance improvement solutions
DIGITALSERVICEPORTFOLIOAMBITIONS

For the new target positioning a consolidated business model
canvas has been developed
Business Model Canvas
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are we
acquiring from partners?
Which Key Activities do
partners perform?
What Key Resources do our
Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue Streams?
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying? How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
What are the most important costs inherent in our business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Is Your Business More Cost Driven, Value Driven ?
For whom are we creating
value?
Who are our most important
customers?
What type of relationship does
each of our Customer Segments
expect us to establish and
maintain with them?
Which ones have we established?
How are they integrated with the
rest of our business model?
How costly are they?
What Key Activities do our
Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue streams?
What value do we deliver to the
customer?
Which one of our customer’s
problems are we helping to
solve?
What bundles of products and
services are we offering to each
Customer Segment?
Which customer needs
are we satisfying?
Through which Channels do our
Customer Segments want to be
reached?
How are we reaching them
now? How are our Channels
integrated?
Which ones work best?
Which ones are most cost
efficient?
Key Resources (#6) Channels (#3)
Cost Structure (#9) Revenue Stream (#5)
Key Partners (#7) Key Activities (#8) Value Proposition (#2) Customer Relationship (#4) Customer Segment (#1)

Introduction1
Agenda
Operating Models3
Platform Design5

Our service innovation funnel goes from ~150 service opportunities
to 3 MVP candidates, combining bottom -up input with top-down validation
Approach for selection of services to implement / MVP
Service Opportunities
Ideation Workshop
n ~ 150
Qualification Workshop
n ~ 75Strategic FitMonetization
Level of detail of service opportunities
Number of service opportunities
Current
Services
Customer
Needs
Regulations
Industry &
Competitors
Is it a
service?
Removing
duplicates
Clustering
similar ideas
Portfolio Workshop
n ~ 20Speed to Market
Differentiation
MVP Workshop
• Revenue
• Capabilities
• …
n ~ 3
Constant Ambition and Business Customerand Expert Mock-ups and Netnography and Crowd Technology and Partner
Validation Model Feedback Prototypes Mirroring Portfolio

Overview of Module 2: Service Portfolio
Ideation for
Services
Current Services
Cross Industry Best Practices
Additional input:
Customer Needs, Regulations
Technology
What is a
service?
Service
Portfolio

A consistent understanding about what a digital service is serves as
the basis for analyzing current offerings and the competitive position
Definition of digital services (1/2)
Smart Helmet Product ManualTurbine Upgrade
Call Center
Remote Diagnostic Center
MobileApp

A consistent understanding about what a digital service is serves as
the basis for analyzing current offerings and the competitive position
Definition of digital services (2/2)
Organization
Organizational entities may be delivering services but
are not services themselves
(e.g. customer service organization, sales force, diagnostic center)
Documents, tools or channels
Services are no documents which describe services,
tools or channels. However, services are enabled by
documents, tools or channels
(e.g. operation manual)
Physical goods & digital products
Services as such are intangible and cannot be stored.
Digital products are discrete storable products such as
software
Brand promotion or marketing campaigns
Services are not activities with the purpose of
generating brand awareness, marketing events or
campaigns
Flexible
Service can be delivered standalone or bundled to a
product
Predictable
Services can be supplied with service performance
levels up front and customer knows what to expect
Repeatable
Services behaves the exact same way every time it is
invoked
Verifiable
Services deliver tangible value adds to the receiver
that can be measured at the service delivery point
What is a service? What is not a service?

In the Ideation phase, participants spark off ideas in the form of
questions and solutions and note them down on a template
Ideation and Service Idea Template
Owner:
Service Name:
Descripton:
Benefits:
Monetization Timetomarket Complexity Strategic fit
L M H L M H L M H L M H
Please discuss and document your ideas for
value propositions and service based on…
▪ … previous sessions and discussions as well as on
best practice and examples provided today
▪ … thinking right-to-left / outside the box / from a
customers perspective

Overview of Module 3: Customer research
Own Customers, CC
Contacts, 3rd Party
Contacts
Qualitative
Research
Quantitative
Research
Customer Panel
Focus Interviews
Creative Workshops
Trade Fairs
Existing Research
(Client and CC)
Interviews
Online Surveys
Conjoint Analysis
Key
Insights
Personas and
Segments
Key Customer Needs
Service Ideas
Business Case MetricsExisting Research
(Client and CC)

