Why Products-as-a-Service (PaaS)
PaaS enables customers to adapt and evolve services with needs over time. Instead of large upfront investments and risk, customers gain access to flexible configurations of service-based solutions. At the same time OEMs (Original Equipment Manufacturers) benefit from deeper insights into customer behavior, fostering long-term and value-driven relationships. The focus shifts from selling standalone products to delivering value through reliability, sustainability, and resource efficiency.
Modular platforms play a crucial role by integrating physical and digital solutions, improving resource utilization, and seamless upgrading and maintenance. The combination of a platform strategy and PaaS model accelerates innovation, including profitable circular principles beyond recycling of hardware.
No single strategy guarantees success
Moving from a product-centered to services-centered model requires an integrated approach that dynamically combines multiple perspectives — providing leadership with the right insights to navigate uncertainties and establish new capabilities to strengthen and scale PaaS over time. FUTURE LAB emphasized five key perspectives:
- Customer – Understanding changing needs, behaviors, value, and risks from a customer perspective
- Modularity – Platforms for integrated value creation through hardware and software solutions
- Configurability – Scalability and customization of services and products
- Lifecycles – Optimization of resources and processes over time and across ecosystems
- Business Model – From one-time sales to a long-term strategy and sustainable value creation
FUTURE LAB discussions highlighted common challenges and a strategic dialogue that is often missing in executive teams and boardrooms. It underscored the need for a shift in perspective from product sales to long-term value creation in PaaS models:
"Too often, experts focus on defending their perspective, which leads to a system that primarily optimizes and improves what is already being done." – Håkan Samuelsson
"This is tied to a long tradition. Many are beginning to understand the value, but few are willing to pay for sustainability. We must recognize that value creation looks entirely different today. The entire ecosystem has yet to catch up, and although companies know what is needed to improve efficiency, they are still far behind in these discussions." – Igor Tasevski
"The focus is on optimizing quality and cost when we really need to become more effective by doing the right things." – Håkan Samuelsson
CAPEX to OPEX - A major shift for OEMs
A major shift for OEMs is moving from capital expenditures (CAPEX) to operational expenditures (OPEX) business value perspective. Instead of selling products as one-time investments, PaaS delivers recurring, needs-based value over time. This shift is especially relevant in capital-intensive industries, where companies offering leasing and service models have already proven their value proposition by reducing investment complexity, risks and improving resource utilization. Another key capability and opportunity for OEMs to succeed with a PaaS model are connected products and digital platforms. These platforms enable service reconfiguration, upgrades, logistics, fleet management and partnership effectiveness to ensure scalability and sustainability of a PaaS model.
What’s Next for FUTURE LAB?
To build up on these insights, we will reconnect with our network to share lessons from ecosystems built around connected products, software, AI, cloud solutions. Our next FUTURE LAB will explore the role of software – from embedded in product-centered business models to cloud platforms for AI and data-driven services, with a focus on customer value, sustainability, and profitability.
