XaaS - Everything-as-a-service

How businesses can thrive in the age of climate change and digitalization

XaaS business and operating models can help us move to a more efficient, more circular economy. We're making the economic, environmental and social case for a better way of doing business.

Industrial companies need new solutions to reduce their carbon impact and increase sustainability. Technological progress provides the data, analytics and connectivity to transform how businesses operate. A new opportunity space exists to create more productive and service-oriented systems. Everything-as-a-Service (XaaS) models can deliver both environmental benefits and economic value.

XaaS models combine tangible products and intangible services to meet users’ needs. Producers often retain ownership of the product, and are responsible for its lifecycle. When they do, they are incentivised to adopt circular economy strategies: to design longer-lasting products that can be used more intensively, and to incorporate maintenance, repair, reuse, remanufacturing, refurbishing, and recycling into their system thinking. By focusing on user needs, flexibility and performance, XaaS models have the potential to strengthen long-term customer relationships and capitalize on new value pools.

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XaaS: Making it work

More and more companies are recognizing the environmental impact of XaaS models – but they do not always leverage the full potential. Many companies are stalled by the complexity of design choices and do not make all the links to economic, environmental and social value creation. This report explores the bigger context: the changing industrial landscape and the connection between the circular economy and value creation.

XaaS can look very different across sectors and businesses. Created with multiple expert inputs, our toolkit offers four design elements: First, an XaaS strategy and value proposition that connects your customers’ needs and your system impact ambitions. Second, business model and financial design. Third, developing the circular product and operating model to decrease environmental impacts; and fourth, an ecosystem design to optimize the internal organizational set-up and finding the right partners for implementation.

Three deep dives show how ambitious transitions to XaaS for cars, machinery & equipment and white goods can generate both environmental and economic value. These analytic insights and a host of case studies make the case for catalysing XaaS ecosystems through digital technologies, policy support and collective industry action.

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"People don’t need cars, they need mobility. They don’t need washing machines, but rather clean clothes. We don't need ownership as much as we need access."

Why XaaS?

The shift towards a performance economy means less focus sale of materials and products, and more on delivering outcomes – ultimately decoupling economic growth from resource consumption. For producers, selling utility or outcomes (e.g. mobility or yield), rather than a product, comes with an incentive to achieve that outcome with less material use or operating cost. And compared to a one-off transaction, it builds the deeper relationship to customers that they need in a competitive market.
Whether as companies or consumers, we know we need to reduce our carbon footprint. But how? For many consumer goods, the majority of emissions come not from manufacturing, but in their use phase: around 50% for computers, closer to 50-80% for conventional cars. The smarter use patterns of XaaS models promote a more sustainable use of natural resources, reduce waste, and help our economies on the path to net zero.

Case study explorer

Scroll and hover on the cards below to explore some of the companies using XaaS

Riversimple

Riversimple operates hydrogen-powered fuel cell electric vehicles in a full-service subscription model. From the business model to the design of the car, circularity principles are applied. The model internalizes all use phase costs (e.g. hydrogen for the fuel cells), which generates incentives to produce/procure for maximum efficiency. Furthermore, it optimizes the design for longevity (i.e. maximized quality), treating the vehicle and its materials as a lifetime revenue generating asset. The company aims to implement XaaS models along the supply chain, from the materials to the fuel cell.

Trumpf

TRUMPF is a market and technology leader in machine tools and lasers for industrial manufacturing. TRUMPF entered a strategic partnership with the reinsurance company Munich Re to provide machinery equipment-as-a-service. The Pay-per-Part model directly addresses customer challenges, offering them improved performance, transparency and
flexibility. TRUMPF and Munich Re assume the operational risk and upfront investment. Customers pay only for what they need – the cut sheet metal part – and can focus more on their core business, sales and own customers.

BlueMovement

BlueMovement, a subsidiary of BSH Hausgeräte, offers high quality and energy efficient Bosch household appliances, such as washing machines, dryers, refrigerators and dishwashers in flexible subscription offers. Customers can choose between different contract periods and between new versus refurbished appliances. Additional services include professional instalment, repair or replacement services. Upon contract termination, the appliances are collected and refurbished/reconditioned. BlueMovement has been introduced in the Netherlands and is scaling in other European countries.

CWS

By focusing on solving customer needs from a systemic perspective, CWS offers full-service solutions for hygiene/washroom and workwear. The Hygiene-as-a-Service model involves everything from equipment to operations and professional support services. The Workwear-as-a-Service model integrates product design strategies for durability, repair and professional washing services, as well as recycling partnerships. Products and services are part of a circular system: for example, textiles are cleaned in a resource-efficient way and can be reused extensively, thereby significantly increasing customer convenience

Philips

Philips is successfully applying various XaaS business models to operationalize the company’s strategic objective of generating 25% of sales from circular products, services and solutions by 2025. To do so, Philips committed to take back all large medical equipment by applying product-oriented XaaS models. Typical equipment to be recycled or repurposed by Philips includes the MRI and CT scanners. To execute the product-oriented business model, the company is collaborating with various partners across the globe.