We identified machine complexity, lack of trainings and service
credibility as main themes mentioned by interviewees across all regions
Interviews - Common Themes in EAME, NA and SA
Recurring Interview Themes Primary Implications
EAME
North America
South America • Dealers struggle to develop & retain
talent to deliver services
• Customers are not able to
appropriately operate, optimize and
maintain machines
• Customers want proof points to see
dealers as credible in services
• Willingness to pay increases as service
results are proven
client will need to develop
monetization models calibrated
to tangible customer benefits to
make customers pay for services
Trainings and optimization
services as an opportunity
client must offer a
comprehensive training
network across all regions to
improve service quality and
enable operators
2
Lack of
Training
Dealer/client
3 Credibility in
Services
Focus area of
collected data
• Demographics/ Farmographics
• Current pain points
• Current service providers
• Service ideas
• Operators do not have full
Increasing transparency on functionality
1 Machine • They are overburdened with using and
Complexity optimizingthe equipment

Personas will be used to represent customer segments for creation
of customer journeys and during service definition
Personas - Why?
Example Persona
Personas represent a
customer/dealer segment and help
them come “alive” by describing
them in an easy to understand way
▪ Demographics
▪ Farmographics
▪ Usage behavior
▪ Goals / drivers
▪ Frustrations & pain points
▪ Turn-ons / offs
▪ Digital affinity
▪ Channel preferences

Our future services deliver a tangible value add to our customers and
solve customer’s higher order objectives at machine or farm level
Key Insights - Key Customer Needs
Key Pain Points:
▪ Insufficient yield
▪ Low crop quality
▪ Sub-optimal crop price
▪ Un- or under-utilized fields
/ capacity
▪ …
Success Metric:
Higher revenue
Key Pain Points:
▪ Machine downtime
▪ Unexpected / untimely
failures
▪ External impact of weather,
prices, etc.
▪ Over-concentration of risk
(op, financial, etc.)
▪ …
Success Metric:
Less outcome variability
Potential
Opportunity:
• Access data by
increasing operator
/ owner
convenience
• Engage operator /
owner with product
and brand
Key Pain Points:
▪ Cost of ownership
▪ Cost of consumables
▪ Capital intensity of
machinery
▪ Idle time
▪ Farm input costs
▪ Operational waste
▪ …
Success Metric:
Lower operating cost
Potential Opportunity:
▪ Access data by increasing
operator / owner
convenience
▪ Engage operator / owner
with product and brand
Increase Efficiency Mitigate Risk Improve Results Add Convenience

A business case reflects the value proposition to a decision maker
and includes metrics from markets, pricing and cost calculations
Key Insights - Business Case Metrics
Businesscase
Market
Share
Cost
Pricing
▪ Sales/Marketing effort?
▪ Effort in Delivery?
▪ Administrative effort?
▪ Market share per region?
▪ Market share per product?
▪ Profit optimal price?
▪ Acceptable price?
▪ Competitive price?
Questions addressed e.g. Answered by
Addressable
Market
▪ Are dealers ready?
▪ Products supported?
▪ Rollout plan?
▪ Team
▪ SMEs (brands)
▪ Market simulation
based on
Quantitative MR
▪ Quantitative MR
▪ Team
▪ Team
▪ SMEs (regions)
▪ Qualitative MR

Pricing studies aim to discover what customers are willing to pay
for a product or a service, and by doing so determine revenue and profit
Key Insights - Business Case Metrics
Take rate
Market * Take Rate * Price =
Revenue
Revenue – Cost = Profit
Pricing Visualization Equation/Factors
Take rate
Revenue
Profit

Overview of Module 4: Operating Model
Operating
Model
Capability Model
Processes
Organization Initiatives
Go-to-market
Customer Journey,
Service Portfolio

Mapped out to-be customer journey events considering a
customer-centric view and derived key customer touch points along the way
From Customer Journeys to Processes
Service
Portfolio
Processes
Customer
Journey
Capabilities

We defined the key capabilities required to deliver a best -in-class
customer experience
Capability Model
Maintenance& Repair Management ProductManagement
Machine Master
Machine Monitoring
Services Master
Configuration
Technical Support
Technical Information Management
Sales & Marketing
Sales Support
Lead & Prospect
Management
E-Commerce
Campaign Management
Offer Generation Retention Management
Training
Development
Planning
Execution
Finance Management
Pricing
SupplyChain Management
Track & Trace
Transport
Management
Inventory
Management
Warehouse
Management
Fulfillment & Return
On-site Stock Management
Foundation Data Capturing, Analytics & SecurityIntegration Management Machine ConnectivityChange Mgmt (int+ext)
Channels
CustomerManagement Partner Management
Customer Profile Profile Partner Profile
Customer History
Interaction
Management
A
B
C
PrintFace-to-Face On-Board
Partner History
Performance Management
Talent Management
Personalized
Communication
Case Management Self-ServiceKey Account
Management
Contract Management Scheduling
Digital
Maintenance Planning
M&R Execution
Field Service Support
Offer Definition &
Delivery
Covers capabilities
required to create,
define, sell and deliver
products and services
Customer Engagement
Covers capabilities to
understand customers
and to consistently
engage through-out the
customer journey
Enterprise
Covers capabilities to
ensure integration,
connectivity and
operational execution
Invoicing
Risk Management

