Purpose The purpose of this paper is to identify the financial potential of new service businesses in the context of a global machinery manufacturer. The objective is to examine the supportive role of management accounting (MA) and control in service business development, which has not been empirically examined previously. Design/methodology/approach The paper takes advantage of an interventionist case study at a global machinery manufacturer and is empirically based on a comprehensive examination of the service business potential in the selected product category in different market areas. The researchers were actively involved in the accounting development activities underlying this paper. Findings The results suggest that the development of a global service business is necessary to build on market area characteristics. An analysis should combine financial information and equipment fleet information across product lines and organizational units. Research limitations/implications MA and control practices tend to require significant development to actually support the process of identifying and capturing the service business potentials. As the findings are limited to one case environment, further studies should address the longitudinal evolution of MA and control, and the choice and utilization of different performance measures, in similar contexts. Practical implications The paper provides managerial insights on how to utilize MA information and proposes ideas for performance indicators. Originality/value The process examined in this paper responds to the need for tools and techniques supporting service business development. MA and control could provide a comprehensive understanding of the dynamics of service business profitability potential and support in identifying and prioritizing the possible avenues of realizing such potential.

This study examines how original equipment manufacturers (OEMs) can segment their product-oriented services customers with the help of a recency, frequency, and monetary value (RFM) analysis of service consumption. The study is an interventionist case study that uses two large OEMs as case companies, both seeking profitable growth in the area of services. The originality of the paper is threefold. First, the research extends the RFM analysis using four product-support-service-specific variables, and it outlines the similarities and differences between the industrial service and consumer business contexts when using the RFM analysis. Second, by applying and modifying the RFM model to better suit the product-support-service context, the study contributes to the literature on the governance of product-oriented services in manufacturing. Third, the paper contributes to the literature on management accounting supporting service business development, by introducing a method that can use installed base and customer information to measure, analyze and govern the business potential of an industrial machinery "fleet". In all, the paper is particularly helpful for service management and accounting academics and practitioners who wish to understand product-oriented service governance in environments in which there is a vast installed base of products at the customers, with remarkable potential for extending service business.

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PurposeThe purpose of this paper is to discuss life cycle cost management and highlight the practical challenges related to collecting adequate data and practicing long‐term cost management in an uncertain environment.Design/methodology/approachThe paper reports a case study conducted in the Finnish Defence Forces. As part of the case study, a life cycle cost model for a case product was developed.FindingsActivity‐based life cycle cost modeling can provide relevant information for varying product management needs at different stages in the life of a product. Quantification of uncertainty is one of the elements in the modeling that can improve the feasibility of LCC both for cost estimation and tracking purposes.Originality/valueOnly a few empirical studies on life cycle costing have been reported which focus on the defence sector. The paper contributes to our understanding of how LCC can be used in a continuous manner and depicts how LCC can produce a sharpened cost image of a particular product.