Grover

Grover is a sharing platform for technological devices such as notebooks and TVs replacing traditional ownership models with flexible subscription services. After the subscription term, products are returned and offered again. On average, products are recirculated four to five times, thus increasing the utilization of unused devices. Reuse and repair services effectively extend the life of the equipment. Grover aims to enable large retailers and OEMs to adapt their business model by integrating consumer-electronics providers on the platform.

Featured exhibits

Report endorsements

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"Business success tomorrow means creating value for environment, society, and business. This requires pioneering research and development, but also new business models that can essentially decouple CO2 emissions from business growth. Scaling XaaS systems that embrace circular economy principles will be important for generating sustainable growth – and calls for a collaborative and focussed effort across industries."
Saori DubourgMember of the Executive Board, BASF

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To reverse the climate and biodiversity crises and build a climate neutral economy by 2050, we must accelerate the decoupling of our economic growth from emissions and resource use. A simple replacement of fossil-based with bio-based will not be enough. We need innovative circular business models that are increasingly service-oriented and drastically reduce our dependency on primary resource extraction.

The Everything-as-a-Service report provides powerful and much-needed evidence on how such models work, and offers clear guidance to have them succeed on the ground. This report is therefore an important contribution to one of the key priorities of the European Green Deal and its Circular Economy Action Plan.
Frans TimmermansExecutive Vice-President of the European Commission

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Sustainability is an integrative part of our corporate strategy. Implementing measures inspired by the circular economy makes an important contribution – ranging from product design for sustainability to circular and service-based business models. We all need to seize the opportunity to accelerate the transition towards more resource-productive and sustainable industrial systems.
Carla KriwetChief Executive Officer, BSH Home Appliances Group

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“Waste and disposability are woven into today’s economy, fueling climate change and limiting opportunities for long-term economic prosperity. Everything as a Service shows how – as part of a circular economy – we can change that, and harness the power of design and innovation to deliver better outcomes for businesses, their customers, and the environment.”
Dame Ellen MacArthurFounder & Chair of Trustees - Ellen MacArthur Foundation

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"Germany has set ambitious climate targets. To achieve climate neutrality by 2045, increasing the use of renewable energies is not enough. We need to manage our natural resources differently. For industrial nations, the transition towards a circular economy is an attractive opportunity to drive prosperity within ecological boundaries. As this report shows, demand-side innovations are both a critical and an attractive way to drive the transition: Germany can sell services, outcomes or results in the same successful way in which we have sold products in the past. The report describes a vision in which XaaS can grow into an essential driver of Germany’s innovation, competitiveness and employment in Europe and beyond.”
Elisabeth Winkelmeier-BeckerParliamentary State Secretary in the Federal Ministry for Economic Affairs and Energy

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"Moving to a Circular Economy will require fundamental change, such as a shift to Producer Ownership, where producers take ownership and responsibility for their product over the full lifecycle. This could generate incentives for new XaaS business models to gain a competitive edge through the design of products for durability, dematerialisation, re-use and high-value recycling."
Paul EkinsProfessor of Resources and Environmental Policy, UCL Institute for Sustainable Resources

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“Services that unlock value by helping us to better utilise, circulate and improve products and materials are critically enabling first layers of the circular economy. They represent exciting ways in which innovators and designers can begin their journey and apply society's well developed skills in service design.”
Tim BrownExecutive Chair, IDEO, and Vice Chair, kyu Collective

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“As markets tumbled early 2020, many of us expected that the pandemic would slow global action on climate change, but the opposite happened. The pandemic forced society as a whole to remember the fragility of our planet. The 2021 XaaS Everything-as-a-Service report splendidly raises the importance of climate risks and outlines holistic strategies as we face issues relating to climate change. For us as an investment firm, climate risks are investment risks and we therefore see sustainable circular economy strategies, that aim to reduce carbon emissions, as becoming increasingly important.”
Mirjam Staub-BisangCountry Manager Switzerland and member of the ExCo EMEA, BlackRock, Senior Advisor BlackRock Sustainable Investing

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“Equipment-as-a-Service offers industrial companies entirely new and disruptive business and production opportunities. By essentially focusing on performance, flexibility and convenience, this allows customers to focus and grow. Beyond that, EaaS is the path to a business model based on Circular Economy principles. As this report outlines, implementing such models at scale will require collective action within and across industries.”
Peter LeibingerChief Technology Officer and Vice Chairman of the Group Management Board, TRUMPF