Capgemini Sees Subscription Model Adoption Increase

Reading time: 7 mins

Meet the Experts

  • Ram Ranganathan

    Director of SAP billing and revenue innovation management practice, Capgemini SAP Practice

  • Prashant Jain

    Vice President, Business Transformations and NA SAP CoE Leader, Capgemini

Meet the Authors

Key Takeaways

⇨ Consider servitization for flexibility, risk reduction, and increased profit margin. Subscription-based models provide companies with flexible billing options, reducing risks associated with economic volatility. Such revenue options are unattainable with a single customer transaction. Smart products can help capture the monthly usage of products and stream that information into the billing engine.

⇨ Explore technologies that support an evolving XaaS model. Smart devices, including sensors, are critical to providing a long-term strategic advantage for companies utilizing a XaaS model. Sensors provide 24/7 monitoring of usage and continual data insights that enable companies to respond quickly.

⇨ Subscription-based does not equate to inferior quality. There can be misconceptions that servitization means lower quality to the customer. In fact, the opposite should be true. Because customers are paying on a subscription-based schedule with outcome-based expectations, the pressure is on companies to provide the most high-quality service possible. Customers can often discontinue service and move to another provider if quality suffers.

In this article, we will explore the benefits of the subscription model, like Software-as-a-Service and Infrastructure-as-a-Service, in the technological arena
Within the last few years, more companies (and consumers) are becoming part of the subscription economy. However, servitization now extends into a multitude of product and service categories, changing the business landscape — both financially and operationally. Today, more companies are adopting the XaaS approach to bring individualized solutions and experiences to their customers and establish a partnership for future growth. How customers interact with products and services is evolving, says Jain. Commoditization is giving way to personalization where product and service alignment is a critical business strategy. And with it comes a higher service expectation. But how do companies better service their customers? Traditionally, companies sell a product and it is delivered to the customer without further engagement. However, customers want to engage with products to leverage them for strategic advantage. They want to be associated with leading products and services and see what improvements and new features are launched as they evolve throughout the life cycle.

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