The E2E Process Model is a holistic view of all the aftersales
processes required to deliver a best-in-class customer experience
End-to-End Process Model
Allocate
Available
Resources
Create
Appointment

Two governance levers – centralizing resources & coordinating
initiatives – lead to four typical models for the realization of digital
organizations
Typical organizational models for the realization of digital transformation
Board
Dig.Acceleration
Team
E ExecutionV Digital Vision B Budget
Board
BU1
BU2
BU3
VB
EE
Less coordinatedinitiatives More coordinated initiatives
MoreSharedresourcesLessSharedresources
Board
BU1
BU2
BU3
E
B
E
B
BU1
BU2
BU3
E
BU1
BU2
BU3
Dig.Acceleration
Team
E E
B BB
V V
Board
E
V
E E
B B
V V
B
V V
▪ Digital strategy defined by
central unit, althoughlocal
business units can have their
own strategies
▪ Local business units develop
and manage operations, but
must use solutions and
resources from dedicated
business unit when available
▪ Each business unit can have
its own strategy and budget
for digital initiatives
▪ No enterprise-level
coordination
▪ Digital operations developed
and managed in business
units
▪ Digital strategy defined at
enterprise level
▪ Digital initiatives funded
and coordinatedat
enterprise level
▪ Digital operations
developed and managed in
business units
▪ Digital strategy set by a
dedicated business unit.
▪ Local business unit digital
strategies and budgets are
coordinated across the
company
▪ Local business units develop
and manage operations, but
must use solutions and
resources from dedicated
business unit when available
Digital Hub Global Execution
Rapid Implementation Central Coordination
V

Usage-based Extended Warranty
Go-to-market concept (1/2)
▪ Contract holder TBD
▪ EAME: contractbetween dealer and customer
▪ NA: contract between insurance company and customer
▪ Extended service coverage with discount/ rebate for lower usage or lower
risk customers; reimbursementby contract party
▪ Only applies to extended warranty, not contractual warranty
▪ Service only available to connected machines
▪ Load profile monitoringdone by client
▪ Service follows evolution of standard warranty, e.g. offer add-ons like
towing and weekend work
Service Description
▪ Insurance model varies across regions (i.e. insurance by 3rd party or client):
harmonizationor region specific service execution
▪ Make maintenance contract mandatory
▪ Decide if break-even vs. making margin
Service Variations
Evolution Phases
Phase 1
▪ Discover which usage characteristics
drive costs in warranty (e.g.
operating mode, environment, duty
cycles) and how to define a
contractual framework and setup
▪ Use either existing data or start
collecting new data (TBD)
Phase 2
▪ Focus on tractors (there is less
variability in usage of other
equipment)
▪ Roll-out service in selected markets
and brands (depending on data
available today)
Phase 3
▪ Roll-out service to remaining
markets and brands
Phase 4
▪ Check if service can be extended to
other equipment, e.g. harvesters
(analyze environment, crop type,
load, …)
Target Penetration and Revenue Potential
Region Target Penetration (2015-2020) Revenue Potential (2020)
EAME ▪ Germany:
▪ France:
▪ UK:
▪ Other:
NA ▪ …
SA ▪ …

Usage-based Extended Warranty
Go-to-market concept (2/2)
▪ Sales support: dealers lack experience in selling intangible services
(communicate added value); offer dealer trainings and sales tools to
foster sales expertise for services (value based selling)
▪ (Globally the ability to sell extended warranty is a weakness, but there
are a few good examples / best practices)
▪ Service contract execution / service delivery gap
 Maintenance planning
 Inventory planning
• Capability of managing and distributingrebates (when dealer has
commercialresponsibility)
Dealer Capability Gaps
▪ Commercialresponsibility TBD: Dealer in EAME and 3rd party in NA
today
▪ Dealer is responsible for selling the service
▪ Sell service with new machine purchase and/or to customers whose
extended warranty is about to expire
▪ Focus on machines with low usage profile where customer might not
be willing to pay for the regular extended warranty
Distribution Channels & Delivery Partners
Commercial Responsibility / Contract ownership
Client ✓ ✓Dealer 3rd Party
Delivery Responsibility
✓ Client ✓ Dealer 3rd Party
Activities to close Dealer and client Capability Gaps
# Activities Phase Duration
1 Define system and administrative process to manage rebates Phase 1
2 Discover which usage characteristics drive costs in warranty (e.g. operating mode, environment, duty cycles) and
how to define a contractual frameworkand setup
Phase 1
3 Create and provide trainings for dealers to support sales of this service Phase 1

