11.1
Further usability
One of the aspect worth discussing in this thesis are other possible usability’s for parts of this Master Thesis. One of the first parts which is well suited for possible other usage is the PSS Pricing Tool. In principle, the tool can be used for any kind of service where Schiphol is able to perform a TCO calculation and an uncertainty assessment. This could be a tool to check whether a price of a service is fair, in the same manner the tool is intended for the PSS.
Another possible usage is in software and IT solutions. Within IT, many products are sold as services to firms such as Schiphol, from Oracle systems to website design. The tool can be used, but gaining the proper inputs much more difficult, because IT and software are very intangible compared to an ordinary asset. This makes it difficult to assess the uncertainties and when TCO is available for a traditional solution, the financials are missing. Therefore, it may be hard to use it and more research is required on how the model can be translated that it fits IT-as-a-Service. This is however a point which was explicitly mentioned during the presentation and discussion with Business Control of Schiphol.
11.2
Limitations
It is always good to take into account the limitations the answer to the research question may introduce. Within this Master Thesis, a framework and a PSS Pricing Tool are developed. It is important to check what limitations there are, in order to take them into account.
The first limitation has to do with Product-Service Systems. It is good to know that PSS are not the ultimate solution. Not for introducing complete CE within Schiphol or ASM, not for all new assets, or to become an effective Asset Management organisation. It is one of the tools to help in the transition process, but common sense and judgement should always prevail in decision making.
The second limitation has to do with the complexity which is introduced in using PSS. Due to the different nature of PSS, the cooperation with suppliers in delivering performance and the monitoring needed for proper function, a usual simple asset might become more complex than necessary. The service layer on top of the asset is an extra investment.
The third limitation is a model risk in the PSS Pricing Tool. Uncertainties are scored and are assigned to different cost drivers. These cost drivers are thus sort of correlated with uncertainties. This could induce an unexpected correlation between cost drivers. This effect has not been quantified or examined, but it is present and therefore good to mention.
11.3
Discussion & Reflection
Discussion
There are a few point worth mentioning as a discussion point given this Master Thesis and the direction it is written. As with any research, there are point which remain unclear and open for interpretation. One of the points has to do with the fact that Schiphol has opted to reduce Operational Expenditure (OPEX). Usually this translates into investing more into Capital Expenditure (CAPEX), which can be spread out more easily over time. PSS is an OPEX solution, because one does not invest in assets, but pays a fee for a service. While this support Schiphol’s wish to become more an asset management organisation, due to the fact that you let the firms who are specialised in their business actually execute it, it does not stroke with the wishes to also reduce OPEX. This is an issue which will pop up more often, if PSSs are introduced more at Schiphol and the management of ASM needs to think if they can agree
with it or not. This problem is further complicated because one of the uses of a PSS, financially, could be to be able to not let the asset be added to the RAB, and therefore the tariffs. By paying a service fee, Schiphol is able to keep the shock of an asset added to the RAB to a minimum. Not adding to the RAB is a non-CAPEX solution.
The second point worth discussion is that the model is based on the fact that the financials come from the already used TCO model for a traditional asset purchase. One could think of a hypothetical scenario where Schiphol no longer has any experience with the purchase of a specific asset, because it all acquired it as a service. This would render the pricing tool useless. Hopefully, Schiphol has by that time enough experience in the acquiring of PSS and has develop another set of tools to judge the price. The last point has to do with one of the barriers as posed in paragraph 9.2. The new accounting rules under IFRS 16 Leases are going to be much stricter on lease accounting. Every single lease needs to be on the balance sheet. This has a potential big effect for Schiphol, compared to other firms, not because one can see how much is leased, but more because Schiphol is obliged by law to charge airlines for the asset using a controlled WACC. This could introduce a double charging mechanism which can be considered unwanted. Airlines are always tough in negotiations for airline fees and they know better than anyone else that the new lease rulings are coming (airlines are one of best well known users of leases with airplanes). In order to avoid discussion on this point during the negotiations, it is best for Schiphol to already have a plan on how to tackle this issue. Not only for PSS, but for all leases which are currently not on the balance sheet.
Reflection
During my research at Schiphol, I was granted the opportunity to have a peek inside on of the most complex and biggest operations in the Netherlands. In my opinion the complexity and 24 hour operations with complete dependency of the customer (the air traveller, 60 million of them in 2016) can only be compared to a big hospital. The operation never stops and the effect of any work on the operation must be kept to a minimum, also due to the scarcity of capacity. On the other hand, the need to invest and continually improve the operation is very strong. This puts pressure on project to deliver the best result, with the least amount of spending, while not disturbing operation and with continuing shifting demands on what is considered the best for the customers and clients. This combined with the fact that cost and revenue are not directly related within ASM provided me with a very interesting picture. All around me the call for more commercial thinking was heard more than once, but now that I have experienced how thorough decision making needs to be, combined with the fact that ASM is not able to directly appoint revenue to a specific project, I can understand why the process is slow and appears to stay slow, despite the efforts. Plans keep on shifting and changing and important and powerful stakeholders (airlines, LVNL (air traffic control NL), government) are constantly changing their point-of-view and position. I did my best to come up with a solution which would fit within the modus operandi of ASM. I listened well to what was needed and translated it into, hopefully, an easy to use tool which allows for informed decision making. If my pricing tool and the matrix would be used in checking if a PSS or lease construction would be a suitable alternative, I am more than happy. Schiphol thought me that a big and complex organisation is hugely interesting and slow at the same time and proved to me once again that I find such a working field very intriguing.
11.4
Future Research
The most important future research point is that it needs to be clear for Schiphol what the potential impact is of the new IFRS ruling on leases. This could undermine the financial benefits of not only PSS, but on leasing all together. A graduation project on itself, which is the most important potential research which I could identify.