A transition to a “service-based” business model requires the entrepreneur to employ innovative models, processes, and technologies to achieve the relevant expected benefits, such as:
- substantial increase in margins
- customer retention through a long-term relationship
- prospective stabilisation of cash flow
- optimization of spare parts inventory
- improvement of brand reputation with connotations of Corporate Social Responsibility, thanks to a sustainable and prolonged management of machinery, with a Circular Economy perspective.
Careful risk management makes it possible to fully exploit the new real wealth generated by excellent networked machines, maximising the extractable financial economic value of the machinery.
Each service contract is conceptually likened to the management of a micro-enterprise, to which the entrepreneur is assigned economic/financial objectives: through special tools, oriented to prudential risk management, the entrepreneur is led toward a reasoned determination of expected values, such as the margin on the cost of sales, the expected cash flow, the residual value of the machinery at the end of the contract and the pool of related services.
The risk/performance control/monitoring system of PARADIGMIX – SERVITIZATION LIFECYCLE ENGINE calculates with parameterizable frequency the scoring related to each service contract having a machinery as underlying asset and allows an immediate and synthetic visibility of its health status, according to the risk dimensions mentioned above.
By being able to intercept and weigh risks according to different dimensions, it is possible to translate information into behaviours aimed at achieving the economic targets of the service contract.
The system enables a revolutionary risk management: given a usual credit scoring model, based on internal and external data, the improvement is made by placing alongside usual credit data risk indicators calculated using “Alternative Data,” to calculate scoring indicators relevant to each risk area and determine, through a proprietary weighing of the indicators, an innovative synthetic scoring indicator, capable of being certified and reconstructed, as deposited on a special Blockchain.
In addition, the trend stream created by calculating time-by-time scoring allows to support the possible use of the cash flow generated by Digital Asset Servitization as the underlying for a new class of Asset-Backed Securities: this would let the manufacturer access a new source of self-financing.
Machinery companies that adopt the Digital Asset Servitization model will have greater bargaining power with the credit system, since they will exhibit in the notes to the financial statements both the cash flow forecast and the risk-weighted valuation of the servitized portfolio, and this will be reflected, given the greater visibility of the future cash position, in an increase in the rating assigned to the company by the credit system.
As already defined, the machines produced are no longer sold, but leased for their entire life, and industrial companies engaged in Digital Asset Servitization, will in fact hold assets on their balance sheet, whose economic performance will be related to the governance, integration and interpretation of the information generated throughout the useful life of the machinery (from prototyping to scrapping).