INTERNATIONAL JOURNAL OF

PROJECT
MANAGEMENT
International Journal of Project Management 23 (2005) 360365
www.elsevier.com/locate/ijproman

Creating value by delivering integrated solutions

a,* b,1 c,2
Tim Brady , Andrew Davies , David M Gann
a
Centre for Research in Innovation Management, Brighton University, The Freeman Centre,
University of Sussex Campus, Falmer, Brighton BN1 9QE, UK
b
SPRU, University of Sussex, The Freeman Centre, University of Sussex, Falmer, Brighton BN1 9QE , UK
c
Innovation Studies Centre, Imperial College London, South Kensington Campus, London SW7 2AZ, UK

Abstract

This paper examines how suppliers of complex capital goods are moving into the provision of integrated solutions unique com-
binations of products and services that address a customers specic business problems. Integrated solutions providers need to
develop or acquire new capabilities as they shift from being product- or service-centric to customer centric. Integrated solutions pro-
jects extend the traditional life-cycle to include pre-bid and post implementation activities requiring innovative approaches to cre-
ating value for suppliers and their customers.
2005 Elsevier Ltd and IPMA. All rights reserved.

Keywords: Capital goods; Integrated solutions; Value; Life-cycle; Innovation

1. Introduction ernments to invite private sector entities to enter into

Recent business literature has shown how some of the
worlds leading rms have been changing their strategic
focus to compete by providing solutions rather than
individual products or services [18]. This trend has par-
ticularly aected the high value, engineering and soft-
ware-intensive capital goods sectors, where rms
design, integrate, and deliver complex products and sys-
tems (CoPS) on a project basis in small batches or as
one-os for business users, operators, service providers
and/or government agencies [9,10].
The trend towards what we call integrated solutions
(IS) can be traced back to the 1980s with the emergence
of BOT (Build-operate-transfer) infrastructure projects.
Limitations on the availability of public funds led gov-
*
Corresponding author. Tel.: +44 1273 877932.
E-mail addresses: t.m.brady@bton.ac.uk (T. Brady), a.c.davies@
sussex.ac.uk (A. Davies), d.gann@imperial.ac.uk (D.M Gann).
1
Tel.: +44 1273 877103.
2
Tel.: +44 207 594 5950.
long-term contractual agreements for the nancing, con-
struction, and/or operation of capital-intensive projects.
Project management literature has examined the risk
associated with such projects [11,12] and covered the role
of governments in infrastructure projects [13]. However,
to date little has been written about the role of the sup-
plier organisations and the implications for them in deliv-
ering such projects. Drawing on research into the
provision of IS by complex capital goods producers, this
paper hopes to begin to ll that gap. Delivering IS to meet
user needs means combining products and systems with
services in order to specify, design, deliver, nance, main-
tain, support and operate a system throughout its life cy-
cle. It involves a dierent type of project which extends
the traditional life cycle backwards into a pre-project
phase and beyond the delivery phase into the operational
phase. CoPS suppliers have to take a new approach to
creating value for themselves and their customer.
This paper is based on a three year research project
funded by the UKs Engineering and Physical Sciences
Research Council (EPSRC) Systems Integration

0263-7863/$30.00 2005 Elsevier Ltd and IPMA. All rights reserved.

