11.12.2024

Subscription in SAP:
Synergy for a New Business Model

"Use instead of own" is the credo of a new movement marking a paradigm shift in consumer behavior. Trend researchers predict that this shift will drive the transition toward a circular economy. Companies can capitalize on this change through innovative subscription-based business models, such as those XEPTUM implements in partnership with solution provider Zuora.

"As-a-Service" approaches have long been successful in the software and cloud industries, and now subscription models are making their way into the world of physical products. A likely reason for this is consumers’ changing attitudes, as highlighted by a recent trend study. In the study, one in two respondents indicated that the idea of using products without owning them is a central part of their purchasing decisions. This shift may be due to heightened environmental awareness, as well as the financial benefits of "pay-per-use" models, which offer predictable expenses and flexible usage options. Without stretching their budgets, subscribers enjoy enhanced product and service quality.

How Can Subscription Models Help Companies Navigate Economic Challenges?

The shift in consumer culture and the transition to a circular economy offer companies significant added value – particularly in today’s challenging economic climate, characterized by declining growth rates, inflation, and postponed investments. As the traditional product-centered approach yields to a customer-centric mindset, manufacturers can leverage subscription or usage-based business models to great effect.
Subscription models, fully aligned with the principles of the circular economy, support the reuse of materials and products, helping reduce resources, waste, emissions, and energy consumption. This approach appeals to environmentally conscious consumers, while companies benefit from stable, predictable revenue and long-term customer relationships. Compared to one-time sales, subscription contracts lead to increased revenue as well as greater customer loyalty and brand affinity.

Which Subscription Models Are Already Delivering Success for Industry Leaders?

From product and service subscriptions to e-commerce, usage-based models are increasingly popular and are viewed as a core success factor in many innovative business concepts. One product example is Acer’s Device-as-a-Service (DaaS) program, launched by this global leader in information and communication technology. Acer’s program offers a highly scalable subscription model for providing the modern devices, software solutions, and service packages that businesses need to stay productive and competitive. In the service domain, Philips – a global leader in health technology – offers the Enterprise-Monitoring-as-a-Service (EmaaS) model, which enables care facilities to achieve a new dimension in patient monitoring.
The list of successful "As-a-Service" concepts continues to grow across all industries. With these models, providers succeed in building enduring customer relationships while embracing a resource-efficient and future-proof approach.