Yannik and his team have put two years of hard work into developing a calculator that is now paying off: “At the end of August, we had our final meeting with the companies involved – now everyone can use the SCALA profitability calculator as an online tool.” In this case, profitability means long-term customer loyalty for machine and plant manufacturers with the help of subscription models. Yannik explains how it works: “The basic idea behind this business model is that you don't just sell the machine once and then stop to interact with the customer, but offer a product service package, for example.” This subscription includes services such as installation, consulting and maintenance, so that more money can be earned overall.
Decisions Made Easy
However, not every customer is suited to this business model. “There can be risks for machine and plant manufacturers, for example due to payment defaults, machine downtime or market risks,” explains Yannik. The calculator is designed to provide a rating on a scale of one to five, which can then be used to decide for or against the subscription model, with five being the best possible rating. “In the second step, we then carry out a profitability analysis of the customer based on a key figure analysis.”
To develop the calculator, the team first conducted a literature review to determine the appropriate methodology for each step. The scientists collected customer data in interviews with companies such as Kurtz Ersa and AS Schneider from the Heilbronn-Franken region. “But information from lenders such as Sparkasse was also involved,” explains Yannik. Data maintenance was mainly carried out manually: “We worked in a similar way to the companies themselves: we entered key figures and empirical values.” The key feature of the tool is that it combines the empirical values of all companies and shows what is important for every one of them.
Teamwork Pays Off
In addition to Yannik, the team consists of Jan-Philipp Nickel from RWTH Aachen University. Each of them was able to contribute their strengths: “Jan focused on the work packages of service orientation and service management, while I tackled the business side with corporate risks and valuations.” It was a real win-win situation, because: “When you have people from different backgrounds, it's naturally easier to achieve a good result.” An important advisor at Yannik's side was his doctoral supervisor Sebastian Müller, professor of Finance at TUM Campus Heilbronn. He provided important feedback on the tool, especially during the test phase.
“The feedback on the calculator was very positive. We offer an alternative perspective on how companies can measure and evaluate their business relationships,” says Yannik. And it wasn't just the companies involved in the project that tested the tool. At the Rethink.Mittelstand event on 21 October at the Heilbronn ‘Bildungscampus’, Jan-Philipp and Yannik presented the calculator to a wide audience. Yannik sums up: “Apart from a few concerns about data protection, which is normal for an open-source tool, many companies have shown interest. We are excited to see whether SCALA can provide sustainable support for mechanical engineering.”