Introduction1
Agenda
Operating Models3
Platform Design5

An MVP allows you to test the value brought to customers and
verify your basic hypothesis
What is a MVP
Minimum Viable Product (MVP)
A MVP is a set of simple functionalities, that let
you:
▪ Test the value brought to customers and verify
your fundamental hypothesis,
▪ Understand your customers true expectations
▪ Improve quickly your service / product
depending on your customers feedbacks and
data
▪ Validate (technical) feasibility and evaluate
vendors
An MVP is not a final product and aims at
generating valuable insights to persist or pivot
afterwards

MVPs help companies bringing a start-up-like and fail-early
mindset into their projects
Why do we use MVPs
Corporate World Start-up World
lean
fast close to the customer
adaptable
flexible
independent
agile
hierarchical
byrocratic
risk averse
experienced
structured
dynamic
process focussed
political
standardised predictable
Agility and flexibility within companies can only be achieved by creating a corresponding mindset.

MVPs will be executed in a fast and agile approach to establish a
new way of innovation and acceleration within the client
How do we do MVPs
Frugal
▪ Minimal costs/ effort
▪ Results before detail
Fast
▪ Sprints for early
and ongoing success
▪ Requires time-boxing
Business impact
▪ High business value
▪ Awareness and momentum
▪ Urgency: addresses urgent needs
Smart
▪ Hands-on:
Brings technology to life
▪ Innovation: Reflects state-of-the-art
solutions
Using an effective approach for innovation

MVP follows a clearly defined process along three phases beginning
with the launch decision to an actual showcase within 9 -14 weeks
How long does it take to do MVPs
I. Setup and scope
2-4 weeks
MVP Workshop
II. Design and build
6-8 weeks
Launch build phase
III. Showcase
1-2 weeks
Learning journey
▪ Engage with management and
agree on detailed scope
▪ Set up team, project plan
▪ Detail scope, develop user stories
▪ Identify and mobilize partner
ecosystem, identify required
tools/ software
▪ Ramp up infrastructure
▪ Identify early adopters
▪ Extract, transform, load data
▪ Design and build solution in iterations
(agile)
▪ Conduct regular stakeholder/ sponsor
reviews
▪ Finalize demonstrator
▪ Draft high-level roadmap, benefits
and effort estimate
▪ Decide next steps
▪ Market ‘WOW-effect’/ collect
lessons learned (esp. in case of
failure)
∑9-14
weeks
Budget approval Next step decisionFinalization

Filtering service opportunities through the innovation funnel
results in promising MVP candidates
Approach for selection of services to implement / MVP
• Revenue
• Capabilities
• …
n ~ 3
Service Opportunities
Ideation Workshop
n ~ 150
Qualification Workshop
n ~ 75Strategic FitMonetization
Level of detail of service opportunities
Number of service opportunities
Current
Services
Customer
Needs
Regulations
Industry &
Competitors
Is it a
service?
Removing
duplicates
Clustering
similar ideas
Portfolio Workshop
n ~ 20Speed to Market
Differentiation
MVP Workshop
Constant Ambition and Business Customerand Expert Mock-ups and Netnography and Crowd Technology and Partner
Validation Model Feedback Prototypes Mirroring Portfolio

What if we could directly configure, create a bid and sell complex
solutions in the course of a single customer encounter?
MVP Project Charter (1/2)
Scope
• Demonstrate through a live demo that we can increase efficiency in the RFQ process
through guided selling, by modelling and visualizing a Power Island of a CCPP
• Demonstrateconceptually that we can…
• Drive standardizationof proposals with a database of reference configurations
• Provide input for load planning/forecast from configurations and quotes in sales
funnel
• Integrate into Salesforce CRM to provide transparency on previous quotes
• Create target pricing based on market intelligence and CRM/CPQ information
CustomerBenefits
Benefits/
Customer
Value
• Improve the overall customerexperience when buying
• Reduce complexity towards the customer, make company easy to do business with
client’s benefits
• Increase sales: Improve quality of consultation in early phases to become the preferred
bidder
• Reduce costs: Less efforts for Field Sales, for Hub Sales, and for bidding
• Increase governance and support modularizationefforts / building blocks
Approach
Total duration from 08/02/2017 to 14/04/2017 – total 9,5 weeks
er
Sponsor: Lead Business: Lead IT:
Resources: Expected Costs
Resources: Required Team
• Step 1: Scoping -- Analyze current tools and processes used in sales 17/02/2017
• Step 2: Scoping – Define proof-points of Demonstrator 24/02/2017
• Step 3: Ramp-up – Gather data and ramp-up implementation partn 03/03/2017
• Step 4: Design and build – Agile implementation of proof-points 07/04/2017

