Do you remember the days when your favorite CDs were all neatly lined up in a shelving unit? Since Spotify entered the market 15 years ago and let us stream music as a service, CDs have had their day. Now, we can use our freed-up shelf space for other nice things. Similar to the rise of Spotify, the manufacturing industry is on the verge of a revolution. The curtain is rising on Equipment-as-a-Service (EaaS), where manufacturers no longer purchase their machinery, rather lease them alongside a number of associated services.
EaaS in plant engineering – revolutionary, service-based and flexible
The pace of change in the manufacturing industry has really taken off. Equipment manufacturers are increasingly using the EaaS model to create more sustainable revenue streams and offer powerful service packages with hardware and software components. Due to increasing competition and commoditization1, manufacturers are constantly looking for new strategies to remain competitive. Equipment as a Service (EaaS) is a pioneering approach – comparable to the growing importance of cloud services.
What is Equipment as a Service?
Equipment as a Service, also known as Machine as a Service or Machinery as a Service (MaaS), is a business model that means that engineering and other companies no longer buy their tooling machines, automation lines or plant equipment. Instead, they rent them from the machine builders, at the same time outsourcing maintenance, updates and general upkeep to the OEM. The fees and service level agreement tend to be decided on an individual basis. This may be a set monthly charge or be according to actual usage in a pay-per-use model. The service charge encompasses continuous upkeep of the machine, including monitoring, maintenance, spare parts, upgrades and all-round customer support. While there are several advantages for the customer with this service-based business model, the machine manufacturer also benefits from entering an MaaS agreement through secure, regular revenues and the ability to gain in-depth knowledge of actual customer needs. This lets the equipment manufacturers grow customer satisfaction and exploit cross-selling potential. They can also ensure that their machines and systems stay up-to-date with the latest technology, as the equipment remains under their responsibility.
For the customer, this different way of investing in tangible, fixed assets gives them a high degree of flexibility and scalability. By leasing rather than buying their equipment, they reduce or even eliminate high one-off investment costs. At the same time, they transfer part of the operating risk to the manufacturer. All in all, EaaS is not just an innovative business strategy, but a revolution in the traditional understanding of machine ownership and use. And this comes with a number of benefits – for both customers and manufacturers.
The advantages of EaaS for customers and providers
For the customer, the biggest advantages of an Equipment as a Service model are in ease and security of planning.
- Higher flexibility: The ability to access machines and systems as and when you need them, without high initial outlay.
- Greater scalability: The freedom to adjust the machine capacity and quantity according to demand and other production fluctuations.
- Lower workload: The responsibility of carrying out maintenance, upgrades and repairs now lies with the manufacturer. The customer doesn’t need to budget time or financial resources for this as the costs are fully covered by the service charge. This also makes budgeting and accounting easier.
However, machine manufacturers also benefit from a Machine as a Service model in the following ways:
- Regular income streams: Rather than getting a one-off lump sum, the machine builder benefits from a continuous income stream. This improves cashflow, makes financial planning easier and also has tax benefits.
- Improved customer retention and relationship management: The ongoing support in an MaaS model promotes a close, long-term relationship between plant engineer and plant operator. This can be further strengthened by using the insights into the customer’s needs to introduce further customer satisfaction methods.
- Greater scope for innovation: A USP of being able to constantly offer the latest technology to meet their customers’ needs gives the machine builder a competitive edge over the rest of the market.
A closer comparison of the EaaS model with the traditional purchase model reveals further advantages for the machine manufacturers’ customers:
Equipment as a Service versus purchasing fixed assets
In the traditional purchasing model, companies invest in plant, property and equipment (PP&E) as capital expenditure (CAPEX). This requires considerable financial investment upfront, which often carries a high level of risk. EaaS, on the other hand, converts the costs for plant equipment into operating expenses (OPEX). This enables more accurate budgeting and creates the opportunity for more flexible investments.
