By Sajith Sahadevan, Dynamics 365 for Field Service
Many manufacturing organizations are transitioning from a traditional product business model to an “as-a-service” business model—including flexible consumption models (FCMs) and “Anything-as-a-service (XaaS)—that lets them pay for what they use. “As-a-service” models provide compelling benefits, such as:
- Predictable and renewable revenue streams
- Greater value to the customer, as they only pay for what they consume
- Deeper insights into consumption patterns to help inform add-on sales
- Lower operational costs by serving customers through a common platform
There are benefits and risks to an “as-a-service” model in manufacturing. For manufacturers, the service has value in that it provides a consistent revenue stream. Conversely, the risk lies in the service not being available for the customer to consume. Any downtime interrupts revenue for the manufacturer as consumption is halted and frustrates the customer with costly interruptions of service.
For the customer, the benefit is that there is a set recurring cost and no capital outlay. Plus, the customer doesn’t have to keep up with the latest technology as it’s not their device. Upgrades and maintenance are typically factored into the service fee. The risk lies in the reliance on the service provider to provide a steady, reliable service and the possibility of the customer increasing usage of the service.