There was a time when customers purchased a new laptop or piece of equipment from a manufacturer and all they heard was “good luck, we’ll see you in a few years when you want another one.” As-a-service business models have changed all that, upending manufacturing norms and customer expectations to deliver results that are driving further innovations across industries.
The immediate outcomes of cloud-based services are obvious. Manufacturers gain continuous monetization from a steady stream of revenue, while their customers have new payment flexibilities to better control cash flow. However, as-a-service business models are not just a different way of doing business. They are also a relationship-building lever between manufacturers and customers – whether consumers or businesses. Two market leaders in the manufacturing industry shared their service-based strategies during a session held at this year’s SAP Sapphire & ASUG Annual Conference Orlando that was hosted by Heidi Zhao, director of Global Billing and Revenue Solution Management at SAP.
Service-Based Innovation at Align Technology Is Reason to Smile
Global medical device company Align Technology manufactures Invisalign clear aligners and 3D digital scanners that improve the smiles of millions of people each year. A longtime pioneer in advanced orthodontics, Align is constantly innovating to serve doctors in over 120 markets worldwide. The company is on a digitalization journey with SAP that will support monetization from as-a-service offerings for orthodontics care professionals and their patients.
“We selected SAP Billing and Revenue Innovation Management to help evolve our monetization models providing outcome-based services to our customers,” said Mary Kumar, senior vice president of Enterprise Engineering at Align Technology. “Customers will gain the ease of subscription-based options on a consumption or on-demand service model. In addition, having the ability to meet the country-specific needs of orthodontists and dentists in our global markets is super important.”
Align is undergoing the same business transformation as every traditional high technology company, exploring as-a-service choices such as leasing scanners to orthodontists and subscription-based packages that combine aligners and treatment planning.
“Customers don’t always want to pay larger amounts up front to purchase our scanners or diagnostic orthodontic software. They want to modernize their practice using our advanced technology, but with manageable monthly payments,” said Kumar. “These market demands are driving pay-as-you-go and subscription-based models with our customers who prefer to pay as they scan instead of paying for the scanner itself. Similarly, we produce four million aligners each day with automatic treatment planning. They may want to purchase a set number of aligners and mix and match treatment.”
SAP Is Central to Lenovo’s As-a-Service Transformation
Services are an important part of Lenovo’s vision to provide smarter technology for all through personal computers, smartphones, televisions, and wearable devices. As the world’s top PC manufacturer, providing the building blocks of modern IT, the US$70 billion company transformed itself two years ago to bring service-based solutions to meet customers where they are.
“Consumers and businesses want more flexibility in how they consume our products,” said Arthur Hu, senior vice president and CIO at Lenovo. “In the process of taking our portfolio and offering it as a service, SAP Billing and Revenue Innovation Management helped us evolve to a pay-as-you-go service model, providing the technology capabilities that underpin our business model transformation.”
Historically, Lenovo has sold hardware devices like laptops, phones, and tablets on a one-time basis. Now customers want to reduce the overhead surrounding the purchase and maintenance of Lenovo’s computing and edge devices and networking and storage solutions.
“Having an understanding of what your customers and their customers are doing drives innovation. Building a new business model is about exploring ideas, using technology to iterate quickly with insights from integrated data,” said Hu. “Customers are interested in a more managed service model for our devices across hundreds of countries and tens of thousands of seats. They want a secure computer experience for end users. Infrastructure-as-a-service is also on the rise. We can support everything-as-a-service, providing customers with different ways to consume our solutions, helping them be more nimble by reducing capital expenditures.”
Getting closer to customers may well be among the most positive unintended consequences of as-a-service business models. Manufacturers know precisely how customers are using their products and can continuously innovate services to better serve them, opening up greater revenue streams and delivering stronger experiences.