Stibo Systems - The Master Data Management Company

How Manufacturers Can Shift to Product-as-a-Service Offerings

Master Data Management Blog by Stibo Systems logo
| 5 minute read
April 20 2022

Whether their customers are individuals or global enterprises, all industries now face a range of challenges and opportunities presented by a ‘digital-first’ world. As a consequence, traditional companies are looking for ways of complementing and differentiating their product-based business models with value-based services.  A recent Frost & Sullivan estimation foresees that 70 percent of Fortune 500 companies are expected to develop new business models that provide product-as-a-service.

 

Table of contents

 

manufacturing_header-optimized

What is Product-as-a-Service (PaaS)?

Product-as-a-Service, often abbreviated as PaaS, is a business model that emphasizes delivering value through a product's utilization rather than conventional product or service sales. It is primarily marketed based on its capacity to facilitate specific business outcomes.

PaaS initiatives can be observed in various industries, including discrete and process manufacturing, as well as consumer and business services. The service offered may involve utilizing a physical product manufactured by a company or accessing an application or cloud-based service. In both scenarios, the end user typically does not retain ownership of the product itself.

It's important to note that Product-as-a-Service is not limited solely to physical products and can encompass digital offerings as well.

Examples of Product-as-a-Service offerings in the manufacturing industry:

  • Apple sells music, but added its Apple Music service to develop subscription-based revenue streams which will potentially appeal to a different type of audience. In doing so, it reported adding over 10 million subscribers to its service.
  • Aircraft manufacturer, GE, offers efficiency and analytics services to help optimise flight procedures. Since it began using these services in 2011, Italian carrier Alitalia has saved over $34 million in fuel costs.
  • Philips Healthcare plan to use cloud services and IoT technology to provide remote monitoring services for patients in an aim to help reduce the number of visits required to hospitals and medical clinics.

In this last example, we see how the connected devices of the ever-growing Internet of Things (IoT), as part of an evolving digital transformation, are able to significantly support product-as-a-service offerings. Healthcare device manufacturers, for example, are increasingly offering monitoring solutions as product services.

While customers might value the ability of product-as-a-service to potentially reduce costs and free up resources, for manufacturers the value is a long term engagement in customer relationships.

 

What are the benefits of shifting forwards Product-as-a-Service offerings?

Transitioning to Product-as-a-Service offerings can yield several significant benefits for businesses. Here are some of the key advantages:

  • Recurring revenue streams: PaaS models often involve subscription-based pricing or pay-per-use structures, providing a steady and predictable source of revenue for businesses, as opposed to one-time product sales.

  • Customer-centric approach: PaaS encourages a customer-centric approach by focusing on the value delivered to users. This can lead to increased customer satisfaction, loyalty and long-term relationships.

  • Lower upfront costs: Customers typically avoid the substantial upfront costs associated with purchasing products outright. This can make high-quality products and services more accessible to a broader audience.

  • Flexibility and scalability: PaaS offerings are often scalable, allowing customers to adjust their usage or subscription level based on their changing needs. This flexibility can attract a broader range of customers.

  • Data insights: PaaS models often collect data on product usage, enabling businesses to gain valuable insights into customer behavior and preferences. This data can inform product improvements and marketing strategies.

  • Sustainability: By promoting product sharing, optimization and efficiency, PaaS can contribute to sustainability efforts by reducing resource consumption and waste.

  • Competitive advantage: Adopting PaaS can differentiate a business from competitors and position it as innovative and forward-thinking in the marketplace.

  • Cross-Selling opportunities: PaaS models can open doors to cross-selling additional services or complementary products to existing customers, further boosting revenue.

  • Risk mitigation: Businesses can spread risk across a broader customer base, reducing their reliance on a small number of high-value product sales.

  • Access to new markets: PaaS can make it easier for businesses to enter new markets or reach underserved customer segments that may not have the means to purchase products outright.

  • Easier product updates: In digital PaaS offerings, updates and improvements can be rolled out seamlessly to all users, ensuring that customers always have access to the latest features and security updates.

  • Improved cash flow: Steady subscription-based revenue can improve cash flow predictability, helping businesses manage their finances more effectively.

  • Reduced maintenance burden: Businesses may assume less responsibility for maintenance and repairs, as some PaaS models include these services as part of the offering.

