Abstract:
This whitepaper provides a thorough exploration of Servitisation and 'as-a-Service' businessmodels, detailing their advantages for manufacturers, customers, and the environment. Itincludes real-world examples, a timely analysis of why the current market conditions are ripefor the development of such models, and outlines P2S Management Consulting’s tailoredapproach to guide companies in conceptualising and developing ‘as-a-Service’ models. It is acomprehensive guide for businesses looking to navigate the shift towards service-basedmodels while contributing positively to the planet and a company’s bottom line.
Introduction:
In 2018, Atlas-Copco, a world-leading provider of sustainable productivity solutions,introduced its Air-as-a-Service model, a paradigm shift in the compressed air industry.Traditionally, customers would invest heavily in air compressors, which come with associatedmaintenance and upgrade costs. With Atlas-Copco's model, customers no longer purchaseair compressors but rather pay for the cubic metres of compressed air they consume. This reduces the upfront capital expenses and shifts the responsibility of maintenance, uptime,and upgrades to Atlas-Copco. The model is eco-friendly too, as Atlas-Copco focuses onenergy-efficient solutions, ensuring that customers consume compressed air sustainably.
This is just one example of a manufacturer that developed an ‘as-a-Service’ offering. Inspiredby other manufacturers and by B2C subscription successes like Netflix and Spotify, manymanufacturers are complementing their sales portfolio by developing their own ‘as-aService’ offerings.
‘as-a-Service’, also known as ‘Servitisation’ or ’XaaS’, (hereafter jointly referred to as ‘‘as-aService’’), are innovative subscription-based business models that bundle equipment,services, and software into a continuous solution. Instead of a single outright CapitalExpenditure (CapEx) purchase, customers engage in a recurring payment model, tailoredaround access, usage, output, or performance.
In this article, we will explore successful ‘as-a-Service’ models such as Rolls-Royce’s 'Jet-Engineas-a-Service', Signify’s ‘Light-as-a-Service’, Engel's 'Injection-moulding-as-a-Service' or Michelin’s ‘Tyres-as-a-Service’ models, and discover how these companies complementedtheir sales portfolio with new ‘as-a-Service’ offerings.
The advantage of this model for customers is that it equips them with state-of-the-art technology without the initial hefty price tag. They will pay a fee which typically coversequipment financing, associated services, and performance guarantees. The essence ofsubscription isn't mere financing; it centres on optimising Overall Equipment Effectiveness(OEE), reducing Total Cost of Ownership (TCO), and working towards a more sustainable wayof doing business.