Asset as a Service

 

EXECUTIVE SUMMARY

Asset-as-a-service (AaaS) business models are increasingly being adopted across multiple industry sectors, driven by a growing demand from users of such assets as machinery and equipment. In the AaaS model, users no longer purchase assets; instead, they are billed for the actual benefit they receive. However, to introduce AaaS business models successfully, parties must meet several conditions.

AaaS models require the use of sensors to collect Internet of Things (IoT) and telemetry data, which is then shared and processed via networked systems, and provide a basis for calculating actual usage and current asset value. Automated billing, invoicing, and payment, as well as integration with existing enterprise resource planning systems, are important factors for scaling AaaS models.

AaaS delivers both benefits and implications for the existing business models of all parties involved. These parties include the equipment manufacturer, the user, and investors, such as financial institutions that traditionally provide loans or leasing models.

But a key question arises: which of the parties involved own the assets, receive cash flows from their use, and bear utilization risks? The answer will depend on each player’s ability to transform — along with their willingness to change their business models. The outcome is also closely linked to financing design, which can be structured differently depending on the business model, preferences, and type of asset. This Report describes various options and explains the benefits and risks for everyone involved.