We have scoped, designed and built the CPQ demonstrator in a 9 weeks
timeframe
MVP Project Charter (2/2)
Start-Up phase
Build foundation:
Lighthouse ramp-up
Transform to
Virtual Company
Immersive Customer
Experience
2017 2019 2021
CEO/ CIO
Workshop
Initiation
Dec. 2016
Iteration 1 (2 weeks)
✓ Design and
implement guided
sellingquestions
✓ Link guided selling
to configurations/
products
✓ Link guided selling
to visualization
▪ Get feedback from
organizationw/hands-on
experience
▪ Collect lessons learned
▪ Conductprojectsetup
workshopsto drafthigh-level
roadmap
▪ Prepareexecutive WS
▪ Decide next steps and
potentiallyramp-upproject
Iteration 2 (2 weeks)
✓ Refineguided
sellingquestions&
productmodels
✓ Integratepricing
and performance
calculations
✓ Implement deep-
dive
Iteration 3 (1 week)
✓ Prepareindicative
budget/ PDF
generation
✓ Design Salesforce
processesand
implement pricing
✓ PopulateSales-force
environmentwith
test data
Daily stand-up calls, weekly demonstrator reviews
Scoping and
preparation
2,5 weeks Sprint
Launch decision Scope approval
Ramp-up
Design and build
Iteration 2
5 weeks Sprints
Sell and Scale
1 week Sprint 3 week Sprints
∑ 11,5
weeksIteration 1 Iteration 3
CEO/ CIO
WorkshopMay 2nd
✓
✓ Set up team, project plan
✓ Engage executives and
confirmkey questions
✓ Align target picture,
design user storiesand
proofpoints
✓ Identifyand mobilize
partnerecosystem
✓ Ramp up infrastructure,
set up sandbox/template
✓ Configurebasicworkflows
✓ Identifyneeded data
✓ Set up jointworkingmode
Next step decisionLaunch build phase Initiate finalization Today

Introduction1
Agenda
Operating Models3
Platform Design5

Overview of Module 6: Platform and Ecosystem
Platform Design
Platform Architecture
Software / Vendor Selection
Connectivity and Hardware
Make or Buy
Digital Platform / IoT Platforms
Overview of common platforms

Digital Platforms provide the capabilities to offer personalized Apps
and Digital Services by connecting physical products with the virtual world
What is a Digital Platform?
Digital
Platform
Enabling Connectivity
Central Component
Connect Real & Virtual World
Device Management
Database
Personalization
Processing & Action Management
Analytics Capabilities
3rd Party Integration
Visualization
Apps
Digital Services

Digital Platforms can be structured based on the capabilties they
offer: generic, functional, cross-industry and technology-focused platforms
Overview of the classification critera and the categories
CategoriesDimensions
Specific use cases that the platform offers a solution
to. This could e.g. be an industry or a use case within
an industry
Use cases
The main technical capability the platform focuses on,
e.g. applicationenablement, data processing(i.e.
aggregationand analytics), connectivity and network
managementand device management
Technology
Capabilities
Focus on addressing applications and use cases for a
particular enterprise, or support of collaboration
across organizational boundaries (e.g. vertical market
integration or inter-organizationalcollaboration)
Vertical
Integration
Platforms use various models for deployment, e.g. a
third-party cloud platform (Software-as-a-Service or
Platform-as-a-Service) or on-premises (which means
that companies privately own and control facilities)
Deployment
Model
Cross-
Industry
platform
Generic
platform
Technology-
focused
platform
Functional
platform

