In 2017, Christoph Loos, CEO of Liechtenstein-based tool manufacturer Hilti, said: "Customers want to buy holes instead of rotary hammers." He was expressing a development that is becoming increasingly relevant for manufacturers and their customers: Technology alone has no value for them, no matter how sophisticated it is. It must also offer a concrete benefit, for example by solving a problem or improving a situation. In addition, digitalization means that customers can use machines without having to buy them. X-as-a-Service business models - be it mobility, lighting or machining - are therefore becoming increasingly popular. This lesson can be drawn from this: It is no longer enough to develop and produce innovative, high-quality or inexpensive products; companies must solve problems with their products, fulfill a wish or make them usable as a service. The development from pure product manufacturer to solution provider takes place in several stages.

Five stages of development

The FIR research institute at RWTH Aachen University, which specializes in service and maintenance, describes the path from product to solution provider in five stages. In the first stage, the company begins as a pure product manufacturer. The product and its features are clearly the focus of the business model and marketing. If the company already offers services at this stage, this is done unsystematically and not as part of planned business revenue. At Lapp, this level initially includes the production and sale of connection components such as cables, connectors and switches. This is also the entrepreneurial origin of the Stuttgart-based company for integrated solutions in the field of cable and connection technology. At the second stage, the company then offers individual services in addition to the product that are useful for its use. One example from Lapp here is the additional handling of logistics services and project management in the project business.

One level further includes services as a business model, which are an integral part of the offering together with the product, for example a service with which the company offers customized solutions and their implementation for its customers. Lapp can already be involved in planning processes for machines, for example, whereupon individual adaptation and implementation of corresponding connection components is possible. Special cable configurators give customers more flexibility when planning and ordering. In the Ölflex-Connect system, the Stuttgart-based connection specialist offers customized solutions from design and drawing to assembly and pre-assembled drag chains.

At level four, the company has arrived at a complete solution. The product is no longer the core component of the business model. It is now about comprehensive services for development, production, operation and optimization. To this end, Lapp now offers the Health Check Service for machine and system areas. A company that offers a complete solution as a service in an operator model - an as-a-service model - has reached the fifth stage and thus the peak.

Maximize capacity utilization, minimize cost pressure

For manufacturers as well as their customers, such a change across the five stages means many advantages. The purchase of new machines is usually a significant investment. This can be difficult to shoulder, especially in sectors such as woodworking or metalworking, which in Germany consist mainly of small and medium-sized companies. And once the machines have been purchased, there is pressure to use them around the clock in order to justify the costs - but this is not always possible.

A metalworking company that no longer buys and operates its machines itself, but instead purchases machining as a service, can significantly reduce this economic pressure - usage-based billing takes away the worry of order-related machine downtime and can even make the production of small batches and individual pieces economical. Meanwhile, the providers of the overall solution in the operator model, in this case machining, benefit from the fact that their machines are utilized to the maximum because they are accessed by many different customers.

Secure network technology with the Health Check Service

For such business models to work, providers and customers must exchange data on a large scale - when the customer orders or pays for a service and when the provider tracks and invoices usage or monitors and optimizes processes. High system availability and the networking of the machine with higher-level business processes and their production data are prerequisites for the transformation in terms of the Industrial Internet of Things (IIoT) - this is where Lapp comes in with its Health Check Service model for network technology.

The background: According to the Indusol Vortex Report, 50% of all machines failed in 2021 due to connection problems with plugs, cables and switches, for example due to mechanical stress, ageing, inferior products, incorrect earthing and other factors. And when industrial machines and their data connections fail, it quickly becomes costly - as well as extremely damaging for usage-based business models. Lapp wants to avoid this: The health check service analyzes Ethernet and Profinet systems, detects current and impending errors or weak points and offers suggestions for improvement. Lapp not only provides support for existing machines, but can also be consulted during machine planning and commissioning in order to identify probable faults and failure factors in advance. It makes sense for Lapp to offer this service, as the knowledge is available, as are the measuring instruments and the experience. Customers receive a reliable status analysis of their network technology, which enables higher machine availability and production efficiency. Lapp ensures that the appropriate and reliable components are used and, if necessary, recognizes the need for further developments in its own product portfolio to meet individual customer requirements.

With offerings such as the Health Check service, Lapp has not yet reached the peak of the transformation, but has already successfully climbed the fourth step on the way to becoming a service provider. This is because customers want to purchase efficient production processes instead of individual components.