doi:10.1016/j.ijproman.2005.01.001
 T. Brady et al. / International Journal of Project Management 23 (2005) 360365
Initiative (Grant No. GR/59403). The project involved
leading international suppliers of CoPS: Alstom in rail-
ways; Ericsson in mobile phone networks; Thales in
ight simulation; WS Atkins in the built environment
and infrastructure; Cable and Wireless in managed tele-
com network services; BDP in architectural services. In
the early stages of the research managers were asked
about their companies products and service oerings
in 1995 and how and why they had moved into the pro-
vision of IS by the next decade. Initial interviews were
followed by case studies during 20012003, examining
how rms were changing their business models, capabil-
ities and organisational structures to deliver IS. Inter-
views were conducted with senior managers in a
division or business unit responsible for IS; with func-
tional managers, cross functional or business process
managers (e.g., engineering, design, production, logis-
tics, marketing, human resources, nance, maintenance,
and operations) responsible for supporting project
implementation and for maintaining, operating and pro-
viding services in the post-implementation phase; and
with bid and project managers responsible for submit-
ting proposals and ensuring projects are delivered within
cost, time and to specication. A total of 92 interviews
were conducted in the UK, Sweden and France. All
interviews involved at least two researchers and one or
more interviewees. Interviews lasted 12 h, and in sev-
eral cases, between 4 and 8 h. The case studies aimed
to be descriptive to improve our understanding of
the problem and to generate new theory by building
on the case study evidence [14].
2. The move towards integrated solutions provision
The trend towards IS can be traced back to the 1980s
with the emergence of BOT infrastructure projects
(power, water supply, transport, telecommunications
and process plants). In BOT projects a consortium is
granted a concession by a commissioning body to -
nance, design, construct and operate a facility/plant
for a specied time (during which it is paid to cover -
nance and operation costs and hopefully make prot
to distribute to the equity participants) after which the
ownership of the assets returns to the commissioning
entity for continued operation [11]. In BOO (build-
own-operate) projects the private sector entity operates
an infrastructure facility in perpetuity. While most
BOT projects have been carried out in developing coun-
tries, government-led market reforms such as privatisa-
tion, de-regulation and liberalisation in sectors such as
railways, telecoms, electricity, and airports during the
1990s extended their use to developed countries. The
use of private nance for public investment projects on
the basis that this will allow public infrastructure to be
built without having to raise taxes, a belief that such
361
programmes deliver better value for money, and the
assumption that giving the private sector responsibility
for the risks of operating and maintaining systems
would result in more cost-eective designs in terms of
operation and maintenance over the whole life cycle, be-
came widespread.
This trend towards provision of IS in public infra-
structure sectors was mirrored by a similar development
in business infrastructure projects in the 1990s when IT
equipment suppliers like IBM and Sun Microsystems re-
sponded to customer pressure to take responsibility for
supplying and installing integrated hardware and soft-
ware systems, and providing support throughout the
product life cycle. Similar moves have occurred in other
sectors with customers increasingly focusing on the pro-
vision of services to nal consumers, and outsourcing
what they consider to be non-core activities such as de-
sign, systems integration, project management, mainte-
nance and aspects of operation to their suppliers
[7,15,16]. The shift to IS provision requires CoPS rms
not only to take over activities previously carried out
by their customers, but also to undertake completely
new service activities such as consultancy and nance.
A further encouragement for suppliers was the attrac-
tion of protable markets - high-cost capital goods tend
to be bought in surges at irregular intervals, making sup-
pliers vulnerable to periods when the volume of work
declines and their revenues and operating margins
shrink. Services provided throughout the product life cy-
cle oer the advantage of continuous revenue streams.
Table 1 shows how rms collaborating in the research
shifted their emphasis from a traditional product or ser-
vice focus in the mid-1990s to IS provision by 2003.
Our research has shown that both service and prod-
uct rms develop new capabilities as they shift to
becoming IS providers. These include:
 Systems integration capabilities: to design and inte-
grate systems composed of internally or externally
developed hardware, software and services,
 Operational service capabilities: to maintain, operate,
upgrade and renovate a product through its opera-
tional life cycle,
 Business consulting capabilities: to provide customers
with advice on how to develop business plans, design
and build a system and maintain and operate it,
 Financing capabilities: to help customers purchase
high-cost products and manage an installed base of
capital assets.
However, this is often a painful process, as they are
torn between preserving their traditional strengths and
developing new ones. Downstream service-based rms
like C&W and WS Atkins already had a strong services
capability but have had to build and expand their
systems integration capability to integrate products
362 T. Brady et al. / International Journal of Project Management 23 (2005) 360365

Table 1
The shift to integrated solutions
Company Traditional product or service focus Integrated Solutions (2003)
(1995)
Alstom Transport Products: Transport solutions (e.g. train availability):
Railways  subsystems (e.g. propulsion, traction,  Systems integrator turnkey solutions for project management, xed
drive, electronic information systems) infrastructure, and nance
 rolling stock  Services for maintenance, renovation, parts replacement & service
 signalling and train control systems products Total Train-Life Management

Ericsson Products: Turnkey solutions to design, build and operate mobile phone networks:
Mobile Communications  mobile handsets  Mobile systems complete supplier, systems integrator and partner
Systems  mobile system  Global Services services and business consulting to support a
 Subsystem products: radio base customers network operations
stations, base station controllers, mobile
switches, operating systems, and
customer databases
Thales Training & Products standalone ight simulators Training solutions (e.g. pay as you train):
Simulation for commercial and military aircraft  Systems integration
Flight Simulation  Training services: networked training; independent training centres
for training services; and, synthetic training environments

