Companies selling functions offer the customer a "subscription", for example a function as a machine performs. Unlike the sale of traditional products, the supplier of the function pays for maintenance, service, spare parts etc at an agreed-upon level of availability and cost.The company makes money only when the machine is working. That places great demands on the company that provides the function.
– To provide a function means long contracts and customer relationships, says John Lindstrom. Then the sustainability aspects becomes especially important when repeated downtime has major consequences for both the supplier and the customer.
– For the company that delivers the function is sophisticated software that can be quickly adapted, for example to new laws, or adding new functionality and efficient service and support system for proactive maintenance, a large initial investment that contributes to eventually create a win-win situation, both for the customer and the supplier, says John Lindstrom.
Less risk, less responsibility and greater availability are the major benefits for customers buying a function. New business models makes it easier for the customer to focus on core business when the supplier has the responsibility for maintenance, service and update of the machine to optimize productivity.
With less maintenance and increased durability follow higher safety, better working environment and safer working methods. When the supplier, or the consortium that delivers functionality, owns the machine there is also a growing potential for so-called downcycling, where replacement equipment can be reused by other customers with lower requirements.
In northern Europe the interest in functional products is growing when more companies take interest in new business models that are performance- and results-oriented.