It's important to note that the benefits of transitioning to PaaS can vary depending on the industry, target market and the specific PaaS model implemented. However, when executed effectively, this shift can offer a strategic advantage and contribute to long-term business success.

 

How is Product-as-a-Service evolving?

Product-as-a-Service is undergoing specific evolutions within the manufacturing sector to address industry-specific challenges and opportunities. Here are some key ways PaaS is evolving in manufacturing:

  • Smart manufacturing and industry 4.0: PaaS is increasingly integrating with Industry 4.0 principles, leveraging technologies like the IoT, data analytics and automation. Manufacturers are using PaaS to create smart factories that optimize production processes, monitor equipment health in real time and predict maintenance needs.

  • Predictive maintenance: PaaS in manufacturing is evolving to offer predictive maintenance solutions. By analyzing data from sensors and equipment, PaaS can help manufacturers detect potential equipment failures before they occur, reducing downtime and maintenance costs.

  • Product lifecycle management (PLM): PaaS is extending its reach into product design and development with PLM integration. Manufacturers can collaborate on product designs, simulate production processes and manage product data more efficiently.

  • Supply chain optimization: PaaS solutions are helping manufacturers optimize their supply chains. This includes demand forecasting, inventory management and logistics optimization to reduce costs and improve efficiency.

  • Circular economy: Manufacturers are increasingly embracing the circular economy model, and PaaS is evolving to support this trend. PaaS can facilitate product-sharing models, remanufacturing and recycling initiatives to reduce waste and promote sustainability.

  • Servitization: Manufacturers are moving beyond just selling products to offering services and outcomes. PaaS plays a crucial role in enabling this shift by providing the infrastructure for delivering services and tracking their performance.

  • Additive manufacturing: PaaS is integrating with additive manufacturing (3D printing) technologies. It allows manufacturers to offer 3D printing as a service, making it easier for customers to access and utilize this innovative production method.

  • Data analytics and AI: PaaS is leveraging advanced data analytics and artificial intelligence to extract valuable insights from manufacturing data. This can improve product quality, process efficiency and resource utilization.

  • Customization and personalization: PaaS is enabling mass customization in manufacturing. Manufacturers can offer highly customizable products and services to meet the specific needs and preferences of individual customers.

  • Remote monitoring and control: Manufacturers are using PaaS to remotely monitor and control manufacturing processes and equipment. This has become especially important in the context of global supply chains and remote work.

  • Regulatory compliance: PaaS providers in manufacturing are focusing on ensuring their solutions comply with industry-specific regulations and standards, such as ISO certifications and safety requirements.

  • Energy efficiency: PaaS solutions are evolving to help manufacturers optimize energy consumption and reduce their environmental footprint. This aligns with sustainability goals and regulatory pressures.

  • Collaboration platforms: PaaS is enabling collaboration across manufacturing ecosystems. Manufacturers can connect with suppliers, partners and customers in a more seamless and data-driven way.

  • Quality control and assurance: PaaS offerings are incorporating advanced quality control and assurance features, including real-time monitoring, defect detection and automated testing.

  • Worker safety: PaaS in manufacturing is evolving to include worker safety solutions, such as wearable technology and predictive analytics to prevent workplace accidents.

In the manufacturing sector, PaaS is playing a pivotal role in enhancing productivity, reducing costs and enabling innovation. Its evolution is closely tied to the broader trends and technological advancements shaping the manufacturing industry.


Topics: 
Master Data Management Blog by Stibo Systems logo

During the past 20 years, Darren has been advising companies on selecting and implementing software tools that support their data governance strategy. Darren helps business leaders understand and quantify the positive impact that good data governance and data management, can have on their organization.

Discover Blogs by Topic

  • MDM strategy
  • Customer and party data
  • Retail and distribution
  • See more
  • Data governance
  • Manufacturing
  • Supplier data
  • Data quality
  • Product data and PIM
  • AI and machine learning
  • CPG
  • Financial services
  • GDPR
  • Sustainability
  • Location data
  • PDX Syndication

Data Governance Trends 2024

1/30/24

NRF 2024 Recap: In the AI era, better data can make all the difference

1/19/24

Building Supply Chain Resilience: Strategies & Examples

12/19/23

How Master Data Management Can Enhance Your ERP Solution

12/14/23

Shedding Light on Climate Accountability and Traceability in Retail

11/29/23

What is Smart Manufacturing and Why Does it Matter?