This approach allows machine ownership and service to converge. By shifting asset costs from CAPEX to OPEX, EaaS improves cashflow while also providing constant access to the latest technologies. The future of mechanical engineering is becoming more flexible, innovative and sustainable through EaaS – a promising, revolutionary service model.
Equipment as a Service also has a positive impact on a company’s sustainability credentials, a value that is becoming increasingly important for all companies. An EaaS model contributes to greater sustainability in several ways.
Equipment as a Service increases sustainability in plant engineering
Equipment as a Service (EaaS) plays a crucial role in driving sustainability in the mechanical engineering sector by promoting resource efficiency and a circular economy. The model encourages manufacturers to produce high-quality and long-lasting machines as they remain responsible for their lifespan and ongoing performance. This quality reduces the need to frequently replace equipment, which naturally reduces resource consumption and waste. In addition, EaaS persuades manufacturers to implement innovative technologies to monitor and optimize machine performance, resulting in improved energy efficiency and a lower environmental footprint. With flexible billing models and the ability to reuse or recycle machines at the end of their life, EaaS promotes a circular economy, contributing to the long-term sustainability of mechanical engineering.
One of the main advantages of EaaS for customers is the convenience of no longer needing to worry about maintenance and servicing. After-sales services therefore play a key role in EaaS.
After sales in Machinery as a Service
After-sales services play a crucial role in Equipment as a Service. By continuously monitoring machine performance and analyzing the data collected, service providers can identify potential problems at an early stage and take appropriate action. This minimizes downtime and maximizes machine availability. Furthermore, after-sales may also include additional services such as maintenance, repairs and training to ensure that customers always get the most out of their machines.
In order for manufacturers and customers alike to benefit from EaaS, large amounts of data need to be able to flow unhindered. This requires a certain groundwork which not only ensures the data can flow, but also meets all security and compliance requirements.
MaaS needs a solid, technical foundation
Good, solid integration is at the heart of MaaS/EaaS. In order for data and commands to flow, as well as ensuring an efficient machine control and monitoring, there needs to be a flawless interplay of different technologies. This is made possible by application programming interfaces (APIs) that mediate between machines, digital platforms and the Industrial Internet of Things (IIoT).
Adding IIoT sensors that continuously collect data on the performance, condition and operating parameters of machines enables real-time monitoring. This data is then forwarded to a Manufacturing Execution System (MES), where it can be used for preventive maintenance or to record performance.
At the foundation of EaaS is a strong technical infrastructure, which is crucial for its efficiency. By harnessing edge computing alongside cloud infrastructure, data can be processed and stored efficiently, ensuring seamless functionality. A central integration platform serves as a hub for the exchange of information between different systems and enables smooth communication and collaboration.
This platform acts as a control center that connects the various components of EaaS and ensures efficient operations.
Outlook: Remote services and predictive maintenance for EaaS models
Harnessing EaaS opens up new possibilities for remote services and predictive maintenance. By continuously monitoring machine performance, potential problems can be detected early and rectified before they lead to expensive downtime. This predictive maintenance helps to extend the service life of machines and increase productivity. In the future, the integration of remote services and predictive maintenance will enable even closer networking between machines and service providers, which will lead to greater optimization of operating processes.
In order to reliably meet all technical requirements as well as security and compliance specifications, even in complex integration landscapes, it is essential to work with a specialist integration provider.
How can SEEBURGER help you implement Equipment as a Service?
The SEEBURGER BIS platform means machine manufacturers and their customers always have access to up-to-date, valuable data on the status and utilization of the machines and systems provided. The low-code platform provides users with a wide range of integration functions, connectors and industry-specific solutions, as well as cloud integration services. The BIS platform meets the highest standards of scalability, stability and security and enables the seamless integration of APIs, applications and data as well as digital twins and smart services.
Source: https://blog.seeburger.com/equipment-as-a-service-from-fixed-assets-to-flexible-services/