Companies are buying services instead of robots

6.12.19

– Margaret Banasik, Vecna Robotics

Left to right: James Peverill, Dan Patt, Justin Kasznica, Karen Leavitt

 

The Robotics Summit & Expo recently hosted a panel with Dan Patt, CEO of Vecna Robotics; James Peverill, CEO of GreenSight Agronomics; Karen Leavitt, CMO of Locus Robotics; and Justine Kasznica, Shareholder of Babst Calland Clements & Zomnir. Moderated by Dan Kara, VP of Robotics at WTWH Media, the topic of RaaS was analyzed from a business, technical, legal, and operational aspect. 

“The heart of RaaS is all about flexibility,” says Dan Patt at the Robotics Summit panel about Robotics-as-a-Service (RaaS) Business Models. “If you could predict the future and know exactly what your needs for work or process would be in ten years, you’d just design and build the right thing for that. RaaS lowers the cost to grow and the cost to change. It’s about enabling flexibility.”

As manufacturing and warehousing industries grow, robots are becoming a large part of the business plan. Traditionally, robots have been purchased as capital equipment and used to automate a part of the workflow. Recently, companies have been exploring the idea of hiring robot workers similar to the way people are hired: as independent contractors.

The shift that makes this possible is the purchase of not the robot itself, but the service that it provides. Dan calls this work-as-a-service, Karen calls it flexibility-as-a-service. From a legal standpoint, Justine agrees that this model aligns well with business goals because it is pricing the service in a way that’s equal to the value provided to the customer.

Material handling robots like Vecna’s are providing a solution that changes customer site workflows, essentially amplifying human productivity to increase throughput while maintaining the same footprint of people and space. This helps companies overcome the factors that make hiring more difficult and space more constrained when demand is increasing. Dan explains, “If you construct the model around the work that the robots do, you align your RaaS model around paying for work that’s accomplished and not just for the robot per month; it focuses everybody on what matters.”

Companies are also seeking robots to work in the warehouse fulfillment space to offset the difficulty of hiring seasonal workers. Karen explains how Locus’s customers are having difficulty finding workers for a highly seasonal business where the volume around holidays can be up to 15 times higher than usual. Keeping a large human workforce year-round to accommodate this spike is not feasible, so companies are looking for ways to increase productivity with their current workforce. RaaS has given customers the flexibility to scale up and down with robots and predict workflow requirements more reliably.

Right now, the RaaS model is in the early stages and while adopting the model is a growing trend, providers are faced with a few challenges they believe will be overcome as industrial robotics mature. Some larger customers are used to the traditional approach of purchasing capital and the process to change has been slow. There’s also an emotional barrier for some to sharing robots, which can feel like a member of the team.

On the other hand, many customers adopting the RaaS model have found soaring benefits for their business. In RaaS, the provider typically incurs the larger costs associated with robotics including insurance policies and regulatory filings, a value proposition for small to medium-sized companies. Operation managers can purchase robotic services based on actual work that needs to be accomplished, giving more transparency into the value they’re actually paying for.

James sees seasonality not as a barrier but as an opportunity for the RaaS model because providers can find co-aligned customers with different peak seasons and ship the solutions from one to another. GreenSight Technologies provides solutions in the agriculture space, where equipment sharing is a common practice among farms that otherwise could not afford the technology needed. The RaaS model has been a relatively seamless adoption for many customers.

In the end, robotics is a large investment whether utilizing traditional purchasing models or Robotics-as-a-Service models. Dan emphasizes, “Manufacturing inherited a lot of processes for predictable work, but manufacturers who are becoming more flexible and desire to scale up and down better will be among the first to embrace RaaS.”