Everything As A Service

In the old world, commerce worked like this: You bought an item, owned the item, then discarded the item when it reached the end of life. But increasingly, this model is falling out of favor. 

Instead, the Fourth Industrial Revolution, and the associated rise of IoT, data, and connectivity is driving the rise of a new approach to the sale and management of goods and manufacturing services: Servitization. Increasingly, people are not necessarily buying a single product, but a lifetime relationship with the supplier of that product. 

Say you buy a car, or a piece of capital equipment. Under old models, you would own the asset, and periodically call in for repairs or new parts. Servitization transforms that business model into one of personalized goods that are continuously monitored and serviced. This allows manufacturers to better address customer demand, and generates a continuous revenue stream for vendors.

 

Tying together EaaS value networks is data. For items to be manufactured to order and then continually updated, customer data needs to be easily accessible. This is the bedrock upon which servitized businesses must be built. 

However, building a data-centric model means addressing concerns around data integrity. Whether it’s inputting your health metrics with a customized food provider, or sharing operational blueprints with a capital equipment manufacturer, customers have every right to expect privacy and security. 

“EaaS means a lot more data being shared,” says Loeb. “And we have to think carefully about how we protect that personal data, how we help people share only what they want to share, and how we inform them about how that data will be used.”

The focus of the next few years will therefore be on digital tools that help manage all this data in a way that is secure yet collaborative. Integrating the necessary data on a shared single platform gives both customers and suppliers a single source of truth from which to work, as well as the ability to create walled gardens – ring-fencing specific pools of data so only the necessary information gets shared. It is crucial that what needs to stay private, stays private.

“The implications on the business models of companies are going to be huge,” says Loeb. “It goes without saying, becoming a servitized business is a dramatic change. But if you do it right, it can offer a truly radical improvement in your levels of service, and in your revenue model.”