A nuanced, technology wise approach to the Product-as-a-Service space

Last week on HappyPorch Radio, we got the opportunity to learn from and engage with Patrick Hypscher, who brings a unique background: His education is a mix of economics and philosophy, while his professional experience is a blend of the corporate and entrepreneurial worlds. As host of Circularity.fm, he’s had a front row seat in getting to know a variety of key players shaping the circular economy, especially the Product-as-a-Service (PaaS) space. 

In a world where resources are becoming increasingly scarce and people are seeking ways to both simplify and make their lives and businesses more sustainable,  PaaS businesses can strongly meet this need.  

Let’s dive in, shall we?

Wading Into The PaaS Waters Smartly

Making the move to Product-as-a-Service isn't just about changing your pricing model. It's about changing minds—both inside your company and with your customers. Patrick, a circular business strategist who has guided companies through this transformation, puts it simply: "No matter if it's B2B or B2C, it's in almost all cases about change. And this is of course also true for all new companies and propositions. So when you enter a market with a PaaS solution, it's most likely in a setting where people are used to traditional buying and owning of a product."

This means you're not just launching a new offering—you're teaching people a new way of thinking. As Patrick explains: "It's about educating them, first of all, that this option exists - that you as a provider exist - and highlighting the benefits. Of course, the more you need to argue and convince, the more it is an indicator that your commercial proposition is not as strong as you want it to be. But still, you need to educate customers about it. And also, especially if you start in an existing organization, you need to educate your stakeholders and colleagues about that one."

The lesson here? If you're planning a PaaS transformation, budget time and energy for education—not just marketing, but genuine change management throughout your organization.

Why This Isn't Just a Trend

Product-as-a-Service might seem like a new business model, but the underlying concept is as old as commerce itself. As Patrick points out: "You could even argue like visiting a restaurant or maybe a bit easier visiting a hotel. If you want to go to the Highlands in Scotland and enjoy the nature up there, there's no need to buy a hotel or your own house. So you rent for a limited point of time. The privilege to use that asset over there. And this is a pretty common way of consumption."

What's new is applying these principles to previously product-dominated markets: "And of course now with the technology and technological innovation overall on the one hand and also with growing awareness for excess consumption you want to try out putting these kind of product-as-a-service systems into new fields, both in B2B and B2C."

But not every product should become a service. Success depends on solving real problems: "It always comes down to solving a customer problem. And in PaaS, I mentioned this is almost always connected to the service aspect or as we discussed before, the under utilization of assets which can be recovered through product-as-a-service."

The Secret Sauce: It Really Is About Service

After interviewing people at 16 different PaaS companies on his podcast, Patrick found a clear pattern: "It’s the service aspect that stands out. It's in your face, it's in the name, it's product-as-a-service. And the stronger the service aspect, the more likely you'll be successful with your product-as-a-service proposition." In other words, the "service" in Product-as-a-Service isn't just marketing language. It's the entire point. While this should seem self-evident, it’s something that those in the company beyond those leading the charge into this sector need to be bought in around, and actively supporting. 

What does this look like in practice? Take cooling-as-a-service in Singapore. Instead of selling air conditioning equipment to shopping malls and office buildings, companies like Kaer realized something: facility managers don't want to own complex HVAC systems—they want comfortable buildings. So rather than selling equipment, they started offering comfort. "What cooling-as-a-service does is they take away that pain both on the asset side but also on the service and maintenance side. And they equip all the assets with IoT devices and remotely operate this air-con setup," Patrick explains.

If you want to delve into the nuances of what such a business could look like, we interviewed Kaer’s director Dave Mackerness on HappyPorch Radio season 5. We explored how their shift to a PaaS model has allowed them to use data to build more efficient systems, saving them money to invest in technology that further optimises their infrastructure. 

Or consider HP's Instant Ink program, which serves over 11 million customers. People don't want to own ink cartridges—they want to print when they need to. HP's service solves the real problem: "It solves a customer problem and it takes the pain away of monitoring the status of your ink cartridge and ordering that."

However, we must note that this service highlights some of the environmental challenges of PaaS, as you are locked into disposable cartridges, rather than refillable. While HP does build recycling into this service, it could skip the need to do that altogether, by offering such a choice. 

How Customer Relationships Change (For the Better)

When you shift to Product-as-a-Service, something remarkable happens: you stop caring about making the sale and start caring about making the customer successful. This isn't just feel-good business philosophy—it creates tangible business advantages.

Consider Trumpf, a company that makes metal-cutting machines. They used to sell expensive equipment and hope customers figured out how to use it effectively. Now they offer a pay-per-part service where they remotely operate the machines for customers. As Patrick describes: "And they used to just sell it to their customers who then cut metal sheets and now with the as-a-service models. So basically, they even went further and say it's a Pay-per-Part model. They have a remote control center and they only require the customers to provide the input material to the machine."

The transformation goes deeper than operations: "That changed the whole, let's say, perception of the customer - The process and even also what you as a customer always want to have. The Trumpf team as the provider thought completely new about the appliance itself or the product itself, and ran into some weird behavior of their own product, which they wouldn't have found out if they were not responsible for the operations of this product."

When you're responsible for making your product work well over time, you learn things about it that you never would have discovered just by selling it. This creates a cycle of continuous improvement that benefits everyone.