10/11/23

Future Proof Your Retail Business with Composable Commerce

10/9/23

5 Common Reasons Why Manufacturers Fail at Digital Transformation

10/5/23

How to Digitally Transform a Restaurant Chain

9/29/23

Three Benefits of Moving to Headless Commerce and the Role of a Modern PIM

9/14/23

12 Steps to a Successful Omnichannel and Unified Commerce

7/6/23

CGF Global Summit 2023: Unlock Sustainable Growth With Collaboration and Innovation

7/5/23

Navigating the Current Challenges of Supply Chain Management

6/28/23

Responsible AI relies on data governance

5/11/23

Product Data Management during Mergers and Acquisitions

4/6/23

Master Data Management Definitions: The Complete A-Z of MDM

3/14/23

4 Ways to Reduce Ecommerce Returns

3/8/23

Asset Data Governance is Central for Asset Management

3/1/23

Digital Product Passports

2/24/23

4 Common Master Data Management Implementation Styles

2/21/23

How to Leverage Internet of Things with Master Data Management

2/14/23

Manufacturing Trends and Insights in 2023-2025

2/14/23

Sustainability in Retail Needs Governed Data

2/13/23

What is Augmented Data Management?

2/9/23

NRF 2023: Retail Turns to AI and Automation to Increase Efficiencies

1/20/23

What is the difference between CPG and FMCG?

1/18/23

8 Best Practices for Customer Master Data Management

1/16/23

5 Key Manufacturing Challenges in 2023

1/16/23

What is a Golden Customer Record in Master Data Management?

1/9/23

The Future of Master Data Management: Trends in 2023-2025

1/8/23

Innovation in Retail

1/4/23

5 CPG Industry Trends and Opportunities for 2023-2025

12/5/22

Life Cycle Assessment Scoring for Food Products

11/21/22

Retail of the Future

11/14/22

Omnichannel Strategies for Retail

11/7/22

Hyper-Personalized Customer Experiences Need Multidomain MDM

11/5/22

What is Omnichannel Retailing and What is the Role of Data Management?

10/25/22

Most Common ISO Standards in the Manufacturing Industry

10/18/22

How to Get Started with Master Data Management: 5 Steps to Consider

10/17/22

What is Supply Chain Analytics and Why It's Important

10/12/22

What is Data Quality and Why It's Important

10/12/22

A Data Monetization Strategy - Get More Value from Your Master Data

10/11/22

What Is Master Data Governance – And Why You Need It?

10/7/22

An Introductory Guide: What is Data Intelligence?

10/1/22

Revolutionizing Manufacturing: 5 Must-Have SaaS Systems for Success

9/15/22

An Introductory Guide to Supplier Compliance

9/7/22

What is Application Data Management and How Does It Differ From MDM?

8/29/22

Digital Transformation in the Manufacturing Industry

8/25/22

Master Data Management Framework: Get Set for Success

8/17/22

Discover the Value of Your Data: Master Data Management KPIs & Metrics

8/15/22

Master Data Management Roles and Responsibilities

7/17/22

Supplier Self-Service: Everything You Need to Know

6/15/22

Omnichannel vs. Multichannel: What’s the Difference?

6/14/22

Digital Transformation in the CPG Industry

6/14/22

Create a Culture of Data Transparency - Begin with a Solid Foundation

6/10/22

The 5 Biggest Retail Trends for 2023-2025

5/31/22

What is a Location Intelligence?

5/31/22

Omnichannel Customer Experience: The Ultimate Guide

5/30/22

Location Analytics – All You Need to Know

5/26/22

Omnichannel Commerce: Creating a Seamless Shopping Experience

5/24/22

Top 4 Data Management Trends in the Insurance Industry

5/11/22

What is Supply Chain Visibility and Why It's Important

5/1/22

6 Features of an Effective Master Data Management Solution

4/30/22

What is Digital Asset Management?

