Framework elements

The proposed solutions to the abovementioned points can be considered elements which need to be incorporated into the framework. For each point, a solution will be put forth and substantiated if necessary.

Product-Service Criteria

The current Light-as-a-Service has been put forth from a novelty, and innovative point of view, as a pilot project. While this is a good starting position, it is however important to check which criteria there are to determine whether a project is actually feasible. As stated, this was not checked beforehand. The reason for this is unclear, but with the knowledge obtained in paragraph 5.3.1, it is possible to state four criteria which need to be met in order to safely say that a certain product/asset is suitable to be purchased as a service instead of the traditional ownership. These four criteria are:

1. Labour, resource and/or energy intensive 2. Not part of a critical primary process 3. Severity of malfunction

4. Market/Investment size sufficient

Performance Steering

As stated in 7.2, to ensure maximum effect of a PSS, Result Orientation is needed. In order to have the capability to make results count, performance steering is required. If the operation of an asset does not allow for performance steering and/or improvement, it is hard for either Schiphol or the supplier of the service to provide continuous improvement and therefore increasing results. Therefore, some form of performance steering is necessary for both parties to reach the full value adding effects of a PSS.

Risks and Impacts

If one buys an asset and operates it in the traditional way of being full owner, the associated risks and impact are different from when Schiphol purchases a service from a supplier.

The first thing which needs to happen that the potential financial impact is to be determined. This needs to be done via the TCO methodology already in use at Schiphol. The traditional way and as an alternative the service. By comparing the annual service fee with the Equivalent Annual Cost (EAC) of the traditional way. This allows to get an idea of how the annual cost compare.

Furthermore, this can be used in order to assess the risks. The traditional way has maintenance, energy and other asset usage related costs, these cost also have risks, but also certainty because Schiphol has full control compared to the dependency of a service and other involved parties. All these kinds of risks and their potential impact need to be visualised, so that not only a financial comparison is performed,

but also functional and risk comparison. This is in line with the Asset Wise decision making on the triangle of function, risks and euros.

Stakeholder relations

The first condition is that stakeholder relations need to be clear and mapped. Due to the new environment of taking on a service with much broader possible consequences due to increased dependency, it is vital to get a clear picture of which stakeholders are involved in the respective project. Besides these relationships, it is important to map which type of goods, services, information and monetary flows there exist between the stakeholders on the given project. Due to the change of ownership compared to traditional asset management, there is the possibility that this could lead to decreased transparency in functionality, product and information flow. In order to tackle this, it is important that the contractual relationship between stakeholders also needs to be clear. Usually, the contractual relationships are different than the informal relationships. For the Light-as-a-Service case, the official contract is with Cofely, while Philips is nonetheless an important stakeholder in the project. This is important to map beforehand, because a good and stable relationship between buyer and supplier is essential. By having an overview of both situation, the legal and actual dependencies between different stakeholders is clear and can be acted accordingly.

KPI development

Key Performance Indicators (KPI) are at the base of modern contractual agreements and business models. They are quintessential in order to measure performance and exert and manage control over assets. The problem with the current Light-as-a-Service contract is that while constantly mentioned in the trajectory of development of L.a.a.S., they were never formally agreed upon. There is only one KPI which is actually in the current contract and that is Lux/m2. As can be imagined, one KPI is not enough to actively steer on performance and therefore contribute to the CE. Therefore, how basic it may sound, it is explicitly identified as one of the reason the current L.a.a.S. project has not been the success it could be. Given the increased dependencies between stakeholders on a variety of relationships, whether goods, services, information or data, KPIs are the tools to produce common grounds, derive clear expectation for all parties and cover the potential loss of control by mutually agreeing on KPIs. From Schiphol’s perspective, KPIs are the performance agreements for which it pays its service fee. Function, result and performance and risk coverage all come down to proper KPIs.

Contractual Incentives

KPIs alone are not enough to persuade a supplier to deliver the best possible service it can. With KPIs, a norm is needed which is the minimum performance required by Schiphol. Together with this minimum performance, contractual incentives can boost constant innovation and improvement. Therefore, a bonus can be agreed upon if the supplier outperformance the expectations. What is necessary is that it should not invoke strategic behaviour, however a bonus for (long term) performance can push the supplier the extra mile to deliver. On the contrary, due to the increase dependency of Schiphol, it is important that a malus is also included. If the required performance is not met, the consequence of this failure to meet promises should be penalised. This to ensure that a supplier will deliver the minimum required performance. The dependency of the two parties puts additional risks at both of them, but by setting a minimum performance together with sufficient means to steer on performance, these risks can be dealt with. A mutual beneficial solution for both parties and a potential basis for a long and healthy relationship between them.

Service Level Agreement

The final point which needs to be addressed in the framework is that within the contract all the above mentioned points need to be firmly represented in the contract with the supplier. Therefore, a Service

Level Agreement (SLA) part needs to be part of the contract in which all these kinds of measures and agreements are put forth. In order to make sure that the SLA covers the needs completely, the points provided in Conditions for success for Product-Service Systems5.3.2 are followed.