WS Atkins
Infrastructure and the
Built Environment
Cable & Wireless Global
Markets
Global Business Telecom
Networks
Engineering consultancy, project
management and technical services for
infrastructure projects
Providing managed network services for
multinational corporations
 Network design
 Supply telecom infrastructure and
applications
 Network management
Integrated solutions for the built environment:
 the design, build, nance and operation of infrastructure across
industrial sectors
Total Solutions for Industry (TS4i) provides one-stop-shop for design,
construction, maintenance and nance
Providing global outsourcing solutions for a multinational
corporations entire telecom and IT needs on a global basis:
 Network design
 Supplies telecom infrastructure and applications
 Network management
 Ownership of the network
 Network operation
 Business process applications
 Service level agreements

BDP Providing integrated design architectural Involvement in identifying pre-project requirements for potential
Architectural and and engineering design of buildings either facilities, such as schools, development of delivery plans and
engineering design directly for a client or to a prime mechanisms including nancial and risk analysis and consortia
services for the built contractor through a design/build building. Joint equity partner in project. Design, build, operate,
environment approach maintain activities once facility has been delivered.

supplied from external manufacturers. Upstream prod-
uct-based rms like Thales, Ericsson and Alstom have
had to overcome enormous inertia and resistance to
the shift to services and solutions. They have built their
reputation on designing and manufacturing superior
products and managing the processes involved in mak-
ing and selling them. Developing service capabilities
and adopting customer-centric thinking is dicult for
such managers especially if it involves accepting that
the best solution for the customer may require incorpo-
rating a competitors product rather than their own.
3. The value of integrated solutions to the customer
In business markets, value is the monetary worth of
the economic/commercial, technical, service and social
benets a customer receives in exchange for what it pays
for a market oering [17]. IS providers add value by pro-
viding combinations of products and services that create
unique benets for each customer. Not only do they
take over responsibility (and risk) for performing activ-
ities previously carried out in-house by their customers,
they develop new ways for components to work together
as an integrated whole to increase the overall value of
the solution for the customer.
Becoming solutions-focused means that providers
have to understand how value is created through the
eyes of the customer. The conventional product-for-
ward orientation towards value creation is reversed
[2]. IS providers begin by thinking about the desired out-
come for the customer and work backwards to the prod-
ucts or services required to meet those needs. This
demands a detailed understanding of the customers
 T. Brady et al. / International Journal of Project Management 23 (2005) 360365
Fig. 1. The integrated solutions life cycle (source: [19]).
business activities as it operates a product through its
life cycle, from initial purchase to de-commissioning.
The change of emphasis towards customer-centric rather
than product-centric thinking has major implications for
the kind of activities that need to take place in the pro-
ject life cycle, particularly in the early stages. These are
shown in Fig. 1.
To meet a customers needs, senior commercial and
bid managers have to enter into high-level pre-bid nego-
tiations with the customer to discuss business problems,
often before an invitation to tender has been issued. As
Morris has shown eective management of the front end
of a project leads to better overall designs and improved
productivity during later phases [18]. Before any bid
process can begin, informal discussions with existing
or potential customers need to take place to begin to
understand their strategic needs and priorities. These
discussions are often about helping a customer enhance
existing business operations but they may also cover
strategic issues such as how to re-shape a business model
or open up new markets. This dialogue takes place at a
senior level and strategic management resources and
high-level consulting capabilities are required. We use
the term strategic engagement for this phase of the pro-
cess. For example, Ericsson has strategic partnerships
with leading mobile phone operators, such as Vodafone.
A value proposition for an IS must be developed.
There is a distinction between a bid and an oer. For po-
tential customers, in a competitive tendering process the
supplier will need to develop a value proposition as a
bid. Ultimately solutions providers want to develop
long-term partnerships with customers which helps
avoid the costly process of competitive bids [16]. For
363
existing customers who have become strategic partners
an oer is made rather than a bid. In either case, a con-
tract has to be made prior to the start of an IS project.
In these initial stages the team producing the pro-
posal needs to be multi-skilled and cross-functional with
representation from commercial management, technical
design, and project management. Rather than selling
from a set menu, the team determines how to tailor
product and service oerings to solve specic business
problems for the customer. The main responsibility for
the proposal team is to ensure that the value created
by the solution in the integration and operational phases
of the project meets or exceeds customers expectations.
Because it is dicult to quantify the value of a solu-
tion, an IS requires a commercial framework based on
co-operation and trust. This allows the proposal team
to develop a creative proposition with the customer
and develop a common understanding of how value will
be measured in terms of pricing and margins, the volume
and mix of products and services, capital costs, and dis-
tribution of risks. The commercial framework denes
the success criteria usually based on service level agree-
ments and reward mechanisms.
