EAAS, the business model that is revolutionizing the world of industrial machinery manufacturing

2023-06-12

With Equipment as a Service (EAAS), machinery manufacturers have the ability to meet the challenge of providing technologically advanced equipment at a flexible cost and high efficiency, as well as reducing investment and improving customer competitiveness.

This business model enables large companies in the industrial sector to offer their products together with a wide range of digital services that customers are willing to pay additionally, due to the guarantee of a Service Level Agreement (SLA).

Thanks to EAAS, a company dedicated to the manufacture of machinery assumes the role as the main responsible in the maintenance and supply of spare parts. This allows you to ensure the almost total availability of machinery or equipment, which is one of the fundamental reasons why customers purchase your products. In other words, EAAS guarantees customers to have an optimal and continuous operation of the equipment, becoming the most valued aspect when obtaining such products.

In this way, manufacturers generate a source of income that over the years can mean an increase in their turnover. Also, this new business model promotes customer loyalty by turning it into a recurring one.

What are the benefits of EAAS for manufacturers?

Machinery manufacturers who choose to implement the EAAS model must adapt to a new business paradigm that will help them experience a number of important advantages. First of all, they will find themselves in a scenario that will favor an increasing evolution and transformation for their company. Although, what they really appreciate is the possibility of establishing more solid and lasting relationships with the client and thus promoting values such as loyalty.

Also, EAAS offers the opportunity to set prices for the use of the equipment depending on the duration, per piece produced or as a subscription. Through this model, suppliers have the ability to generate and provide their customers with personalized and easy-to-use options, specifically adapted to their needs. In this way, a much more competitive and improved product is achieved in the market.

Finally, it highlights the ability to offer new services that increase the financial results of machinery manufacturers. Now they have the opportunity to implement health monitoring and predictive maintenance of assets, which ensures optimal uptime. In addition, IoT (Internet of Things) technology and AIoT (Artificial Intelligence of Things) platforms allow them to expand the company’s revenue by providing after-sales services. Therefore, they take advantage of new opportunities and provide their customers with added value.

As a summary, we could say that the most outstanding benefits for a machinery manufacturer that offers the EAAS model are the following:

• Improve the capabilities and functionalities of the products that are sold thanks to all the information that can be captured from the monitoring of the assets in client
• Build better and longer-lasting customer relationships
• Introduce new pricing models (pay per use, pay per unit produced, subscription, etc.)
• Make it easier for the customer to purchase equipment, thanks to the fact that EAAs is an Opex financing model
• Introduce predictive monitoring and maintenance as added services
• To improve the revenue from after-sales services.

What conditions are necessary for the implementation of EAAs?

The implementation of an EAAS model requires the fulfillment of a series of prerequisites, both by the machinery manufacturer that offers the EAAS model and by the client that wants to implement it in his company.

Focusing on the supplier, among the preconditions that must be considered, the following stand out:

• It is necessary to be aware of the degree of digitalization in your organization and in your products, as well as the level of knowledge and skills in the implementation
• Be aware of the technical requirements of the machines or production facilities
• Have the ability to offer new services and business models
• Comply with legal regulations.

It is relevant to highlight that approximately 45% of manufacturers have the capacity to offer machinery in their product portfolio that can be digitized or that is already digitized. However, only 37% of them possess the knowledge and skills necessary to successfully implement an EAAS model in their product portfolio for their customers.

And as far as the technical requirements of the offered machines and systems are concerned, about 43% of them demonstrate sufficient flexibility. As for the preparation for digital/remote control and predictive/condition-based maintenance of machines, 38% of manufacturers are prepared, either by themselves or in collaboration with partners such as MonoM of the Álava Group whose main pillar is the digitization of predictive maintenance of assets.

On the other hand, machine manufacturers that have developed an EAAS offer and have integrated it into their portfolio have invested an average of 6 to 12 months in its creation and preparation. However, when it comes to deploying EAAS to clients, the time required is drastically reduced. On average, it is estimated that it takes about 6 months to have the solution fully implemented.

In addition to the necessary efforts, we must also take into account the economic investment involved for the client. When analyzing the economic ranges of investment, it is observed that those that oscillate around half a million euros prevail. Although, there are also extreme cases where the investment in the EAAS model can be less than € 100,000 or more than five million euros.

The future about EAAS

According to the trends, a significant increase in the offers of EAAS and its use in the manufacturing industry can be anticipated for next year.

Business leaders are completely willing and see multiple benefits in the EAAS model both for the industry in general and for their own companies. Nearly half of the heads of machinery manufacturing companies consider that the flexibility of their own equipment and machinery (43%) and the level of digitalization (45%) are suitable for the EAAS model. However, the results also indicate that three out of four (72%) want to take advantage of the experience of external partners to overcome the challenges in the integration of EAAS models.

In addition, half of the machinery manufacturers express their desire to receive support to better understand the needs of their respective markets. About 49% require strategic assistance, while 46% seek operational implementation support from external partners. There is also a high demand for technical support for obtaining real-time data from machines and devices, with 42% of manufacturers requesting it.

In short, the potential of EAAs is recognized in the manufacturing industry and the need for specialized partners is real for them.