The Digital Technology Framework supports the
target-oriented design of digital platforms
Digital Technology Framework
Personalization & Interaction
Customer, Supplier, Partner
Management
API Management
Integration
Process & Rules Management
Operat.
Business
Services
Automated Provisioning
Application Lifecycle Management
Identify&AccessManagement
ServiceManagement
Common Data
Services
Business
Support
Services
Identity & Access
Management
▪ Authorization and authentication of users
▪ Seamless use experience across all customer
touchpoints
Process & Rules
Management
▪ Business process and rules engines
▪ Implementation of automated processes to
less-automated processes (e.g. case mgmt.)
Integration & API
Management
▪ Integration approach based on enterprise
service bus (ESB)
▪ Capsuling of (legacy) backends via APIs
Service
Management
▪ Tools for the operative support of
implemented digital services
▪ Real-time monitoring
Automated
Provisioning
▪ Management of IT environment by automated
processes
▪ Continuous deployment of services (DevOps)
Application
Lifecycle
Management
▪ Management of applications over its lifecycle
▪ Management of requirements and
configurations

IoT architectures follow the concept of the 5A Reference
Architecture from data acquisition to digital services and apps
A5 Reference Architecture
Solution Layer Description IoT Technology Stack
A1. Acquisition Data is acquired from connected devices and pulled/pushed into
a layer A2 database.
Product Hardware, Product
Software and Connectivity
A2. Aggregation Mass transactional data is stored on a central database and can
be analyzed by a layer A3 analytics application or further
processed through a layer A4 process engine.
Database
A3. Analysis Transactional and master data stored on layer A2 and external
data sources are analyzed. Results can be processed in layer A4
or embedded in layer A5.
Rules/Analytics Engines
A4. Assignment Transactional data or analytics results can be processed through
a standard workflow engine or custom algorithms. Output data
can be pushed to or created in a layer A5 application.
Smart Product Applications /
Integration with Business
Systems
A5. Action Transactional or master data, analytical information and A4
output data can be visualized.

Several factors influence potential levels of connectivity of your
devices
Getting data out of devices
▪ Polling frequency is the amount of time
between the checks that are performed
▪ Polls can be performed constantly,
every second, every minute, every
hour, etc.
Time to Act Intermittent use
▪ The time to act describes the time, in
which an action has to be taken after
the relevant parameters change
▪ Non-wireless technologies
(e.g. VCI, USB, “cable”)
▪ Wireless technologies
(e.g. NFC, Bluetooth, Wi-Fi,
GSM/UMTS, Satellite)
▪ Constantly installed solution vs.
solution installed on demand, e.g. to
diagnose a problem
Number of Parameters
▪ Amount of input data required
Number of
Parameters
Polling Frequency Data Transfer Technology
Polling
Frequency
Time to Act
Intermittent
Use
Data Transfer
Technology
...
Levels of
Connectivity

During platform design clients need to decide if they want to make
or buy their digital platform
Make or Buy (1/2)
Make or BuyFunctional & Technical
Requirements
Check processes
and dependencies:
▪ Impact analysis of
major internal and
external change
drivers
▪ Evaluate specific
processes deviating
from standard model
and quantify impact of
low change ability
▪ Review operational
process model
Analyse functional and
technical scope
▪ Understand business
requirements & IT impact
on processes, architecture
and applications
▪ Design transition using
process model for
implementation
▪ Vendor market overview,
proof of concept,
rough prototyping
Compare standard or
individual-SW against
“Best of Breed”:
▪ Challenge requirement
analysisresults in
comparison of individual vs.
standard solution
▪ Quantify comparative
advantages of potential
individual solution
▪ Evaluate integration of
“Best-of-Breed” options
▪ Quantify mid/long term
cost effects of
near/offshore solutions
▪ Explore potential and
efficiency of Shared
Services
▪ Validate entire business
process outsourcing
options
▪ Evaluate scenario
▪ Recommend design
▪ Vendor and
near/offshore
partner selection
▪ Implementation
roadmap
Operating Model &
Processes
Sourcing Recommendation
Options
Check options from cost Recommendation:
and benefit perspective:

Several factors need to be considered for a make or buy decision
Make or Buy (2/2)
Source: Hung, P. & Cedric, G., 2008.Factors affecting the buy vs build decision in large Australian organisations. Journal of Information Technology, 23(2).
Factors Detail Make Buy
Strategy & Competitive
Advantage
Is the system for the core processes
that differentiate the company?
Core processes None core processes
Cost Implementation cost?
Ongoing cost?
Higher Lower
Scale &
Complexity
Simple and easy to build? Complex
requirements, e.g. expertise, maturity,
and economies of scale
Simple and easy Complex
Maturity /
Commoditization
Do we want best practices?
Are all current and future features
covered?
Low maturity Best practice
Time Time for development, testing and
deployment. Are customization,
changes and trainings needed?
Long timeframe Short timeframe
Internal resources
(staff expertise)
What capabilities do the staff have?
Technical experience and skills
High amount of resources, external
support low
Low amount of internal resources,
high external support
Risks Control, time, development problems High control, high risks Low control, low risks
(puts risks to the vendor)
Support structures Professional support structures
and/or open source communities?
Buil-up infrastructure and knowledge
(costly!)
Given and skilled infrastructure

