The comprehensive nature of our IIoT solutions are one of relayr’s key USPs. It goes without saying that at the heart of the relayr offer are its world-class engineering, tech and logistics teams. But we also offer financing options that cover consultation, brokerage, and implementation. Relayr can even put together insurance packages to underwrite a business’ ability to invest more in its IIoT transformation and work with financial institutions to makes these changes possible. Financing can be a daunting challenge to businesses making a decisive move toward digitalization. At relayr, we understand the challenges and have the experience and connections to source bespoke financing packages for our IIoT partners.
THE CHALLENGE FOR BUSINESS
There are any number of reasons why businesses may have difficulties getting the right financial package for their IIoT investments. A weak credit rating matched with difficult-to-asses business outcomes is an obvious issue for some companies tapping up standard financial institutions for credit. This is because typical financing instruments very often do not match industrial SMEs’ funding requirements for digital transformation cases. This is especially true for Equipment-as-a-Service (EaaS) business model transformations, which can be complex and not without risk. For mid-sized SMEs, tempted by but unsure of the major benefits achievable with smart manufacturing or servicing, the initial retrofit or equipment investment can appear relatively high compared to the company’s revenues. Moreover, IIoT equipment is generally is not mobile and is therefore hard or even impossible to resell. Businesses themselves may be unsure of the outcomes as the market demand for the promised new service or improved product has not yet been proven. In general, traditional financial institutions have still not adjusted their financial packages to suit current business digital transformation needs This is why, at relayr, to enable our customers to realize innovation, we can help secure financing from progressive financial institutions with whom we have already worked. Although each package will be unique, there are three main financing models.
At the beginning of all digital transformations, machines and processes are retrofitted inorder to harvest the data necessary to visualize the process or machines properly or to create digital twin models. This whole process, from planning to the initial implementations, can be financed and even insured. Financing retrofitting rather than purchasing is advantageous as any improvement to OEE or machine efficiency reduces the need for CAPEX investment. OPEX investment enables the improvement of existing infrastructure, the benefits of which are reaped in increased capacity and enhanced efficiency. It also helps to introduce predictive maintenance, smarter servicing and to support the development of new products or services. Compared to new machine purchasing, retrofitting finance packages have a low complexity and a matching low financing volume compared to financing new machines (circa $1-$3k per unit). Importantly, financing also covers the planning and implementation phases.
For service model transformations, customers face high-exposure due to SLAs (service level agreements) demanded by the end-customers. To limit these risks, relayr’s financing packages also cover service level insurance, which basically guarantees the agreed business outcomes. This unique financial setup shifts the guarantor-role from our partner to the end-customers by diversifying the risk to a larger pool. By reversing the risk, relayr can then finance the transformation, as our partner will receive the complete five-year payout for their services in advance.
This innovative finance and insurance instrument helps businesses to develop or improve Equipment-as-a-Service models where manufacturers can begin buying back sold equipment, then retrofitting or scrapping it in order to resell or lease according to an EaaS model. The investment can help finance the kind of machinery needed to retrofit, retire, or renew used equipment. As part of a relayr package, the funds are used to create and implement a master plan that will oversee the introduction of an EaaS business model based on buying and reprocessing used machinery.
These projects are highly complex and financing levels are usually quite high. Relayr works simultaneously on both the orchestration of the project and the finance package to suit it, which means the entire project is quickly scalable. Financing is made easier by shifting the risk on the products onto the end customers. Additionally, minimum demand guarantees for the end customers and buy-back guarantees from hardware suppliers reduces the risks attached to the transformation.
As with the buy-back business model transformation above, there is a high level of complex risk assessment attached too EaaS models that move businesses away from straight up selling of machines to pay-per-use machinery models. The manufacturing plants themselves have to change and the machines need to be systemically altered to take on the kind of technology required to measure and also monitor their individual inner states and their aggregate performance.
There are no universal solutions for financing complex and radically different projects. Relayr creates and wins vital financial support through progressive lending institutions who understand relayr and their enviable track record. relayr knows the projects they orchestrate, and they know the right financial instruments to make them possible. By creating insurance packages to cover implementation and even business outcomes, it reduces the appearance of risk and helps encourage businesses to make that decisive move into IIoT. This type of financing shifts risk away from partners and on to end customers. Relayr can also reduce costs by negotiating buy-back deals for you for the expensive equipment needed in the transformation. Needless to say, financial institutions also support relayr partners as they know, based relayr’s success, that each project will both attain the set business outcomes and surpass them going forward.
CAN WE DO
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