In 2021, businesses and industries are confronted with an unprecedented rate of change. With digitalisation and the changes that come with Industry 4.0, a host of new technologies are popping up that can improve productivity, sustainability and efficiency.
EaaS
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Along with these technological changes, customers are becoming more environmentally conscious and consumer savvy than ever before with increasing demands for a higher quality service at more competitive prices.
Yesterday’s solutions are not cutting it anymore and for many businesses of all sizes, amidst this rapidly evolving new paradigm, finding the right way to implement these new digital business models can be daunting and is still considered to be somewhat risky.
Risk is, of course, a two-way street, and businesses that embrace new models of innovation early on often find themselves at an advantage when compared with their more risk-averse competitors.
Utilising the myriad opportunities that the Industrial Internet of Things (IIoT) presents can deliver significant growth to industries across all sectors. IoT brings with it opportunities for great improvements on uptime for customers, as well as reducing the cost of sometimes expensive maintenance and repairs by catching problems early on.
The problem that many companies, particularly SMEs, find themselves faced with is raising the necessary investment to make the much-needed changes, if they are to thrive going forward. All this is compounded by it coming at a time when almost every other company is looking to do the same thing, and the global economy is still reeling from the effects of the pandemic.
One increasingly popular solution is the Equipment-as-a-Service (EaaS) model. EaaS offers manufacturers the ability to streamline business operations more efficiently and remotely, whilst offering flexible payment options and lowering overall cost burdens.
What is Equipment-as-a-Service?
Cloud computing gave birth to the concept of software-as-a-service – offering users access to software for a subscription fee. Here, the companies providing the software take care of issues such as cybersecurity, upgrades and maintenance. The concept has grown exponentially, now covering a range of IT and other areas. One of the best-known examples being the way Netflix offers video services in return for a monthly fee.
EaaS broadens out the “as-a-service” subscription model to fit a broader range of industries, and acts as a win-win option for many companies.
The term “Equipment-as-a-Service” largely describes the process in which production systems, machines or equipment are not purchased, but are provided by a third-party company for a certain period and in exchange for a type of leasing fee. An important component of this model is usually that responsibility for maintenance, service, repairs and replacement equipment remains with the EaaS provider allowing companies to fully concentrate on their own main business.
The EaaS model changes traditional business models in high investment sectors. Instead of procuring highly complex machines at great expense, they can be leased for a fixed period or paid for on a usage-only basis. This offers security in financial planning. Outgoings for fixed assets, such as production systems, machines and equipment, are no longer needed in this model, or at least can be reduced significantly. Once purchased, these systems become part of your company assets and they steadily lose their value as they are used.
Instead of high capital expenditure (CAPEX), medium- or long-term subscription contracts are concluded. These now come under operating expenditure (OPEX). This reduces business risks, improves cash flow and increases productivity due to more reliable systems that are maintained regularly and, when needed, are repaired immediately by the service provider.
Life-cycle management is an important component of this model, as the connected equipment must be maintained regularly. The service, however, is no longer limited just to the maintenance and repair of equipment, but also includes software updates with extended functions that allow your connected equipment to support all the departments of a company with relevant data. Implementing an EaaS model allows the latest hardware and software to be procured and high-quality production results to be attained.
With a subscription model, the greatest advantage for companies is to be found in the low operating costs. Because maintenance and service are covered completely by the EaaS model, operation becomes more efficient in comparison with conventional operating models such as procurement, installation, testing, validation and maintenance of the assets.
Benefits of EaaS
Subscription-based models, common in the software industry, are now being introduced in the heavy equipment industry. Shifting from the limitations of the capital expenditure model (CAPEX) to the flexible operating expenditure model (OPEX), manufacturers can provide service and attract a broader customer base.
There is no substantial upfront investment in equipment, and the model allows for greater flexibility for the end customer. Thus, industrial businesses can ensure better outcomes for their end customers, capture more of the lifetime value chain through value-added services, and create a stable recurring revenue base.
By moving from selling products to selling performance through the EaaS model, industrial companies not only build digital capabilities but also become an integral part of their customers’ processes.
However, a digital strategy is not something every company can easily enact. EaaS can help make IIoT and Industry 4.0 work for companies of all sizes.
EaaS
A rapidly growing digital transition solution
EaaS services allow companies to face the changes and challenges brought about by Industry 4.0 and the Industrial Internet of Things, as well as letting them harness the myriad opportunities created by the digital transition in a risk-free way.
The EaaS model improves efficiency and productivity, bringing better quality products and therefore increased customer satisfaction, ultimately serving as an opportunity for growth. Put succinctly, in the words of a recent white paper published by Berlin-based IIoT specialists relayr, the model allows empowers “manufacturers, operators, and service companies for industrial equipment to implement fully interoperable IIoT solutions guaranteed to achieve their target business outcomes”.
To learn more about the EaaS model, the full white paper can be read here.
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