Sustainability in X-as-a-Service Business Models – Analysis of Possible Enhancements of B2B E-Commerce Processes and Related SAP Standard Software

When I was thinking about topics that might be interesting for my Bachelor thesis in Business Information Systems, the circular economy came directly to my mind. I was convinced that taking a deep dive into the new Everything-as-a-Service (XaaS)[1] concepts as business models of the circular economy would allow me to spend three months of exciting research in the fields of sustainability, business networks and innovative technologies such as Internet of Things (IoT), big data analytics, machine learning (ML) and many more. Accordingly, I was delighted that SAP, and in particular my colleague Raik Kulinna, gave me the opportunity to work on such a topic as part of SAP’s X-as-a-Service initiative.

Everything-as-a-Service are a set of global trends of businesses shifting their business models to deliver and monetize physical goods, software and services via subscription and outcome-based models instead of traditional sell-once models. This comes with many economic benefits, such as improved and more flexible customer service, increased customer loyalty, product differentiation or business risk sharing, to name a few. As the XaaS service provider retains ownership of the physical components under the subscription model, there is also a great incentive for sustainability and circularity. A modular design for reuse, refurbishment and recycling is an attractive way to create an extended product lifecycle and save material, while maximizing the outcome of the product through the service component. Even better, there is also a direct link between sustainability and a company’s financial performance. Sustainability helps companies reduce costs by minimizing the use of resources, energy and water, satisfying stakeholder needs and helping them comply with regulations, reduce risks and dependencies on certain raw materials. The picture below visualizes how XaaS, sustainability and technology are connected.

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Of course, the customers of XaaS service providers  are also interested in buying sustainably and want to know what specific environmental benefits they receive by using an XaaS offering. Therefore, they need to find sustainability information in the sales channels for the particular offer and usage scenario they have in mind. Business-to-business (B2B) e-commerce can be one such channel, which also fulfils customers’ increasing desire for a self-directed and low-touch digital buying process.

Yet, there are many challenges for XaaS vendors to provide sustainability information for their offerings. The subscription model leads to vendor responsibility for the entire product lifecycle, so the entire lifecycle must also be reflected in the sustainability information. Long-term, customer segment-specific data as well as an idea of the customer’s planned use are crucial to arrive at a rough estimate of the subsequent sustainability benefit of the XaaS offering for the customer. However, the interaction of product, software and service bundled in the XaaS offering or the combination of individual components can also lead to difficulties in predicting the sustainability benefit. Nevertheless, it is these individual benefits that differentiate XaaS offerings from traditional product sales and are necessary to demonstrate their competitive advantage.

Consequently, intelligent and integrated IT systems are needed to collect and analyze customer and sustainability data, calculate environmental footprints individually, easily guide each customer to the most appropriate XaaS solution, and leverage up-sell and cross-sell opportunities for the XaaS provider. Therefore, I took a closer look at SAP’s software portfolio[2] in the areas of e-commerce and sustainability to get an overview of the extent to which SAP can already support such scenarios with its solutions. The top 5 scenarios are also shown in the picture below:

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To give you an outlook on the results: While there are still some open possibilities for enhancements around more advanced future scenarios, a lot can already be done with the functionalities offered by SAP today. In my thsesis you can read more about which scenarios are supported or about the benefits and challenges of technology-enabled XaaS business models and the role B2B e-commerce and sustainability can play in this. Simply contact me or my colleagues on LinkedIn via Nadine Cordes, Raik Kulinna, Torsten Welte or Ankit Sharma and we will send you the full thesis.

Below you can already find the table of contents to see what I wrote about in detail.

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[1] In scientific literature also known as „product-service systems“ (PSS).

[2] Software considered: SAP Commerce Cloud, SAP Marketing Cloud, Qualtrics, SAP Customer Data Cloud, SAP Internet of Things, SAP S/4HANA for Advanced Variant Configuration, SAP S/4HANA for Product Compliance, SAP Product Footprint Management.