The expansion of customer-centric business models is becoming a highly immersive factor in the success of product-based companies, boosting their revenue growth and profitability. OEMs can explore ample opportunities with advancements in digital technologies such as IoT and data analytics coupled with AI/ML-based models. They can create more value and achieve a better competitive edge with their products and added services to it with the right business transformation approach.  

Servitization is a transformative approach integrating services with products to create comprehensive solutions. Equipment-as-a-Service (EaaS) is a key enabler of servitization in the industrial sector. By shifting from a product-centric model to a custom-centric model, the EaaS strategy for enabling servitization can help OEMs reach out to the end-users directly, fulfilling the customer expectations with the help of valuable usage data acquired.

In this article, let’s explore the concept of servitization, the emergence of EaaS, and how OEMs can effectively implement and benefit from this model.

What is Servitization?  

Servitization in the OEM Landscape refers to transforming Original Equipment Manufacturers (OEMs) from solely product-focused businesses to service-oriented enterprises. This involves integrating services with traditional product offerings, such as maintenance, support, and performance optimization. By adopting servitization, OEMs enhance customer value, build stronger relationships, and create new revenue streams. It leverages Operational Technology (OT) and IIoT to offer predictive and preventive maintenance as tailored solutions. The benefits of servitization include improved customer satisfaction, differentiated market positioning, and consistent revenue. Servitization enables OEMs to meet evolving market demands, providing comprehensive solutions rather than just physical products, thereby fostering long-term business growth and customer service excellence.  

EaaS: Equipment as a Service  

Equipment-as-a-Service (EaaS) is a business model in which OEMs provide equipment on a subscription basis. This model offers OEMs recurring revenue and allows their customers to access advanced machinery without the large upfront costs, transforming CapEx into OpEx. EaaS includes maintenance, repairs, and upgrades, ensuring equipment remains optimal with reduced downtime.  

To enable EaaS, OEMs need to leverage an industrial IoT-led business model transition, where device/sensor data is converted into valuable equipment usage metrics, allowing them to establish the subscription system. OEMs can establish customer service excellence and product differentiation and take complete advantage of consumer usage data and behavior. EaaS transforms traditional sales into a service-oriented relationship, aligning OEMs with advanced technological disruptions.  

Why EaaS and the Industry Perspective  

The industrial sector is increasingly recognizing the benefits of EaaS. Here’s why:  

• Cost Efficiency: Customers can avoid the high upfront costs associated with purchasing equipment and instead spread payments over time.  

• Operational Flexibility: EaaS allows businesses to scale their operations more easily, as they can adjust their usage based on demand without being tied to long-term investments.  

• Access to Latest Technology: EaaS ensures that customers enjoy the latest technology and optimal performance through continuous maintenance and periodic updates.

• Focus on Core Competencies: OEMs can concentrate on their core needs and workflow by outsourcing equipment management, enriching overall productivity.

Different Equipment-as-a-Service (EaaS) Models

Why Are OEMs Now Aggressively Adopting EaaS?  

OEMs are increasingly adopting EaaS for several reasons:  

• Steady Revenue Streams: EaaS transforms one-time sales into recurring revenue, providing more predictable cash flows.  

• Enhanced Customer Service Excellence: Offering comprehensive solutions fosters deeper customer relationships to increase loyalty.  

• Market Differentiation: EaaS sets OEMs apart from competitors who only offer traditional sales models.  

• Data Insights: Continuous monitoring and maintenance services provide valuable data that can be used to improve products and services.

How Ready is Your Organization for EaaS Adoption?

We have developed a readiness assessment to help your business evaluate its preparation for Equipment-as-a-Service (EaaS) and identify areas for improvement:  

1. Determine Readiness Dimensions: Assess the critical dimensions and sub-dimensions for your business based on the four pillars of ITIL 4®: Process, People, Organization, Technology and Data, and Partners.  

2. Measure Current State: Use our maturity model to evaluate your organization’s current state in each sub-dimension.

• Level 0 -> Outsider
• Level 1 -> Beginner
• Level 2 -> Intermediate
• Level 3 -> Expert
• Level 4 -> Top Performer

3. Assess Maturity Levels:  

• Identify Key Personas: Include executives, representatives from various functions, customers, and vendors.
• Conduct Interviews: Gather insights from key personas.
• Administer Surveys: Use questionnaires to assess readiness in each dimension/sub-dimension.

4. Identify Improvement Areas: Highlight focus areas for short-term and long-term strategies.  5. Set Milestones and Plan Implementation: Establish milestones and develop a detailed implementation plan.  

How Can an AEP Approach Help?

Flex83 as an application enablement platform (AEP) provides two essential components: Flex Platform and Flex Core, enabling industrial OEMs to incorporate the vital business transformation.

Flex Platform is an industry-grade application catalyst suite built on top of Flex Core Services that helps OEMs build their custom IIoT application(s) using low-code, pro-code offerings. Data Handler, Backend and Frontend SDKs, Design Libraries, and Components made available through Flex83 help OEMs focus on building the custom business logic of their applications by building a lightweight backend service with minimal lines of code.

Flex Core consolidates 15+ modules, services offering the pro-code APIs for the ease of implementing the custom IIoT applications by an OEM without having the need to design and build the platform layer code allowing to focus on their application’s custom business logic requirements. Here’s the list of services offered in Flex83 Core that helps OEM accelerate in their application development.

This transformation isn’t merely about creating additional revenue streams; it’s about ensuring business continuity, gaining competitive advantage in market share, and effectively navigating technological disruptions for long-term strategy and growth in the evolving industrial landscape.  

Conclusion

Servitization through Equipment as a Service is revolutionizing the industrial sector, offering OEMs and their customers numerous benefits. By adopting EaaS, OEMs can create steady revenue streams, boost customer service excellence, and outperform the competition. With a strategic approach and the right technological support, equipment manufacturers can successfully onboard the required business model transition.