20 risks that B2B OEMs need to manage and mitigate selling Product-as-a-Service agreements
Configuring a B2B tailored, fixed-fee (i.e., $10 per hour of use), performance-assured (i.e., 97% availability), multi-year Product-as-a-Service [PaaS] agreement is difficult; indeed, driven by unfavorable impacts upon the income statement, balance sheet, IFRS/GAAP reporting, customer relationship, and more. A PaaS ‘gone bad’ can have a long-lasting negative impact on the seller.
The CFO and CMO of an OEM need to be assured that transitioning from the legacy build-and-sell business model to that of the PaaS model exposes the company to as few unfavorable risks as possible. So, in order to achieve leadership objectives, one has to know where the unfavorable risks can lie. The following list provides a selection of 20 risks that should be mitigated to assure leadership that the construct of a PaaS has addressed these concerns.
There are 4 sections to review for the risks:
A. Delivery of Aftermarket Services
B. Machine Production
C. Embedded Machine Operating Lease
D. Agreement Management
What other risk can you name for PaaS agreements?