There are some relational shifts that can happen, as Barry O’Kane, co-host of HappyPorch Radio, noted: 

“One of the things that stood out for me when Kaer talk about their transition from a linear to that is they moved from caring about the machinery to really caring about the users in the building. So interested in temperature change across time and people's attitudes to temperature, which is only possible if there's the real data and the measurement. There's a real kind of, not just practical business change, but a whole almost rethinking about who the user is, who the customer is.”

Taking a Patient Approach to Technology

One of the biggest mistakes companies make when building PaaS offerings is overcomplicating the technology from day one. In a world of rapid digital transformation, taking a careful, measured approach to technology a la the Agile framework can pay great dividends in the long run. While focusing on learning and moving quickly with technology as the business and broader world shifts can feel messy, we’ve found it the best way to align the tech benefits with the business needs - especially at the early stages. 

The strategy should be simple: start with what exists, focus on flexibility, and build only what you absolutely must. "When you start with the new offering, I think it's helpful to use existing software and when you select them, look first for maximum flexibility of the software itself, especially when it comes to everything proposition related. And of course also operations related."

Think of it as building with Lego blocks rather than carving from stone: "And in the next step check for compatibility and integration with as many other platforms and software as possible because that gives you just more options later on to iterate faster."

Why this approach? Because in the early stages, you need to be able to change direction quickly: "A typical challenge you will run into especially in the first years is iteration and flexibility of the software because at the end it's about exploring a new field and you don't know what kind of proposition will work in the market."

This flexibility matters because you'll need to experiment: "You need to tweak your offering, tweak processes, tweak, be it like contract durations, does it run on a fixed monthly amount? Are there any consumption based elements in the pricing? And so on and so forth. So you might wanna experiment with customer facing propositions and you need your software to reflect that."

The lesson? Build what you need when you need it, not before. And this is exactly how we at HappyPorch can help. From fractional CTO advice to dev team execution.

Making It Work Inside Big Companies

If you're trying to launch PaaS within an established company, you have some unique advantages—and some unique challenges. Patrick learned this firsthand at Bosch Siemens Home Appliances.

The advantages are real: "First of all, and this was also one of the main reasons to join BSH after I did my own startup independently - They have a legacy that people have them top of mind." Plus, you have infrastructure: "If you have an impact ambition it's great to build upon an existing global infrastructure in terms of sales and operations and when you know that something works and has a potential, it seems to be easier to scale that on a global level."

But there are challenges too. The biggest is often internal resistance based on the fear that services will cannibalize product sales: "At some point you do run into channel conflicts or at least discussions about that. Because it depends on the offering. But you could argue that the offering we had, which is using washing machines, dryers, fridges as-a-service, that this competes with the core business, which is selling."

Patrick's team found a way through this: "However we solved that pretty quickly in a way that basically said if the market develops in that direction, let's rather be part of that, right? And if the market doesn't, then there is no threat to the core business. Either way the company is better off."

The cultural challenge is just as important: "Of course you're always the odd person or team in the room, because you're doing something differently and that either leads to enthusiasm by certain people and say 'Yeah, we always said we should do that!' Or skepticism and resistance to change." Success requires empathy and patience: "You need to explain the model to at least 50% of the organization and without telling them that the way they did it the last 20 years is wrong, which is not the case, but you need to be aware of that dimension."

Building Your Business Case

Getting buy-in for PaaS initiatives requires understanding what matters to different people in your organisation. Patrick emphasises the importance of speaking everyone's language: "It depends on the function of the people. If it was from someone from accounting and controlling the answer and the approach would probably be different. And from marketing. So we'd always try to link it back to their domain and what are the goals of the department? And of course what's the personal interest?"

Your approach should also match your stage of development: "And it also depends on the stage of course, if you're super early stage and you're just trying it out then you have a different conversation. But it's harder to have something against just trying it out assuming that you're not in a phase of strict cost cutting."

As you grow, your justification becomes more data-driven: "But as soon as you have some traction, if you have hundreds or even hundreds of thousands or millions in terms of revenue, then of course you also need to provide a bit more and can provide a bit more data, what works, what doesn't work and so on. And how does it tie into the corporate strategy."

The key is always connecting back to company goals: "And this is, I think, key in any case. Especially when it goes beyond the initial pilot project that you need to link it back to corporate strategy and make it clear how it pays into the company goals."

The Bottom Line

Transforming to a PaaS company is more than simply a business model pivot — it’s a complete reorientation of how you as a company create value. Instead of simply making products and hoping your customers figure out how to get value from them, you as a PaaS company take responsibility for delivering that value directly, learning from your customers and improving how you serve them. 

The companies that succeed with this transformation share common traits: they ensure the entirety of the company is bought in, choose flexible technologies that allow rapid iteration to reflect the current business and broader reality, take a patient approach to building their capabilities, and keep the customer problems they're trying to solve at the forefront.

Most importantly, they understand that it's about becoming the kind of organization that customers want to have an ongoing relationship with, because you make their lives genuinely better over time.

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Want to go deeper? We invite you to take in the full episode, both in audio and written form, along with all associated links, here. Beyond that, we are always here to support your circular ambitions, with a nuanced, long term approach to technology inclusion. Learn more about our services here.