Chapter 2 Making Business Cases for Health Management—Return on Investment

Following the best seller, Integrated Vehicle Health Management: Perspectives on an Emerging Field, the new title Integrated Vehicle Health Management: The Business Case Theory and Practice takes the subject to the next level. This time it addresses the commercial justification for the adoption of a new modus operandi in asset health management, and its impact on business strategy and servitization of technology. Edited by Dr. Ian Jennions, Director of the IVHM Center at Cranfield University in the U.K., the book tackles the most important questions on the transformation of business from selling a product, and deriving future income from spare part sales, to selling a service in which income is received in return for effective maintenance of the asset. The resulting service business requires a much deeper understanding of how the product is used and should be maintained, thus providing the rationale for Integrated Vehicle Health Management- IVHM. Chapter highlights include: -How to calculate the return on investment of an IVHM system -How real options can be used for decision making -How the availability of prognostic information affects maintenance -The business potential of structural health monitoring in aeronautics Integrated Vehicle Health Management: The Business Case Theory and Practice includes interviews with manufacturers and suppliers on how they are marketing one-of-a-kind services, and opening up new and sustainable revenue streams. Case studies are also introduced to demonstrate the real value of condition-based maintenance, the advantage of cost avoidance and risk mitigation for high-value assets. The objective is to provide the tools and techniques for constructing a business case while also providing some of the context in which these variables are framed. Directed at industry professionals as well as researchers and students, Integrated Vehicle Health Management: The Business Case Theory and Practice fills an important gap in this emerging body of knowledge which unites the technical and the business aspects of a paradigm shift.