Based on the analysis of a long-list with 15 vendors a handful of
candidates were selected to participate in a formal Request for Proposal
Software/Vendor Selection - Process
Long-list Pre-filtering Detailed assessment
and short-list
Input
Research
Analyst
Reports
Pre-Study
Detail of analysis
Number of software vendors
Expert
Interviews

The detailed assessment is based on the criteria that the core team
has defined in a joint workshop
Software/Vendor Selection - Selection criteria
Business
Requirements
80%
Integration and
Flexibility
15%
Interfaces to systems used at the client
(i.e. SAP, MS Dynamics AX, IBM WebSphere, PTC)
Order Handling Price Management
Soft Offer Administration Reporting
Billing, Invoicing & Accounting Service Delivery
Common Data Management
Yearly revenue >25 mEUR in the last 3 years / stable financial ratings
Positive EBIT in the last 3 years / positive market & growth forecast
Standard, well-known interface technologies (e.g. WebServices)
SW based on technology used at Volvo CE
(i.e. SAP, MS Dynamics AX, .NET, Oracle, PTC)
SW made of different modules that can be added/removed easily
Customization through configuration, i.e. without programming
Integration
Revenue
Profit
Interfaces
Technology
Modularity
Configuration
25 service elements, see detailed
description
Strategic
Requirements
5%
References showing business understanding & relevant client engagements (service
mgmt, manufacturing OEM, large companies)
References
7. C o m m on Data Man agem ent

The heat map summarizes how the different vendors perform on
each individual evaluation criteria
Software/Vendor Selection - Vendors’ performance analysis
Common Master Data have been left out of the scoring due to lack of sufficient and consistent information
New Frompre-study New From
pre-study
New From
pre-study
New
Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 Vendor 6 Vendor 7 Vendor 8 Vendor 9 Vendor 10 Vendor 11
Business 99% 95% 95% 98% 89% 91% 90% 89% 73% 63% 30%
Soft Offer Admin 100% 100% 100% 100% 100% 100% 100% 75% 100% 50% 100%
Order Handling 95% 100% 85% 100% 100% 100% 100% 95% 80% 65% 35%
Billing, Invoicing… 100% 92% 97% 94% 75% 81% 81% 83% 58% 56% 3%
Reporting 100% 75% 100% 100% 100% 100% 75% 100% 50% 50% 25%
Price Management 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 50%
Service Delivery 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 75%
Integration & flexibility 95% 95% 85% 65% 95% 70% 60% 65% 95% 60% 90%
Interfaces 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100%
Integration 100% 100% 100% 75% 100% 100% 25% 100% 100% 100% 100%
Technology 100% 100% 100% 0% 100% 0% 25% 0% 100% 0% 100%
Modularity 75% 100% 50% 75% 75% 50% 75% 75% 75% 50% 75%
Configuration 100% 75% 75% 75% 100% 100% 100% 50% 100% 50% 75%
Strategic 100% 83% 100% 58% 92% 100% 92% 67% 100% 75% 58%
Revenue 100% 75% 100% 100% 100% 100% 100% 50% 100% 100% 0%
Profit 100% 75% 100% 75% 75% 100% 100% 50% 100% 75% 75%
References 100% 100% 100% 25% 100% 100% 75% 100% 100% 50% 100%
Overall performance 98% 94% 94% 91% 90% 89% 86% 84% 77% 63% 63%
Low <30%
Medium 30%-84%
High 85%-95%
Very high >95%

Generic platforms are clear leaders with mature strategies and
offerings across verticals
Market study of generic platform providers
Generic
platform
▪ Definition: Providers that offer a broad range of platform end-to-end functionalities, without a specific focus on
a use case or industry1. Multiple platforms might also be used at the same time to enhance the native functions
included in the solutions .
▪ Current market situation: Generic IoT platforms are an exception to the platform market in that they are mature
providers with formulated strategies and offerings. In this quickly maturing market there are clear established
leaders who are clearly formulating their strategies and roadmaps in ecosystems of collaboration and
partnerships. Almost half of today’s IoT customers prefer to use traditional and well-established software
companies for their solutions.
IBM Watson
▪ PaaS
▪ Serves broad range
of use cases (e.g.
industries, horizontal
assets, etc.)
▪ Contains enriching
capabilities like AR
and blockahin
Universal IoT Platform
▪ Private cloud/on-
premises
▪ Delivers industry,
vertical and client-
agnostic solutions
▪ Streamlines device
interoperability
Amazon Web Services
▪ IaaS
▪ On-demand cloud
computing platform
▪ Connection and data
ingestion services
▪ Supports AWS’ Cloud
Service
Azore IoT Suite
▪ PaaS
▪ Quick start-up for IoT
projects
▪ Mainly supports
operational
processes
▪ Part of Azure Cloud
Service
Cumulocity IoT
▪ SaaS/PaaS/on-
premises
▪ Pre-packaged
solution accelerator
platform
▪ Integrated to Digital
Business Platform