4/23/22

The Ultimate Guide to Data Transparency

4/21/22

How Manufacturers Can Shift to Product-as-a-Service Offerings

4/20/22

How to Check Your Enterprise Data Foundation

4/16/22

An Introductory Guide to Manufacturing Compliance

4/14/22

Multidomain MDM vs. Multiple Domain MDM

3/31/22

Making Master Data Accessible: What is Data as a Service (DaaS)?

3/29/22

How to Build a Successful Data Governance Strategy

3/23/22

What is Unified Commerce? Key Advantages & Best Practices

3/22/22

How to Choose the Right Data Quality Tool?

3/22/22

What is a Data Domain?

3/21/22

6 Best Practices for Data Governance

3/17/22

5 Advantages of a Master Data Management System

3/16/22

A Unified Customer View: What Is It and Why You Need It

3/9/22

Supply Chain Challenges in the CPG Industry

2/24/22

Data Migration to SAP S/4HANA ERP - The Fast and Safe Approach with MDM

2/17/22

The Best Data Governance Tools You Need to Know About

2/17/22

Top 5 Most Common Data Quality Issues

2/14/22

What Is Synthetic Data and Why It Needs Master Data Management

2/10/22

What is Cloud Master Data Management?

2/8/22

How to Implement Data Governance

2/7/22

Build vs. Buy Master Data Management Software

1/28/22

Why is Data Governance Important?

1/27/22

Five Reasons Your Data Governance Initiative Could Fail

1/24/22

How to Turn Your Data Silos Into Zones of Insight

1/21/22

How to Improve Supplier Experience Management

1/16/22

​​How to Improve Supplier Onboarding

1/16/22

How to Enable a Single Source of Truth with Master Data Management

1/13/22

What is a Data Quality Framework?

1/11/22

How to Measure the ROI of Master Data Management

1/11/22

What is Manufacturing-as-a-Service (MaaS)?

1/7/22

The Ultimate Guide to Building a Data Governance Framework

1/4/22

Introducing the Master Data Management Maturity Model

1/3/22

Master Data Management Tools - and Why You Need Them

12/20/21

The Dynamic Duo of Data Security and Data Governance

12/20/21

How to Choose the Right Supplier Management Solution

12/20/21

How Data Transparency Enables Sustainable Retailing

12/6/21

What is Supplier Performance Management?

12/1/21

What is Party Data? All You Need to Know About Party Data Management

11/28/21

What is Data Compliance? An Introductory Guide

11/18/21

How to Create a Marketing Center of Excellence

11/14/21

The Complete Guide: How to Get a 360° Customer View

11/7/21

What is the Difference Between Master Data and Metadata?

11/1/21

How Location Data Adds Value to Master Data Projects

10/29/21

How Marketers Should Prepare for the 2023 Holiday Shopping Season

10/26/21

What is Supplier Lifecycle Management?

10/19/21

What is a Data Mesh? A Simple Introduction

10/15/21

How to Build a Master Data Management Strategy

9/26/21

10 Signs You Need a Master Data Management Platform

9/2/21

What Vendor Data Is and Why It Matters to Manufacturers

8/31/21

3 Reasons High-Quality Supplier Data Can Benefit Any Organization

8/25/21

4 Trends in the Automotive Industry

8/11/21

What is Reference Data and Reference Data Management?

8/9/21

What Obstacles Are Impacting the Global Retail Recovery?

8/2/21

GDPR as a Catalyst for Effective Data Governance

7/25/21

All You Need to Know About Supplier Information Management

7/21/21

5 Tips for Driving a Centralized Data Management Strategy

7/3/21

Data Governance and Data Protection, a Match Made in Heaven?

6/29/21

Welcome to the Decade of Transparency

5/26/21

How to Become a Customer-Obsessed Brand

5/12/21

How to Create a Master Data Management Roadmap in Five Steps

4/27/21

What is a Data Catalog? Definition and Benefits

4/13/21

How to Improve the Retail Customer Experience with Data Management

4/8/21

How to Improve Your Data Management

3/31/21

How to Choose the Right Master Data Management Solution

3/29/21

Business Intelligence and Analytics: What's the Difference?

3/25/21

Spending too much on Big Data? Try Small Data and MDM

3/24/21

What is a Data Lake? Everything You Need to Know

3/21/21

How to Extract More Value from Your Data

3/17/21

Are you making decisions based on bad HCO/HCP information?

