Consulted on assorted matters by the Commission:
In a bid to adapt to the evolving market landscape, providers are exploring the 'Product as a Service' (PaaS) offers as an alternative to the traditional business model. This new paradigm in manufacturing is gaining traction, with companies from various sectors embracing the shift from ownership to service models.
One such example is PTC, which has adopted the PaaS approach, although further details about their strategy are not yet available. Other companies, such as those involved in sharing economy practices, startups like Traceless with eco-friendly products, and German startups like NEURA Robotics, Leaping AI, qru, and Paul's Job leveraging AI and digital services, have already implemented this model.
Under the PaaS model, customers rent products from providers for a fee based on usage (Pay-per-Use). This shift from one-time sales to recurring revenues benefits the provider, offering more predictable income. For the customer, capital costs become operating costs, preserving liquidity by turning one-time expenses into regular operating costs.
The model also involves shared success and risk between customer and provider. The provider's readiness to switch the established business model is a prerequisite, which may temporarily result in lower revenues. However, the increased customer-provider relationships through recurring transactions can offset this, leading to a more intimate business relationship.
The market readiness for the PaaS business model is at a level of 3 to 4, indicating that the required infrastructures and technologies already exist, first offers have been available for some time, and industry-specific digital architectures are currently being built. Providers are considering strategies for switching the business model, including the use of IoT platforms to ensure scalability.
An essential aspect of the PaaS model is the product's connectivity at the customer's site. The product must be connected to track usage, bill accordingly, and enable operational tasks, such as via an IoT platform. The customer's willingness to have their usage behavior monitored by the provider is another prerequisite.
The continuation of the classic business model remains an alternative, but the PaaS approach offers a more sustainable, customer-centric, and cost-effective solution for both parties. As more companies embrace this model, we can expect to see a significant shift in the manufacturing industry.
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