Functional platforms are young and evolving platforms, developed to
excel in a specific capability
Market study of functional platforms
Functional
platform
▪ Definition: Platforms that emphasize on providing specific capabilities within a focus area, often relating to
specific use cases (e.g. industrial). They use recent technologies and deep functional expertise to leverage strong
capabilities, thereby often complementing existing platforms1.
▪ Current market situation: Major industrial companies are progressively transitioning from being IoT customers to
being IoT providers. New business models are created to gain from the expected growth of functional markets.
For example, the manufacturing sector is expected to grow into one of the biggest IoT platform segments as
more and more companies are realising the benefits of connecting industrial equipment to streamline operations
and reduce costs2.
Oracle IoT Cloud
▪ PaaS
▪ Focus is on business
applications rather
than technology
▪ Emphasizes acts of
monitoring
▪ Works with Oracle
ThingWorx
▪ Cloud/on-premises
▪ Enables easy
application
development
▪ Focus on
manufacturers of
smart products
Predix
▪ IaaS
▪ Enables remote
monitoring and edge
analytics
▪ Designed for the
industrial area
▪ Digital twin ability
SAP Leonardo
▪ Cloud/on-premises
▪ Appropriate for asset
monitoring and
analytics
▪ Addresses product-
/asset-centric and
industrial use cases
MindSphere
▪ PaaS
▪ Provides full array of
industrial apps and
services
▪ Allows industrial
customers to act on
actual factual data

Cross-industry platforms are newly emerging and an undiscovered
opportunity for many organizations
Market study of cross-industry platforms
Cross-
industry
platform
▪ Definition: Cross-industry IoT platforms are designed for addressing ready-to-use applications and solutions for a
particular enterprise (e.g. multiple processes of the value chain within one sector) or support collaboration
across organizational boundaries (e.g. vertical market integration or inter-organizational collaboration). These
platforms thus have a vertical market focus and often collaborate with their partners in the value chain1.
▪ Current market situation: The market for firms that pick their focus areas and develop partnerships with other
companies in order to deliver end-to-end offerings is still in an early stage2. While horizontal platforms are well-
established and well-present on the IoT platform market, providing end-to-end solutions across the vertical chain
is still an undiscovered opportunityfor many firms. Vertical IoT platforms are just newly emerging.
Zatar
▪ PaaS
▪ Applications improve
critical workflows in
vertical markets
▪ Central in Zebra’s
Enterprise Asset
Intelligence strategy
OceanConnect
▪ IaaS
▪ Connects up and
downstream products
in vertical markets
▪ Developed by
Huawei’s CloudCore
Network

Technology-focused platforms are fighting their way through an
overcrowded but promising market
Market study of technology-focused platforms
Technology-
focused
platform
▪ Definition: Platforms that focused on specific technologies. They excel in providing services regarding
connectivity, network management and device management1.
▪ Current market situation: The market is young, overcrowded but promising. For technology and communications
companies, IoT opportunities are very significant. The stakes are very high, as companies that own the dominant
platforms are expected to capture significant growth in the IoT market, growing quickly in value in the short-term.
Yet, not everyone will generate a part of the revenue since the market is quickly becoming overcrowded, as many
companies are aware of the broad range of opportunities in this market2.
IoT Accelerator
▪ Saas/on-premises
▪ Horizontal cross-
industry offering
of platform and prof
essional services
▪ Leading know-how
of connectivity
Cisco Jasper
▪ PaaS
▪ Helps customers
deliver and operate
connected solutions
▪ Ideal for sim-card
based use cases
AT&T IoT Platform
▪ PaaS
▪ End-to-end platform
for developing
connected solutions
▪ Part of a complete
AT&T portfolio
Cloud IoT Core
▪ Saas/on-premises
▪ End-to-end platform
for device and data
management
▪ Works in
combination with
Google IoT Platform
Mendix IoT Platform
▪ PaaS
▪ Focuses on rapid
application
development for
web and mobile
▪ Known to be the
fastest and easiest

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