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Digitalization has changed not only technology but the way we do business nowadays.
As technology spreads to new horizons, companies have the opportunity to shift their current business models and expand their product offerings in the direction of as-a-service models. Why? Companies are looking to exceed customer expectations while delivering personalised solutions more targeted to their customer needs’.
As-a-Service (aaS) models have helped to move companies beyond physical products and software to additional service offerings. The As-a-Service market is increasingly growing, with a growth rate of nearly 40% from 2016 to 2020, with different services ranging from software to bike renting. The As-a-Service mentality is becoming part of the strategy and mindset for companies to keep growing.
This article will focus on defining what the as-a-service model is, and some factors to consider when having a digital transformation with as-a-service models.
What is the As-a-Service Model?
As-a-Service models offer customers the possibility to access products as services with recurring payments. Some of the characteristics of the As-a-Service model are; recurring billing, taxing & invoicing, operations, and (return) logistics. With this model, companies are shifting to provide its customers with subscription-based products where customer satisfaction is enhanced.
There are different examples of As-a-Service companies ranging from Software-as-a-Service (SaaS) to Product-as-a-Service (PaaS) to Infrastructure-as-a-Service (IaaS). Some of the companies working with as-a-service models are: Google, Amazon, Philips, and Microsoft.
Why a digital transformation with As-a-Service models?
As mentioned before, companies' desire to have a digital transformation are driven by factors such as; matching customer requirements, a better/improved product efficiency, and because of competitive pressures. Digital transformation with As-a-Service models enables organisations to launch minimum viable products (MVPs) with faster capabilities in place, working in an agile way.
These are 6 factors to consider when doing a digital transition into As-a-Service models:
1. Developing a gap analysis
For organisations to succeed with As-a-Service (aaS) models, it is crucial to keep the main goal in mind. Why is your company interested in having an ‘aaS’ proposition? You need to be aware of the capabilities you currently have and which processes will need to change and automated for a more flexible model, with recurring billing, since it is based on usage data or products rather than fixed prices.
For example, companies that are offering As-a-Service models, often find themselves processing invoices manually due to a lack of automated processes and tools. Closing this gap will require the automation and adoption of new tools or systems where you can track the usage and translate this into flexible invoices and rates. So firstly, understand which capabilities and processes need to be in place, to determine gaps that your organisation currently have so it can be better adapted for a digital transformation.
2. Customer value
For companies to have a successful as-a-service model, it is crucial to redefine customer relationships, by placing the customer at the center of the digital transformation. To do this, companies need to reduce organisational silos; which means to align between different departments, in particular, the business and IT functions to address and manage better critical dependencies together.
3. Being agile & refine processes
This means to have established decision-making processes that can adapt rapidly and can enable swift and organisational decisions to move the transformation forward. Create an execution path together with the gap analysis to target the journey for the digital transformation.
Adopt a digital plan that allows your company to add the capabilities to offer as-a-service models. Focus on go-to-market strategies, such as; pricing, marketing and sales, to establish your as-a-service proposition in the market.
4. Diverse Business Integrations
As-a-Service models integrate physical (hardware), software, and services in a single customer offering. Value for companies is changing from the physical towards the insights and data collected from customers on the services provided. These operations require companies to make transformations across various aspects of their business, to establish timelines, and changes which are critical to successful execution.
5. Partnerships and new ecosystems
For a company to transition to an as-a-service model, it is fundamental to align with suppliers and partners on what processes and automations are necessary as part of their digital transformations. Make sure your company is ready in terms of having the right stakeholders with the mindset to influence rapid organisational change and proactively anticipate risks, dependencies, and issues. These stakeholders have such an important role to play in the transformation, your as-a-service business cannot thrive without the commitment of the whole organisation.
6. Financial stability
For your company to scale with an as-a-service proposition, it is essential to secure some investment for all the total costs of your entire transformation. You can do this in our Business Calculator for Product-as-a-Service companies to identify all possible costs.
Having a successful digital transformation with as-a-service models starts with having a clear understanding of the capabilities & gaps missing, and the right mindset from everyone in your company to take on the change. Understanding these aspects will be crucial to determine the path of your as-a-service journey and how quickly your company can adapt to new digital transformations with as-a-service models.