How to thrive in the Product-as-a-Service space

In a world where resources are becoming more constrained - things like copper becoming 20x more expensive in the past decade, others becoming entirely unavailable - maintaining stewardship over your products rather than solely focusing on always making new ones is just smart business. But it requires a different mindset, across the board. We explored this and more, in conversation with Yann Toutant of Black Winch, an expert in the Products-as-a-Service space, and ally to companies wanting to enter into and thrive in it. 

Overall, it became clear: PaaS by its very nature requires a different mindset around product development - shifting from designing against competitor’s specs and your previous products in order to inspire new sales, to making what you create endure, flex with and continue to meet your customer’s needs. With the increased data and longer lifespan of your products, it can make for a far more satisfying, beneficial and profitable experience.

But it requires thoughtful inclusion of the right technology for your particular needs, integrated well, which we’ll explore with you today. You can hear and read the full episode here. 

But first, what’s in a name?

We, along with probably you, were curious as to where Black Winch’s head tilting name came from. As it turns out, it’s not there out of mere attention seeking. It speaks directly to what they do:

“So Black Winch refers to two of my passions, which are sailing and music. A winch on a sailboat is an extremely interesting piece of equipment. It helps to leverage a lot of forces with very little force, so you can trim the sail and get tons of pressure just with your wrist by turning a little winch. 

So the message is this: You can leverage a lot within your organisation by implementing as-a-service with just a little effort. 

And as for the black part of the name - when you look at a stage performance, there's always a lot of people that are dressed in black from head to toe and are part of the show. You don't see them of course, but they are there on stage. They are very important in the performance. Similarly, Black Winch is on stage with you, but you won’t see us, helping you to leverage a lot of forces.”

We can relate to this, as it’s in a way emblematic of what HappyPorch does: help you harness technology to simplify your circular business operations, elevate the customer experience, and ultimately, endure as a company for the long run, its impact maximised.

Just what is PaaS?

While people’s definitions of PaaS can vary widely, seeing it much like any other subscription service, Black Winch’s definition brings it into sharp focus.:

“Our definition at Black Winch is the fact that a manufacturer will make a product available to  use with associated services, ideally based on an outcome. I'm providing you this technology with this expected outcome, and I will make sure that all the services are delivered.

In fact, in this case, the product doesn't count. It's not the problem of the user, it's the problem of the manufacturer to provide the right solution for the existing needs and to upgrade or downgrade this solution according to the evolution of the needs of the user. That's the holy grail of Product-as-a-Service. It's outcome-based. It's completely fluctuating and it's priced based on the usage.”

And how does PaaS differ from rental?

While some may see PaaS and rental as one and the same, Yann illuminated a critical distinction between the two:

“Product as-a-Service- the difference is that you have this solution, this product at your premises, at your home for a long period of time and you are the only user of this product for a year, two years, three years. And that's the main difference with rental. Rental is really a product that's gonna have a lot of different users during his lifespan. Product-as-a-Service will have 2, 3, 4 users during lifespan max.”

And as we discussed in the beginning of the Rental season of HPR with Danai Osmond of Refulfil, there are a spectrum of business types and terminologies under the Rental umbrella, offering a variety of experiences for the customer. PaaS bears similarity to those businesses, but differs in its overall orientation. 

PaaS: A deep and fruitful relationship between customer and business

Given its outcome based orientation, there is a deeper, more nuanced interaction between the company and customer, when it comes to associated services. Which the right technology can help glean and best leverage the most useful data. 

Yann shared what he saw as two levels of services, the first being maintenance, but with a different orientation than the status quo:

“It's more than maintenance. It's making sure that the equipment is performing as it should perform. Why? Because you're paid by the outcome. So if the equipment is not performing, you don't get paid. So  it's quite a good incentive for both parties to make the equipment run perfectly.”

But it’s the second level of services that things get quite interesting:

“The second level of service will be to make sure that the equipment is used to its best, so it's the consulting that comes with it. This is based on data that is being collected from the user of the equipment. And often this data is also being used to price the service, so it is easy to collect data to price the service but also to measure the efficiency of the usage of this equipment. 

And as a manufacturer, my role is to help the user to improve this efficiency. Think about industrial ovens, for example. In industrial bakeries, you can measure the usage of this oven the way it’s being heated up or cooling down. Many parameters that could be used to make sure that this oven is being used to the max and for example, that the energy consumption is the lowest.”

All of this requires the right mix of technology to gather and help make sense of the data being retrieved. 

And what does that look like in practice, and how does it benefit the customer?

“I can give you a very interesting example I've been involved in recently, someone in my family is in the flying industry. And the engines of planes, they're as-a-service. It's mainly a Rolls Royce doing it. It’s a very known use case. 

But then what they have developed also is that per airport, you need a certain power to take off. And it's different from one airport to another because of mountains around, because of the wind, because whatever. So the power you are going to put in the engine, according to the plane, of course, is different from each airport. So they have developed an algorithm that helps the pilots to choose the right amount of power to take off from this specific airport, to be able to take off and to respect safety. 

For example, one safety condition is that the plane could fly on any one engine if they have an engine failure. But the impact of that is that the price of the pay per use will be the best because the engine is being priced by the number of hours, but also the power of the engine that is used. Okay. It has also an impact on the kerosene consumption because you will have the best consumption of kerosene. 

That's a concrete example of: I can sell an engine and it's being put on a plane, or I can sell the way this engine is gonna be used for every takeoff. And that's an example of service to really enhance the usage of the equipment and get the best performance.”

How can technology best enable PaaS?

Given PaaS, practiced well, involves an ecosystem of services in support of the best outcome for all concerned, there is of course need for technology undergirding this. 

In what may come as a surprise to you, but for us is also a core way we approach the inclusion of technology, Yann has this to suggest:

“The mistake I see very often are organisations that define the whole technical stack before the first customer.

And then they automate something that they don't know what to automate, in fact. And in the practice they realise that what they have automated has no value.

So it's good to start with a lot of manual processes and basically Excel is the winner at this stage. And then to observe and to automate what needs to be automated.”

We couldn’t agree more. 

And while he sees CRMs such as SAP and Salesforce and an ERP as the top level resources that encompass the needed tech stack for an SaaP offering, it’s the connective software between product, consumer and business that is yet to have broadly applicable resources available.

In an insightful exchange that followed, our host Barry O’Kane noted,

“That is very clear for, as-a-service on these still relatively new models and particularly relatively new in certain sectors or certain categories where you need to work out or develop the process. It's not ‘Here's the blueprint, I know exactly what to do. Check the box.’ 

Are you seeing that slowly changing as we get more examples of successful models launching or Products-as-a-service launching? Is there starting to be more of a body of work of places for people to learn from each other and the work that you're doing for example, or is it still very nascent and everybody has to move a little bit iteratively and really do that learning?”

Yann’s answer was telling:

“It is so specific per industry that it's difficult to define. The principles, yes, are common to every industry, but the application of it has so much particularities that we haven't seen it yet.”

Which is where we can step in and help your business define, realise and execute the needed connective software resources. 

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We invite you to delve into the full conversation, transcript and resources here.