In the last decade, software companies have blazed a new trail for “as-a-Service” offerings. Selling software as perpetual license has faded out of fashion. Instead, companies such as Adobe or Amazon are providing Software-as-a-Service (SaaS) or Infrastructure-as-a-Service (IaaS). Success proves them right, as these vendors enjoy higher customer retention and recurring revenue. Conversely, customers benefit from the continuous deployment of new functions.
But what about manufacturing companies? Especially in Business-to-Business, margins on product sales have become razor-thin. Thanks to recent advancements in digital technology and data analytics, a new breed of services has appeared. However, manufacturers face difficulties in monetizing these new data-based, smart services. One major reason is that customers often underestimate the value of these smart services, such that customers’ willingness to pay is low.
Can “Everything-as-a-Service” (XaaS) be a solution? For manufacturing companies, this equals to providing Industrial Goods as-a-Service. Customers can use these goods or simply benefit from their outcome without having to own them. Hence, customers can flexibly adapt service consumption to their needs. XaaS providers, in turn, remain responsible for maintaining the industrial goods operational. Thus, in addition to the service fees, every Franc or Euro saved by using remote monitoring or predictive maintenance goes directly into the pockets of the manufacturers offering XaaS.
However, the path towards XaaS is rocky. It is not only about implementing a new business model, with new pricing approaches and customer relationships that are closer than ever. Instead, companies considering the move towards XaaS need to reflect their current strategy first. Operating traditional and as-a-Service business models in parallel can lead to serious cannibalization. In addition, new operational processes need to be implemented, organizational structure and roles to be reconsidered. Overall, transitioning to XaaS requires a deep organizational transformation.
Our benchmarking “Everything-as-a-Service? Learning from Software and Manufacturing Companies” explores this topic systematically. The benchmarking’s objective is to identify “Successful Practice” companies that have successfully introduced XaaS offerings and managed the organizational transformation.
Our White Paper "Everything as a service? - Revealing Challenges for Software & Manufacturing Companies" targets practicioners intrigued by Everything-as-a-Service (XaaS) offerings. We address some of the opportunities and challenges faced by companies turning towards XaaS by describing real cases from the software and manufacturing industry. We define "Industrial Goods-as-a-Service" (IGaaS) and introduce the St.Gallen IGaaS Management Model for managerial guidance.
If you are interested in the whitepaper, do not hesitate to contact us!