Machine-as-a-Service

How Machine-as-a-Service Will Impact the Manufacturing Industry

Friday, June 1, 2018

​​The Industrial IoT is connecting gadgets, tools, and equipment to leverage the efficiency of advanced machines to benefit the everyday consumer. Unfortunately, today’s consumer is prone to rejecting outdated gadgets and deeming them unusable, regardless of functionality. This costly, inefficient, consumer mentality has created somewhat of a cyclical entanglement between consumers, the Industrial IoT, and the manufacturing industry.

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​​In this article, we will discuss how Machine-as-a-Service could bridge the gap between the ever-changing consumer platform and advanced technologies.

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​​Enter Machine-as-a-Service

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​​Instead of purchasing new equipment and adopting techniques to keep up with the rapidly-changing consumer demands, manufacturers have an opportunity to reduce the cost of acquiring hardware. Machine-as-a-Service enables manufacturers to finance usage-based equipment on scalable, affordable terms, which can ultimately increase both productivity and efficiency; creating significant financial gains.

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​​What is Machine-as-a-Service (MaaS)?

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​​As many of you know, Software-as-a-Service (SaaS) is an established business model and widely used today. MaaS has the potential to become as influential in the manufacturing industry. The MaaS model allows OEMs to sell machine packages including hardware, software, maintenance, and installation and receive revenue based on the productivity of the machine over its life-cycle rather than a traditional capital purchase.  This aligns incentives for both the OEM and end-user and creates a better business environment.

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​​Under a MaaS model, end-users can pay for services rather than a product, and MaaS contracts often include a service-level agreement (SLA). So how does MaaS affect the manufacturing industry?

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​​OEMs have the opportunity to offer usage-based financing, or MaaS, to their customers. The payment scheme for end-users allows them to pay OEMs in correlation with pre-determined milestones before and after the delivery of machines. This allows the OEM to create a recurring revenue business model and break away from the industry's traditional machine acquisition process. Significant upfront capital purchases are no longer required with MaaS.

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​​For the end-user it allows them to afford the most technologically advanced machines on the market, without having to pay for the entire machine and technology upfront.  Leveraging the power of blockchain, OEMs base payment processes on the productivity of a machine over its leased lifecycle.

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​​Improving Profitability

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​​With the OEM making money based on the performance of the machine, the maintenance of that machine suddenly becomes very important to both the OEM and end-user. Changes to the payment structure incentivize quick, preventative maintenance.

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​​We've seen a similar transformation of MaaS in Software as a Service (SaaS). SaaS made it possible for subscription services to become widespread and largely accepted by the consumer platform. As manufacturers search for ways to become more efficient and continuously sell the most advanced technology, MaaS becomes a more attractive option for OEMs to explore. MaaS has room to transform the manufacturing industry.  Cheaper components, easier prototyping, more accessible contract manufacturers, newer distribution channels and hardware-friendly investors make it easier for MaaS to reach multiple audiences.

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​​Conclusion

​​There several advantages to MaaS which make it a natural fit for the manufacturing industry, including lower up-front capital expenditures, service-sharing, simplified maintenance, and guaranteed up-to-date hardware. With this model, manufacturers can achieve greater flexibility, lower running costs/cost-per-part, and, ultimately, drastically improve their bottom line. SteamChain's Machine-as-a-Service model enhances the opportunities and benefits for OEMs and end-users alike.  

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​​Want to learn more? Reach out to the professionals at SteamChain.io or give us a call at (414) 502-8880.

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