2/24/21

Why Master Data Cleansing is Important to CPG Brands

1/20/21

CRM 2.0 – It All Starts With Master Data Management

12/19/20

5 Trends in Telecom that Rely on Transparency of Master Data

12/15/20

10 Data Management Trends in Financial Services

11/19/20

Seasonal Marketing Campaigns: What Is It and Why Is It Important?

11/8/20

What Is a Data Fabric and Why Do You Need It?

10/29/20

Transparent Product Information in Pharmaceutical Manufacturing

10/14/20

How to Improve Back-End Systems Using Master Data Management

9/19/20

8 Benefits of Transparent Product Information for Medical Devices

9/1/20

How Retailers Can Increase Online Sales in 2023

8/23/20

Master Data Management (MDM) & Big Data

8/14/20

Key Benefits of Knowing Your Customers

8/9/20

Women in Master Data: Kelly Amavisca, Ferguson

8/5/20

Customer Data in Corporate Banking Reveal New Opportunities

7/21/20

How to Analyze Customer Data With Customer Master Data Management

7/21/20

How to Improve Your 2023 Black Friday Sales in 5 Steps

7/18/20

4 Ways Product Information Management (PIM) Improves the Customer Experience

7/18/20

How to Estimate the ROI of Your Customer Data

7/1/20

Women in Master Data: Rebecca Chamberlain, M&S

6/24/20

How to Personalise Insurance Solutions with MDM

6/17/20

How to Democratize Your Data

6/3/20

How to Get Buy-In for a Master Data Management Solution

5/25/20

How CPG Brands Manage the Impact of Covid-19 in a Post-Pandemic World

5/18/20

5 Steps to Improve Your Data Syndication

5/7/20

Women in Master Data: Gwen Moilanen-Kollar

3/31/20

Marketing Data Quality: Why Is It Important and How to Get Started

3/26/20

Panic Buying: Navigating Long-term Implications and Uncertainty

3/24/20

Women in Master Data: Ditte Brix, IMPACT

2/20/20

Get More Value From Your CRM With Customer Master Data Management

2/17/20

Women in Master Data: Nagashree Devadas, Stibo Systems

2/4/20

How to Create Direct-to-Consumer (D2C) Success for CPG Brands

1/3/20

Women in Master Data: Anna Schéle, Ahlsell

10/25/19

Women in Master Data: Morgan Lawrence, Infoverity

9/26/19

Women in Master Data: Sara Friberg, Acando (Part of CGI)

9/13/19

Improving Product Setup Processes Enhances Superior Experiences

8/21/19

How to Improve Your Product's Time to Market With PDX Syndication

7/18/19

8 Tips For Pricing Automation In The Aftermarket

6/1/19

How to Drive Innovation With Master Data Management

3/15/19

Discover PDX Syndication to Launch New Products with Speed

2/27/19

How to Benefit from Product Data Management

2/20/19

What is a Product Backlog and How to Avoid It

2/13/19

How to Get Rid of Customer Duplicates

2/7/19

4 Types of IT Systems That Should Be Sunsetted

1/3/19

How to Use Customer Data Modeling

11/15/18

How to Reduce Time-to-Market with Master Data Management

10/28/18

How to Start Taking Advantage of Your Data

9/12/18

6 Signs You Have a Potential GDPR Problem

8/16/18

GDPR: The DOs and DON’Ts of Personal Data

6/13/18

How Master Data Management Supports Data Security

6/7/18

Frequently Asked Questions (FAQ) About the GDPR

5/30/18

Understanding the Role of a Chief Data Officer

4/26/18

3 Steps: How to Plan, Execute and Evaluate Any IoT Initiative

2/20/18

How to Benefit From Customer-Centric Data Management

9/7/17

3 Ways to Faster Innovation with Multidomain Master Data Management

6/7/17

Product Information Management Trends to Consider

5/25/17

4 Major GDPR Challenges and How to Solve Them

5/12/17

How to Prepare for GDPR in Five Steps

2/21/17

How Data Can Help Fight Counterfeit Pharmaceuticals

1/24/17

Create the Best Customer Experience with a Customer Data Platform

1/11/17
Did you like this blog post?

Sign up to get the latest blog content in your inbox.