Criteria for Successful Equipment-as-a-Service Models: A Manufacturer's Guide

Eligibility Criteria for Equipment-as-a-Service | Criteria for Success

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Over the past few years, companies across various sectors have developed a wide range of Subscription, Pay-per-Use and Equipment-as-a-Service business models to deliver more value to customers by selling equipment usage instead of ownership.

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In these models, a company's offerings - such as hardware, software or services - are not sold as one-off products but as ongoing solutions that can be charged to customers in a recurring way. Pricing can be either subscription-, usage-, output-, or performance-based (or a mix of it).

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Today, we're focusing on a critical aspect: the equipment criteria that make EaaS models particularly compelling for your industry. When it comes to the successful implementation of EaaS models, certain equipment criteria play a vital role. Here are key equipment factors that make EaaS models a perfect fit:

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I. High initial cost

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EaaS models shine when it comes to equipment with a substantial upfront price tag. Instead of investing a significant amount upfront, customers can embrace EaaS and pay for the equipment's usage over time. This approach removes the barriers of hefty upfront investments, making expensive equipment more accessible.

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II. Equipment-connectivity capabilities (digitalisation)

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EaaS models can only work if the equipment is at least partly connected/digitised, i.e. providers must be able to remotely monitor the health and usage of their equipment. This capability enables proactive maintenance, optimised performance, seamless operations, and accurate usage-based billing.

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III. Rapid technological advancements

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If your equipment experiences frequent technological advancements, EaaS models become invaluable. Industries like medical devices or information technology evolve at lightning speed, rendering equipment outdated sooner than we expect. With EaaS, businesses can effortlessly stay up to date with the latest technology without the burden of constantly purchasing new equipment. In the manufacturing industry, most technological advances come from the software side of things, not hardware.

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IV. Maintenance and support requirements

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Equipment that requires regular maintenance, servicing, or technical support can benefit greatly from EaaS models. In an EaaS arrangement, the responsibility for maintenance, repairs, and updates often lies with the service provider (in most cases the manufacturer). This relieves customers of the financial and operational burden of managing equipment maintenance, ensuring optimal performance.

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V. Scalability and flexibility

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EaaS models offer tremendous advantages for customers that require equipment flexibility and scalability. If the demand for equipment varies over time, EaaS allows customers to adjust their subscription or usage levels accordingly. This flexibility ensures efficient resource allocation and cost optimisation, adapting to your evolving needs.

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VI. Specialised or niche equipment

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EaaS models are a perfect match for specialised or niche equipment that may have limited usage or specific time frames of need. Rather than investing in equipment that might sit idle for long periods, customers can access the required equipment through an EaaS model precisely when it's needed, avoiding idle assets and optimising resource utilisation.

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VIII. Equipment with variable utilisation

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For equipment with fluctuating utilisation levels, EaaS models offer acost-effective solution. Instead of owning equipment that might be underutilised during certain periods, customers can pay based on actual usage with an EaaS subscription. This approach ensures that costs align with the equipment's utilisation levels, optimising your expenditure.

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It's important to note that the suitability of EaaS models may depend on various factors, including your specific industry, equipment type, and individual business and customer needs. That's where P2S Management Consulting - Subscription and As-a-Service Business Model Transformations comes in. To start, we're here to guide you in assessing if there is a fit for an EaaS model for your company.

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About P2S Management Consulting (www.p2sconsulting.com):

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P2S Management Consulting is an innovation consultancy specialised in helping companies develop their own Subscription, Pay-per-Use and As-a-Service business models.

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We first assess if these models show a promising opportunity for your company. If so, we take your company on an innovation journey and conceptualise, build and launch the model together with you.

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Our expertise is based on best practices and implementations from dozens of successful models in various industries.