Improve Product Value:
Design for Supportability
Co-authored By Frederick C. Van Bennekom, Dr.B.A., Principal, Great Brook And Keith Goffin, Ph.D, Professor, Cranfield School of Management

What do Dell and Boeing have in common?  You wouldn’t think much, but both have been in the news lately for similar reasons.  They have recognized that their product design practices were flawed in their over emphasis on reducing initial product cost.  Their experiences have led to their re-evaluation of the definition of “product cost”.  In both cases, the companies’ new focus is to lower their customers’ Total Cost of Ownership (TCO) while enhancing the value of the solution their customers purchase.  These are being achieved through the application of Design for Supportability (DFS) practices.

The Value of TCO Methodology

Total Cost of Ownership has received considerable airplay over the past decade as research groups like Gartner started measuring the TCO of IT solutions and companies like Microsoft responded by marketing their product with a lower TCO argument.  The standard definition of TCO is the “cost to acquire, deploy, operate, and maintain” some product that we put into use.  It seems reasonable at first blush, and a rigorous TCO analysis has benefits for the development of a new product.

Not all product-related costs are measured and emphasized equally. 
A key objective of TCO analysis is to force buyers and sellers to examine its product cost structure, and in particular the key cost drivers, over the life-cycle of product ownership.  Typically, product acquisition costs are the single largest outlay.  So buyers overemphasize acquisition costs in their decision calculus, and sellers respond by overemphasis on reducing that initial cost.  Plus, many of the downstream costs are indirect costs or opportunity costs.  That makes accounting for them more difficult – for buyer and seller – and easier to ignore.  Yet, these costs may well overwhelm acquisition costs in the long run.  Also, the monetized costs during the product usage period come out of an operating budget as opposed to a capital budget, and operating budgets generate less emotion.  Thus, for several reasons, product acquisition costs are overweighed, and a rigorous TCO approach will lead to a more rational purchase decision for buyers and more rational product management decisions for the vendors. 

In Dell’s case, the drive to lower the sticker price of their laptops drove design decisions that led to severe overheating of laptops and potentially even some fires.  The product failures from these design decisions created a high cost for those unlucky customers and also for Dell, which has found that reliability issues has forced it to ramp up its customer support function.

TCO may provide for competitive inroads. 
Newcomers to a marketplace may find a receptive ear to a TCO product pitch that creates a contrast to a dominant player in an industry.  This pitch will be more convincing if the dominant player hasn’t made a convincing value-based pricing argument and has created a cost consciousness among its customers. 

The Shortcomings of TCO Methodology

Lower Total Cost to Deliver is not the same as lower TCO. 
Today we see companies promoting self-service technologies as a way to lower costs – but for whom?  Most of these technologies lower the company’s cost by offloading work onto the customer.  (How many of us curse at voice menus as we get 3 levels deep with 6 options on each level… and they further waste our time telling us to “please listen to all the menu options as our menu has recently changed.”  Sure…) Does this added cost to the customer increase the value perceived by the customer?  Are customers rewarded with lower pricing?  That’s possible, but doubtful. 

Also, some companies lower their supply chain and manufacturing costs and claim to have lowered TCO.  Lowered cost to deliver increases margins, allowing for a response to competitors.  But if the costs incurred by the customer are not lowered, then TCO is not lowered, only the cost to deliver is lowered.  Yet, you will hear companies claim they’ve lowered TCO. 

TCO terminology confuses the issue. 
The “O” in TCO implies that the customer must buy some something.  That something is typically a tangible product.  Yet, customers buy solutions to address some need, and that solution may not involve tangible product ownership.  Consider your personal transportation needs.  You could buy a car or lease a car.  Alternatively, you could use livery services – and use your garage for storage.  In all three options, the transportation need is addressed, but the product-service bundle of the solution differs radically.  In the latter two, no Ownership exists.  Technically, the phrase should be “Total Cost of Solution Consumption” (TCSC), but that’s rather inelegant. 

TCO treats cost projections as deterministic.
A real challenge for TCO lies in its forward-looking projections.  TCO analysis uses point estimates for these future cost streams, which can run our ten years or more and have varying degrees of certainty.  It would be more realistic to build in probabilistic estimates.  Otherwise, the TCO analysis will lose credibility when wrong – and those point estimates will be wrong.

