To reach its lofty goal of generating $50 billion of revenue from services in 5-10 years, or about half of the company’s current revenues, Boeing's new Global Services division needs to become more operationally agile and deliver customer responses faster.
To achieve this, on July 1 the OEM merged its commercial and defense services portfolios, while also trying to shift from a heavy industrial and manufacturing mentality to a more nimble one that delivers customer-focused, competitively priced services across product life cycles, says Stan Deal, Boeing Global Services president and CEO.
From day one, Boeing Global Services will launch with four major service capabilities: supply chain; engineering, modifications and MRO; information services and analytics; and training/professional services.
Those four service capabilities will be distributed across four channels: commercial; business and general aviation; U.S. government, and international governments.
GoldCare, its fleet services portfolio, will become Global Fleet Care to reflect the breadth of the new services portfolio.
“We’re in the midst of a reorganization,” says Deal, who expects to provide more transparency about details of the new structure in the third quarter. While the majority of military services will transfer to the new entity, he says, some pieces—such as embedded engineering teams and modernizing current platforms—will remain under Boeing Defense, Space & Security President and CEO Leanne Caret.
Deal thinks that the “digital portfolio is the one that could be a 10X growth portfolio.” At the Paris Air Show, the OEM launched Boeing AnalytX, which combines analytics experts—from Airplane Health Management to Jeppesen—to deliver data-driven solutions and insights. “We monitor 4,300 tails every day” and have “seven million records” used to predict maintenance and reduce costs, he says. Expect Boeing to invest and partner in this area in the future.
Unlike the aircraft manufacturing industry, the services arena is highly fragmented and includes companies such as Airbus, Lockheed and Lufthansa Technik—as well as nontraditional players entering the market. However, when Boeing combines its government- and commercial-support functions, “there’s nobody with a foothold in both [of these] like Boeing,” says Deal. Boeing has about a 7% share of the commercial- and 9% of the defense-support market, of the total $2.6 trillion services market, he says.
As it develops its new organization, Deal wants a “service champion culture” and one that incubates innovation. “Last year, we produced 17 new services that we took to market,” Deal says. He would like this to grow to 100 annually.
The measure of this new organization’s success will not be rhetoric, but winning new business. “The No. 1 thing customers say is ‘We love Boeing, but we want faster services,’ ” he says.
“We’ve already accelerated being more aggressive on deals and being faster to respond in competitive situations,” says Deal, who is seeing improvement but still wants teams to “shorten cycle times and increase win rates.” By cutting processes and delivery times, “coupled with our internal work on cost-competitiveness, I would like to increase our win rate by 100%,” says Deal.
Boeing’s digital services portfolio—including Airplane Health Monitoring—could grow by a factor of 10. Credit: Boeing
This goal should be brought closer by the portfolio of capabilities that can now better span an aircraft’s life cycle, enabled by the new structure.
“We’ve done a good share of transformation by day one,” he says. But Deal thinks it will take 18 months to complete the divestiture, merging and launching process for Global Services.