Product as a Service—a potential game-changing factor for equipment manufacturers – News Couple
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Product as a Service—a potential game-changing factor for equipment manufacturers


In today’s rapidly changing technology landscape, with turbulence evolving as the new constant, the need for companies to stand out from the competition is not only prominent but also more than ever. To achieve this market differentiation, you may need to continually devise and initiate various new measures, including consideration of several revenue models, Implement inspirational techniques, and spread a novel Strategies It can add value to your products and help you gain customer loyalty.

Let’s consider the case of manufacturing companies that have traditionally followed a product sales business model, where the business cycle usually ends with selling products to customers. With less digitization of overall production and sales cycles, and technologies such as the Internet of Things and technologies that make equipment easier to trace, manufacturers are now moving from the traditional model to the service-based model, also known as Product as a Service (PaaS).

PaaS – What is it and why is it important to equipment manufacturers?

PaaS is a business model that helps manufacturers provide not only products, but also rental support services, as part of long or short-term subscription contracts. In this model, existing customers either rent or lease the equipment rather than purchase it. They can get the products directly from the manufacturers, use them for as long as they need them, and once their requirements are met, they can return them to the manufacturers.

A win-win situation for manufacturers and their customers

The PaaS model is rapidly gaining popularity. Many of the big names in the manufacturing industry, such as Xerox, HP, Rolls-Royce and Philips, have long recognized its importance and reaped its benefits for a long time now.

Philips, for example, offers Lighting as a Service to their clients. Customers pay only for the use of the lamps, while Philips is responsible for all after-sales services, repairs and replacements. It’s a win-win situation, as customers don’t need to worry about the hassles of repair and maintenance, while Philips still has to own their assets.

Here’s what a typical PaaS lifecycle looks like:

How can equipment manufacturers benefit from the PaaS model?

Instead of focusing on one-time sales, by switching to a PaaS model, equipment manufacturers can develop innovative strategies to create multiple revenue streams through their services. For example, let’s look at how German power tool manufacturer Hilti is using the PaaS model to its advantage. Hilti provides fleet management services through a Usage based model, which covers usage, service and repair costs for a fixed monthly payment. It helps the client select the right mix of tools to reduce redundancy. They also offer upgrades, as all tools are replaced with newer models, helping customers avoid costly downtime. Through this move, Hilti was able to win the hearts and minds of customers, increase revenue, and achieve differentiation in a highly competitive global market.

The PaaS model can help you:

  • Increase profitability: PaaS helps ensure regular and recurring sales revenue. Additional services, such as repairs, maintenance, upgrades, and replacements that are provided under this model, help manufacturers retain customers and enhance profitability.
  • Accelerate market penetration: PaaS is a low capital spending model, which makes it more attractive to clients. Additionally, using technologies such as big data and the Internet of Things, manufacturers can make key business decisions and develop strategies to penetrate new markets.
  • Overall business risk reduction: The service platform builds long-term relationships with customers by providing the right product and quality services. It also provides a sustainable revenue stream, allowing manufacturers to better manage their finances.
  • Sustainability push: Once customers return equipment to manufacturers after use, it can be recycled and delivered to another user.

What steps should you take to be PaaS ready?

Aside from planning and strategizing, here are some critical steps you need to take before implementing a PaaS model:

  • Make sure your application scene is ready to adopt a new model.
  • Have your IoT equipment ready so you can read and translate data and use payment models, such as pay-per-use and hourly power.
  • Train your sales team to start offering this model, including performance-based contracts.
  • Put in place a back-end ERP system that can handle flexible contract accounting.
  • Build an effective customer portal to provide the latest contract and performance details to customers.

What does the future hold for PaaS?

To be successful or ahead of the competition, you need to develop strategies that focus beyond selling your products. You need to work out how to retain your customers and gain a competitive advantage in the market. As the concept of “equipment sharing” benefits all parties involved, PaaS has become a crucial alternative for equipment manufacturers to establish their business in the future in a rapidly evolving technology landscape.

How can we at To-Scale Help with PaaS?

Adopting a new business model, such as PaaS, requires specific technical understanding and significant knowledge of the current business landscape. With our deep domain expertise and 16 years of experience developing solutions for companies in the equipment leasing industry, we at To-Ziya are ready to help you embrace the PaaS model and grow your business and transform it to new heights.

Our business applications are specifically designed to meet the requirements of equipment manufacturers. They can help you work effectively in your PaaS model and lay the foundation for you to create or enhance the relationship with potential and existing clients.

To learn more about the PaaS model and how it can benefit equipment manufacturers, talk to our expert.

The post Product as a Service – a potential game-changer for equipment manufacturers first appeared on the ERP Software Blog.



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