Most importantly, TCO overemphasizes costs of ownership and ignores value of ownership.
Let’s return to the transportation example.  I guarantee you I can lower your transportation TCO quickly and emphatically.  Just stay at home!  Get rid of the car!  Don’t go anywhere!  TCO for transportation becomes zero.  However, the value derived from the transportation solution is now lost.  Conceptually, this is TCO’s greatest shortcoming.  Our analysis should focus on costs incurred compared to value derived.  Thus, the more appropriate measure is: Total Net Benefit of Ownership (TNBO) SM.   (Yes, to follow our above argument, it should be Total Net Benefit of Solution Consumption.) 

Boeing’s latest airplane designs for the new 787 Dreamliner demonstrate the TNBO balance.  Airlines wanted planes that were less expensive to operate and maintain, but they must also have wanted certain operational characteristics, such as longer flight range.  A lower acquisition cost is less important than life-cycle costs and value.  The 787 is designed to have major maintenance overhaul periods twice that of today’s aircraft. Plus, it is designed to allow swapping from GE engines to Rolls Royce engines in 24 hours.  This design allows the true owners of most planes, the aircraft leasing companies, to more easily resell a plane from airline to another airline with a different engine preference.  Shorter time to put a plane back in service means faster revenue generation, not just cost reduction – and a competitive advantage for Boeing.

Achieving Higher TNBO through Products Designed for Supportability

Given the benefits of a TNBO focus in product development, how can this vantage point be driven within product engineering?  The key lies in the “Design for…” requirements that drive product development.  New Product Development (NPD) has long challenged designers to think downstream to the manufacturing stage, concurrently engineering products to achieve Design for Manufacturability.  Boeing and others challenged designers to think farther downstream into the product life cycle by placing Design for Supportability (DFS) requirement in NPD.

Our DFS model goes beyond the traditional TCO definition and examines the five major stages of a product’s use and support period – Install, Use, Maintain, Enhance, and Decommission – each of which has several components.  It is imperative for all five stages to be considered collectively in NPD.  Otherwise, product characteristics that might make a product easy to maintain could lead to more complicated installations or training.  Metrics for each of these five stages need to be part of the goals for the NPD project along with overall life cycle goals. 

Perhaps the real challenge lies in instilling a DFS mentality in an organization.  We in customer support “get it”.  We see higher life cycle costs and lowered customer value from products whose designs make them hard to service or upgrade.  Product managers frequently say that supportability is important, but other features always seem to elbow out supportability features when deadlines loom.  In Boeing’s case the customers were demanding supportability features – yes, the airlines were thinking rationally – creating a burning platform for change. 

The challenge typically is two-fold.  First, a compelling case needs to be developed that shows the bottom-line value of DFS in creating higher TNBO.  Second, the organizational dynamics within the company have to change such that customer support has a voice in the strategic area of NPD.  This change requires an understanding at senior management levels and frequently a shift in corporate culture – not trivial issues.  These challenges can be the “Gordian Knot” to achieving the long term competitive advantage that a TNBO focus and DFS practices can provide.

About the Authors..................................

Fred Van Bennekom founded Great Brook to help organizations collect and apply feedback, especially customer feedback learned by support groups.  Fred served as an information systems consultant for Digital Equipment Corporation’s field service organization before earning his doctorate from Boston University's School of Management.  Fred teaches operations management in Northeastern University’s Executive MBA and Harvard’s Certificate in Management programs, and he conducts survey workshops and projects based on his book, Customer Surveying: A Guidebook for Service Manager.

Keith Goffin is Professor of Innovation and New Product Development at Cranfield School of Management in the UK. Previously, he worked for 14 years for Hewlett-Packard, in management and marketing roles. At Cranfield, he teaches on MBA and executive programs and acts as a consultant on innovation management to organizations such as Agilent Technologies, Sony and Unilever. His latest book Innovation Management: Strategy and Implementation Using the Pentathlon Framework was published in June 2005.

Fred & Keith co-authored a major research report on Design for Supportability practices, Problem Prevention Through Design for Supportability: Gaining Competitive Advantage from Customer Support. For details, including how to receive the first chapter complimentary, please click to

http://www.greatbrook.com/design_for_product_supportability.htm