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How Equipment-as-a-Service Maintains Business Continuity

July 2, 2020
Expanding competition, demands for flexibility and customization, cost reductions and shorter delivery times, plus changing regulatory requirements, make the case for EaaS in manufacturing.

"Business" and "change" are synonymous now, especially in manufacturing, where today companies are faced with more competition (even from non-traditional manufacturing businesses), increased demand for flexibility and customization (not to mention reduced costs and shorter timeframes), plus ever-changing regulatory requirements.

We can plan for some changes in advance. For instance, maybe there's a known issue with a supplier, and you're able to switch lines to avoid huge losses. Other disruptions are more volatile. None of us could have anticipated the current crisis. While the future still feels uncertain, we're discovering new ways to help enterprises cope with drastic and unplanned changes.

Servitization improves business flexibility — For many industrial enterprises, equipment-as-a-service (EaaS) is a critical factor to business stability and efficiency. Because of this, we're likely to see more companies switch to an EaaS model in the future.

EaaS, also dubbed servitization, is essentially a subscription. With EaaS, instead of an expensive one-time sale, customers make ongoing payments for their actual usage of assets.

There are various EaaS scenarios, including unlimited subscriptions and outcome-based models, where customers are charged on the value delivered.

On the other hand, freemium structures offer essential services for free and advanced or full features for a premium.

The best servitization model for your company depends on your business relationships and offerings. Yet, no matter the contract you decide on, all EaaS models have similar advantages that can help sustain your business during fluctuations or uncertainty.

EaaS puts the responsibility for any updates and maintenance on the asset provider. This arrangement may sound contradictory. However, with servitization, operating costs are actually lowered for customers, and the revenue potential doubles for equipment manufacturers.

You can also build trusting partnerships with your customers through EaaS, aligning the interests of manufacturers, asset operators, and servicers. Other benefits include:
  Enhanced prediction capabilities for revenue projections, as well as maintenance needs or faults before they occur
  The ability to adapt to customer needs for better lifecycle management
  Minimized business risks by providing more straightforward pricing and flexible contracts

Does this sound too good to be true? It's not. EaaS can benefit any company. But, while other industries, like software and streaming services (think Netflix) have excelled with subscription-based models, being a pioneer in your vertical can feel daunting.

From my experience, regardless of the size of your business, a few best practices always apply:

Start with your desired business outcomes. Undergoing a business transformation of any nature requires a rock-solid strategy. Before rolling out contracts or purchasing any technology needed to implement EaaS, ensure leaders from every division in your company are represented, aligned, and onboard with your new direction before moving ahead.

Assess your customer relationships. Pinpoint a handful of customers primed for a pay-per-use arrangement. Use those customers as a baseline to calculate price points, contract terms, and establish criteria that would result in a withdrawal from the contract.

Slow down before you speed up. This is a motto I use often with customers. Remember to take a step back and assess all of the potential risks that can arise from undergoing a business transformation. From having the right resources in place to any investment you might need for technology, ensure you're just as smart about the risks as you are about the benefits EaaS can bring. 

While the current global crisis is an extreme situation, and will dramatically change how manufacturers operate, other seemingly lesser challenges can negatively affect business outcomes. Ensuring business continuity through the unplanned changes -- large and small -- can make an incredible difference in operations. The idea is preparedness.

Guneet Bedi is the chief revenue officer and GM – Americas at relayr, overseeing the company's sales, business development and revenue generation efforts. relayr supplies enterprise middleware and IoT solutions for industrial organizations. Contact him at [email protected], or follow him at

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