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Product-as-a-Service (PaaS)

Product as a Service (PaaS) is a pragmatic and increasingly popular business model which provides the computing platform for cloud applications. The services developed within this model differ from the conventional process of simply selling a product. Instead, PaaS transforms the product into one that can be reused, repaired, recycled and redistributed. The user pays as and when they access the service, as opposed to paying a single lump sum for a single usage. PaaS indicates a business trend that favours practicality over conspicuous consumption. As well as making companies more efficient, this is contributing to overall sustainability. It also demonstrates the shift towards a circular economy.[1]

Product-as-a-Service (PaaS) is a business model that allows customers to purchase a desired result rather than the equipment that delivers that result. For example, a manufacturing operation may need to have two pieces of metal welded together. In the traditional purchasing model, the manufacturer would buy a welding robot. In the PaaS model, the company would purchase a certain number of welding operations, not the robot itself—in effect, paying for repetitions instead of robots. This model offers benefits to both the customer and the provider. Some examples of products as a service, which shift the risk of performance from the customer to the manufacturer, include jet engines, compressed air, valves, robots, water pumps, smart lighting systems, and even passenger trains. A PaaS relationship typically involves agreements among three entities: the client, who purchases the service; the manufacturer, who delivers the product and its associated services; and the PaaS platform provider, who handles the infrastructure, including data collection, transmission, storage, security, and analytics.[2]


PaaS Partnerships
PaaS Partnerships
source: Engineering.Com

Broader adoption of product as a service has been enabled by IoT, sensor technology, data analytics, personal mobile devices and cloud computing. Cheap and widely available wireless and internet connectivity make it feasible for manufacturers to outfit their products with sensors that indicate how a product is being used, as well as environmental factors that affect its reliability, such as temperature and humidity, or the failure of a specific part. The manufacturer can monitor the product remotely and apply predictive analytics to the captured data to identify and address mechanical problems or find opportunities to offer new products and services to the customer. It can also foster the customer relationship through smartphone apps that allow the user to monitor and control certain aspects of the product, provide feedback to the manufacturer and order new products and services. Enterprise software, especially ERP, customer relationship management (CRM) and product lifecycle management (PLM), are usually necessary for managing the products, services and customer relationships, and some vendors are explicitly marketing their software as product-as-a-service platforms. Related tools, such as field service management (FSM), asset performance management and enterprise asset management (EAM) software come into play for managing and servicing products.[3]

  1. Defining Product-as-a-Service (PaaS) Disruption
  2. PaaS Relationships Tom Lombardo
  3. How Product as a Service (PaaS) works Techtarget