– Everything as a Service moves companies and consumers away from linear consumption to circular models of production and use
– Four building blocks are key to accelerating the transition to this circular model
- Transition to XAAS already happening:Rolls-Royce, Michelin, ShareNow, Signify, CWS and TRUMPF’s have successfully implemented XAAS models
LONDON/MUNICH – Transforming our current consumption models, from “take-make-dispose,” to a circular one where companies provide products as a service, can power economic growth and competitiveness with increased positive environmental impact. This transformation, called Everything-as-a-Service (XAAS), radically shifts ownership to the company—and away from the consumer—which means the entire lifecycle is extended, keeping products out of the waste steam and out of the environment. The findings are featured as part of “Everything-As-A-Service (XAAS): How businesses can thrive in the age of climate change and digitalization,” a report to be launch by SYSTEMIQ, on behalf of the SUN Institute, at the World Circular Economy Forum on 20 September.
The report focuses on the manufacturing sector and lays out how circular XAAS systems can be designed – and how these ecosystems can be catalyzed through digital technologies, policy support and collective industry action. It underscores that moving away from linear consumption models to circular approaches can generate positive environmental impact and reduce total cost of ownership (TCO) to up to nearly 40%. The report provides comprehensive insights gained from interviews with more than 50 experts from pioneering companies and leading academic institutions, and analyses the advantages and challenges associated with circular XAAS models.
“People don’t need cars, but mobility; they don’t need washing machines, but clean clothes,” said Sophie Hermann, Partner at SYSTEMIQ. “XAAS provides an alternative way of doing business that meets societal needs with efficient resource managementand lower environmental impact. Our report explains why and how innovative and bold XAAS models can deliver the much-needed shift to a circular economy.”
A toolkit featured in the report presents four building blocks (value proposition design, business model and financial design, circular product and operating model design, ecosystem design) and design parameters to optimize for both economic and sustainability impact, as well as three deep dives that showcase successful transitions to XAAS for cars, industrial equipment and white goods
XAAS business and operating models place the responsibility for the product lifecycle on producers, who are incentivized to optimize for resource productivity – designing longer-lasting products and incorporating maintenance, repair, reuse, remanufacturing, refurbishing, and recycling into their system thinking. XAAS models promote circular materials systems, which, if designed ambitiously, have the potential to decarbonizeBattery Electric Vehicles (BEV) by ~25-45% for Car-as-a-Service models. Through XAAS models. Equipment-as-a-Service can also reduce the footprint of metal laser cutting machines by ~37%-65%, and White Goods-as-a-Service models (such as refrigerators) can reduce residential laundry footprint by ~24-35%.
Challenges to scaling this approach, however, exist. If the four design building blocks are not applied and organisations do not holistically adopt sustainable strategies, integrating circularity through its value-chain, potential rebound effects such as consumption increase, and less efficient and frequent obsolete technology would result in environmental and circularity impact not reaching full potential. But the report shows this transition is already happening: Across industry sectors, companies such as Rolls-Royce (power-by-the-hour), Michelin (tires-as-a-service), ShareNow (car-sharing), Signify (lighting-as-a-service), CWS (workwear-as-a-service) and TRUMPF’s (equipment-as-a-service) have successfully implemented XAAS models.
In order to accelerate the economic transition towards dematerialization and circularity – and XAAS, consumer behaviour needs to follow suit and adopt access over ownership, and policy interventions need to encourage circular material use, rewarding innovation and mobilizing industry action.
“Waste and disposability are woven into today’s economy, fueling climate change and limiting opportunities for long-term economic prosperity,” said Dame Ellen MacArthur, Founder and Chair of Trustees, the Ellen MacArthur Foundation. “Everything-as-a-Service (XAAS) 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.”
At a time when industrial companies need new solutions to become more sustainable while staying competitive, and technological progress provides the data, analytics, and connectivity to transform how businesses operate, the report shows the XAAS is opportunity to create systems that decouple natural resource use from economic growth and well-being, reduce waste and help economies on the path to net zero.
SYSTEMIQ is a B Corp created in 2016 to drive achievement of the UN Sustainable Development Goals and the Paris Agreement by transforming markets and business models across three areas: land use, circular materials, and energy. Working with partners across sectors, SYSTEMIQ aims to unlock economic opportunities that benefit business, society and the environment. To learn more, visit www.systemiq.earth.
About the SUN Institute Environment & Sustainability
The SUN Institute Environment & Sustainability is a non-profit organisation established in Germany by the Deutsche Post Foundation in 2014. It supports institutions, programs and projects dealing with the environmental challenges and opportunities of globalization and enhanced cross-border activities.