Key Benefits & Challenges of EaaS for Manufacturers

The innovative EaaS business model, also known as servitization, is driving manufacturers to adopt a service-centric approach. This shift in perspective requires companies to reimagine their internal and external processes, but the rewards are plentiful.

Positive Changes in Business Models

EaaS is driving the creation of an independent after-sales market, which now comprises a significant portion of original equipment manufacturer (OEM) sales. OEMs are seeking new opportunities to diversify their offerings and gain market share beyond just asset sales. Simultaneously, customers are calling for service models that allow them to share risk with asset manufacturers and transfer capital expenditure (CapEx) to operating expenditure (OpEx), giving them greater flexibility.

Technological advancements, such as the Internet of Things (IoT), Artificial Intelligence (AI) and 5G, enable asset performance transparency and sharing, thus reducing risks and costs, and ensuring higher levels of customer service. These changes offer a variety of complementary benefits that manufacturers can integrate to deliver greater value than individual products can deliver on their own.

Benefits of EaaS for Manufacturers

EaaS enables manufacturers to increase lifecycle revenue per unit through greater customer penetration and longevity. It is also a key enabler for electrification projects and other sustainability initiatives, such as the circular economy. Additionally, EaaS improves business resilience by reducing the exposure of revenues, profits and cash flows to market volatility.

Challenges of EaaS Deployment

Despite the many benefits, very few organizations have successfully deployed and extended their EaaS activity. To overcome these obstacles, manufacturers need to ensure that all parameters relating to the costs and risks of services are understood, and that tariffs are set accordingly. They must also adapt their service level agreements (SLAs) to ensure transparency and minimal risk for both parties. Additionally, they must be able to control the use made by their customers and ensure that equipment is protected and respected in adverse environmental conditions. Finally, it's crucial to capture and measure the profitability of customers and services throughout the service lifecycle.

Process Management

The sales team must be ready to adopt EaaS offerings, which implies a change in mindset. Each member of staff must be able to configure, quote and draw up the contract confidently. The use of a single, integrated and easy-to-use pricing, quoting and contracting platform, such as Conga CPQ, is essential to enable vendors to quickly configure profitable contracts or contracts of use.

Integrating New Tools

Managing the processes, teams and systems involved in the revenue lifecycle is becoming increasingly complex. EaaS brings an even greater dimension of complexity to this already significant challenge because it operates end-to-end, across an OEM's entire capability and product portfolio - from equipment to spare parts to maintenance services and financing. Achieving this transformation means breaking down long-established functional silos and integrating disparate processes, data and systems to create a single revenue lifecycle platform.

Conga Solutions to Make Life Easier

Conga's Revenue Lifecycle solution is designed to help manufacturing companies make the transition to EaaS. The unified data model proposed by Conga activates the entire revenue lifecycle, whatever the nature of the activity, product, service or results offering. The open, API-based architecture integrates seamlessly with existing enterprise resource planning (ERP), customer relationship management (CRM) and pricing systems. The solution also uses key data from connected devices so that manufacturers can rapidly deploy, manage risk and create value.

In conclusion, EaaS represents an exciting opportunity for manufacturers to optimize their business models and drive growth, sustainability and resilience. While challenges exist, the benefits of EaaS make the journey worth taking. Conga's Revenue Lifecycle solution provides a comprehensive platform to help manufacturers make the transition to EaaS with confidence.