Are you ready for the next service trend?
When was the last time you actually purchased software outright and had it completely installed on your own device, complete with all the data it requires to operate? The answer for most, is probably that you can’t remember.
We’ve all become so used to receiving Software as a Service over recent years that it’s quickly become the norm for almost everything. The convenience of having software hosted on another computer and transferring data over a network to the SaaS provider has become so effective that the idea is manifesting itself in all walks of life. Today, we have Software as a Service, Infrastructure as a Service, Platform as a Service, Desktop as a Service, Mobile Backend as a Service – almost our entire technology stack has been servitized so much so that many businesses no longer have to invest in costly servers and hardware.
Other services in life are also being delivered through subscriptions, licences or on demand – television, music, even taxi hailing and ride sharing. The next natural trend to follow this sequence is likely to become the most impactful yet – Product as a Service. This is not a new concept in manufacturing, but it is one that has yet to take hold in the same way that we have embraced technology delivered as services that we rent, licence and stream.
Product as a Service explains the sale of services and outcomes a product can provide, rather than selling the actual product itself. For example, precision engineering company Alphadrive Engineering offers Product as a Service by adopting a circular economy model into their business, providing the machining, fabrication and repair of components, as well as a complete consultation, design, build, maintenance and repair service for plant and machinery.
When you look beyond products and features and consider the benefits fully and what this really means for your customers, it can open up new ways of thinking about your whole business model.
Just as the advent of cloud computing signalled a major boost for Software as a Service, the development of the Internet of Things is doing the same for Product as a Service. Forward-thinking manufacturers are already utilising Product as a Service strategies to boost the profitability of their products, improve customer retention and engagement, and diversify into new areas of business.
Consumerisation and sustainability
As concepts such as the circular economy increasingly hold greater societal and political gravitas moving forward, the demand for lifecycle services, and Product as a Service, will become even greater.
There are many things in life that you simply cannot predict, but throughout history the changing trends within consumerism have always found their way into the business and corporate world. For decades we have stopped owning mobile phones, instead paying contracts for the data and services these phones provide and being given the actual device either for free or for a nominal amount. It has become a minimum expectation that the phone provider will responsibility dispose of our old phone as part of their service when we renew our contract. In return, we are sent a new phone and our contract allowance is refreshed.
The same is true of several other products: streaming music online instead of purchasing CDs, playing games online rather than purchasing them outright. Now, with the automotive industry ready to take the leap into the world of Mobility as a Service, the time for products alone has long passed us by. The increasing momentum towards Product as a Service will enable manufacturing companies to boost profits, foster innovation and futureproof their business models.
Furthermore, this is not a trend just for larger companies. SMEs are often more agile and flexible and perhaps more able to adapt their thinking as well as transform their business models to incorporate servitization. The Advanced Services Group SME Partnership is helping businesses in the Black Country, Birmingham and Solihull to do just that.
The SME Partnership is now recruiting its next cohort of SMEs from Solihull and the Black Country, to take part in 12 hours support, helping to make the transition from making and selling products, to embracing Product as a Service strategies. Places are fully funded through the ERDF. To enquire further, click here.