Services – Why XaaS is a thing?

XaaS seems to be a hype term used by many instances and in different contexts. It has gradually moved from the original meaning of cloud computing services to a much wider use¹. Different branches of industry have begun to offer traditional commodities as a service. There must be a catch in offering services.

Mostly services, less products

If you check the annual reports and financial statements of large global companies that are considered as conventional equipment manufacturers, you notice a common trend.  A noticeable share of the revenue come from services, in some companies up to 50 %.  Some of these companies have already stated themselves as service providers instead of manufacturers. 

The first impressions to these statements were a bit suspicious, but over the years, attitudes have changed.  Now there probably isn’t a manufacturing company that doesn’t mention services in their websites. What makes service providing so attractive then?

Steady cash flow and less care of expenses

I think that the most important factor is the continuous cash flow that services offer. Most of the equipment manufacturers offer for example maintenance with a monthly or annual charge that acts as an insurance. If something unexpected happens, the company promises to offer maintenance without separate expenses to the customer. The same applies to scheduled maintenance and other fixed costs. 

This is at least in my opinion a win-win situation as the service provider gets a steady cash flow and the customer is carefree from any unexpected maintenance costs. Carefree use of products is probably a crucial factor for many and the companies offering services are trying to fill this need.

New services in progress

We at TT Gaskets are also considering service providing as a potential way to improve our business. Many of our current development projects are related to new services in one way or another. The use of novel technology and new business models open possibilities for our products that seem simple to untrained eyes.  

But there’s more to the life cycle of gaskets than expected. Gaskets as a service or GaaS may one day be realistic. At least that is our target for the future of Smarter Sealing. 

¹ https://searchcloudcomputing.techtarget.com/definition/XaaS-anything-as-a-service