Digital Transformation in Practice

In the lecture Digital Transformation in Practice, by our Managing Director Sebastian van Wickern, he explains using many examples from 9 years of innovative digital product development how you could enrich your products with business models from the software industry and thus positively influence your target group, your profit and the quality of your product.

Sebastian takes up examples from the consumer electronics environment, from the construction industry, from the cleaning industry, and from the software industry to show how they strengthen their customers’ loyalty, increase their prices and at the same time make their customers happier.

_Business Models.

SaaS

Software as a Service (SaaS) can be explained well using Salesforce as an example. Salesforce is a leader in customer relationship management (CRM) and offers cloud-based CRM software. Customers use Salesforce by logging in over the web instead of installing the software on their own servers. This gives them convenient access to powerful customer relationship management, sales, marketing, and customer service tools from anywhere. Customers pay regular subscription fees to use the Salesforce platform, saving them from updates, maintenance, and support. Salesforce takes care of the technical infrastructure, while customers can focus on optimizing their customer relationships. This SaaS model has helped increase the efficiency and agility of businesses and transform the way software is delivered and consumed.

Free / Freemium

The free business model, also known as the “free model” or “freemium model,” refers to a business strategy in which a company offers a basic version of its service or software for free, while charging for advanced features or premium services. This model is often used by online services and software companies. Google Search offers a good example of the free business model:

Google Search’s business model is based on an effective and comprehensive search engine offering that is free for users. Google generates the majority of its revenue from advertisements that appear in search results. Businesses pay Google to place their ads prominently when users search for relevant terms. The auction model allows advertisers to bid for the positioning of their ads. Google also benefits from its extensive reach and personalized search results, which allow it to deliver targeted ads to users. In addition, Google offers additional services and products, such as Google Ads, Google Maps, and Google Workspace, that businesses can use for a fee. This business model allows Google to target a huge user base while generating revenue from advertising and premium services, making it one of the most successful tech companies in the world.

PaaS

The “Product as a Service” (PaaS) business model is an innovative approach in which companies no longer sell products, but instead offer them as a service or subscription. This model aims to provide customers with convenient access to the benefits of a product without physically owning it or having to pay for the full purchase price. An example of Product as a Service is Xerox Print Services:

The Xerox Print Services (XPS) business model is based on Managed Print Services (MPS) and provides companies with comprehensive solutions to efficiently manage their print and document infrastructure. XPS starts with a thorough analysis of the existing print environment, identifies weaknesses and inefficient processes, and then develops customized solutions. Xerox will supply, install and train the customer’s required printing and copying hardware. Through continuous monitoring and remote maintenance, Xerox ensures that printing equipment is always ready for use. Transparent billing is based on actual usage and consumables, allowing businesses to control costs. This model allows companies to focus on their core businesses while Xerox manages and optimizes print infrastructure to increase productivity and reduce total cost of ownership.

Razor and Blade

The Razor-and-Blade model is a good example of Xbox. Microsoft often sells the Xbox consoles (Razors) at a comparatively low price, sometimes even at a loss, in order to then generate long-term revenue through the sale of video games, subscription services such as Xbox Live Gold or Xbox Game Pass, and accessories (blades). The console itself serves as a platform to keep customers engaged in the Xbox ecosystem. Customers need to purchase new games and services on a regular basis to improve their gaming experience, resulting in them spending more on blades over time than on the console itself. This model fosters customer loyalty and allows Microsoft to generate long-term revenue and maximize the value of their console offerings.

_How does the digitalization of your products lead to more sales?

In the spirit of a lean startup, we suggest thinking in deliverable steps, which means that your customers can slowly get used to the new products and services and you can try them out without having to take all the risk at once.

Here is an excerpt from our webinar where we describe the usual steps:

_Why should you know why PaaS might be so important to you?

PaaS means that the barrier to entry for your customer becomes smaller by paying for the product over time, rather than at first. In the video excerpt from the webinar, you can find out what makes us believe that the majority of your customers want this.