It is essential to take into account the lifetime costs of
a solution to assess the value of a contract. The solutions
provider may have to accept up-front costs in return for
a share in the eciency gains the solution generates for
the customer in the longer term via improvements in
operations, new revenues and market share.
Once the contract has been agreed the project can
move to the integration phase where the provider estab-
lishes a project organisation and implements the solu-
tion. This involves traditional project management
364 T. Brady et al. / International Journal of Project Management 23 (2005) 360365
skills and in-depth systems integration capabilities to de-
sign, integrate, verify and test the system before hand-
over to the customer. The traditional triple constraints
about completing the project within budget, on time
and to specication come to the fore, but IS project man-
agers also have to pay attention to an increasingly impor-
tant fourth constraint customer satisfaction [20,21].
In traditional projects, hand-over signals the end of
the project, but solutions projects usually include the
responsibility for the provider to manage, resource, sup-
port and improve the delivery of the solution through
the life of the product or system in use. For example,
Alstom Transports rst IS project was to design, build
and maintain the London Undergrounds Northern
Lines eet of trains for a 20 year period. These opera-
tional capabilities are usually supplied from the sup-
pliers functional line. By taking over responsibility for
operational performance, solution providers can feed
back critical information about in-service problems di-
rectly to the product units to improve the design and
functionality of future products.
4. New skills
In addition to the broad capabilities described above,
rms wishing to become successful IS providers, need to
acquire or develop skills covering the four phases of the
IS life cycle:
 Key account management: knowledge of customers
markets, business processes and their own customers
in particular market segments (e.g., airline industry,
education, health, rail transport). People capable of
becoming embedded within the customers businesses
over a long period of time.
 Risk analysis and management: deployment of new
skills in identifying, evaluating and managing risk,
including real options theory (making NPV and
DCF approaches obsolete). Management of risk reg-
isters and ability to understand long-term risks in
supply streams.
 Financial acumen: new skills in understanding base
case nancial models, whole life costing, capital
expenditure and operational expenditure.
 Legal skills: new capabilities in long-term contracting
framework agreements, concession-building, joint-
venturing, risk mitigation, and intellectual property.
 Information management: skills needed to manage
information over very long timescales and across dif-
ferent vintages of technology.
 Innovation management: ability to assess dynamics
upstream and downstream over long term. This
requires appreciation of incremental innovation to
extract more from assets in-use as well as radical
innovation understanding when to scrap or make
major alterations before concessions are over, includ-
ing ability to spot when new value can be added dur-
ing a facilitys life because of technical change.
 Portfolio management: skills in building teams and
consortia, assembling and managing concession part-
ners, etc.
5. Conclusions
This paper describes a new approach to creating value
from implementation projects in the complex capital
goods sector. Traditional project management is the pro-
cess of planning, organising, directing and controlling
company resources for a short term objective established
to achieve specic goals [22]. In contrast to the generic
project life cycle of four phases concept, denition, exe-
cution, closeout [23] IS delivery projects extend the
timescale of the project backwards into pre-bid or pre-of-
fer stages and forward beyond the handover stage into
the operational life of the system being oered [24].
This profoundly alters the way a business handles its
customer relationships and denes its value adding
activities. IS transform the customer relationship. Sup-
pliers no longer respond passively to specications set
by their customers or assume that customer needs are
set in stone. The emphasis is on a long-term relationship
built on trust. Rather than worrying about information
leaking out to their competitors or being used against
them in future negotiations, the partners share informa-
tion in a more open, consultative, and informal way and
at multiple levels in each organisation. This new rela-
tionship is often formalised through the creation of stra-
tegic partnerships. The two organisations engage in a
close dialogue to develop conceptual solutions to a
problem before the customer has even thought about
its products and service requirements. Responsibility
for the success of the solution is shared; providers and
customers work jointly to plan, implement the solution
and monitor its ongoing performance.
Our research has shown that the shift towards IS has
major implications for rms as they attempt to move
from product- or service-centric business strategies to
customer-centric ones. Firms making the transition to
becoming IS providers nd they need to transform al-
most every aspect of the way they do business from
their business strategies and positions in the value
stream, to their capabilities, organisational structures,
cultures and mindsets. They have to have to grapple with
the question of whether they should preserve or forsake
their traditional strengths and capabilities during this
transition to an advanced IS provider. Our case study re-
search revealed that there is no denitive business model
but that success depends on the ability to be entrepre-
neurial, experimental and open-minded. To make this
 T. Brady et al. / International Journal of Project Management 23 (2005) 360365
transition rms have to be able to learn, change and re-
new their structures continually while at the same time
delivering the solutions their customers demand.
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