XaaS: Is The Hype Real for Industrial Manufacturing Companies?

The Buzz 1: XaaS stands for Everything as a Service or Anything as a Service. It's an acronym for providing any products, tools and technologies that businesses may need as a service instead of on premise or with a physical product.” (givainc.com) The Buzz 2: “Whether you view XaaS (everything-as-a-service) as a dream or a nightmare, it’s here to stay.… XaaS is not a one-size-fits-all proposition. Nor must it be a revolutionary one – though it will challenge your business.” (manufacturing.net) The Buzz 3: “The concept of servitization is not new, but it is obtaining renewed interest … Rather than buying the piece of equipment, the customer contracts with the supplier for the result. So, instead of buying paving equipment, the customer might buy x miles of paved road for $x. The customer is assured of getting the final result. The supplier uses equipment sensors and internet of things (IoT) technology to track performance of the machinery on the job site.” (diginomica.com) What does the future hold for XaaS models for industrial manufacturing companies and what will adoption look like in the next five years? Subscription and servitization models are getting a lot of attention, as they typically provide higher margins and more resilience than product-based businesses. This transformation – from selling products to selling services and outcomes – provides manufacturers with needed predictability of revenue and potentially higher margins as they face continuous disruption, commoditization of products and stagnating growth. Although subscription offerings for remote monitoring, equipment diagnostics, predictive maintenance and other digital services are gaining traction, the adoption of outcome- or usage-based models seems to be slowing down. Why? We’ll ask Don Swenson at SAP and Sergey Jermakov at CLARITY for their take on XaaS: Is The Hype Real for Industrial Manufacturing Companies?